Tribunal Approves EMC Ltd.'s Resolution Plan Under Insolvency Law

The Tribunal approved the Resolution Plan of EMC Ltd., which had been endorsed by the Committee of Creditors with an 80.18% voting share. The Plan met the requirements of the Insolvency and Bankruptcy Code, was deemed fair and equitable, and adhered to the law. Consequently, the Resolution Plan was approved under Section 31(1) of the Code, binding all stakeholders. The Tribunal also lifted the moratorium order, instructed the Resolution Professional to transfer all relevant records to the Insolvency and Bankruptcy Board of India, and dismissed the objections raised by various financial creditors, thereby concluding the case.

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Issues Involved:
1. Objection to the approval of the Resolution Plan by Bank of Baroda.
2. Objection to the approval of the Resolution Plan by Canara Bank.
3. Objection to the distribution pattern of the Resolution Plan by Union Bank of India.
4. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016.

Issue-wise Detailed Analysis:

1. Objection to the approval of the Resolution Plan by Bank of Baroda:
The Bank of Baroda, a Financial Creditor and Member of the Committee of Creditors (CoC), filed CA(IB) No. 1175/KB/2019 seeking directions regarding the payment pursuant to the invocation of a Bank Guarantee by M/s. Power Grid Corporation of India Limited during the Corporate Insolvency Resolution Process (CIRP). The Tribunal observed that the Bank Guarantee is an independent contract between the Bank and the beneficiary, which cannot be stopped due to the moratorium declared under Section 14 of the Insolvency and Bankruptcy Code, 2016. Therefore, the Tribunal dismissed the application, stating that the Bank should decide in accordance with the terms and conditions stipulated under the Bank Guarantee.

2. Objection to the approval of the Resolution Plan by Canara Bank:
Canara Bank, another Financial Creditor and Member of the CoC, filed CA(IB) No. 1266/KB/2019 seeking to recall an order directing the Bank to refund a sum of Rs. 1,96,12,749/- to the Corporate Debtor, which was adjusted in violation of the moratorium. The Tribunal noted that the objections raised were similar to those previously raised and contested in CA(IB) No. 947/KB/2019. The Tribunal found no justifiable reason to recall the order dated 06-09-2019 and dismissed the application, stating that the Applicant had the right to appeal the order on merits.

3. Objection to the distribution pattern of the Resolution Plan by Union Bank of India:
Union Bank of India, a Financial Creditor and Member of the CoC, filed CA(IB) No. 1327/KB/2019 objecting to the approval of the Resolution Plan on the grounds that the distribution of the Resolution fund was not fair, equitable, and hence discriminatory. The Tribunal noted that the distribution pattern was deliberated upon at length in the CoC meeting held on 26-09-2019, and the objections raised by the Applicant were considered and addressed. The Tribunal cited the Supreme Court's decision in K. Sashidhar V. Indian Overseas Bank and Others, which stated that the commercial/business decision of the financial creditors taken collectively cannot be challenged on the grounds that reasons were not recorded. The Tribunal concluded that the objections raised by the Applicant deserved no consideration and dismissed the application.

4. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal examined whether the Resolution Plan met the requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016, and whether it was fair, equitable, and adhered to the object of the Code. The Tribunal noted that the Resolution Plan was approved by the CoC with a vote share of 80.18%, was complete, and was not in contravention of any provisions of the law. The Plan provided for the payment of Insolvency Process Costs, liquidation value due to Operational Creditors, and liquidation value due to Financial Creditors. The Tribunal cited the Supreme Court's decision in Rajputana Properties Private Limited Vs. Ultratech Cement Limited and Ors., which outlined the criteria for approving a Resolution Plan. The Tribunal found that the Plan satisfied all the requirements and approved the Resolution Plan.

Order:
1. The Resolution Plan of EMC Ltd., approved by the CoC with 80.18% voting share, is hereby approved under Section 31(1) of the Insolvency and Bankruptcy Code, 2016, and shall be binding on all stakeholders.
2. The moratorium order passed under Section 14 shall cease to have effect.
3. The Resolution Professional shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the Insolvency and Bankruptcy Board of India.
4. CA(IB) No. 1175/KB/2019, CA(IB) No. 1266/KB/2019, and CA(IB) No. 1327/KB/2019, in CP(IB) No. 1237/KB/2018, are dismissed and disposed of accordingly.
5. CP(IB) No. 1237/KB/2018 is allowed and disposed of accordingly.

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