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TMI Blog2020 (8) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... cating Authority in CIRP initiated by original Financial Creditor - Oriental Bank of Commerce against M/s. Allied Strips Ltd. (Corporate Debtor) accepted the Resolution Plan submitted by Respondent No.2 - G.P. Global Energy Pvt. Ltd. The main grievance of the Appellant with regard to the Resolution Plan accepted is that while the Financial Creditors are proposed to be paid 13.69% of their admitted claim by RP (Resolution Professional), the Operational Creditors are proposed to be paid only 0.46%. Apart from this, the grievance of the Appellant is that the RP accepted on record even in the final list of creditors that all Operational Creditors were unsecured except for the Appellant. It is thus, claimed that the Appellant deserve similar treatment as the Secured Financial Creditors. 2. Company Appeal (AT) (Ins) 688 of 2019 has been filed by Appellant - Indian Oil Corporation Ltd. as Operational Creditor against the same Impugned Order as has been challenged in Company Appeal (AT) (Ins) 680 of 2019 raising similar grievances as in Company Appeal (AT) (Ins) No.680 of 2019 that the Operational Creditors have not been given a fair deal compared to the difference in percentage of 13.69% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rational Creditors were to be paid in priority. Reference was made to Judgements in the matter of "Binani Industries Limited vs. Bank of Baroda and Anr." (2018 SCC OnLine NCLAT 521) and Judgement of the Hon'ble Supreme Court in the matter of "Swiss Ribbons Pvt. Ltd. &Anr. vs. Union of India & Ors." reported in (2019) 4 SCC 17 and the Resolution Plan was examined keeping in view the said Judgements and examining the various conditions required to be specified including requirement of mandatory contents, the Adjudicating Authority accepted and approved the act of COC (Committee of Creditors) approving the Resolution Plan of the SRA. 5. Subsequent to the date of passing of the Impugned Order, there has been amendment in Sub-Section (2) of Section 30 and Sub-Section (4) of Section 30 of IBC and also Judgement came to be passed in the matter of "Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors." (Civil Appeal No.8766-67 of 2019) in the Judgement dated 15th November, 2019. We have heard the arguments of Counsel for both sides keeping these developments also in view to see, if even these developments were to be kept in view, whether any change would be nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use shall be fair and equitable to such creditors. Explanation 2.--For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor-- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;" 6. Learned Counsel for the Appellant referred to Judgement in the matter of "Essar Steel" (supra) (para - 57) to submit that equitable treatment is to be accorded to each creditor depending upon the clause to which it belongs: secured or unsecured, financial or operational. It is argued that even operational creditors could be secured operational creditors and thus, it is stated that the Appellant who was accepted as a Secured Oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of Operational Creditors, reads as under:- "1. All Operational Creditors are unsecured Except Power2SME Private Limited at S.No.53. Please see annexure 1 for security interest of Power2SME Private Limited." The footnote leads us to Annexure - 1 (as at Page - 87) which reads as under:- " Annexure I Sl.No. Facility Security Interest-Power2SME Private Limited 1. Personal Guarantees of Gaurav Aggarwal and Mohender Aggarwal (dated 28-03-2017) For Rs. 36 Crores each 2. Hypothecation of Stocks of HR coils whether Raw or in the process of manufacture and all products goods and any of the moveable property i.e. product from material supplied by the Power2SME of any kind vide hypothecation deed dated 01-12-2016 for Rs. 80 Crores. Subject charge in favour of Power2SME is subservient charge to the charges of Financial institutions/banks due to following reasons:- a) No NOC was taken by Power2SME Private Limited from FIs/Banks to create charge on stock on which banks/FIs are first and second charge holders. b) Bank/FIs charge was created prior to the charge of Power2SME Private Limited. 9. The learned Counsel for the RP and SRA as well as COC point out that the hyp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i in respect of the ownership of material lying in the factory of CD at Bahadurgarh and apprised that after his appointment as RP, he also contested against the Erstwhile RP's order dated 20-08-2018 of allowing the Power2SME Pvt Ltd to lift the material from the premises of CD, through his counsel - Mr. Abhishek Anand. It was further apprised that Hon'ble NCLT vide its order dated 11-10-018 clearly stated that Adjudicating Authority does not permit new RP to contest/challenge/review the decision of Erstwhile RP and further directed to comply with the order passed by Erstwhile RP on 20-08-2018 within two weeks and disposed of the Application. The RP further briefed while going through the Order dated 20-08-2018 of Erstwhile RP it has been observed that in the Civil Suit No. 26/2018 in civil court Bahadurgarh, stay has been granted. In the order of the Erstwhile RP dated 20-08-2018 it is stated in Para 10(viii)(b), to quote interalia as "The said material can be lifted by the applicant (P2S) at their own cost, arrangement and responsibility in the presence of the Representative of RP, subject to vacation of the restraints orders, if any, by any court/Tribunal, including but not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old security interests over the same asset, the value of that asset may only support the claim first in priority and part of the second in priority. The second creditor therefore may have a right to vote only in respect of the unsecured portion of its claim, while the third creditor will be totally unsecured. The valuation of the asset is therefore crucial to determining the extent to which these secured creditors are secured and whether or not they are entitled to vote as unsecured creditors with respect to any portion of their claim." 14. Referring to such BLRC Report 2015, Hon'ble Supreme Court observed that it is of great help in understanding what is meant by respecting the rights of all creditors equally. Paragraphs - 56 and 57 of the said Judgement read as under:- "56. .......Fair and equitable dealing of operational creditors' rights under the said Regulation involves the resolution plan stating as to how it has dealt with the interests of operational creditors, which is not the same thing as saying that they must be paid the same amount of their debt proportionately. Also, the fact that the operational creditors are given priority in payment over all financial creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 203.41 Crores. Counsel for RP stated that the debt of employees is of Rs. 7.07 Crores. Referring to these figures, the argument raised by the Counsel for Respondents is that even if Section 30(2)(b)(i) and (ii) as are now applicable were to be applied, what comes to the Operational Creditors and the Appellant would still be NIL. It is argued that the COC with the object of keeping the Corporate Debtor a going concern over various meetings deliberated with the SRA to maximise the value of the assets and ultimately the Resolution Plan was approved by the COC with 99.84 percent vote in favour of the Resolution Plan of SRA. It is argued that the Financial Creditors have also themselves given up huge claims, in spite of being Secured Financial Creditors so as to accept receipt of 13.69 percent of their claims and the workers and employees were provided 23.83 percent of their claims and in the circumstances, Operational Creditors could get only 0.46 percent. It is argued that the COC took commercial decision to accept the Resolution Plan and the Adjudicating Authority had accepted the Resolution Plan and this Tribunal may not disturb the Resolution Plan already accepted. 17. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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