Tribunal Upholds Claim Reduction, Partially Allows Appeal on Resolution Plan. Appellant Awarded Rs. 8.60 Crores.

The Tribunal upheld the reduction of the Appellant's claim and voting share in the Committee of Creditors (COC) and partially allowed the appeal regarding the approval of the Resolution Plan. The Appellant was ordered to be paid Rs. 8.60 Crores on priority under the Resolution Plan, which was in accordance with the 2019 Amendment to the Insolvency and Bankruptcy Code (IBC).

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Issues Involved:
1. Reduction of Appellant's claim and voting share in the Committee of Creditors (COC).
2. Approval of the Resolution Plan by the Adjudicating Authority without considering the 2019 Amendment to the Insolvency and Bankruptcy Code (IBC).

Issue-wise Detailed Analysis:

1. Reduction of Appellant's Claim and Voting Share in the COC:
The Appellant filed Company Appeal (AT) (Ins) No.552 of 2019 against the order dated 25th April 2019, which dismissed I.A. 665 of 2018 and I.A. 52 of 2019. The Appellant's claim was reduced, and their voting share in the COC was decreased. The Appellant, a non-banking financial company, entered into multiple loan agreements with the Corporate Debtor and its group companies. A Loan-cum-Hypothecation Agreement dated 22nd September 2016 rescheduled and restructured the total dues to Rs. 23.50 Crores, with Rs. 10 Crores to be repaid in cash and Rs. 13.50 Crores to be paid by issuing 52 Lakhs equity shares. The Appellant claimed these shares were held as security. However, the Adjudicating Authority found that the shares were transferred to the Appellant's demat account, making the Appellant the absolute owner. Consequently, the Resolution Professional (RP) was justified in reducing the claim by Rs. 10.40 Crores, the value of the shares. The Adjudicating Authority dismissed the Appellant's applications, and the appeal was also dismissed, finding no error in the reduction of the claim and voting share.

2. Approval of the Resolution Plan Without Considering the 2019 Amendment to IBC:
The Appellant filed Company Appeal (AT) (Ins) No.976 of 2019 against the approval of the Resolution Plan by the Adjudicating Authority on 31st July 2019. The Appellant argued that the Resolution Plan was approved without considering the 2019 Amendment to IBC, which entitles dissenting financial creditors to a minimum amount equivalent to the liquidation value. The Appellant claimed the average liquidation value of its securities was Rs. 12.98 Crores, but only Rs. 8.64 Crores was approved. The Resolution Professional confirmed that the average liquidation value of the secured assets was Rs. 12.86 Crores. However, under the amended Section 30(2)(b)(ii) of IBC, the Appellant was entitled to Rs. 8.60 Crores, which was provided in the Resolution Plan. The Tribunal found no substance in the challenge to the Resolution Plan but ordered that the Appellant be paid Rs. 8.60 Crores on priority.

Conclusion:
The appeals were disposed of with the Tribunal upholding the reduction of the Appellant's claim and voting share and partially allowing the second appeal to ensure the Appellant is paid Rs. 8.60 Crores on priority under the approved Resolution Plan.

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