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TMI Blog2021 (1) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... btor, thus being wholly unaware of the progress of Resolution Process with no details provided by the Resolution Professional as regards disbursal of fund towards their claims and that their claims have not received a fair and equitable treatment - HELD THAT:- Admittedly being Operational Creditors cannot claim that they have been treated unfairly or inequitably as regards distribution of funds provided under the approved Resolution Plan. It is not the case of the Appellants that they have been completely ignored or left out of consideration while distributing the upfront money provided under the plan approved by the Committee of Creditors with the requisite majority and finally passing the muster under Section 30(2) of the Insolvency and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editors and Secured Creditors, they were not entitled to the same treatment. Their claim to proceeds of sale of preference shares, not being part of the assets value or a component of upfront payment is not warranted as the Corporate Debtor has been restructured and revived and protected from being pushed into liquidation. It is futile to contend on their behalf that the Financial Creditors being lenders having huge financial resources can take a bigger hair cut as compared to the financial condition of the Appellants. The distribution mechanism adopted in the instant case being not only conformable to the mechanism envisaged under Section 53 of the I B Code but also according priority in upfront payment to Operational Creditors cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir claims and that their claims have not received a fair and equitable treatment. 2. It is contended that the fair market value as also the liquidation value of the Corporate Debtor has not been taken into account and such amount consisting of ₹ 800 crores does not form part of the corpus of payments to the Operational Creditors. It is further contended on behalf of the Appellants that the Adjudicating Authority approved the Resolution Plan of Successful Resolution Applicant overlooking the material irregularities in the accumulation and disbursal of funds constituting the corpus of the Corporate Debtor for the purpose of making distribution to the creditors. It is submitted that the Appellants have been made to suffer a reduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the record and is borne out from page 45 of the Appeal paper-book (Financial Terms of the approved Resolution Plan) is that the Operational Creditors other than related parties and Statutory Creditors (the Class to which the Appellants belong) have been allocated 19.62% of the upfront payment of ₹ 3,720 crores while the Financial Creditors have been paid only 10.32% of the upfront payment. The relevant portion of the page 45 (supra) is reproduced below: - Particulars Amount Admitted Amount Proposed under the Plan % of recovery under the Plan CIRP Costs - To be paid in priority in full. [Refer Note 1] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o allege being excluded from CIRP proceedings. 7. It is by now well settled that equitable treatment can be claimed only by similarly situated creditors. Operational Creditors stand at a different footing as compared to Financial Creditors. They are entitled to receive a minimum payment being not less than liquidation value, which does not apply to Financial Creditors. Para 77 read in juxtaposition with para 76 of the judgment delivered by the Hon ble Apex Court in Swiss Ribbons Private Limited v. Union of India MANU/SC/0079/2019 : (2019) 4 SCC 17 dealing with this aspect of legal proposition clearly lays down that there is a difference in payment of the debts of Financial and Operational Creditors, Operational Creditors having to rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt 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 creditors does not lead to the conclusion that such payment must necessarily be the same recovery percentage as financial creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution Applicant for better or dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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