TMI Blog2022 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... E 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. - Company Appeal (AT) (Insolvency) No. 959 of 2021 - - - Dated:- 31-1-2022 - [Justice Ashok Bhushan] Chairperson And [Dr. Alok Srivastava] Member (Technical) For the Appellant : Mr. G. Rabinathan (in person) For the Respondents : Mr. Arjun Padhiyar, Advocate for R-1 Mr. Atul Sharma, RP, R-1 JUDGMENT ASHOK BHUSHAN, J. This Appeal has been filed against the judgment dated 18th January, 2021 passed by the National Company Law Tribunal, Ahmedabad Bench, Ahmedabad, Court-1 allowing the IA No.794 of 2019 filed by the Resolution Professional (RP) for approval of Resolution Plan under Section 30, sub-section (6) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ). 2. Brief fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olation 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 dated 12th February, 2015 passed in OS No.4378 of 2014. The Appellant had filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Code, 2016 30(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan - (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the 3 payment of other debts of the corporate debtor; (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, 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 remov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al creditors who voted in favour of the resolution plan. (1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor. (2) A resolution plan shall provide: (a) the term of the plan and its implementation schedule; (b) the management and control of the business of the corporate debtor during its 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act and a prime bankruptcy policy. The bankruptcy system is designed to distribute an estate as equally as possible among similarly situated creditors. Thus, creditors of equal status must be treated equally and equitably. One of the conditions placed upon the debtor's use of the Bankruptcy Code to obtain a fresh start is that the debtor treat all creditors fairly. The bankruptcy process is the process by which a res, under the constructive possession of the bankruptcy court, is administered 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 Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors in Sl. No. 5 of Para 7 of statutory Form H. Thus, it can be seen that the Code and the Regulations, read as a whole, together with the observations of expert bodies and this Court's judgment, all lead to the conclusion that the equality principle cannot be stretched to treating unequals equally, as that will destroy the very objective of the Code - to resolve stressed assets. Equitable treatment is to be accorded to each creditor depending upon the class to which it belongs: secured or unsecured, 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 ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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