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TMI Blog2023 (12) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... .218/Chd/Chd/2018. By the impugned order, the Adjudicating Authority has allowed IA No. 659 of 2023 and disposed of the main company petition by approving the resolution plan in respect of M/s Jaycon Infrastructure Ltd-Corporate Debtor. Aggrieved by the impugned order, the present appeal has been filed by the Appellants- Operational Creditors with regard to treatment of their claims as being inconsistent with the objectives of the IBC. 2. Coming to the factual matrix, M/s Jaycon Infrastructure Ltd-Corporate Debtor was admitted into Corporate Insolvency Resolution Process ("CIRP" in short) on 07.10.2019 following which Interim Resolution Professional was appointed. Public announcement of CIRP was made inviting claims. The three Appellants herein who were Operational Creditors of the Corporate Debtor submitted their respective claims within time to the Respondent No.1/Resolution Professional ("RP" in short). Pursuant to receiving and collating the claims of the creditors, the RP constituted the Committee of Creditors ("CoC" in short). The CoC comprised of the State Bank of India as sole secured Financial Creditor with a vote share of 90.12% and three other unsecured Financial Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the amount agreed to be paid to the various stakeholders. Advancing their arguments further it was submitted that the Financial Creditors cannot be paid proportionately higher than the Operational Creditors or be paid before them. Submissions have been further pressed that the claims of the Appellants stand extinguished which is violative of Section 30(2)(e) of the IBC. The Learned Counsel for the Appellant while admitting that the commercial wisdom of the CoC is not to be interfered with, however, argued that the commercial wisdom of the CoC cannot be over expanded to brush aside a significant shortcoming in the decision making of the CoC in approving the present Resolution Plan. 4. Refuting the above submissions, the Learned Counsel for the Respondent No.1 submitted that the present appeal is not maintainable since it is well settled that under the statutory scheme of IBC and the Regulations framed thereunder, the approval of the resolution plan lies solely within the domain of the CoC in the exercise of its commercial wisdom which cannot be transposed by the wisdom of the Adjudicating Authority. It was emphatically asserted that the legislative intent of according primacy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount proposed to be paid by the present SRA under their resolution plan. The summary of the financial proposal/payment under the resolution plan of the SRA has also been captured at para 23 of the impugned order and in para 33 of the impugned order it has been noticed that the SRA proposes to make payment of Rs.1161.09 lakhs to secured Financial Creditors, Rs.21.95 lakhs payment to workmen and employees and Rs.13.96 lakhs to Operational Creditors (Govt. dues). The impugned order also notes at para 34 that the resolution plan meets the requirement of being viable and feasible for the revival of the Corporate Debtor and that by and large all compliances have been met by the RP and the SRA for making the plan effective after approval. The Adjudicating Authority at para 35 of the impugned order has recorded its satisfaction that the resolution plan is in accordance with Sections 30 and 31 of the IBC and compliant of Regulations 38 and 39. 8. In the present matter we are concerned with the claim of the Appellants who have been classified as Operational Creditors. There is no dispute with regard to the fact that the liquidation value of the Corporate Debtor is Rs.11.53 crore as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akeholders or maximise the value of assets of a corporate debtor if it becomes impossible to continue running its business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. 73. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 subsection (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. " 11. We are of the view that as per the law as exist today, the Operational Creditors are only entitled for minimum of the liquidation value and there being no breach of any of the provisions of the Code, we are unable to interfere with the impugned order. With observations as above, Appeal is dismissed. (Emphasis supplied) 11. From what has been noticed here-in-above as per the law which exists as of date, we agree with the Respondent No.1 that the question with respect to payments to Operational Creditors under resolution plan as per the scheme of the IBC is no longer res-integra. The Appellants as Operational Creditors are entitled to the mi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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