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2022 (10) TMI 95 - AT - Insolvency and BankruptcyApproval of Resolution Plan - it is alleged that the Resolution Plan dated 26.06.2020 submitted by 4th Respondent has been approved without application of mind and without scrutinizing the Resolution Plan - it is alleged that the financial proposal against the total dues of Operational Creditors were made without actual assessment of Liquidation Value of Corporate Debtor which dehors the provisions of Section 30(2)(b) read with Section 53 of the Insolvency and Bankruptcy Code, 2016. Whether the CoC and Adjudicating Authority discriminated the Operational Creditors from Financial Creditor while approving the Resolution plan making the Appellant to loss 100% of its claim, if so, the order is liable to be set aside? - HELD THAT - The Resolution Professional distributed the proportionate amount to the Operational Creditors strictly adhering to Section 30(2)(b) and Section 53 of IBC. Even otherwise, the plan was approved by the CoC with 100% majority voting share. The Adjudicating Authority shall examine, whether the approved resolution plan by CoC is contrary to any law or whether it is viable and implementable, and the Adjudicating Authority is not under an obligation to examine the amount to be distributed to the different class of creditors. Thus, the once the plan was approved by CoC in its commercial wisdom, the Adjudicating Authority cannot interfere with such decision taken by the CoC, unless the plan is contrary to any of the provisions of IBC or any other law. It is not the case of the Appellant that in approved is against any of the provisions of the IBC or and any other, but, pleaded only discrimination. This Tribunal in DAMODAR VALLEY CORPORATION VERSUS KHARKIA STEELS PVT. LTD., MR. UDAY NARAYAN MITRA LSI RESOLUTION PRIVATE LIMITED, AMRITVANI EXIM PRIVATE LIMITED 2022 (3) TMI 821 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI , this Tribunal held that the NCLT does not hold equity-based jurisdiction and any distribution which is in accordance with Section 30(2)(b) of IBC is considered fair and equitable and accordingly the approved resolution plan is not interfered by this Tribunal. Thus, it is clear that the discrimination among class of creditors vitiates the Resolution plan. The Appellant being an Operational Creditor if discriminated from the other Operational Creditor, it is a ground to set aside, but here Appellant, being Operational Creditor was not discriminated from the other Operational Creditors. Therefore, it is not a ground for set aside the resolution plan since such discrimination is permissible in terms of the judgments referred - the ground of discrimination does not stand to any scrutiny - the point is answered against in Appellant and in favour of respondents. Whether the Resolution Professional is under legal obligation to inform the fair, liquidation value of the Corporate Debtor to the Appellant, who is not a member of CoC? - HELD THAT - Since the Appellant is not a member of the CoC failure to provide fair value and liquidation value to the Appellant is not a ground to set aside the order impugned in the Appeal while exercising jurisdiction under Section 61 of IBC. Therefore, the contention of the Appellant about non-compliance of Regulation 35(2) is hereby rejected while holding that is not a ground to set aside the order impugned. Accordingly, point is here against the Appellant and in favour of the Respondents. Whether the alleged failure to appoint a registered valuer for valuing the Corporate Debtor to fix, fair and liquidation value is an legality in the order passed by the Adjudicating Authority? - HELD THAT - The Tribunal recording a finding in para 16 and 17 of the order about appointment of registered valuer for determining the fair value and liquidation value of the Corporate Debtor in compliance of Regulation 27 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate persons) Regulation, 2016. But nobody will be allowed to access to such information as to the liquidation value except providing the same to the member of CoC. On over all consideration of material on record, the resolution plan was approved by CoC strictly in compliance of the procedure prescribed under the Code and Regulations framed thereunder. In the present facts of the case, except the alleged violation referred, nothing is brought on record to establish that this plan was approved in contravention in any law. In those circumstances, the Appellate Tribunal while exercising jurisdiction under Section 61 cannot interfere with such order as no law as the approval of resolution plan is in compliance of statutory procedure. Therefore, there are no ground to interfere with the order passed by the Adjudicating Authority challenging for interference of this Court, while exercising jurisdiction under 61 of the IBC. Appeal dismissed.
Issues Involved:
1. Discrimination against Operational Creditors 2. Obligation to Inform Fair and Liquidation Value to Non-CoC Members 3. Appointment of Registered Valuer for Fair and Liquidation Value Issue-wise Detailed Analysis: 1. Discrimination against Operational Creditors: The appellant, Chhattisgarh State Power Distribution Company Ltd. (CSPDCL), contended that the Resolution Professional (RP) failed to comply with Section 30(2)(b) of the Insolvency and Bankruptcy Code (IBC), thereby discriminating against Operational Creditors. Section 30(2)(b) mandates the RP to ensure that the resolution plan provides for payment of debts to Operational Creditors in a manner specified by the Board, which should not be less than the amount payable in the event of liquidation under Section 53. The RP, however, distributed the proportionate amount to Operational Creditors adhering to Section 30(2)(b) and Section 53 of IBC, and the plan was approved by the Committee of Creditors (CoC) with 100% voting. The appellant argued that the financial proposal against the total dues amounting to Rs. 48.38 crores of Operational Creditors was made without actual assessment of the liquidation value, violating Section 30(2)(b) read with Section 53 of IBC. The RP allegedly placed the appellant's claim in the last of the waterfall model, causing a 100% loss of the appellant's claim. However, the tribunal found no discrimination among the same class of creditors and upheld the commercial wisdom of CoC, which is final and beyond judicial review unless the plan is contrary to the provisions of IBC or any other law. 2. Obligation to Inform Fair and Liquidation Value to Non-CoC Members: The appellant contended that the liquidation value of the Corporate Debtor was not communicated to them. The tribunal clarified that Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 mandates disclosure of liquidation value only to the members of CoC. Since the appellant was not a member of CoC, the RP was not obligated to inform them of the liquidation value. The tribunal rejected this contention, stating that the failure to provide fair and liquidation value to the appellant is not a ground to set aside the order. 3. Appointment of Registered Valuer for Fair and Liquidation Value: The appellant argued that the RP did not appoint a registered valuer to determine the fair and liquidation value of the Corporate Debtor. The tribunal found that the RP had indeed appointed a registered valuer in compliance with Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The tribunal noted that the information regarding the liquidation value is confidential and is only shared with CoC members. The tribunal concluded that the resolution plan was approved by CoC in compliance with the prescribed procedure under the Code and Regulations. Conclusion: The tribunal dismissed the appeal, confirming the order passed by the Adjudicating Authority. The tribunal held that the appellant's contentions regarding discrimination, non-disclosure of liquidation value, and non-appointment of a registered valuer were without merit. The tribunal emphasized that the commercial wisdom of CoC is supreme and cannot be interfered with unless the resolution plan is contrary to the provisions of IBC or any other law. The appeal was found to be devoid of merits and was dismissed.
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