Tribunal directs RP to reconsider claim as Operational Creditor, treating 'Take or Pay' obligations as operational debt

The Tribunal allowed the application, directing the RP to reconsider the applicant's claim as an Operational Creditor and treat the "Take or Pay" obligations under the Gas Sale Agreement as operational debt. The decision aimed to ensure consistency in the treatment of similar claims across different CIRPs and uphold the principles of natural justice. The Tribunal emphasized that the RP should consult the CoC and seek clarification from the Adjudicating Authority if needed.

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Issues Involved:
1. Rejection of the applicant's claim as an Operational Creditor.
2. Validity of the "Take or Pay" obligations under the Gas Sale Agreement as operational debt.
3. Adjudicatory powers of the Resolution Professional (RP).
4. Principles of natural justice in the insolvency process.
5. Consistency in treatment of similar claims across different Corporate Insolvency Resolution Processes (CIRPs).

Issue-wise Detailed Analysis:

1. Rejection of the applicant's claim as an Operational Creditor:
The applicant, M/s. GAIL India Ltd., filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, challenging the rejection of its claim as an Operational Creditor by the Resolution Professional (RP) of M/s. Alok Industries Ltd. The RP rejected the claim on the grounds that the "Take or Pay" obligations under the Gas Sale Agreement (GSA) did not qualify as operational debt under Section 5(21) of the Code. The applicant contended that its claim for unpaid dues from 2014 to 2016, amounting to Rs. 506.42 crores, was acknowledged by the Corporate Debtor but not paid.

2. Validity of the "Take or Pay" obligations under the Gas Sale Agreement as operational debt:
The RP argued that the "Take or Pay" obligations did not relate to goods or services used for production or output by the Corporate Debtor and thus did not qualify as operational debt. The applicant countered that the gas supplied under the GSA was a direct input for the Corporate Debtor's manufacturing process and should be considered operational debt. The applicant also highlighted that similar claims were accepted as operational debt in the CIRP of M/s. Essar Steel India Ltd.

3. Adjudicatory powers of the Resolution Professional (RP):
The Tribunal noted that the RP is not vested with adjudicatory powers and is expected to collate and verify claims, presenting them to the Committee of Creditors (CoC) for consideration. The RP's unilateral decision to reject the claim without CoC consultation was deemed unreasonable. The Tribunal emphasized that the RP should have sought clarification from the Adjudicating Authority if needed.

4. Principles of natural justice in the insolvency process:
The Tribunal underscored the importance of natural justice, stating that the RP should have provided the applicant an opportunity to be heard before rejecting the claim. The RP's failure to do so was a violation of natural justice principles. The Tribunal referenced Supreme Court judgments emphasizing the necessity of fair treatment and non-arbitrariness in administrative actions.

5. Consistency in treatment of similar claims across different CIRPs:
The Tribunal highlighted the need for consistency in the treatment of similar claims across different CIRPs. It noted that the applicant's claim was accepted as operational debt in the CIRP of M/s. Essar Steel India Ltd., where many of the same banks were members of the CoC. The Tribunal directed the RP to reconsider the applicant's claim as operational debt to maintain consistency and avoid discriminatory practices.

Conclusion:
The Tribunal allowed the application, directing the RP to reconsider the applicant's claim as an Operational Creditor and treat the "Take or Pay" obligations under the GSA as operational debt. The decision aimed to ensure consistency in the treatment of similar claims across different CIRPs and uphold the principles of natural justice. The Tribunal emphasized that the RP should consult the CoC and seek clarification from the Adjudicating Authority if needed.

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