9911796707
TMI Blog2022 (3) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... - it is clear that the commercial wisdom of the CoC in arriving at a business decision has been given primacy and finality and is not open to judicial review unless the decision carries any infirmity under law. In the present case, there is any dispute to be resolved during the moratorium period. The pre-CIRP claim of DVC has been dealt with as per provisions of IBC in the successful resolution plan and and since a fresh connection has to be provided to the corporate debtor after the completion of CIRP, we have surmised that it shall be given under the WBERC Regulations. Thus there is no dissonance in the present case vis- -vis the Embassy Property Developments Judgment. Thus, the liabilities of DVC that relate to past dues prior to the Effective Date have been extinguished under the approved Resolution Plan and DVC is prohibited from raising any further demand on this account. The clause (d) in Para 6 Section VI of the Resolution Plan directs DVC to restore the power connection immediately after the Effective Date and not withhold/disconnect power supply on the ground of pending old dues whose claim has been submitted to Resolution Professional during CIRP and which have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and R-3. Mr. Utsav Mukherjee, Ms. Megha Tyagi and Ms. Deepti Babel, Advocates for R-2 (IRP) JUDGMENT (VIRTUAL MODE) [Per. Dr. Alok Srivastava, Member (Technical)] The present appeal has been preferred by the Appellant under Section 61 of the Insolvency Bankruptcy Code (hereafter called IBC ) assailing the order dated 21.9.2020 passed by the Adjudicating Authority (NCLT, Kolkata)in IA (IB) No. 680/KB/2020 in CP IB No.1440/KB/2018, by which the Adjudicating Authority has approved the resolution plan of the Corporate Debtor Kharkia Steels Private Limited. 2. The Appellant is aggrieved by the Impugned Order as the Resolution Plan approved by the said order has not considered the claims of the operational creditors adequately and only around 0.16% of the admitted claims of the operational creditors have been taken care of in the approved resolution plan. 3. The facts of the case, as stated and argued by the Appellant, are that the Corporate Debtor/Kharkia Steels Private Limited entered into a Power Purchase Agreement (hereafter called PPA ) with Respondent No. 1 Kharkia Steels Pvt. Ltd. for supply of power to operate their manufacturing units. Thereafter Kharki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r supply of power was entered into between the Appellant and Respondent No. 1.She has also referred to the notice issued by DVC dated 12.8.2015 for disconnection of power supply due to non-payment of dues (attached at pp. 73 74 of the Appeal paper book) to argue that the notice asked for payment of ₹ 3,62,0156/- within 15 days from the date of issuance of the notice, failing which the power supply would be disconnected without any further reference to the corporate debtor. Later, through letter dated 23.11.2015and another letter dated 25.5.2016, the DVC communicated that a total arrear due amount for period April 2014 to May, 2015 is ₹ 4,06,85,200 and for the period April 2013 to March 2014 the arrears amount is ₹ 4,43,94,390. 7. The Ld. Senior Counsel for Appellant has further urged that after initiation of CIRP against the Corporate Debtor, the Appellant submitted its claim and also proof of claim vide letter dated 17.10.2019 (attached at pp. 77 82 of the Appeal paper book) as an operational creditor. She has further submitted that the Appellant s claim was admitted for ₹ 18.71 crore but only an amount of ₹ 14 lakhs was approved for all the oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... She has also referred to paragraphs 71 of the Committee of Creditors of Essar Steel judgment (supra) to argue that if the corporate debtor has to be kept as a going concern during the Insolvency Resolution Process, it is incumbent upon it to make past and present payments to the DVC. She has further adverted to para 72 of the Committee of Creditors of Essar Steel judgment (supra)to argue that Regulation 38(1-A) of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 stipulates that the amount due to operational creditors under the resolution plan are supposed to be given priority in payment over financial creditors and when the COC exercises its commercial wisdom to finalize the resolution plan for revival of the Corporate Debtor, it must necessarily take into account this requirement before it arrives at a business decision for approving the proposed resolution plan. 10. The Learned Senior Counsel for Appellant has further argued that payment of past dues and reconnection of electricity supply after depositing security deposit are covered under the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations ( WBERC Regulations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced has to be determined within the four corners of the statutory provisions of IBC. It must be borne in mind that the jurisdiction of the Adjudicating Authority is circumscribed by the terms of the provisions conferring the jurisdiction. 13. The Ld. Senior Counsel for Respondent has further urged that there is no equity-based jurisdiction available with NCLT under the provisions of IBC which allows for the dues of DVC as an operational creditor to be treated differently from other operational creditors. He has further argued that under section 30(2)(b)(i) and (ii), the provision regarding treatment of claims of operational creditors has been laid down and Explanation 1 clearly states that if the provision of section 30(2)(b) is followed then it is supposed to meet the requirement of equity and viability. He has also referred to the principle laid down by the three-judge bench of the Hon ble Supreme Court in the matter of Committee of Creditors of Essar Steel (supra) which has held in paragraph 73 as follows:- 73. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or some-class of creditors is with the Committee of Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine each resolution plan received by him to confirm that each resolution plan Xx xx xx xx (b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than (i) the amount that would have been 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. 17. It is noted that the liquidation valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. According to the distribution matrix, operational creditors (other than workmen/employees) have been provided a total amount of ₹ 0.140crorewhich has been distributed among the operational creditors vide clause 5 of section II, namely Detailed Financial Proposal of the Resolution Applicant in the resolution plan. The two operational creditors have been provided settlement of their claims vide clause 6.6 of sectionII of the approved Resolution Plan (attached at page 138 of the Appeal Paperbook):- 6.6 Operational Creditors 6.6.1 Claims (Amount Rs. In crores) Claim filed by Claim Admitted Remarks Commissioner of commercial Taxes, Government of West Bengal 76.13 This amount relates to Assessed Dues u/s 46 of WB VAT Act, 2003. . Assessed dues comprising of Principal of ₹ 30.11 crores and Interest of ₹ 46.12 crores. Damodar Valley Corporation 18.71 RA understands that the amount relates to non-payment of bill raised for supply of Power by the DVC. The dues comprising of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he condition imposed by Section 30(2)(b) of IBC and hence the successful resolution plan satisfies the provisions of IBC. Furthermore, this payment is in accordance with the commercial wisdom of the COC. 21. Regarding the primacy accorded to commercial wisdom of COC in taking a business decision in approving the resolution plan, we advert to the judgment of Hon ble Supreme Court in the matter of Ghanashyam Mishra Sons Private Limited through the authorized signatory Vs Edelweiss Asset Reconstruction Company Ltd. through the Director and Ors. (2021 SSC Online SC 313) wherein the Hon ble Supreme Court has, referring to Para 52 in the K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 observed noted as follows: Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e corporate debtor after the completion of CIRP, we have surmised that it shall be given under the WBERC Regulations. Thus there is no dissonance in the present case vis- -vis the Embassy Property Developments Judgment. 25. We follow the judgment of Hon ble Supreme Court in the matter of India Resurgence ARC Pvt. Ltd. (supra), wherein in para 14 the Hon ble Supreme Court has held that business decision taken in exercise of the commercial wisdom of CoC does not call for interference unless creditors belonging to a class being similarly situated are denied fair and equitable treatment. 26. Furthermore, the case of Respondents is supported by the judgment in the matter of Pratap Technocrats (P) Ltd. (supra), Hon ble Supreme Court has held as follows:- 25. The resolution plan was approved by the CoC, in compliance with the provisions of IBC. The jurisdiction of the Adjudicating Authority under section 31(1) is to determine whether the resolution plan as approved by the CoC, complies with the requirement of section 30(2). NCLT is within its jurisdiction in approving a resolution plan which accords with IBC. There is no equity- based jurisdiction with NCLT under the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly after the Effective Date and shall not withhold/disconnect the Power supplyon the ground of pending old dues prior to the Effective Date. e. DVC should withdraw all legal cases filed, if any, immediately after the Effective Date. f. DVC to commit supply of power to the plant of CD immediately after the Effective Date. g. DVC should ensure availability of continuous Power to the Plant at the same rate at which it is supplying power to adjoining units. 28. We thus note that the liabilities of DVC that relate to past dues prior to the Effective Date have been extinguished under the approved Resolution Plan and DVC is prohibited from raising any further demand on this account. The clause (d) in Para 6 Section VI of the Resolution Plan directs DVC to restore the power connection immediately after the Effective Date and not withhold/disconnect power supply on the ground of pending old dues whose claim has been submitted to Resolution Professional during CIRP and which have been taken care of in the resolution plan and clause (f) directs DVC to commit supply of power to the plant of CD immediately after the Effective Date. The other condition that is approved as par ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
