Tribunal rules in favor of Ghanashyam Mishra & Sons over Edelweiss ARC; workers' union claims dismissed

The Tribunal upheld the rejection of Edelweiss Asset Reconstruction Company Limited's claim as a Financial Creditor and its Resolution Plan, favoring Ghanashyam Mishra & Sons Private Limited's plan. Sundargarh Mines & Transport Workers Union's claims regarding workers' dues were dismissed, with the Tribunal suggesting pursuing relief through other legal avenues. The State of Jharkhand's challenge as a secured creditor was not addressed due to the absence of an appeal. The Tribunal clarified the nature of the State's dues as operational debt and imposed no costs.

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Issues Involved:

1. Non-inclusion of Edelweiss Asset Reconstruction Company Limited as a Financial Creditor.
2. Rejection of Edelweiss Asset Reconstruction Company Limited's Resolution Plan.
3. Claims of Sundargarh Mines & Transport Workers Union regarding workers' dues.
4. Dues of the State of Jharkhand.

Issue-Wise Detailed Analysis:

1. Non-inclusion of Edelweiss Asset Reconstruction Company Limited as a Financial Creditor:

The Appellant, Edelweiss Asset Reconstruction Company Limited, claimed to be a Financial Creditor based on a Corporate Guarantee provided by Orissa Manganese & Minerals Limited. The Corporate Debtor had guaranteed a loan availed by Adhunik Power and Natural Resources Limited from a consortium of banks. The debt was assigned to Edelweiss, which argued that it should be considered a Financial Creditor under Section 5(7) and Section 5(8)(h) of the Insolvency and Bankruptcy Code (I&B Code). However, the guarantee was not invoked before the initiation of the Corporate Insolvency Resolution Process (CIRP), and thus, the claim was not recognized. The Tribunal upheld the Resolution Professional's decision, stating that the claim had not matured due to non-invocation of the guarantee before the CIRP initiation.

2. Rejection of Edelweiss Asset Reconstruction Company Limited's Resolution Plan:

Edelweiss contended that its Resolution Plan was unfairly ranked lower than that of Ghanashyam Mishra & Sons Private Limited. The Tribunal emphasized that the Committee of Creditors (CoC) has the expertise to evaluate the viability and feasibility of Resolution Plans. The comparative chart showed that Ghanashyam Mishra & Sons Private Limited's plan offered better terms, including higher payments to creditors and a more favorable equity stake. The Tribunal found no illegality in the CoC's decision and upheld the approval of Ghanashyam Mishra & Sons Private Limited's plan.

3. Claims of Sundargarh Mines & Transport Workers Union regarding workers' dues:

The Union, representing 1476 workers, claimed that their dues were ignored in the CIRP. The Tribunal noted that the claim was filed after the 270-day resolution period and that the workers were aware of the CIRP proceedings. The Tribunal acknowledged the workers' right to pursue their claims in a Civil Court or Labour Court post-moratorium, as it was not feasible to determine the validity of all claims within the CIRP framework. The Tribunal suggested that the workers seek appropriate relief through other legal avenues.

4. Dues of the State of Jharkhand:

The State of Jharkhand challenged the non-admission of its claim, arguing that it should be treated as a secured creditor. The Tribunal referred to the statutory provisions defining operational debt and held that the dues were operational in nature. The Tribunal did not pass any specific order regarding the State's claim due to the absence of an appeal by the State of Jharkhand.

Conclusion:

The Tribunal dismissed the appeals by Edelweiss Asset Reconstruction Company Limited and Sundargarh Mines & Transport Workers Union, while providing observations on the workers' right to seek relief through other legal forums. The Tribunal also clarified the nature of the State of Jharkhand's dues as operational debt. No costs were imposed.

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