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2022 (2) TMI 98 - AT - Insolvency and BankruptcyApproval of Resolution Plan - Section 30 sub-section (6) of the Insolvency and Bankruptcy Code 2016 - HELD THAT - The mere fact that Financial Creditors are paid @ 8% and Operational Creditors are paid @ 0.5% cannot be said to be unequitable treatment. It is relevant to note that statutory dues which are more than of 10 crores have also been only allocated 0.5%. It is true that the claim of the Appellant was based on Decree of Civil Court. But when we look into the definition of Section 3 sub-section (6) it is clear that the IBC contemplates all claims whether or not such right is reduced to judgment had to be filed in IBC. Even if right to payment is reduced to judgment of a Civil Court the same is also a claim at par with other claimants as referred to in Section 3 sub-section (6). The judgment of Apex Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT has settled the legal position regarding payment to Operational Creditors and Financial Creditors. There are no ground is covered by grounds enumerated in sub-section (3) of Section 61 so as to exercise any jurisdiction by this Tribunal to interfere with the order of Adjudicating Authority approving the Resolution Plan. The Adjudicating Authority has considered claim of the Appellant and approved the Resolution Plan. The appeal is dismissed.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016. 2. Discrimination in payment between Operational Creditors and Financial Creditors. 3. Compliance with Section 30(2) and Regulation 38 of the IBBI (CIRP) Regulations, 2016. 4. Validity of claims based on a Civil Court Decree under IBC. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016: The appeal was filed against the judgment of the National Company Law Tribunal (NCLT), Ahmedabad Bench, which approved the Resolution Plan submitted by the Resolution Professional (RP) under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (the Code). The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, and a Resolution Plan providing for payment of ?19.36 lakhs was approved by the Committee of Creditors (CoC) with a 100% majority. 2. Discrimination in payment between Operational Creditors and Financial Creditors: The appellant, an Operational Creditor, argued that the Resolution Plan was inequitable as it proposed to pay only 0.5% of their claim, while Financial Creditors were to be paid 8%. The appellant contended that this was discriminatory and violated the principles of equitable treatment. The RP countered that the payment to Operational Creditors was in accordance with Section 30(2) and Regulation 38, and in the event of liquidation, the appellant would have received nil. 3. Compliance with Section 30(2) and Regulation 38 of the IBBI (CIRP) Regulations, 2016: The appellant argued that the Resolution Plan did not comply with Section 30(2) and Regulation 38, which mandate fair treatment of Operational Creditors. The Tribunal examined these provisions and referred to the Supreme Court's judgment in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Others, which clarified that equitable treatment is required only within the same class of creditors. The Supreme Court had held that differential treatment between Financial and Operational Creditors is permissible as long as the provisions of the Code and Regulations are met. 4. Validity of claims based on a Civil Court Decree under IBC: The appellant's claim was based on a decree from the Civil Court for ?5,00,000/- plus interest. The Tribunal noted that under Section 3(6) of the Code, all claims, whether or not reduced to judgment, are to be treated equally. The RP had admitted the appellant's claim, but the Resolution Plan allocated only 0.5% to Operational Creditors due to the financial constraints and the priority of claims. Conclusion: The Tribunal concluded that the mere fact that Financial Creditors were paid 8% and Operational Creditors 0.5% did not constitute inequitable treatment. The Tribunal upheld the NCLT's approval of the Resolution Plan, stating that it complied with the legal requirements and that the appellant's grounds for appeal did not meet the criteria under Section 61(3) of the Code. The appeal was dismissed with no order as to costs.
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