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2022 (4) TMI 656 - AT - Insolvency and BankruptcyValidity of approved Resolution Plan - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The resolution plan presented by the resolution applicant Amit Metaliks in relation to the corporate debtor VSP Udyog was assailed before NCLAT and thereafter before Hon ble Supreme Court, which was found compliant of the provisions under IBC, and the Hon ble Supreme Court vide its judgment dated 13.05.2021 in the matter of India Resurgence ARC Private Limited 2021 (6) TMI 684 - SUPREME COURT held that the business decision taken in exercise of the commercial wisdom of Committee of Creditors cannot be interfered with unless creditors belonging to a class being similarly situated are denied fair and equitable treatment. The statement of the Ld. Sr. Counsel for the Respondents that the Successful Resolution Applicant is not interested in seeking a fresh electricity connection from the Appellant / DVC and therefore, the provisions made in the approved resolution plan regarding waiver of charges etc. for a fresh connection from the Appellant-DVC will not be of concern to DVC. The Ld. Sr. Counsel for the Appellant has stated that the Successful Resolution Applicant is free to take a new connection from any other discom under WBERC Regulations - any provision in the approved resolution plan with relates to any waiver or relief with regard to a new connection from the Appellant/DVC need not be gone into and hence, insofar as the rights of the Successful Resolution Applicant about taking a new connection from the Appellant/DVC is concerned, it is not significant and the Successful Resolution Applicant is at liberty to take a new electricity connection from any discom under WBERC Regulations. In view of the fact that the resolution plan of the corporate debtor VSP Udyog has been affirmed by Hon ble Supreme Court in the matter of India Resurgence (Supra), the challenge to the approval of resolution plan cannot be sustained - appeal disposed off.
Issues Involved:
1. Contravention of laws in the approved resolution plan. 2. Disparity in treatment between operational creditors and financial creditors. 3. Legality of provisions for future dues and fresh electricity connection in the resolution plan. 4. Compliance of the resolution plan with Section 30(2) of the IBC. 5. Judicial review and commercial wisdom of the Committee of Creditors (CoC). Detailed Analysis: 1. Contravention of laws in the approved resolution plan: The Appellant/DVC argued that the approved resolution plan contravenes existing laws, specifically the extant laws regarding the supply of electricity, and hence should be quashed. The Appellant highlighted that future dues have been waived in the resolution plan, which is not legally tenable. The resolution plan included provisions for deemed renewal of licenses and fresh power connections which the Appellant contended were beyond the legal scope of the Insolvency and Bankruptcy Code (IBC). 2. Disparity in treatment between operational creditors and financial creditors: The Appellant contended that the resolution plan arbitrarily favored financial creditors over operational creditors. The Appellant received a meager amount against its substantial admitted claim, arguing that the disparity was without any concrete reason and violated the principles laid down in Section 30(2) of the IBC. The Appellant also highlighted that the treatment of operational creditors in the resolution plan did not meet the requirements of Regulation 38(1)(a) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 3. Legality of provisions for future dues and fresh electricity connection in the resolution plan: The Appellant argued that the resolution plan's provisions for future dues and fresh electricity connections were not in accordance with the legal provisions under the Electricity Act and WBERC Regulations. The Appellant cited specific paragraphs of the resolution plan that directed the restoration of essential services and fresh power connections, which they claimed could not be mandated through the resolution plan under the IBC. 4. Compliance of the resolution plan with Section 30(2) of the IBC: The Appellant asserted that the resolution plan did not satisfy the conditions laid out in Section 30(2) of the IBC, particularly subsections (b) and (e), which pertain to the payment of debts to operational creditors and compliance with the provisions of law. The Appellant argued that the adjudicating authority's approval of the resolution plan lacked a detailed examination of its terms and did not ensure compliance with the legal requirements. 5. Judicial review and commercial wisdom of the Committee of Creditors (CoC): The Respondents argued that the resolution plan was compliant with the IBC provisions and had been approved by the CoC, whose commercial wisdom is paramount and beyond judicial review except within the limited scope defined by Section 30(2) of the IBC. They cited the Supreme Court's judgment in the case of India Resurgence ARC Private Limited vs. Amit Metaliks Ltd. & Another, which upheld the resolution plan and emphasized the limited scope of judicial review of CoC's decisions. Judgment: The tribunal noted that the resolution plan had been affirmed by the Supreme Court, which found it compliant with the IBC provisions. The tribunal emphasized the limited scope of judicial review, which is confined to ensuring that the resolution plan does not contravene any provisions of law and that the interests of all stakeholders, including operational creditors, are taken care of. The tribunal also noted the Respondents' statement that the Successful Resolution Applicant was not interested in seeking a fresh electricity connection from the Appellant/DVC, rendering the Appellant's concerns about future dues and fresh connections irrelevant. In light of these findings, the tribunal dismissed the appeal, stating that the challenge to the approval of the resolution plan could not be sustained and that the grievance regarding the directions for a new connection was irrelevant. The appeal was disposed of without any order as to costs.
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