Tribunal approves resolution plan for Bhagwati Power and Steel Limited, deems creditor payment methodology non-discriminatory.

The Tribunal found CA (IB) No. 1092/KB/2018 not maintainable as the distribution methodology for payments to financial creditors was previously consented to by IFCI. The methodology, approved by a significant majority of the Committee of Creditors, was deemed non-discriminatory. The resolution plan of Bhagwati Power and Steel Limited was approved, the moratorium order ceased, and all records were directed to be forwarded to the Insolvency and Bankruptcy Board of India. The Tribunal appreciated the Resolution Professional's work and dismissed CA (IB) No. 1092/KB/2018 with no costs awarded.

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Issues Involved:
1. Maintainability of CA (IB) No. 1092/KB/2018.
2. Justification of the distribution methodology for disbursing payments to financial creditors.
3. Alleged violation of provisions of the Insolvency and Bankruptcy Code (IBC) in the approval of the resolution plan.
4. Reliefs and costs.

Detailed Analysis:

1. Maintainability of CA (IB) No. 1092/KB/2018:
The application filed by IFCI Limited challenged the distribution methodology of payments to financial creditors, alleging it created classes among creditors based on the nature of security interest, which was discriminatory. The Tribunal noted that the methodology was approved by a significant majority (89.71%) of the Committee of Creditors (CoC) and that IFCI had voted in favor of it. The Tribunal held that IFCI's objection was barred by the principle of estoppel, as they had previously consented to the methodology. The Tribunal concluded that CA (IB) No. 1092/KB/2018 was not maintainable.

2. Justification of the Distribution Methodology:
The Tribunal examined whether the distribution methodology, which created classes among financial creditors based on the nature of security interest, was contrary to the IBC or any regulations. It was noted that the methodology was discussed and approved by the CoC, considering both security interest and voting shares. The Tribunal found that the methodology did not discriminate against similarly situated creditors and was not contrary to any law or regulations. It was highlighted that the methodology was in the best interest of secured creditors and was based on sound reasoning and logic.

3. Alleged Violation of Provisions of the IBC:
The Tribunal reviewed the resolution plan and found that it met all the requirements of Section 30(2) of the IBC and Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The plan was prepared in accordance with the provisions of the Code, regulations, and directions from financial creditors. The Tribunal noted that the plan was fair, equitable, and did not discriminate against the objectors (IFCI and SREI). The Tribunal also excluded the period of litigation (199 days) for counting the 270-day CIRP period, concluding that the resolution plan was filed within time.

4. Reliefs and Costs:
The Tribunal approved the resolution plan of Bhagwati Power and Steel Limited, which was approved by the CoC with a 77.20% voting share. The Tribunal ordered that the resolution plan would be binding on the corporate debtor, its employees, members, creditors, guarantors, and other stakeholders. The moratorium order passed under Section 14 ceased to have effect, and the Resolution Professional was directed to forward all records to the Insolvency and Bankruptcy Board of India. The Tribunal appreciated the work of the Resolution Professional, Mr. Sumit Binani, and disposed of CA (IB) No. 1086/KB/2018 accordingly. CA (IB) No. 1092/KB/2018 was dismissed with no order as to costs.

Orders:
1. Approval of the resolution plan of Bhagwati Power and Steel Limited.
2. Immediate implementation of the revival plan.
3. Cessation of the moratorium order.
4. Forwarding of all records by the Resolution Professional to the Insolvency and Bankruptcy Board of India.
5. Appreciation of the work done by the Resolution Professional, Mr. Sumit Binani.
6. Disposal of CA (IB) No. 1086/KB/2018.
7. Dismissal of CA (IB) No. 1092/KB/2018 with no order as to costs.
8. Disposal of CP (IB) No. 387/KB/2017 along with all related CAs.

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