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TMI Blog2022 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 3, sub-section (6). The judgment of Apex Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] has settled the legal position regarding payment to Operational Creditors and Financial Creditors. There are no ground is covered by grounds enumerated in sub-section (3) of Section 61, so as to exercise any jurisdiction by this Tribunal to interfere with the order of Adjudicating Authority approving the Resolution Plan. The Adjudicating Authority has considered claim of the Appellant and approved the Resolution Plan. The appeal is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... n Plan is not in conformity with Section 30, sub-section (2) of the Code and is in violation of Regulation 38. It is submitted that Resolution Plan is inequitable since only 0.5% claim of the Appellant has been proposed to be paid and the Financial Creditors on the other hand are being paid @ of 8%. There is a discrimination in payment to Financial Creditors and Operational Creditor. The Operational Creditor cannot be paid less amount than the Financial Creditor. The claim of Appellant was based on Decree of the Civil Court and ought to have been placed on higher rank. 4. The learned Counsel for the RP refuting the submissions of the Appellant submitted that the Appellant is an Operational Creditor and payment to the extent of 0.5% is in accordance with provisions of Section 30, sub-section (2) and Regulation 38. It is submitted that the claim based on the Decree is also a claim within the meaning of Section 3, sub-section (6). It is submitted that in the Liquidation, the Appellant could have got only Nil amount. 5. We have considered the submissions of learned Counsel for the parties and have perused the record. 6. The Appellant has filed the copy of Decree of the Civil Court d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1. - For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2. - For the purpose 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s term; and (c) adequate means for supervising its implementation. (3) A resolution plan shall contain details of the resolution applicant and other connected persons to enable the committee to assess the credibility of such applicant and other connected persons to take a prudent decision while considering the resolution plan for its approval. Explanation : For the purposes of this sub-regulation,- (i) 'details' shall include the following in respect of the resolution applicant and other connected person, namely:- (a) identity; (b) conviction for any offence , if any, during the preceding five years; (c) criminal proceedings pending, if any; (d) disqualification, if any, under Companies Act, 2013, to act as a director; (e) identification as a willful defaulter, if any, by any bank or financial institution or consortium thereof in accordance with the guidelines of the Reserve Bank of India; (f) debarment, if any, from accessing to, or trading in, securities markets under any order or directions of the Securities and Exchange Board of India,; and (g) transactions, if any, with the corporate debtor in the preceding two years. (ii) the expression 'connected person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered for the purpose of allowing, disallowing, organizing, and prioritizing claims of creditors in, to, and upon the res. Although the central policy of the Bankruptcy Code is equality of distribution among all creditors, exceptions are made by granting priority to certain claims and subordinating others. Pursuant to the central policy, creditors of equal priority should receive a pro rata share of the debtor's property; thus, when there is not enough to go around, the bankruptcy judge must establish priorities and apportion assets among creditors with the same priority." (emphasis supplied) 88. By reading para 77 (of Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] ) dehors the earlier paragraphs, the Appellate Tribunal has fallen into grave error. Para 76 clearly refers to the Uncitral Legislative Guide which makes it clear beyond any doubt that equitable treatment is only of similarly situated creditors. This being so, the observation in para 77 cannot be read to mean that financial and operational creditors must be paid the same amounts in any resolution plan before it can pass muster. On the contrary, para 77 itself makes it clear that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , financial or operational. 10. Thus, the mere fact that Financial Creditors are paid @ 8% and Operational Creditors are paid @ 0.5% cannot be said to be unequitable treatment. It is relevant to note that statutory dues, which are more than of ₹ 10 crores have also been only allocated 0.5%. It is true that the claim of the Appellant was based on Decree of Civil Court. But when we look into the definition of Section 3, sub-section (6), it is clear that the IBC contemplates all claims whether or not such right is reduced to judgment, had to be filed in IBC. Section 3, sub-section (6) is as follows:- "3(6) "claim" means - (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured, or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;" 11. Even if, right to payment is reduced to judgment of a Civil Court, the same is also a claim at par with other claimants as referred to in Section 3, sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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