SP Coal Resources Pvt. Ltd. vs. Indus FILA Limited
Company Appeal (AT) (INS.) No. 850 of 2019
Facts:
1.Appellant had supplied the `imported Coal’ to the Corporate Debtor’, over several years and raised a total of 14 Invoices towards such supplies which remained unpaid. An application bearing no. CP (IB) 136 of 2017 was filed by a operational Creditor which was admitted by the AA vide order dated 20.08.2018. Appellant being operational creditor submitted its claim Rs.6,05,00,111/- to the Resolution Professional who had admitted only Rs.3.53 Crores of such Claim’. Also that, the interest portion of Appellant’s claim was disallowed by the Resolution Professional, based on the reason that the Interest’ was not mentioned in the Invoice.
2.Resolution Plan was submitted by SRA which was approved by the COC with 69.04% voting in favour. An application bearing no IA 40 of 2019 in the main application was filed for seeking approval of resolution plan which was approved by the AA vide order dated 10.05.2019. Appellant is challenging the order of approval of resolution plan contending that no amount was paid to the appellant out of the admitted claims.
Issue: Whether AA erred in passing the order ?
Arguments:
For Appellants:
1.Counsel for the Appellant strenuously contends that the Adjudicating Authority’, had failed to appreciate that the Resolution Plan makes no provision for any payment of Debts, owed by the Corporate Debtor’, to its Operational Creditor’, and that the Resolution Plan fails to meet the two vital requirements’ of the I & B Code, 2016 (a) Maximisation of the Value of the Assets of the Corporate Debtor (b) Equitable and non-discriminatory treatment of operational creditors.
2.Counsel submitted that mere glance of the Resolution Plan, makes it clear that the Resolution Applicant, had hijacked the Substantial Assets’ of the Corporate Debtor’, at a `Price’, substantially below the Liquidated Value of the Corporate Debtor’, as defined in Regulation 2 (k) of the IBBI (CIRP_ Regulations 2016. It was projected on the side of the Appellant’, that the Assets’ of the Corporate Debtor’ (in the Approved Resolution Plan’ itself) as on the Insolvency Commencement Date of 20.08.2018’, was Rs.80.75 Crores. As a matter of fact, prima facie, the Resolution Plan’, appears to provide for the complete takeover of these Assets’, for only a sale consideration of Rs.50.50 Crores, which is substantially, below theValue of the Assets’ of the `Corporate Debtor.
3.Counsel for the Appellant, submits that although the I & B Code, 2016, does not require equal treatment of differently situated classes of Creditors’, in a Resolution Plan, it certainly requires an Equitable Treatment’ of the Classes in `non-discriminatory’ manner.
For respondents:
1.Counsel for the 2nd Respondent, points out that in the instant case, the Liquidation Value’ of the Operational Creditors’, is Nil’, the Sum’, assigned to them, under the Resolution Plan’, being Nil’, is in no way, lesser than the Liquidation Value’, and thus the Resolution Plan’, complies with the ingredients of Section 30(2)(b)(i) of the I & B Code, 2016. The amount to be paid to the Operational Creditors’, as per Section 53(1) of the Code, is Nil’, as the Liquidation Value’ isNil’, and hence, the `Resolution Plan’, also satisfies the requirements of Section 30(2)(b)(ii) of the I & B Code, 2016.
2.Counsel Contended that because of the ingredients of Section 53 of the Code, dues of Secured Financial Creditors and Workmen’ rank much higher than the Dues’ of the Operational Creditors’, and the Liquidation Value of the corporate Debtor being Nil’, no amount was assigned to such Creditors’. In effect, according to the 2nd Respondent, the `Resolution Plan’, is in conformity with the ingredients of Section 30(2)(b) read with Section 53 (1) of the Code.
3.Counsel for the 2nd Respondent points out that, since the Value of the Corporate Debtor is Nil’, and the sum of INR 50.70 Crores was fully used in payment of (a) the CIRP Costs (b) the aforesaid dues of the Financial Creditors’ and the Workmen’. No amount remains to be assigned towards the other Creditors’, in accordance with Section 30 (2) (b) read with Section 53 of the I & B Code, 2016, Hence, all the Creditors had taken a significant hair cut in the CIRP’ of the Corporate Debtor.
3.Counsel for 4th respondent contended that Appeal’, is per se not maintainable, because of the fact that the Appellant’, is endeavouring to impugned the merits of the commercial decision taken by the Committee of Creditors in approving the Resolution Plan of the Corporate Debtor. Also the jurisdiction under the I & B Code, 2016, does not extend to altering / changing the commercial wisdom of the Committee of Creditors’, which took into consideration, the feasibility and viability of the Resolution Plan. Besides this, the Resolution Professional does not have any role to play, because of the supremacy being given to the commercial wisdom of the Committee of Creditors.
Decision: AA did not erred while passing the order and the plan is in conformity with the Code.
Rationale:
1.NCLAT noted that A Resolution Plan’, ought to be planned for Insolvency Resolution’ of the Corporate Debtor’, as a Going Concern’, and not for Addition of Value’, with an intent to sell’, the `Corporate Debtor’. It noted that it is quite evident that the 2nd Respondent through a Resolution Plan’, had offered Rs.50.70 Crores as Full and Final Settlement’ of all the Liabilities’ of the1st Respondent / Corporate Debtor’, which was duly approved with requisite majority of the Committee of Creditors’, in itscommercial wisdom’, ofcourse, after numerous rounds of discussions and negotiations.
2.It held that As far as the present case is concerned, keeping in mind the payment to all the Operational Creditors’, isNil’, there is no aspect of discrimination between the Operational Creditors’, in the considered opinion of thisTribunal’. Further, when the ingredients of Section 30 (2) (b) of the I & B Code, 2016, are satisfied, the distribution is to be treated as Fair’ andEquitable’ one. After all, the Plea’ of theFair’ and Equitable’ treatment is not between the different classes ofCreditors’, and the same is between the Operational Creditors’, as aClass’, as opined by this `Tribunal’
Order:
