Tribunal upholds Committee of Creditors' Resolution Plan, dismissing Applicant's plea for higher settlement offer

The Tribunal upheld the Resolution Plan approved by the Committee of Creditors (CoC), emphasizing the CoC's discretion in fund distribution. The Applicant's plea for a higher settlement offer was dismissed as the CoC's decision regarding second charge holders' allocation was deemed valid. The Resolution Plan, despite objections, was considered fair as it offered more than the liquidation value to the Applicant. The Application was rejected without costs, affirming the CoC's authority in determining fund distribution.

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Issues Involved:
1. Revision and improvement of the settlement of claim amount to the Applicant and second charge holders.
2. Direction to the Resolution Applicant to increase the settlement amount.
3. Restraint on the Resolution Professional from seeking approval of the proposed Resolution Plan.
4. Stay on further steps for approval of the Proposed Resolution Plan without considering the Applicant's claim.

Detailed Analysis:

1. Revision and Improvement of the Settlement of Claim Amount:
The Applicant, a Financial Creditor of the Corporate Debtor under Corporate Insolvency Resolution Process (CIRP), sought the Tribunal's intervention to revise the Resolution Plan to improve the settlement offer of 0.5% on the principal outstanding, which was deemed very low. The Applicant had a second charge on the immovable property of the Corporate Debtor and argued that the Resolution Plan was arbitrary and unfair, especially since Operational Creditors were in a better position percentage-wise.

2. Direction to the Resolution Applicant to Increase the Settlement Amount:
The Applicant contended that the Resolution Professional admitted their claim as a second charge holder and that the Resolution Applicants had initially agreed to consider improving the offer. However, the final Resolution Plan did not reflect any improvement, and the Applicant was offered a meager sum of Rs. 1,81,676 against a principal outstanding of Rs. 46,89,86,949.

3. Restraint on the Resolution Professional from Seeking Approval:
The Respondents argued that the Corporate Debtor was non-functional since 2005, with a liquidation value of approximately Rs. 4,00,00,000, and the Resolution Plan was for Rs. 32,28,00,000. Despite discussions in the 6th CoC meeting about improving the 0.5% offer, the Resolution Applicants did not commit to any changes. The Plan was approved by the Committee of Creditors (CoC) with a 93.06% voting share, meeting the requisite majority under Section 30(4) of the Code.

4. Stay on Further Steps for Approval Without Considering Applicant's Claim:
The Tribunal observed that the liquidation value payable to the Applicant was "NIL." The Resolution Plan offered Rs. 1,81,676, which was better than the liquidation value. The Supreme Court in the Essar Steel case emphasized that the CoC has the authority to decide the distribution of funds, considering the security interest of secured creditors. The CoC's commercial wisdom in deciding the distribution pattern is paramount and not subject to judicial review unless it violates Section 30(2) of the Code.

Conclusion:
The Tribunal concluded that the CoC's decision to allocate 0.5% of the debt due to second charge holders was within its commercial wisdom and not justiciable. The Applicant's cause of complaint lacked merit, as the liquidation value attributable to them was zero. The Application was thus rejected with no costs.

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