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2022 (12) TMI 1054 - AT - Insolvency and BankruptcyValidity of approval of Resolution Plan - Dues of EPF - Seeking entire claim to be allowed on priority - the Petitioner / Appellant is not a Party to the Proceedings - It is the stand of the Petitioner / Appellant that it is the Statutory Authority and Creditor to the Corporate Debtor and the grievance of the Petitioner/ Appellant is that its Claim, was not paid, in entirety and in priority, in the Resolution Plan - HELD THAT - The Resolution Plan of the 2nd Respondent / Successful Resolution Applicant, was voted by 97.18% voting share of Committee of Creditors and the 2nd Respondent / Successful Resolution Applicant, was declared as the Successful Resolution Applicant, in terms of the ingredients of Section 30 (2) of the Insolvency Bankruptcy Code, 2016. The 1st Respondent/ Resolution Professional had evaluated the Resolution Plan of the 2nd Respondent and, affirmed, that it fulfills the requirements of the Insolvency and Bankruptcy Code, 2016. It is axiomatic principle, in Law, that before approving the Resolution Plan, the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench, Hyderabad) is to apply his mind and come to a conclusion, that the same satisfies the requirements adumbrated under Section 30 (2) of the I B Code, 2016 - Undoubtedly, an approval of Resolution Plan, is to be Judged, with due diligence, by an Adjudicating Authority. In fact, the Resolution Plan is not a Sale / Auction/ Not Recovery / Not Liquidation. The Creditors will be bound by the Sums, stated to be Payable, under the Resolution Plan, of course, in accordance with Section 31, of the Insolvency Bankruptcy Code, 2016. The pros and cons of the Scheme / Resolution Plan, is required to be thoroughly scrutinised, regarding a subjective satisfaction, being arrived at, by an Adjudicating Authority. A Resolution Professional is to find out, whether the Resolution Plan of a Resolution Applicant, satisfies the requirements, mentioned in Section 30 (2) of the I B Code, 2016 - In the instant case, the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench, Hyderabad) came to the conclusion, that the Resolution Plan, satisfies the requirements of the I B Code, 2016, and approved the said Plan, through an Order dated 10.01.2022 in IA No.746/2021 in CP (IB) No.326/7/HDB/2020. The Adjudicating Authority, is empowered to turn down the Resolution Plan, when it does not satisfy the parameters mentioned in Section 30 (2) of the I B Code, 2016. A Judicial Review, of the approved Resolution Plan, by the Committee of Creditors is limited, by the Adjudicating Authority, (Tribunal). In the instant case, the Appellant, was paid a sum of Rs.46,400/- through a Cheque dated 10.02.2022, although its Claim in Form B dated 29.01.2021, in respect of the Corporate Debtor was Rs.40,09,102/-. Be that as it may, in view of the fact that in the impugned order, the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench, Hyderabad), had clearly observed that the Resolution Plan, furnished by the 2nd Respondent / successful Resolution Applicant is in conformity with the requirements of Section 30 (2) of the I B Code, 2016 and the other requirements, prescribed by the Insolvency Bankruptcy Board of India, and this Tribunal, keeping in mind an important fact that the Resolution Plan came to be approved with a majority of 97.18% Vote, by giving a due consideration and weightage to the commercial wisdom of the Committee of Creditors, this Tribunal comes to a resultant conclusion, that the impugned order dated 10.01.2022 in IA No.746/2021 in CP (IB) No.326/7/HDB/2020 in allowing the IA No.746/2021, by approving the Resolution Plan, is free from any Legal Flaws. Appeal dismissed.
Issues Involved:
1. Leave to appeal against the impugned order. 2. Approval of the Resolution Plan. 3. Non-payment of EPF dues in entirety and priority. 4. Compliance with statutory obligations and legal provisions. Issue-wise Analysis: 1. Leave to Appeal Against the Impugned Order: The Petitioner/Appellant sought leave to appeal against the impugned order dated 10.01.2022, passed by the National Company Law Tribunal (NCLT), Hyderabad Bench, in IA/746/2021 in CP (IB) No.326/7/HDB/2020, which approved the Resolution Plan submitted by the 2nd Respondent. The Tribunal granted leave to the Petitioner/Appellant to prefer the appeal, considering that the Petitioner/Appellant was not a party to the original proceedings and had a grievance regarding non-payment in full and priority in the Resolution Plan. 2. Approval of the Resolution Plan: The NCLT, Hyderabad Bench, approved the Resolution Plan submitted by M/s Harsha Constructions Pvt. Ltd. with 97.18% votes in favor from the Committee of Creditors (CoC). The Tribunal noted that the Resolution Plan complied with all provisions of the Insolvency and Bankruptcy Code (IBC) 2016 and the Insolvency and Bankruptcy Board of India (IBBI) regulations. The plan was found to be feasible and viable, meeting the requirements of Section 30(2) of the IBC. The Tribunal emphasized that judicial review of the CoC's commercial wisdom is limited and that the Adjudicating Authority must ensure the Resolution Plan meets the statutory requirements. 3. Non-payment of EPF Dues in Entirety and Priority: The Appellant, a statutory authority and creditor to the Corporate Debtor, contended that its EPF dues amounting to Rs.40,09,102/- were not paid in full and priority in the Resolution Plan. The Appellant argued that the Resolution Plan allocated only Rs.46,400/- towards its dues, which was grossly inadequate and violated Section 11 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Appellant cited previous judgments, asserting that EPF dues are outside the liquidation estate and must be paid in priority over other dues. 4. Compliance with Statutory Obligations and Legal Provisions: The Appellant argued that the Resolution Plan contravened Sections 36(4)(a)(iii) and 30(2)(e) of the IBC, which exclude provident fund dues from the liquidation estate. The Appellant emphasized that EPF dues should be paid in priority without applying the waterfall mechanism under Section 53 of the IBC. The Tribunal noted that the Resolution Plan must not waive any statutory obligations/liabilities and must comply with relevant laws. The Tribunal referred to the Supreme Court's judgments, underscoring the limited judicial review of the CoC's commercial decisions and the necessity for the Resolution Plan to meet statutory requirements. Conclusion: The Tribunal dismissed the appeal, affirming that the Resolution Plan approved by the NCLT, Hyderabad Bench, met the requirements of the IBC and IBBI regulations. The Tribunal highlighted the importance of the CoC's commercial wisdom and the limited scope of judicial intervention. The dismissal of the appeal does not preclude the Appellant from pursuing its claim for the balance amount before a competent forum in accordance with the law.
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