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2023 (7) TMI 213 - AT - Insolvency and BankruptcyApproval of Resolution Plan - allegation is that Resolution plan is discriminative in the distribution of the proposed amount to the Operational Creditor vis- -vis Financial Creditor - appellant submits that the Resolution Plan approved by the Adjudicating Authority is not in consonance with the provision of I B Code, 2016 - Whether Appellants can claim discrimination in payment qua the financial creditors in these Appeals? HELD THAT - Financial Creditor and Operational Creditor are at different ladder in Section 53 of the Code. Financial Creditor under Section 53(i)(b) are entitled to receive payment equal to those workmen dues. The Operational Creditor can not claim payment equal to the Financial Creditor which is law well settled - reference made to Judgement of the Hon ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT where the Hon ble Supreme Court has laid down that equality in the payment under the Resolution Plan has to be under some class of creditors. The principle of equality is applicable only in same class of creditors. This Tribunal in a case arising out of similar facts in DAMODAR VALLEY CORPORATION VERSUS DIMENSION STEEL AND ALLOYS PRIVATE LIMITED, BIJOY MURMURIA, RESOLUTION PROFESSIONAL OF THE CORPORATE DEBTOR, C/O SUMEDHA MANAGEMENT SOLUTION PRIVATE LIMITED, C.P. ISPAT PRIVATE LIMITED 2022 (5) TMI 1365 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI where Electricity Dues were unpaid by the Corporate Debtor, Resolution Plan was approved where operational creditors of the Damodar Valley Corporation were provided less than 1% - This tribunal had noticed about the meagre payment to Operational Creditor in most of the Resolution Plan. Tribunal has made observations in the said judgment drawing attention to the fact of the legislative scheme and to consider as to whether any changes are required or not and held that In the present case, the Operational Creditors have been given only miniscule of their admitted claim to the extent of only 0.19%. As the law stand today, no exception can be taken to such Plans, which provide payment to Operational Creditor in accordance with Section 30(2)(b) of the Code. However, the time has come when it should be examined by the Government and the Board to find out as to whether there are any grounds for considering change in the legislative scheme towards the payment to the Operational Creditors, which also consist of Government dues and other statutory dues. We make it clear that our observation is only to facilitate the Government and other competent Authority to consider this issue and take decision, so as to the objective of equitable and fair distribution can be fulfilled with clear parameters to guide the all concerned to arrive at the fair and equitable distribution. Regulation 17(vi) also does not in any manner affect the distribution as contemplated by Section 53 of the Code. The approval of the Resolution Plan cannot be faulted on the grounds as contended by the Learned Counsel for the Appellant in these Appeals - appeal dismissed.
Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority. 2. Alleged discrimination in the distribution of amounts to Operational Creditors vis-Ã -vis Financial Creditors. 3. Compliance with the Insolvency and Bankruptcy Code (I&B Code) and related regulations. 4. Consideration of electricity charges as statutory dues. Summary: Issue 1: Approval of the Resolution Plan by the Adjudicating Authority - The appeals challenge orders by the National Company Law Tribunal (NCLT) approving the Resolution Plans submitted by the Resolution Applicants. In Company Appeal (AT) Ins. No. 613 of 2022, the NCLT Cuttack Bench approved the Resolution Plan on 03.02.2022. In Company Appeal (AT) Ins. No. 795 of 2022, the NCLT Kolkata Bench approved the Resolution Plan on 07.04.2022. Issue 2: Alleged Discrimination in Distribution to Operational Creditors - The appellants argued that the Resolution Plans approved by the Adjudicating Authority were not in consonance with the I&B Code, 2016, particularly Section 30 and Regulation 38, which mandate fair and equitable treatment for Operational Creditors. They contended that the amounts allocated to them were significantly lower (0.5% and 1% of their claims) compared to Financial Creditors, which they claimed was discriminatory. - The Tribunal referred to the Supreme Court's judgment in CoC of Essar Steel India Ltd. Vs. Satish Kumar Gupta & Ors., stating that equality in payment is only required within the same class of creditors. The principle of equitable treatment does not mandate equal payment to Financial and Operational Creditors, but rather fair treatment within their respective classes. Issue 3: Compliance with the Insolvency and Bankruptcy Code (I&B Code) - The Tribunal noted that the appellants' claims were admitted by the Resolution Professional, and the amounts allocated to them were not less than their liquidation value, as required by the I&B Code. The Tribunal emphasized that the commercial wisdom of the Committee of Creditors (CoC) in approving the Resolution Plan should not be interfered with unless it violates the provisions of the Code. - The Tribunal also cited its previous judgment in Damodar Valley Corporation Vs. Dimension Steel and Alloys Pvt. Ltd., where similar arguments regarding meager payments to Operational Creditors were rejected, reiterating that the legislative scheme does not mandate equal payment to Financial and Operational Creditors. Issue 4: Consideration of Electricity Charges as Statutory Dues - The appellants argued that electricity charges should be considered statutory dues and should be recoverable as per the OERC Distribution (Conditions of Supply) Code, 2019. The Tribunal, however, held that such regulations do not override the provisions of the I&B Code and do not affect the distribution scheme under Section 53 of the Code. - The Tribunal concluded that the approval of the Resolution Plans could not be faulted on these grounds and dismissed both appeals. Conclusion: - The Tribunal dismissed both appeals, affirming the approval of the Resolution Plans by the Adjudicating Authority and rejecting the claims of discrimination and non-compliance with the I&B Code. The Tribunal reiterated that the commercial wisdom of the CoC in approving the Resolution Plans is paramount and should not be interfered with unless it contravenes the Code.
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