2019 (4) TMI 734 - AT - Insolvency and Bankruptcy

Appeal resolved with acceptance of Revised Plan, ensuring fair treatment among creditors. Implementation directed, excluding pendency period.

The appeal was disposed of with the acceptance of the Revised Resolution Plan, ensuring non-discriminatory treatment among similarly situated Financial ... Discrimination between two similarly situated ‘Financial Creditors’ - Resolution Plan - Held that:- The question relating to discrimination between two similarly situated ‘Financial Creditors’ fell for consideration before this Appellate Tribunal in “Binani Industries Limited Vs. Bank of Baroda & Anr. [2018 (11) TMI 803 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], where it was held that 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. In the present case, the Appellant-‘Srei Equipment Finance Limited’ (‘Financial Creditor’), ‘M/s. Pegasus’- (‘Financial Creditor’) and some other ‘Financial Creditors’ were discriminated qua similarly situated ‘Financial Creditors’ in the ‘Resolution Plan’ originally submitted by Mr. Mahesh Kr. Agarwal and now the ‘Successful Resolution Applicant’ with a view to remove the discrimination has proposed ‘Revised Resolution Plan’. For the said reason, we accept the ‘Revised Resolution Plan’ submitted by Mr. Mahesh Kr. Agarwal ‘Successful Resolution Applicant’ which should be treated to be part of the original ‘Resolution Plan’ as approved by the Adjudicating Authority. The stand taken by the 3rd Respondent- ‘Edelweiss Asset Reconstruction Company Limited’ that they have moved against the order of adjournment before the Hon’ble Supreme Court. In absence of any order of stay and as the ‘Corporate Insolvency Resolution Process’ has completed more than 270 days, we decided to dispose of the appeal, to give effect to the approved ‘Resolution Plan’, not challenged by ‘Edelweiss Asset Reconstruction Company Limited’ Thus, the period of pendency of this appeal before this Appellate Tribunal i.e. from 22nd November, 2017 till today for calculating the period of 270 days - appeal disposed off. Issues Involved:1. Discrimination between similarly situated Financial Creditors.2. Acceptance and revision of the Resolution Plan.3. Objections raised by Financial Creditors.4. Legal precedents and their application.5. Implementation period extension.Issue-wise Detailed Analysis:1. Discrimination between similarly situated Financial Creditors:The appeal was initiated by a Financial Creditor against the order approving a Resolution Plan that allegedly discriminated between similarly situated Financial Creditors. The original plan provided different settlement amounts to different classes of Financial Creditors, which was contested as discriminatory. The Tribunal noted that the I&B Code and related regulations do not prescribe differential treatment between similarly situated creditors.2. Acceptance and revision of the Resolution Plan:The Successful Resolution Applicant filed a supplementary additional affidavit proposing a Revised Resolution Plan to address the grievances of the Appellant and other similarly situated Financial Creditors. The revised plan aimed to treat all secured Financial Creditors similarly, offering uniform settlement amounts and interest-free term loans. The Appellant accepted the revised amounts payable under the new plan.3. Objections raised by Financial Creditors:One Financial Creditor, M/s. Pegasus, objected to a note in the revised plan stating they had already received their liquidation value and issued a No Due Certificate. The Tribunal acknowledged this but did not interfere, allowing M/s. Pegasus to receive the remaining amount after adjusting the previously received Rs. 32 lacs. Another Financial Creditor, Edelweiss Asset Reconstruction Company Limited, indicated they had moved to the Supreme Court against an earlier order but had not challenged the original plan before the Appellate Tribunal.4. Legal precedents and their application:The Tribunal referred to its previous judgment in 'Binani Industries Limited Vs. Bank of Baroda & Anr.' and 'Central Bank of India Vs. Resolution Professional of the Sirpur Paper Mills Ltd. & Ors.,' which established that differential treatment among similarly situated creditors is not permissible under the I&B Code. These precedents were upheld by the Supreme Court, reinforcing the principle against discrimination in resolution plans.5. Implementation period extension:Given the prolonged pendency of the matter and the interim stay on the implementation of the Resolution Plan, the Successful Resolution Applicant requested an extension of the implementation period. The Tribunal, considering the completion of more than 270 days in the Corporate Insolvency Resolution Process, excluded the period of pendency of the appeal for calculating the 270 days and directed the revised plan to be implemented from the date of issuance of the certified order.Conclusion:The appeal was disposed of with the acceptance of the Revised Resolution Plan, ensuring non-discriminatory treatment among similarly situated Financial Creditors. The Tribunal directed the implementation of the revised plan, excluding the appeal's pendency period from the 270-day calculation, and noted that the 3rd Respondent, Edelweiss Asset Reconstruction Company Limited, would not be affected by the revised plan as they had not challenged the original plan.