9911796707
TMI Blog2023 (11) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case the debt of the Appellant was admitted. In Vistra, the claim of Vistara to be secured creditor was rejected as has been noticed in paragraphs 2 to 10 of the judgment itself. Whereas, the Appellant in the present case has been recognized as a dissenting Financial Creditor and was part of the CoC and in the present case, the CoC by its decision has approved both the distribution mechanism as well as the Resolution Plan, which proposed distribution based on proportion of admitted claim. Vistra was never treated as secured creditor or given its minimum entitlement as secured creditor as per Section 53(1). The judgment of Vistra is a judgment of the Hon ble Supreme Court, which is referable to Article 142 of the Constitution, which jurisdiction was exercised and ultimately the Hon ble Supreme Court has held Vistra to be a secured creditor. The present is a case where ICICI Bank was accepted and recognized as Financial Creditor and its full claim was accepted and distribution to the Appellant was as per Section 30, sub-section (2)(b) of the IBC. Thus, no error has been committed by the Adjudicating Authority in rejecting the application - appeal dismissed. - [ Justice Asho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to secured creditors must be done keeping in mind the security interest. The Members of the CoC requested the RP to assist the CoC with a proposed distribution amount as per security interest and provide the information with disclaimer that such calculation would be suggestive only. The RP on 06.05.2022 addressed an email to all the Financial Creditors of the Corporate Debtor, providing the calculation methodology and the lender-wise proportional share in the liquidation value of the Corporate Debtor for the purposes of distribution as well as proportionate share as per security interest. The Appellant raised objection to the distribution methodology circulated by RP and claimed distribution as per security interest. The Appellant had security interest in immovable and movable property of the Corporate Debtor situated at two places. (v) On 10.05.2022, the 15th CoC Meeting was held where RP proposed the Agenda for distribution of the amount offered to secured creditors either on the basis of outstanding debt or on the basis of security interest available with the respective secured lenders. The Appellant objected to the methodology of the calculation. The Agenda Item was put to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 30, sub-section (2) (b) of the IBC. The Appellant s entire claim of Rs.15.52 crores having been admitted, the proposal of RP to make payment of Rs.4.54 crores to the Appellant is not as per liquidation value attributable to the Appellant. The Appellant having first charge holder in respect of the secured assets, and the liquidation value of such assets being Rs.24.5 crores, the Appellant is entitled to receive an amount of Rs.13.52 crores. The RP has failed to correctly and appropriately calculate the Appellant s proportionate share of the Corporate Debtor s liquidation value. The Adjudicating Authority did not take into consideration the Appellant s priority of charge in the security interest or the value of such security interest. The Appellant s entitlement as a dissenting Financial Creditor cannot be curtailed by exercise of commercial wisdom by the CoC. 5. The learned Counsel for the RP, Shri Rishav Banerjee refuting the submissions of learned Counsel for the Appellant submits that distribution methodology has been approved by the CoC in its 15th Meeting held on 10.05.2022. The distribution methodology having been approved, which is as per Resolution Plan submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the record. 8. Before we enter into respective submission of learned Counsel for the parties, it is relevant to notice the Minutes of the CoC Meeting dated 02.05.2022 and 10.05.2022, i.e., 14th and 15th CoC Meeting respectively. In 14th CoC Meeting, discussion was made on the Resolution Plan received by Uniglobal Papers Private Limited. One of the matters, which was discussed was regarding the distribution as per the Resolution Plan. In Agenda Item No.3, following was noted: 3. Any other matter that CoC members like to discuss. The members of CoC requested the RP to prepare and share with the distribution ratio if the amount offered for secured creditors under the Resolution Plan be distributed as per the security interest available with the lenders. The RP mentioned that while he can share the proposed distribution keeping in view the amount of claims admitted by him, the lenders must among themselves arrive at the proposed distribution on the basis of security interest. The members of CoC requested the RP that in view of limited time at disposal and as the RP already have information of all the secured lenders based on the submitted documents along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DL 2.48 1.82% IDBI 9.21% 14.15 10.36% 3.31 2.68 3.60 BOB 4.91% 7.55 5.52% 1.77 1.43 1.92 JP Fin 4.93% 7.58 Trimurty 4.91% 7.55 Manaksia Steel 0.12% 0.19 Manaksia Ltd. 0.65% 1.00 Vajra 0.48% 0.74 Total 99.99% 153.71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requiring the approval from their higher authority for voting in this matter. After considering the CoC members requests RP announced in the meeting that he would initiate an e-voting for voting by the CoC members on the voting agenda and requested all the members to case their votes as soon as possible. RP informed the CoC members that the e-voting platform would be opened from today late afternoon for the minimum hours as prescribed in IBC, 2016, in the context of time constrained. 3) Discussion on the voting of the final resolution plans submitted by the two prospective resolution applicants RP informed the CoC members that once the voting on the distribution mechanism of amount offered for secured creditors in the resolution plan had been voted decided by a majority of 66% of the CoC members, then both the resolution applicants would be requested to incorporate the same in their resolution plans and the same would be put for final voting by the CoC members subsequently even if the is no separate CoC meeting for the voting on the resolution plan. That voting would be considered as final voting for approval of resolution plan by the CoC members with at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is useful to notice paragraph 2.1 (d) of the Resolution Plan, which dealt with debt owed to the Financial Creditors. Paragraph 2.1.3 (d) is as follows: 2.1.3 (d) The amount proposed for payment towards Secured Financial Creditors shall be distributed amongst them based on the proportion of their admitted claim. 13. The Resolution Plan was approved in the 16th CoC Meeting. Thus, distribution to the Appellant is as per the decision of the CoC. Now the submission of the Appellant that distribution is not in accordance with Section 30, sub-section (2) (b) and the Appellant has not been paid the liquidation value needs to be considered. Section 30, sub-section (2) (b) provides as follows: 30(2)(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 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than workmen for the period of twelve months preceding the liquidation commencement date; (d) financial debts owed to unsecured creditors; (e) the following dues shall rank equally between and among the following: - (i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date; (ii) debts owed to a secured creditor for any amount unpaid following the enforcement of security interest; (f) any remaining debts and dues; (g) preference shareholders, if any; and (h) equity shareholders or partners, as the case may be. 15. When we look into Section 53, sub-section (1) (b), debt owed to a secured creditor has to be distributed equally between and amongst workmen s dues and debts owed to a secured creditors. The debt owed to the secured creditor is a debt as admitted in the CIRP. Admittedly, the claim as submitted by the Appellant was admitted in the CIRP and debt owed to Appellant is as per admitted c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution plan to Applicant SIDBI for an amount of Rs. 5,64,97,893/- in priority in accordance with provisions of IBC 2016 in the interest of justice and equity. 2. Interim stay be granted on distribution of the resolution plan amount by the Resolution Professional to the CoC members till the present application is decided. The case of the Appellant in the Application was that as per security interest of the Appellant, the Appellant is entitled to 6.93 % i.e. the amount of Rs. 5,64,97,893/- and as per voting share as approved by the CoC, the Appellant is entitled to 2.03% i.e. Rs. 1,65,47,078/-. The case of the Appellant set up in the Application is that he is entitled for his distribution of plan amount as per value of the security interest of the Appellant. The Application was objected by the Resolution Professional. The Adjudicating Authority by the Impugned Order dated 17th March, 2022 rejected the I.A. No. 581 of 2021 upholding the decision of the CoC for distribution of proceeds of the Resolution Plan as per the voting share. Appellant aggrieved by the said Order, has come up in this Appeal. 17. This Tribunal after taking into consideration the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing words : - Representative from Religare Finvest/India Resurgence ARC, Mr. Shakti inquired about the lower share they are getting as per Resolution Plan whereas the security interest held by them is far more. He also raised question about the fair market value and liquidation value of the CD. On this the RP informed him that the valuation exercise has been done by registered valuers of IBBI who were appointed by the erstwhile IRP and he do not find any inconsistency in the same. Other members also agreed on the same. Mr. Shakti then raised the point that in the present scenario it will be better for them if the company goes into Liquidation and they will realize their security interest by exercising option u/s 52(1)(b). The RP then replied that Liquidation option may be beneficial to one creditor but is definitely detrimental to other secured lenders who are having majority stake of around 96%. Further the RP also said that the objective of IBC is resolution and revival of a distressed company and is not a recovery procedure. 19. The Hon ble Supreme Court after hearing the parties and referring to the provisions of Section 30 of the IBC, laid down following in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clauses (i) and (ii) of sub-clause (b) that is now to be paid as a minimum amount to operational creditors. The same goes for the latter part of sub - clause (b) which refers to dissentient financial creditors. Ms. Madhavi Divan is correct in her argument that Section 30(2)(b) is in fact a beneficial provision in favour of operational creditors and dissentient financial creditors as they are now to be paid a certain minimum amount, the minimum in the case of operational creditors being the higher of the two figures calculated under sub-clauses (i) and (ii) of clause (b), and the minimum in the case of dissentient financial creditor being a minimum amount that was not earlier payable. As a matter of fact, preamendment, secured financial creditors may cramdown unsecured financial creditors who are dissentient, the majority vote of 66% voting to give them nothing or next to nothing for their dues. In the earlier regime it may have been possible to have done this but after the amendment such financial creditors are now to be paid the minimum amount mentioned in sub-section (2). Ms. Madhavi Divan is also correct in stating that the order of priority of payment of creditors mention ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
