National Company Law Appellate Tribunal, New Delhi: A Division Bench comprising of Ashok Bhushan,* J., and Mr. Barun Mitra (Technical Member), held that the Resolution Plan approved by the Adjudicating Authority is not discriminative in the distribution of the proposed amount to the Operational Creditor vis-à-vis Financial Creditors because the Operational Creditor cannot claim equal payment to the Financial Creditors.
Factual Matrix
In the instant matter, two appeals ‘Company Appeal (AT) Ins. No. 613 of 2022 and Company Appeal (AT) Ins. No. 795 of 2022’ arsing out of order dated 03-02-2022 and 07-04-2022 respectively, passed by the Adjudicating Authority are decided together by the NCLAT, since, both the appeals are raising common questions of fact and law. In both the case, Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor and on the Public Announcement made by the Interim Resolution Processional (IRP), the appellants submitted their claim in Form-B in the capacity of the Operational Creditor. The Adjudicating Authority vide impugned orders approved the Resolution Plan approved by the Committee of Creditors (CoCs) where the appellants were paid less than the claim submitted by them in Form-B and the Financial Creditors were paid much higher amount. Aggrieved by the impugned orders passed by the Adjudicating Authority, the appellants preferred the present appeals challenging the impugned orders.
Moot Point
Whether the appellants can claim discrimination in payment qua the financial creditors in the present appeals?
Court’s Observation
The Court observed that there is no dispute that claim filed by the appellants in CIRP of the Corporate Debtor was admitted by the Resolution Professional, moreover, there is no dispute that Financial Creditors in both the Resolution Plans were paid much higher amount to those given to the appellants-Operational Creditors.
The Court observed that the Financial Creditor under Section 53(i)(b) of the IBC are entitled to receive payment equal to those workmen dues and the Operational Creditor cannot claim payment equal to the Financial Creditor. The Court relied on CoC of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, and observed that the principle of equality is applicable only in same class of creditors, i.e., “equitable treatment is to be accorded to each creditor depending upon the class to which it belongs: secured or unsecured, financial or operational.”
Court’s Verdict
The Court held that the approval of the Resolution Plan by the Adjudicating Authority via impugned orders cannot be faulted on the grounds that the said Resolution Plan is not in consonance with the provision of IBC and is discriminative in the distribution of the proposed amount to the Operational Creditor vis-à-vis Financial Creditors.
[TP Central Odisha Distribution Ltd. v. COS Board Industries Ltd., 2023 SCC OnLine NCLAT 399, order dated 04-07-2023]
*Judgment by Ashok Bhushan
Advocates who appeared in this case :
Mr. Rajeeve Mehra, Sr. Advocate with Mr. Anand Kumar Shrivastava, Ms. Amrita Bakshi, Counsel for the Appellants;
