TMI Blog2021 (10) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... uch money that are payable to them as per Section 53 of Code. In reality, there is no embargo for the classification of Operational creditor(s) into separate/different classes for deciding the way in which the money is to be distributed to them by the Committee of Creditors because of the fact, undoubtedly, they do have the subjective final discretion of Collective Commercial Wisdom in relation to (1) The amount to be paid (2) The quantum of money to be paid, to a certain category or the incidental category of creditors, of course, nicely balancing the interests of the Stakeholders and the Operational Creditors, as the case may be. Suffice it for this Tribunal to pertinently make a significant mention that it cannot be lost sight of that the Appellant s claim is not relatable to the supply of goods or services so as to keep the Corporate Debtor as a Going Concern. It is to be remembered that the Appellant had commenced Arbitration proceedings in regard to its claim emanating from the Gas Sale Agreement. In fact, the Appellant s claim pertains to supposed obligation to pay for goods, even where, these were not made use of as take or pay obligation. The impugned order does not suffer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that CIRP is a time bound process. 20.3. The moment of IA No. 259 of 2018 is filed, all the above applicants have come as intervener, opposing the Plan. The applicants (Intervener Applicants) are not only delayed one but the conduct of the applicants goes on to show that they want to stall the proceedings for the reasons best known to them. Had there been any bonafide action/claim, they would have approached the Adjudicating Authority on the very threshold of rejection of their claim either by the RP or by CoC. There would have been no reason to sit on the fence such conduct itself shows the lack of bonafide on the part of the applicants (Interveners). 20.4 Further, it is specifically provided in the Code under section 30(2)(e) of the Insolvency and Bankruptcy that Resolution Plan should not contravene any of the provisions of law for the time being in force. As per Explanation Clause to section 30(2) of the Insolvency Code (inserted w.e.f. 06.06.2018) which read as under For the purpose of Clause (e), if any approval or shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being in force for implementation of actions under the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the I B Code will provide that the creditors committee should be restricted only the Financial Creditors . 20.6 That with regard to IA No. 41 of 2019 filed by the Gail India Limited, their status has already been considered as Operational Creditor in IA 413 of 2018. Thus, in the event, only liquidation value is payable to the operational creditors and such amount shall be paid in priority to the amount payable to the financial creditors. Further, Resolution Applicant has already clarified before the Adjudicating Authority, that there would be no demand for gas from the applicant of IA 41 of 2019 arising out of any prior obligation under Gas Sale Agreement dated 27.05.2013 (GSA) until the closing date. It is further categorically submitted by the Resolution Applicant that no gas has been availed of by the Corporate Debtor under GSA after January, 2014. However, if applicant wishes to continue supply to the Corporate Debtor, it may separately negotiable on the same with the Resolution Applicant and the same does not fall within the ambit of the Resolution Plan. The Resolution Applicant had already clarified the position. 20.7 It is pertinent to mention that as per the total financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing. However, a provision has been made in the Total Financial Outlay of the Resolution Plan that in the event there are dissenting financial creditors, then the liquidation value due to the such dissenting financial creditors will be discharged out of the financial creditors settlement amount, in priority to any payments being made to the other financial creditors who voted in favour of the Resolution Plan. On perusal of the entire Resolution Plan, we hereby notice that though there are / were heavy haircut, however, the Resolution Plan provides for payment of insolvency resolution process costs in the manner specified by the Code, in priority to the repayment of the other debts of the Corporate Debtor and also provided for the payment of debts of operational creditors as per the waterfall mechanism mentioned under section 53 of the Code. 21. The present application i.e. IA No. 259 of 2018 has been filed for approval of the Resolution Plan under section 30(6) read with section 31(1) of the Code (as amended) read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (as amended for submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Company/Corporate Debtor in the manner as stated in Clause 1.2 at Page No. 5 of the Resolution Plan under the head Key steps of the Plan which is the part and parcel of the Resolution Plan as well as the application. The said Resolution Plan also includes the distribution of financial outlay in Clause No. 1.3 at Page 14 under the head Distribution of Financial Outlay which gives the details in the order of priority and the payments thereof proposed to be made to the members, shareholders and all stakeholders etc. For the sake of convenience, the same is reproduced herein below: Clause 1.3 Distribution of the Total Financial Outlay: The order of priority of distribution using the Total Financial Outlay, is set out below: Order of Priority Total Financial Outlay Amount (in Rs.) (in Crores) First Estimated CIRP Costs. 234 or any lower amount Second Excess CIRP Costs to be determined in terms of Section 3.2.2 Third Liquidation value and other dues owed to workmen. 19.33 Fourth Liquidation value due to Operational Creditors (other than workmen) is NIL. Consequently, amount required to be paid to Operational Creditors for Liabilities until the Insolvency Commencement Date is NIL. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of priority and within such period and in such manner as may be specified, namely: - i. The insolvency resolution process costs and the liquidation costs paid in full; ii. The following debts which shall rank equally between and among the following: - iii. Workmen's dues for the period of twenty-four months preceding the liquidation commencement date; and (i) Debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; (ii) Wages and any unpaid dues owned to employees other than workmen for the period of twelve months preceding the liquidation commencement date; (iii) Financial debts owed to unsecured creditors; (iv) The following dues shall rank equally between and among the following: (i) Any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date; (ii) Debts owed to a secured creditor for any amount unpaid following the enforcement of security interest; (v) Any remaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders including alteration in the priority of the payments of the government dues, to establish an Insolvency and Bankruptcy Fund and matters connected therewith or incidental thereto. Thus, the preamble of the I B Code aims to promote resolution over liquidation. The purpose of resolution is maximization of value of assets of the 'Corporate Debtor' and thereby for all creditors. It is not maximization of value for a 'stakeholder' or 'assets of a stakeholder' such as creditors and to promote entrepreneurship, availability of credit and balance the interests. The first objective is 'resolution'. The second objective is 'maximization of the value of assets of the 'Corporate Debtor' and third objective is 'promoting entrepreneurship, availability of credit and balancing the interests'. This objective of the I B Code is sacrosan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the larger interests of the public: workmen, stakeholders and the other employees of the Corporate Debtor in the interest of justice and in order to achieve the object of the Code, liquidation of a company can only be a last resort wherein, all efforts for brining Resolution Plan were failed or it cannot be found workable in the larger public interest. Hence, now the approval of Resolution Plan by this Adjudicating Authority is rule as per the apex court's decision in the matter of K. Sashidhar Vs. Indian Overseas Bank Ors as discussed above. The Hon ble Supreme Court in its recent judgment in Civil Appeal No. 10673 of 2018 in K. Sashidhar Vs. Indian Overseas Bank Ors. Comprising of Hon ble Justice A.M. Khanwilkar and Hon ble Justice Ajay Rastogi observed that: 33. As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process Under Section 33(1) of the I B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I B Code. The powers and functions of the Board have been delineated in Section 196 of the I B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings, sub clause (n) of Clause No. 33 of application IA 259 of 2018, wherein, the Resolution Applicant(s) pray(s) for passing of an appropriate order/ direction by this Adjudicating Authority for grant of relief, concession or dispensation or exemption, as the case may be, required for implementation of the transactions contemplated under the Resolution Plan in accordance with its terms and conditions detailed in Clause No. 11.1, 11.1.1 to 11.1.20 cannot be allowed, as those are the subject matter of the various concerned Competent Authorities and the jurisdiction lies upon them to make any concession, waiver, exemption and grant any relief. The Resolution Applicant(s) may approach to the Competent Authorities/ Government/ Semi Government/ Central and State Governments and k. other statutory bodies, as the case may be, as per the need and requirement for exemption, waiver and/or concession for the effective implementation of the Resolution Plan. This Resolution Plan cannot purportedly be used for getting any concession, waiver/ relief or exemption which is against the provisions of the existing laws of the land in force. The instant Resolution Plan cannot be used for the purpose wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency and Bankruptcy Board of India to be recorded on its database. 29. As discussed hereinabove, and as also the view taken by the Hon'ble Supreme Court from time to time in Swiss Ribbons Pvt. Ltd Ors vs. Union of India Ors as well as K. Sashidhar Vs. Indian Overseas Bank Ors. IA 259 of 2018 is allowed with above observations and the IAs mentioned herein below are not maintainable and dismissed the IA No.41/2019. Appellant s Contentions 3. Assailing the validity, propriety and legality of the impugned order dated 08.03.2019 in I.A. No.259 of 2018 in CP(IB) No.48 of 2017 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench), the Learned Counsel for the Appellant submits that the Adjudicating Authority had approved a Resolution Plan which created a clause within a clause of Operational Creditor and further that the Resolution Plan of the Respondent Nos.2 and 3 provides for 100% payment to the Operational Creditors having dues less than Rs.3 lakhs and provide a payment NIL to the Operational Creditors having dues over Rs.3 lakhs, which included the Appellant. 4. According to the Learned Counsel for the Appellant, the Resolution Plan is unreasonably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that in the matter of J.R. Agro Industries Pvt. Ltd. vs. Swadisht Oils Pvt. Ltd. reported in (2018) 147 CLA 260 , the National Company Law Tribunal, Allahabad Bench had observed the following: All the operational creditors are rank equal. Therefore, there should be no discrimination in distribution of the payment among the same class of creditors. Therefore, the part of the Resolution Plan which discriminates the distribution liquidation value amongst Operational Creditors is unsustainable in law. This portion of the plan needs modification. and projects an argument that the Adjudicating Authority had not discussed the aforesaid judgment(s) and approved the Resolution Plan , which is incorrect in the eye of law. 9. The Learned Counsel for the Appellant takes a stand that the Appellant (being an Operational Creditor without any voting rights in the Committee of Creditors ) was placed at a disadvantageous by disentitling it of any payments under the Resolution Plan in respect of its lawful/ legitimate claims. 10. The Learned Counsel for the Appellant brings it to the notice of this Tribunal the Adjudicating Authority (same Bench - National Company Law Tribunal, Ahmedabad Bench) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alised for creation of the Committee of Creditors comprising of only the Financial Creditors and not the Operational Creditors . 14. The Learned Counsel for the Appellant submits that the Adjudicating Authority had failed to take into account that the Hon ble Supreme Court Judgment in Swiss Ribbons case does not discuss the basic contention of the Appellant that the Appellant seeks to create a classification without any intelligible criteria that make the Plan grossly inequitable and fundamentally oppose to their spirit and intent of the legislation, more particularly, the fundamental theme of the I B Code, 2016 that is balancing of interest of all stakeholders. Appellant s Citations 15. In the judgment of this Tribunal dated 14.11. 2018 in Comp. App. (AT) (INS.) 82 of 2018 in the matter of Binani Industries vs. Bank of Baroda and Anr. at paragraph 17 , it is observed as under: 17. To decide the issue, it will be desirable to notice the object of the I B Code , object of Resolution and what is expected from the Committee of Creditors , as summarized below:- 1. The objective of the I B Code: As evident from the long title of the I B Code , it is for reorganisation and insolvency res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be restricted to only the Financial Creditors . ii. In Para 3.4.2 dealing with Principles driving design , the principle IV reads as under: IV. The I B Code will ensure a collective process. 9. The law must ensure that all key stakeholders will participate to collectively assess viability. The law must ensure that all creditors who have the capability and the willingness to restructure their liabilities must be part of the negotiation process. The liabilities of all creditors who are not part of the negotiation process must also be met in any negotiated solution. b. The I B Code aims at promoting availability of credit. Credit comes from the Financial Creditors and the Operational Creditors . Either creditor is not enough for business. Both kinds of credits need to be on a level playing field. Operational Creditors need to provide goods and services. If they are not treated well or discriminated, they will not provide goods and services on credit. The objective of promoting availability of credit will be defeated. c. The I B Code is for reorganisation and insolvency resolution of corporate persons, ....for maximisation of value of assets of such persons to.... balance inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys the highest price would get it. There is no need for voting or application of mind for approving a Resolution Plan , as it will be sold at the highest price. One would not need Corporate Insolvency Resolution Process , Interim Resolution Professional , Resolution Professional , interim finance, calm period, essential services, Committee of Creditors or Resolution Applicant and detailed, regulated process for the purpose of sale. It is possible that under a Resolution Plan , certain rights in the Corporate Debtor , or assets and liabilities of the Corporate Debtor are exchanged, but that is incidental. It is not an auction. Depending on the facts and circumstances of the Corporate Debtor , Resolution Applicant may propose a Resolution Plan that entails change of management, technology, product portfolio or marketing strategy; acquisition or disposal of assets, undertaking or business; modification of capital structure or leverage; infusion of additional resources in cash or kind over time; etc. Each plan has a different likelihood of turnaround depending on credibility and track record of Resolution Applicant and feasibility and viability of a Resolution Plan are not amenable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil 19. Equity/ Working Capital Infusion NA 350 Nil TOTAL 7289.05 7568.89 381.62 Total Amount with Interest 7950.34 19. From the gist aforesaid, it will be evident that the Financial Creditors such as, Edelweiss Asset Reconstruction Company Limited , IDBI Bank Limited , Bank of Baroda , Canara Bank , Bank of India and State Bank of India has been provided with 100% of their verified claim, the Resolution Applicant ( Rajputana Properties Private Limited ) has given lesser percentage to Export-Import Bank of India (72.59%) and State Bank of India-Hong Kong (10%). Discrimination has been made on the ground that some of the Financial Creditors are direct exposure to the Corporate Debtor or some of the Financial Creditors to whom the Corporate Debtor was guarantor. Even the guarantors who are treated to be the Financial Creditors , such as IDBI Bank Limited (Dubai Branch) , Bank of Baroda (London) , State Bank of India (Bahrain) , Syndicate Bank have been provided with 100% proposed payment of their verified claim but the Export-Import Bank of India and the State Bank of India (Hong Kong) who are similarly situated have been discriminated. 20. Learned Senior Counsel appearing on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of maximization of the assets of the Corporate Debtor on one hand and for balancing the stakeholders on the other hand. .. 43. From the two Resolution Plans , it will be clear that the Rajputana Properties Private Limited in its Resolution Plan has discriminated some of the Financial Creditors who are equally situated and not balanced the other stakeholders, such as Operational Creditors . Therefore, the Adjudicating Authority has rightly held the Resolution Plan submitted by Rajputana Properties Private Limited to be discriminatory. 48. If the Operational Creditors are ignored and provided with liquidation value on the basis of misplaced notion and misreading of Section 30(2)(b) of the I B Code , then in such case no creditor will supply the goods or render services on credit to any Corporate Debtor . All those who will supply goods and provide services, will ask for advance payment for such supply of goods or to render services which will be against the basic principle of the I B Code and will also affect 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 Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to similarly placed creditors and states as follows: Ensuring equitable treatment of similarly situated creditors 7. The objective of equitable treatment is based on the notion that, in collective proceedings, creditors with similar legal rights should be treated fairly, receiving a distribution on their claim in accordance with their relative ranking and interests. This key objective recognizes that all creditors do not need to be treated identically, but in a manner that reflects the different bargains they have struck with the debtor. This is less relevant as a defining factor where there is no specific debt contract with the debtor, such as in the case of damage claimants (e.g. for environmental damage) and tax authorities. Even though the principle of equitable treatment may be modified by social policy on priorities and give way to the prerogatives pertaining to holders of claims or interests that arise, for example, by operation of law, it retains 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst Respondent Submissions 19. According to the Learned Counsel for the First Respondent, the Corporate Insolvency Resolution Process (CIRP) in regard to the Corporate Debtor was initiated upon the admission of an application filed by the State Bank of India as per Section 7 of the I B Code through an order dated 18.07.2017, passed by the Adjudicating Authority , in and by which the First Respondent was appointed as an Interim Resolution Professional and was latter affirmed as the Resolution Professional by the Committee of Creditors at its First Meeting that took place on 16.08.2017. In fact, in terms of the ingredients of the I B Code, the Resolution Professional carried out the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor in consultation with the Committee of Creditors of the Corporate Debtor and that the Resolution Applicants submitted a Resolution Plan on 12.04.2018 which 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e two valuers appointed by the Resolution Professional . Accordingly, the Liquidation value due to the Operational Creditors is Nil. Considering that upon an application of the waterfall mechanism mentioned under Section 53 of the code, the whole sum of Rs.4433 crores would be exhausted in payment of the Corporate Insolvency Resolution Process , Costs , Liquidation Costs , Workmen dues and the dues owed to the Secured Creditors (i.e. Financial Creditors ) which are substantially in excess of Rs.4433 crores. 23. The Learned Counsel for the First Respondent cites the decision of Hon ble Supreme Court in Swiss Ribbon Pvt. Ltd. Anr . V. Union of India Ors. (Writ Petition (Civil) 99 of 2018), wherein it is observed and held that a Resolution Plan cannot pass muster under Section 30(2)(b) read with Section 31 unless a minimum 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 othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations and had approved the Resolution Plan therein. 27. The Learned Counsel for the First Respondent contends that the Adjudicating Authority has been tasked to be a process supervisor to ensure compliance with law and exercise restricted jurisdiction under the provisions of the Code which are limited to the matters mentioned in Section 30(2) of the Code as observed by the Hon ble Supreme Court of India in the matter of K. Shashidhar vs. Indian Oversees Bank Anr. (vide Civil Appeal 10673 of 2018 dated 05.02.2019) and refers to paragraph 37 to 38, 44 wherein it is observed as under: 37. On a bare reading of the provisions of the I B Code, it would appear that the remedy of appeal under Section 61(1) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is to determine whether the amounts distributed to the Operational Creditors are in consonance with Section 30(2)(b) of the Code and there does not lie any independent equity based jurisdiction with the Adjudicating Authority : 34.These provisions indicate that the ambit of the Adjudicating Authority is to determine whether the amount that is payable to the operational creditors under the resolution plan is consistent with the above norms which have been stipulated in clause (b) of sub-clause (2) of Section 30. Significantly, Explanation-1 to clause (b), which is clarificatory in nature, provides that a distribution which is in accordance with the provisions of the 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Legislative Guide on Insolvency Law, has succinctly prefaced its recommendations in the following terms:- C. 15. Since an insolvency regime cannot fully protect the interests of all parties, some of the key policy choices to be made when designing an insolvency law relate to defining the broad goals of the law (rescuing businesses in financial difficulty, protecting employment, protecting the interests of creditors, encouraging the development of an entrepreneurial class) and achieving the desired balance between the specific objectives identified above. Insolvency laws achieve that balance by reapportioning the risks of insolvency in a way that 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he resolution consortium which was declared as the Successful Resolution Applicant by the Adjudicating Authority ( National Company Law Tribunal , Ahmedabad Bench) as per order dated 08.03.2019. 33. According to the Learned Counsel for the Respondent Nos.2 and 3 that the Liquidation Value available to the Corporate Debtors , Operational Creditors is Nil and as such, the Operational Creditors (including the Appellant) were not entitled to receive any sum as per Section 30(2)(b) of the Code r/w Regulation 38 of CIRP Regulations. Also it is represented on behalf of the Respondent Nos.2 and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Thousand Three Hundred Twenty One) shall remain NIL and shall not increase. 37. The Learned Counsel for the Second and Third Respondent points out that the Operational Creditors as per Section 32(b) of the I B Code r/w Regulation 38 of CIRP Regulations are entitled to receive only such amounts payable to them, in the event of liquidation of the Corporate Debtor , as computed in terms of Section 53 of the Code and as such the Appellant is not entitled to receive any amount(s) since the liquidation value available to the Operational Creditors 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs which was then done by a majority of 92.24%, as has been seen above based upon the value of their respective security interests. Therefore, the allegation that the Committee of Creditors relieved Arcelor Mittal from the solemn offer made before the Supreme Court by reducing the offer amount of INR 42,000 crores by INR 2,500 crores so that Arcelor Mittal could acquire the debts of OSPIL, is again a matter for negotiation being a business decision taken by the Committee of Creditors with 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 ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant has to match the liquidation value; that the object behind such valuation process was to assist the CoC to take a proper decision on the resolution plan; and once the plan was approved by CoC, the Adjudicating Authority was only to ascertain if the resolution plan was meeting the requirements of subsections (2) and (4) of Section 30. The Court observed that in the given case, the Appellate Authority had proceeded on equitable perceptions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) of which we have reproduced in earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the appellate authority ought to have interfered with the order of the adjudicating authority in directing the successful resolution applicant to enhance their fund inflow upfront. (emphasis in bold supplied) 201. The expositions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority , culminating in approval of the Resolution Plan furnished by the Respondent Nos.2 and 3 and rejection/ dismissal of Appellant s I.A. 41 of 2019. 48. The Learned Counsel for the Fourth Respondent contends that the instant Appeal is an infructuous since the regulatory findings of the Corporate Debtor indicate that the approved Resolution Plan was fully implemented under the Monitoring 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 final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the Learned Counsel for the Fourth Respondent that instead of proceedings with the Arbitration proceedings, the Appellant has endeavoured to effect a recovery through the proceedings under the Code. 54. The Learned Counsel for the Fourth Respondent contends that the Appellant s claim pertains to claims arising out of the Corporate 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat any claim furnished after the lapse of CIRP period was not to be considered. 60. The core plea taken on behalf of the Appellant/Applicant is that the Trade Creditors were allotted only Rs. 4.83 crores and the said Trade Creditors with balance of below Rs. 3 lacs 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plan for Operational Creditors with admitted claims of a sum of rupees upto Rs.3 Lakhs only. 68. The plea of 2nd and 3rd Respondent is that the Resolution Applicant based on Good Faith a sum of Rs.4.83 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 na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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