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TMI Blog2021 (10) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... CP(IB) No.48 of 2017 passed by the 'Adjudicating Authority' (National Company Law Tribunal, Ahmedabad Bench. 2. The 'Adjudicating Authority' (National Company Law Tribunal, Ahmedabad Bench) while passing the impugned order dated 08.03.2019 in I.A. No.41 of 2019 (preferred by the Appellant/Applicant in IA 259/2018(filed by Resolution Professional) in CP(IB) No.48 of 2017 at paragraph 20.1 to 29 had observed the following: 20.1 "During the pendency of IA 259 of 2018(filed for approval of Resolution Plan by the Resolution Professional), number of Intervention/Interlocutory applications are filed with various grievances, some of this are disposed of and some of those which have remained pending, are/were heard collectively for deciding I.A. No. 259 of 2018. 20.2 While proceeding further, it is pertinent to note that the Interlocutory applications are filed at much belated stage i.e. after the filing of I.A. No. 259 of 2018. The Resolution Plan was of dated 12th April, 2018 was approved by the CoC on 20th June, 2018. The applicants(Interveners) are/were well aware of their fate and position, as admitted in their applications but none of them approached this Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court, in its judgement, in the matter of Swiss Ribbons Pvt. Ltd. & Ors. Vs. Union of India & Ors., wherein Hon'ble Apex Court, set out the distinction between 'financial creditors' and 'operational creditors' by observing that since the financial creditors are in the business of money lending, banks and financial institutions are best equipped to assess the viability and feasibility of the business of the corporate debtor. On the other hand, the operational creditors, who provide goods and services, are involved only in recovering amounts that are paid for selling goods and services and are typically unable to assess viability and feasibility of business. In this regard, it is also appropriate to refer the Bankruptcy Law Reforms Committee (BLRC) which conceptualized the 'I&B' Code as under: "The Committee deliberated on who should be on the creditors committee, given the power of the creditors committee to ultimately keep the entity as a going concern or liquidate it. The Committee reasoned that members of the creditors committee have to be creditors both with the capability to assess viability, as well as to be willing to modify terms of existing liabilities in negotiations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. 72.192 per cent of voting in favour of the Resolution Applicant by the CoC, whereas the then requisite percentage of vote of CoC was 75 per cent. It is also a matter of record that the Alok Employees Benefit and Welfare Trust filed an IA being No. 135 of 2018 seeking approval of the Resolution Plan which was approved by 72.192 per cent only, when requisite criteria for approval of the Plan was 75 per cent i.e. prior to amendment, on the ground of the interest of employees, workers and other stakeholders, opposing the application filed by RP vide IA 136 of 2018 under Section 33(1) pf the Code with prayer for passing an order of liquidation. At that point of time, SICOM Ltd., filing p-67 of 2018 made a prayer to get himself impleaded in the IA 135 of 2018, so as to object the prayer of Alok Employees Benefits and Welfare Trust made in IA 135 of 2018 which was made for approval of the Resolution Plan, even if it was voted by 72.192 per cent only which was less than the required percentage of voting of 75 per cent as against the then requisite criterial of voting. However, when an amendment came in section 30(4) w..e.f. 06.06.2018, where percentage of voting of CoC was reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted (Company)/ Corporate Debtor under the provisions of Insolvency and Bankruptcy Code, 2016 and the rules and regulations issued thereunder. 21.3 On perusal of the Resolution Plan, it is found: * that total outstanding financial debt of the Company/Corporate Debtor admitted by the RP towards its financial creditors is Rs. 29614,66,79,258 (Rupees Twenty-nine Thousand Six Hundred and Fourteen Crores Sixty-six Lakhs Seventy-nine Thousand Two Hundred Fifty-eight) as set out in Annexure D of the Information Memorandum. * That, the total outstanding operational debt of the Corporate Debtor Company admitted by the RP towards its operational creditors is Rs. 592,00,44,768 (Rupees Five Hundred Ninety-two Crores forty-four thousand seven hundred sixty-eight) as set out in Annexure D of the Information Memorandum. * That, the total outstanding towards workmen and Employees Dues of the Company admitted by the Resolution Professional towards its employees and workmen, is Rs. 73,01,06,951/- (Rupees Seventy three Crores one lakh Six Thousand Nine Hundred Fifty-One) as set out in Annexure I as set in the Information Memorandum. As per the clarification, vide email dated March 8, 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixth Subject to the adjustments in Section 3.2.2 of this Plan, payment of the Financial Creditors Settlement Amount 5,052 Seventh Need based working capital of the Company and any payment towards Outstanding Workmen and Employee Dues as per the provisions of this Plan, excluding any amounts paid towards the liquidation value of workmen as stated under the third step above (it being clarified that (i) no payments shall be made to any employee belonging to the Existing promoter Group, and (ii) all accrued but unpaid statutory dues owed by the Company with respect to any of its employees not belonging to the existing Promoter Group shall be paid in accordance with this Plan). Note 2: Please note that payments to and by the Company under any supply and offtake arrangement with RIL will be made to augment and meet the additional working capital requirements of the Company. Note 2: This amount shall stand reduced by an amount determined in accordance with Section 1.2(v)(b)(A) of this Plan towards any Excess CIRP Costs, 441.84 Eighth Capital expenditure of the Company 500 TOTAL FINANCIAL OUTLAY 6,252 Note: In the Resolution Plan, the total financial outla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rank equally, each of the debts will paid in full, or will be paid in equal proportion within the same proceeds are insufficient to meet the debts in full; and (b) the term "workmen's dues" shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 23. Thus, Section 53 of the Code lists the priorities to be given to the beneficiaries, of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have edge over the others. 24. It would also be pertinent to mention here that Operational Creditors have no locus standi as far as approval of the Resolution Plan by the COC is concerned. As per Section 24(3)(C), they are not eligible to attend and vote at the meetings of COC if they are holding less than 10% of the total debt. Section 24(3) of the Code reads as under: Section 24: (3) The Resolution Professional shall give notice of each meeting of the committee of creditors to - (a) member of [Committee of creditors, including the authorized representatives referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not spell out the shape, color and texture of 'Resolution Plan', which is left to imagination of stakeholders. Read with long title of the '185B Code', functionally, the 'Resolution Plan' must resolve insolvency (rescue a failing, but viable business); should maximize the value of assets of the 'Corporate Debtor', and should promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. Looking to the object of IBC as well as the Legislative intent, it is amply clear that the "Resolution is Rule and the Liquidation is an Exception". Liquidation brings the life of a corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The 1B Code', therefore, does not allow liquidation of a corporate debtor' directly. It allows liquidation only on failure of corporate insolvency resolution process. It rather facilitates and encourages resolution in several ways. The said objective of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial or majority per cent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October 2017; and now after the amendment w.e.f. 6-6-2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, de jure, entails in its deemed rejection. "35. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite per cent of voting share of financial creditors. Even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(2) of the Code. Therefore, the present application IA 259 of 2018 is allowed subject to certain observation with regard to the Clause No. 3.2.3(iii) and clause No. 11 of Resolution Plan and sub para (n) of paragraph 33 along with the prayers (f) of paragraph 35 of IA 259 of 2018 which cannot be allowed as these are the subject matter of the various Competent Authorities having their own jurisdiction. 27. In this regard, this Adjudicating Authority is of the view that Clause No. 3.2.3(iii) at Page No. 19 of the Resolution Plan viz. all legal proceedings initiated before any forum by Of on behalf of the financial creditors to enforce any rights or claims against the Company/ Corporate Debtor or enforce or invoke any security, interest and/ or guarantee, over the assets of the Company/ Corporate Debtor, shall immediately, irrevocably and unconditionally stand withdrawn, abetted, settled and/or extinguished. Provided however any rights or claims of the financial creditors with respect to Existing Promoters Guarantees shall continue against such guarantors". Approval of the Resolution Plan does not mean automatic waiver or abetment of any legal proceedings which are pending by or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this Clause 11 of the Plan are not received or granted, the Resolution Applicant(s) will implement the Plan in accordance with its terms. Hence, Clause No. 9 of the Resolution Plan is also subject matter of the various Competent Authorities to whom Resolution Applicant(s) may approach. 28.2. Thus, not allowing the above said Clause No. 3.2.3 (iii) and Clause No. 11.1, 11.1.1 to 11.1.20 of the Resolution Plan, along with the prayers vide sub para (O of Paragraph No. 35 and pleadings made thereon in sub clause (n) of Paragraph No. 33 of application being IA No. 259 of 2018, is not going to make any hindrance for proper implementation of the Resolution Plan as those are the subject matter of the concerned/ appropriate Competent Authorities. The Resolution Applicant(s) has/ have liberty to approach Competent authorities for any concession, relief, exemption or dispensation as the case may be. 28.3. It is further directed that: i. The approved Resolution Plan shall come into force with immediate effect. ii. The Resolution Plan shall be subject to the various existing laws in force and shall also confirms to such other requirements specified by the Board and other Statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same Clause of 'Operational Creditors' without there being any intelligible criteria to support the same. 5. It is represented on behalf of the Appellant that the 'Resolution Professional' (1st Respondent) is to ensure that the 'Resolution Plan' is in strict compliance with the provisions of the 'I&B' Code, 2016 and other applicable Regulations before placing the same before the 'Committee of Creditors' for its approval under Section 30(3) of the Code. As a matter of fact, as per Section 30(2) of the Code, the 'Resolution Professional' shall examine the each 'Resolution Plan' and ensure that it satisfies the fulfilment of the ingredients of Section 30(2) of the Code, which among other things mandates that the distribution in the proposed 'Resolution Plan' shall be fair and equitable. 6. Advancing his arguments, the Learned Counsel for the Appellant points out that the 'Adjudicating Authority' had completely lost sight of the fact that while approving the 'Resolution Plan', it is to record satisfaction that the 'Resolution Plan' satisfies the requirements as per Section 30(2) of the Code and that is a '"Sine qua non' for granting approval to any 'Resolution Plan' approved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Essar Steel' but will have to forgo its claim in the resolution of the 'Corporate Debtor' (Alok Industries Limited). 11. The Learned Counsel for the Appellant refers to the judgment of the Hon'ble Supreme Court in 'Essar Steel India Limited' 'Committee of Creditors' vs. 'Satish Kumar Gupta' reported in (2020) 8 SCC 531 wherein at paragraph 73 it is observed as under: " 73. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or sub-class 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." 12. The Learned Counsel for the Appellant comes out with a plea that the 'Adjudicating Authority' and the Respondents had failed to appreciate and apply the 'equality' principle which was reiterated and upheld in the judgment of Hon'ble Supreme Court in 'Essar Steel India Limited', 'Committee of Creditors' case (2020) 8 SCC at page 531 wherein at paragraph 88 to 90 it is observed that 'equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution is for maximisation of value of assets of the 'Corporate Debtor' and thereby for all creditors. It is not maximisation of value for a 'stakeholder' or 'a set of stakeholders' such as Creditors and to promote entrepreneurship, availability of credit and balance the interests. The first order objective is "resolution". The second order objective is "maximisation of value of assets of the 'Corporate Debtor'' and the third order objective is "promoting entrepreneurship, availability of credit and balancing the interests". This order of objective is sacrosanct. In the matter of "Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta and Ors.", the Hon'ble Supreme Court observed that "the 'Corporate Debtor' consists of several employees and workmen whose daily bread is dependent on the outcome of the CIRP. If there is a resolution applicant who can continue to run the corporate debtor as a going concern, every effort must be made to try and see that this is made possible". 3. 'Financial Creditors' as members of the 'Committee of Creditors' and their Role. a. The Bankruptcy Law Reforms Committee (BLRC), which conceptualised the 'I&B Code', reasoned as under: i. Under Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a set of stakeholders cannot benefit unduly stakeholder at the cost of another. d. The 'I&B Code' prohibits any action to foreclose, recover or enforce any security interest during resolution period and thereby prevents a creditor from maximising his interests. e. It follows from the above: i. The liabilities of all creditors who are not part of 'Committee of Creditors' must also be met in the resolution. ii. The 'Financial Creditors can modify the terms of existing liabilities, while other creditors cannot take risk of postponing payment for better future prospectus. That is, 'Financial Creditors' can take haircut and can take their dues in future, while 'Operational Creditors' need to be paid immediately. iii. A creditor cannot maximise his own interests in view of moratorium.' iv. If one type of credit is given preferential treatment, the other type of credit will disappear from market. This will be against the objective of promoting availability of credit. v. The 'I&B Code' aims to balance the interests of all stakeholders and does not maximise value for 'Financial Creditors'. vi. Therefore, the dues of creditors of 'Operational Creditors' must get at l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a process that has debtor and creditor on opposite sides. When creditors recover their dues - one after another or simultaneouslyfrom the available assets of the firm, nothing may be left in due course. Thus, while recovery bleeds the 'Corporate Debtor' to death, resolution endeavors to keep the 'Corporate Debtor' alive. In fact, the 'I&B Code' prohibits and discourages recovery in several ways." 16. Also, in the aforesaid judgment wherein at paragraph 18 to 23, 29, 43, 48 it is observed as under: "18. To decide the question whether the 'Resolution Plan' submitted by 'Rajputana Properties Private Limited' is discriminatory and against the provisions of the 'I&B Code', it is desirable to notice the financial terms of the 'Resolution Plan' of the 'Rajputana Properties Private Limited' gist of which has been produced by Mr. Arun Kathpalia, learned Senior Counsel and is as follows: "FINANCIAL TERMS OF RESOLUTION PLAN OF RPPL S. No. Particulars Verified Claim (in Rs. Crores) Proposed Payment Interest as on 30.04.2018 1. Insolvency Resolution Process Cost 115.91 (114.08 was revised by CoC) 115.91 NA 2. Workman Wages 18.01 18.01 NA FINANCIAL CREDITORS WITH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n discriminated. 20. Learned Senior Counsel appearing on behalf of the 'Rajputana Properties Private Limited' submitted that the 'Exim Bank' has been allotted 72.59% as the principal borrower is 'Binani Industries Limited' which itself is a non-performing asset and facing proceedings under the 'I&B Code'. With regard to claim of 'State Bank of India (Hong Kong)', it was submitted that it could not be paid in full as 'Rajputana Properties Private Limited' was never granted the opportunity to undertake diligence of the underlying plans in China despite repeated requests. Therefore, no opportunity to appropriately analyse the commercial viability. 21. Though the aforesaid explanation seems to be attractive but such ground cannot be taken to discriminate between two same sets of the Creditors namely the 'Financial Creditors' who are similarly situated as guarantors. 22. In so far as the 'Operational Creditors' (other than workmen) are concerned, it will be seen that 'unrelated parties' have been provided with 35% of their verified claim which is about Rs. 90 crores. However, 'related parties' have not been provided with any amount. The breakup of payments to the 'Operationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the Indian economy. Therefore, it is necessary to balance the 'Financial Creditors' and the 'Operational Creditors' while emphasizing on maximization of the assets of the 'Corporate Debtor'. Any 'Resolution Plan' if shown to be discriminatory against one or other 'Financial Creditor' or the 'Operational Creditor', such plan can be held to be against the provisions of the 'I&B Code'. 17. In the order dated 24.07.2018 in CA 59 of 2018 (filed by the 'Resolution Professional' of 'Swadisht Oils P. Ltd'.) in CP No.(IB)13/ALD/2017 in the matter of 'J.R. Agro Industries P. Ltd'. Vs. 'Swadisht Oils P. Ltd.' wherein it is observed as under: "In the UNICITRAL report, it is specifically mentioned that similarly ranked creditors are treated equally. In the resolution plan, the recent dues of operational creditors have been given preference. The resolution plan provides hundred percent payment to the operational creditors whose claims are not more than six months old, whereas those creditors whose claims are more than 24 months old, has been provided with only 5% of the principal amount without any interest or penalty. The operational creditors, whose claims are more than 24 months old ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its significance by 12 UNCITRAL Legislative Guide on Insolvency Law ensuring that the priority accorded to the claims of a similar class affects all members of the class in the same manner. The policy of equitable treatment permeates many aspects of an insolvency law, including the application of the stay or suspension, provisions to set aside acts and transactions and recapture value for the insolvency estate, classification of claims, voting procedures in reorganization and distribution mechanisms. An insolvency law should address problems of fraud and favouritism that may arise in cases of financial distress by providing, for example, that acts and transactions detrimental to equitable treatment of creditors can be avoided. 46. The NCLAT has, while looking into viability and feasibility of resolution plans that are approved by the committee of creditors, always gone into whether operational creditors are given roughly the same treatment as financial creditors, and if they are not, such plans are either rejected or modified so that the operational creditors' rights are safeguarded. It may be seen that a resolution plan cannot pass muster under Section 30(2)(b) read with Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was approved by the 'Committee of Creditors' at its 16th Meeting that took place on 20.06.2018 by 72.192% majority. Hence, the 'Resolution Professional' filed I.A. 259 of 2018 on 11.07.2018 seeking approval of the 'Resolution Plan' and that the 'Resolution Plan' furnished by the 'Resolution Applicant' was subsequently approved by the 'Adjudicating Authority' in terms of the approval order. Indeed, the 'Resolution Professional' had demitted his office as on the date of approval order on 08.03.2019 and in accordance with the provisions of the code, a 'Monitoring Committee' was put in place to manage and operate the 'Corporate Debtor' till 14.09.2020. 20. It is the submission of the Learned Counsel for the First Respondent/ erstwhile 'Resolution Professional' that the 'Resolution Professional' is not a Decision Making Body and is only a facilitator in the 'Corporate Insolvency Resolution Process' of the 'Corporate Debtor'. As a matter of fact, the 'Resolution Professional' is to give his ex-facie opinion as to whether the 'Resolution Plan' confirms to the ingredients of the 'I&B' Code. The 'Resolution Professional' is to place the 'Resolution Plan' before the 'Committee of Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inimum payment is made to operational creditors, being not less than liquidation value due to them.' On behalf of the 1st Respondent, the amounts purportedly claimed by the numerous creditors and admitted by it is shown in tabular form as under:- A Financial Creditor 29595.13 (cr.) 29523.86 Rs. (cr.) B Workman 24.51 19.33 C Employees 63.17 53.68 D Operational creditors other than Workmen and Employees 1406.57 1109.81 Total 31089.38 30706.68 24. The break-up of the 'CIRP Cost' paid out under the 'Resolution Plan' runs to the following effect: - Towards Interim Finance 241.10 Rs. (in Cr.) Fee of the RP 0.49 Fee of the Professionals hired by RP 7.33 Other costs approved by the CoC 2.89 Total 251.81 25. It is worthwhile for this Tribunal to make a relevant mention that the average liquidation value of the Corporate Debtor amounts to 4433 crores in terms of the liquidation value estimated by the two valuers appointed by the Resolution Professional and the total financial outlay as per the Resolution Plan comes to Rs. 6252/- crores, and the break-up is as follows:- Heading Amounts paid (Rs. Cr.) Total Financial Outlay under the Plan Liquidation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is against an "order passed by the adjudicating authority (NCLT)" - which we will assume may also pertain to recording of the fact that the proposed resolution plan has been rejected or not approved by a vote of not less than 75% of voting share of the financial creditors. Indubitably, the remedy of appeal including the width of jurisdiction of the appellate authority and the grounds of appeal, is a creature of statute. The provisions investing jurisdiction and authority in the NCLT or 68 NCLAT as noticed earlier, has not made the commercial decision exercised by the CoC of not approving the resolution plan or rejecting the same, justiciable. This position is reinforced from the limited grounds specified for instituting an appeal that too against an order "approving a resolution plan" under Section 31. First, that the approved resolution plan is in contravention of the provisions of any law for the time being in force. Second, there has been material irregularity in exercise of powers "by the resolution professional" during the corporate insolvency resolution period. Third, the debts owed to operational creditors have not been provided for in the resolution plan in the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clause "shall be fair and equitable" to such creditors. Fair and equitable treatment, in other words, is what is fair and equitable between the operational creditors as a class, and not between different classes of creditors. The statute has indicated that once the requirements of Section 30(2)(b) are fulfilled, the distribution in accordance with its provisions is to be treated as fair and equitable to the operational creditors. ..... 47. These decisions have laid down that the jurisdiction of the Adjudicating Authority and the Appellate Authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom. Nor is there a residual equity based jurisdiction in the Adjudicating Authority or the Appellate Authority to interfere in this decision, so long as it is otherwise in conformity with the provisions of the IBC and the Regulations under the enactment. 48. Certain foreign jurisdictions allow resolution/reorganization plans to be challenged on grounds of fairness and equity. One of the grounds under which a company voluntary arrangement can be challenged under the United Kingdom's Insolvency Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at suits a State's economic, social and political goals. As such, an insolvency law can have widespread effects in the broader economy." 50. Hence, once the requirements of the IBC have been fulfilled, the Adjudicating Authority and the Appellate Authority are duty bound to abide by the discipline of the statutory provisions. It needs no emphasis that neither the Adjudicating Authority nor the Appellate Authority have an unchartered jurisdiction in equity. The jurisdiction arises within and as a product of a statutory framework. 29. The Learned Counsel for the First Respondent refers to the judgment of the Hon'ble Supreme Court in the matter of 'Arcelor Mittal India Pvt. Ltd.' vs. 'Satish Kumar Gupta & Ors.' reported in (2019) 2 SCC at page 1, wherein at paragraph 80, it is held as under: - "80. It is the Committee of Creditors which will approve or disapprove a resolution plan, given the statutory parameters of Section 30. Under Regulation 39 of the CIRP Regulations, subclause (3) thereof provides:- "(3) The committee shall evaluate the resolution plans received under sub-regulation (1) strictly as per the 122 evaluation matrix to identify the best resolution plan and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 that in any event their claim was not towards any real supply of 'Goods' or 'Services', but was in respect of 'take or pay obligation' under a contract with the 'Corporate Debtor' (Alok Industries Ltd.) which was in the nature of advance towards future supplies and not 'Goods' or 'Services'. 34. The Learned Counsel for the Second and Third Respondents points out that their 'Resolution Plan', including the 'provisions for payment' against the 'Operational Creditors' claims contemplated thereunder complies with the provisions of the Code and is also approved by the 'Committee of Creditors' of the 'Corporate Debtor' in its 'Commercial Wisdom' and the 'Adjudicating Authority' as per order passed in March 2019. 35. The Learned Counsel for the Second and Third Respondent takes a plea that the 'Liquidation Value' amounting to Rs.4433 crores could be exhausted towards payment of the CIRP costs and the admitted 'Financial Debt' amounting to Rs. 29,523.86 crores in accordance with Section 53 of the Code r/w Regulation 35 of the 'Insolvency and Bankruptcy Board of India' (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) is Nil. (Vide Clause 3.3.1 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors' is Nil. 38. At this stage, the Learned Counsel for Second and Third Respondent submits that the 'Resolution Applicants' in good faith and despite not bound under any legal obligation to do so, allocated a sum of Rs.4.83 crore towards payment of dues of those 'Operational Creditors', whose admitted claims were upto Rs.3 lakhs. Such treatment had resulted in debts of 357 'Operational Creditors' being satisfied in full and that the acceptance of the allocation of this amount in respect of the 'Operational Debt' of the 'Corporate Debtor' was a bonafide exercise of the 'Commercial Wisdom' of the 'Committee of Creditors'. 39. The Learned Counsel for the Second and Third Respondent refers to the judgment in 'Standard Chartered Bank' vs. 'Resolution Professional of Essar Steel Limited and Ors.' (vide Comp. App. (AT) (Ins.) 242 of 2019) wherein at paragraphs at 177 and 178 it is observed as under: 177. For the aforesaid reasons, if the employees are given 100% of their dues or those who have 'supplied goods' and 'rendered services' having claim less than Rs.1 Crore are provided with 100% dues of their claim amount as provided in the present case, the other 'Operational Creditors' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Arcelor Mittal. In any case ultimately INR 35,000 crores was upped to INR 42,000 crores, it being made clear in the final resolution plan that upfront payment of INR 42,000 crores is a committed amount, even if working capital adjustment turns out to be below INR 2,500 crores." 41. The Learned Counsel for the Second and Third Respondent forcefully projects an argument that the 'Resolution Plan' in the instant case which conceive 100% payment to the 'Operational Creditors' with claim upto Rs.3 lakhs is not discriminatory or in violation of 'Article 14 of the Constitution of India' or the provisions of the Code or Regulations made thereunder. 42. The Learned Counsel for the Respondent Nos.2 and 3 points out that under the 'Gas Sale Agreement' dated 27.05.2013 ('GSA') the 'Corporate Debtor' was required to pay to the Appellant (in addition to the price of Gas utilised by the 'Corporate Debtor', the weighted average contract price for 90% of the gas delivered by the Appellant and not utilised by the 'Corporate Debtor'). 43. It is the version of the Learned Counsel for the Respondent Nos.2 and 3 that the 'Gas Sale Agreement' had provided that the 'Corporate Debtor' can utilise th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions rather than commercial wisdom. Even while observing that release of assets at the value 20% below the liquidation value arrived by valuers appeared inequitable, this Court observed that the adjudicatory process ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. While disapproving interference by the Appellate Authority, this Court observed and held under:- "27. Now the question arises as to whether, while approving a resolution plan, the adjudicating authority could reassess a resolution plan approved by the Committee of Creditors, even if the same otherwise complies with the requirement of Section 31 of the Code. The learned counsel appearing for Indian Bank and the said erstwhile promoter of the corporate debtor have emphasised that there could be no reason to release property valued at Rs. 597.54 crores to MSL for Rs. 477 crores. The learned counsel appearing for these two respondents have sought to strengthen their submission on this point referring to the other resolution applicant whose bid was for Rs. 490 crores which is more than that of the appellant MSL. 28. No provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid make it clear that the decision as to whether corporate debtor should continue as a going concern or should be liquidated is essentially a business decision; and in the scheme of IBC, this decision has been left to the Committee of Creditors, comprising of the financial creditors. Differently put, in regard to the insolvency resolution, the decision as to whether a particular resolution plan is to be accepted or not is ultimately in the hands of the Committee of Creditors; and even in such a decision making process, a resolution plan cannot be taken as approved if the same is not approved by votes of at least 66% of the voting share of financial creditors. Thus, broadly put, a resolution plan is approved only when the collective commercial wisdom of the financial creditors, having at least 2/3 majority of voting share in the Committee of Creditors, stands in its favour. 202. In the scheme of IBC, where approval of resolution plan is exclusively in the domain of the commercial wisdom of CoC, the scope of judicial review is correspondingly circumscribed by the provisions contained in Section 31 as regards approval of the Adjudicating Authority and in Section 32 read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toring Committee' supervising the implementation was dissolved. Moreover, the letter dated 15.09.2020 by the 'Corporate Debtor' to BSE Limited and 'National Stock Exchange of India Ltd'. under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 conforms that "...with reconstitution of the Board, Monitoring Committee stands dissolved". 49. The Learned Counsel for the Fourth Respondent seeks in aid of the judgment of this Tribunal in Comp. App. (AT) (Ins.) 67 of 2020 wherein at paragraph 6 it is observed as under: 6. " The order dated 8th March, 2019 by which the 'Resolution Plan' was approved by the Adjudicating Authority is not under challenge in these appeals. In absence of any challenge, the said plan has reached finality. After the plan has reached finality, it is binding on all the stakeholders including the 'Operational Creditors', 'Financial Creditors' and others. How the distribution is to be made on the basis of the approved plan is for the Monitoring Committee to see. No individual decision can be given either by the Adjudicating Authority or by this Appellate Tribunal on the basis of individual claim of one or other 'Operationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor's purported obligation to pay for 'Goods', even where these were not availed of, as a so-called 'take of pay obligation' and obviously, these disputes are contractual in nature. 55. The Learned Counsel for the Fourth Respondent points out that the 'Resolution Plan' deals with the Appellant's claim (vide Clause 3.3.6 (ii) and pursuant to that all claims arising out of the 'Gas Sale Agreement' pertaining to the period before the closing date) mentioned in the 'Resolution Plan' were immediately irrecoverably and conditionally 'extinguished' and 'waived' as on the closing date mentioned in the 'Resolution Plan'. In short, it is the clear cut stand of the Fourth Respondent that the Appellant has no claim as on date, despite the fact that the 'Resolution Plan' was fully implemented and prays for dismissal of the instant Appeal. Analysis 56. According to the Appellant/Applicant in I.A. No. 41/2019 a 'Gas Sale Agreement' dated 27.05.2013 was executed by it and M/s. Alok Industries (Corporate Debtor) in respect of the supply of (Re-liquified Natural Gas) for a period of 15 years, coming to an end in 2028. Later, the 'Gas Transmissions Agreement' dated 27.05.2013 came to be exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were paid 100% of their verified claims and the remaining 'Trade Creditors' were provided with nil value. 61. The pivotal stand of the Appellant is that if the Appellant's interest is brushed aside in the 'Resolution Plan' it will affect the interests of 'Operational Creditors'. In fact, the proposed 'Resolution Plan' can be assailed as per Section 60(5) of the Code relating to (i) any claim made by or against the 'Corporate Debtor' or Corporate person, including claims by or against any of its subsidiaries situated in India and (ii) any question of priorities or any question of law or facts arising out of or in relation to the 'Insolvency Resolution' or 'Liquidation proceedings of the Corporate Debtor' or 'Corporate Person' under the 'I&B' Code. 62. On behalf of the Respondent, it is projected before this Tribunal that the 'Resolution Plan' got the nod of approval by the 'Committee of Creditors' during June, 2018 and the I.A. 41/2019 was projected by the Appellant/Applicant very lately and during the 'Corporate Insolvency Resolution Process' (CIRP) of the 'Corporate Debtor' the Appellant / Applicant had not expressed its objections in regard to the 'Resolution Plan'. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 crores was allotted in respect of payment of dues relating to debt of 'Operational Creditors' post admitted claims were upto Rs.3 Lakhs and this allocation had culminated in the debts of Operational Creditors numbering 357 were fulfilled in entirety. Added further, the said allotment of the aforesaid sum in respect of the operational debt of the Corporate Debtor was made Bona fide by the 'Committee of Creditors' exercising their 'Commercial Wisdom'. 69. According to the Learned Counsel for the 4th Respondent, the 'Distribution of amounts' in respect of a Resolution Plan comes within the ambit of the Committee of Creditors while exercising their 'commercial wisdom' and in short, the proceeding under the I&B Code, 2016(being summary in character) is not to be resorted to as an 'Debt Enforcement Procedure'. Also that, the Appellant's claim(s) pertain to the same being arising out of the Corporate Debtor's purported obligations to pay for goods, and obviously, the disputes are of contractual in nature. 70. Furthermore, it is the stand of the 4th Respondent that the instant 'Appeal' of the 'Appellant' has become an 'Infructous' one because of the fact that the Resolution Plan was i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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