2020 (9) TMI 437 - Tri - Insolvency and Bankruptcy

Tribunal dismisses interim applications in CIRP, to decide Resolution Plan separately

Weather Makers Private Limited Versus Parabolic Drugs Limited, Small Industries Development Bank of India Versus Raj Kumar Ralhan, Resolution Professional and Another, Export Import Bank of India (Exim Bank) Versus Raj Kumar Ralhan, Resolution Professional and Another, Canara Bank Versus Raj Kumar Ralhan, Resolution Professional and Another, PEC Limited Versus Versus Raj Kumar Ralhan and Others, Sundeep Thakar Versus Raj Kumar Ralhan, Resolution Professional, M/s Akum Drugs & Pharmaceuticals Ltd.

The tribunal dismissed all interim applications and company applications related to the treatment of dissenting financial creditors, allegations of ... Approval of Resolution Plan - CIRP process - dissenting financial creditors - Section 30(2)(b) of the Code read with Regulation 38(1)(b) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- Resolution Professional as well as the Resolution Applicant with regard to treating of the applicant-SIDBI as a dissenting creditor and providing specific amount as required under Section 30(2)(b) of the Code and also since the applicant has not disputed the fact of willingness of the Resolution Applicant for payment of the differential amount, no further orders are required to be passed in the instant IA, with regard to the first ground. Payment to the dissenting financial creditors in priority over the assenting financial creditors in terms of Section 30(2)(b) read with Regulation 38(1)(b) of the 2016 Regulations - HELD THAT:- This is an issue to be considered by this Adjudicating Authority while deciding CA No.389/2019 filed under Section 30(6) and Section 31(1) of the Code, seeking approval of the Resolution Plan, since the same falls under Section 31 (1) i.e. “if the adjudicating authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of Section 30 meets the requirement as referred to in sub-section (2) of Section 30”. No financial creditor either assenting or dissenting can challenge a Resolution Plan, as approved by the CoC, even before the Adjudicating Authority approve the said Plan on the ground that the Plan does not meet the requirements of Section 30 (2) of the Code. Hence, there is no need to examine the rival submissions on this issue at this stage. Application dismissed. Issues Involved:1. Treatment of dissenting financial creditors in the Resolution Plan.2. Allegations of fraudulent and wrongful removal of pledged stock.3. Payment of pending salary to an employee during the Corporate Insolvency Resolution Process (CIRP).4. Disposal of the application seeking approval of the Resolution Plan.Issue-wise Detailed Analysis:1. Treatment of Dissenting Financial Creditors in the Resolution Plan:- IA No.195/2020: The Small Industries Development Bank of India (SIDBI) filed an application to intervene in CA No.389/2019, seeking either an amendment to the Resolution Plan or its rejection. SIDBI, a financial creditor of M/s Parabolic Drugs Limited, abstained from voting on the Resolution Plan and argued that it should have been treated as a dissenting financial creditor under Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 (the Code). The applicant claimed that the Resolution Plan failed to earmark the minimum value required for dissenting creditors and did not prioritize their payments as mandated by Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (2016 Regulations).- Judgment: The tribunal noted that the Resolution Professional and Resolution Applicant acknowledged an error in treating SIDBI as an assenting creditor. They agreed to pay the differential amount of Rs. 15,42,300/- to SIDBI. As SIDBI did not dispute this willingness, the tribunal found no merit in the application regarding this ground and dismissed it. The tribunal also held that the issue of prioritizing payments to dissenting creditors would be considered while deciding CA No.389/2019, as it falls under Section 31(1) of the Code.- IA No.199/2020 and IA No.200/2020: These applications, filed by Export Import Bank of India and Central Bank of India respectively, sought identical reliefs as IA No.195/2020. Both applications were dismissed for the same reasons as IA No.195/2020.2. Allegations of Fraudulent and Wrongful Removal of Pledged Stock:- CA No.493/2019 and IA No.196/2020: PEC Limited, a financial creditor, alleged that the directors and officers of the corporate debtor fraudulently removed pledged stock during the CIRP, violating the moratorium. PEC sought directions for action against the directors, a fresh inventory report, and a stay on the approval of the Resolution Plan until these issues were resolved.- Judgment: The tribunal noted that the Resolution Professional had already filed CA No.74/2019 addressing similar issues under Sections 43 to 51 and 66 of the Code. This application would continue even after the approval or rejection of the Resolution Plan. Therefore, the tribunal found no merit in CA No.493/2019 and IA No.196/2020 and dismissed both applications.3. Payment of Pending Salary to an Employee During CIRP:- CA No.1194/2019: An employee, who was the Vice President (International Marketing Formulations), sought payment of pending salary for services rendered during the CIRP. The employee claimed that he was not paid except for a part payment and that his total outstanding dues amounted to Rs. 44,78,931/-.- Judgment: The tribunal found that the employee's claim for salary dues prior to the CIRP was admitted and included in the Resolution Plan. However, the employee failed to provide sufficient proof of working during the CIRP period, especially since the corporate debtor's operations were shut down. The tribunal dismissed the application, finding no merit in the employee's claims for additional payment.4. Disposal of the Application Seeking Approval of the Resolution Plan:- IA No.194/2020: The Resolution Applicant filed this application seeking the disposal of CA No.389/2019, which was pending approval of the Resolution Plan.- Judgment: The tribunal noted that since the applications seeking to prevent the pronouncement of orders in CA No.389/2019 were dismissed, CA No.389/2019 would be decided in accordance with the law. The tribunal disposed of IA No.194/2020 as no further orders were necessary.Conclusion:The tribunal dismissed all the interim applications (IAs) and company applications (CAs) related to the treatment of dissenting financial creditors, allegations of fraudulent removal of pledged stock, and payment of pending salary during the CIRP. The tribunal indicated that the approval of the Resolution Plan would be decided separately in CA No.389/2019.