TMI Blog2023 (1) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... al Creditors are only entitled for minimum of the liquidation value and there being no breach of any of the provisions of the Code - There are no reason to interfere with the impugned order - appeal dismissed. - Justice Ashok Bhushan, Chairperson And Barun Mitra, Member (Technical) For the Appellant : Present but appearance not marked. For the Respondents : Mr. Abhishek Anand, Mr. Nipun Gautam, Mr. Viren Sharma and Mr. Sajal Jain, Advocates for R1 (RP). ORDER I.A. No.4658 of 2022: This is an application praying for condonation of delay of 13 days in filing the Appeal. The ground taken in the application is that due to scare of COVID being spread in the premises of the firm, the premises of the firm remained restricted and hence, the appeal could not be filed within time. Cause shown sufficient delay in filing the Appeal is condoned. Delay condonation application allowed. I.A. No. 4658 of 2022 stands disposed of. 2. Heard learned counsel for the parties. This Appeal has been filed against the order dated 17.03.2022 by which order the Adjudicating Authority has allowed application filed by the Resolution Professional for approval of the Resolution Plan. The Appellant Operational Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount verified by the Resolution Professional is Rs.295.18 crores to which payment of NIL is being made by the Resolution Applicant. The third category being operational creditors (other than workmen employees and government dues). The amount verified Resolution Professional is Rs.295.18 crores to which payment of NIL is being made by the Resolution Applicant. Further, it has been stated by the Resolution Applicant in Clause 3.4 to 3.7 (Page 22 of the Resolution Plan/ Page 622 of the Application) and Annexure 1 of the Resolution Plan that the amount due to the Operational Creditors shall be paid in compliance with provisions of Section 30(2)(b) of the Code and Regulation 38(1) of the CIRP Regulations, that the Operational creditors are being paid. Annexure 1 provides that in the event there are any dissenting financial shall be paid proportionately from the Upfront cash in priority to the assenting secured financial creditors. In case, resolution applicant is required to make payment higher than the proportionate amount, the payment to the assenting financial creditors shall be reduced to that extent on proportionate basis. In the event, the amount of the upfront cash is not suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are any reasons given by the Committee to demonstrate that it has taken care of interest of all stakeholders. Para - 46 of the Judgement in the matter of Essar Steel requires to see the reasons given by the Committee of Creditors while approving a resolution plan from point of view stated in the paragraph. The reasons for giving NIL to Operational Creditors is not reflected from record. We have already reproduced portion from Part B - Financial Proposal with regard to what the approved Resolution Plan states regarding dues to the Operational Creditors. The proposal is based on the assessment that there is no liquidation value due to Operational Creditors. Although it is not stated but there is reason to doubt that the Resolution Applicants were aware of the liquidation value. There is no dispute that so many of the Operational Creditors have been left high and dry giving them nil amount which Hon'ble Supreme Court has observed that giving NIL to Operational Creditors would certainly not balance the interest of all stakeholders or maximise the value of assets of the Corporate Debtor if it becomes impossible to continue running its business as a going concern. 16. For these reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust 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 provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X
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