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2023 (11) TMI 726 - AT - Insolvency and BankruptcyApproval of Resolution Plan - waterfall mechanism - HELD THAT - The claim filed by the Appellant was as Operational Creditor and it is not shown that Operational Creditor was entitled for any more amount as per Section 30(2)(e) under which the Operational Creditor is entitled for the amount equivalent to the amount which could have been paid to the Operational Creditor in event of liquidation as per waterfall mechanism under Section 53. In judgment of this Tribunal in in Department of State Tax, Through the Dy. Commissioner of State Tax vs. Zicom Saas Pvt. Ltd. Anr. 2023 (2) TMI 1170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI , the submission on the basis of Rainbow Paper was considered and repelled and it was held that The Appellant having been treated as Operational Creditor allocation of amount in the Resolution Plan cannot be said to be in violation of Section 30 (2)(b). There are no grounds have been made to interfere with the order approving the Resolution Plan - appeal dismissed.
Issues involved:
The judgment deals with the challenge against the approval of a Resolution Plan by the Adjudicating Authority, specifically regarding the allocation of funds to the Operational Creditor and the interpretation of relevant legal provisions. Allocation of Funds to Operational Creditor: The Appellant, the Department of State Tax, raised a grievance regarding the allocation of funds in the Resolution Plan, claiming an amount of Rs.67 Crores while the earmarked amount for the Operational Creditor was less than 1%. The Appellant relied on the judgment of the Supreme Court in "State Tax Officer vs. Rainbow Papers Ltd." Interpretation of Legal Provisions: The Respondent argued that a similar issue had been previously decided by the Tribunal in another case, where the appeal by the Department of State Tax was rejected. The Tribunal considered the submissions and reviewed the record, focusing on the provisions of Section 30(2)(e) and Section 53 of the Insolvency and Bankruptcy Code. Judicial Analysis: The Tribunal examined the claim filed by the Appellant as an Operational Creditor and noted that the amount allocated was in accordance with Section 30(2)(e), which entitles the Operational Creditor to an amount equivalent to what could have been received in a liquidation scenario under Section 53. The Tribunal referenced a previous judgment to support its reasoning, highlighting the distinction between different legal provisions and emphasizing that the allocation in the Resolution Plan did not violate Section 30(2)(b). Decision: Based on the analysis and the precedent set by the previous judgment, the Tribunal concluded that there were no grounds to interfere with the order approving the Resolution Plan. Therefore, the Appeal was dismissed. This summary provides a detailed breakdown of the issues involved in the judgment, the arguments presented by both parties, the legal analysis conducted by the Tribunal, and the ultimate decision reached.
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