Tribunal Upholds Approved Resolution Plan, Rejects Modification Applications

The Tribunal dismissed the Applications seeking modification of payment terms under the Resolution Plan, emphasizing the binding nature of an approved Resolution Plan and equitable treatment of creditors as per the Insolvency and Bankruptcy Code. The Tribunal highlighted that once a Resolution Plan is approved, it is frozen and binding on all stakeholders, including Financial Creditors. The Applications were rejected based on this principle, with the Tribunal emphasizing fair and equitable distribution to all creditors and the commercial decisions governed by the Resolution Plan.

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Issues:
1. Discrimination in payment under the Resolution Plan based on the Assenting and Dissenting/Abstaining Financial Creditor.
2. Jurisdiction of the Adjudicating Authority to modify an approved Resolution Plan.
3. Treatment of Dissenting Financial Creditors in the payment of debts under the Insolvency and Bankruptcy Code.
4. Invocation of Bank Guarantee and its impact on the Resolution Plan.

Issue 1: Discrimination in Payment under Resolution Plan:
The Tribunal addressed the issue of discrimination in payment under the Resolution Plan based on the Assenting and Dissenting/Abstaining Financial Creditors. The Applicants sought modification to treat all Secured Financial Creditors equally for payment of the plan value. The Tribunal examined the provisions of the Insolvency and Bankruptcy Code, emphasizing equitable treatment to each creditor based on their class. It was noted that the Code does not intend to discriminate between Assenting and Dissenting Financial Creditors. The Tribunal considered the judgments in relevant cases and concluded that the prayers for modification were liable to be rejected, ultimately dismissing the Applications.

Issue 2: Jurisdiction to Modify an Approved Resolution Plan:
The Respondent argued that the Applications were not maintainable as the Adjudicating Authority lacked jurisdiction to modify an approved Resolution Plan. The Tribunal considered the Respondent's contentions and highlighted that once a Resolution Plan is duly approved by the Adjudicating Authority, it stands frozen and binding on all stakeholders, including Financial Creditors. Referring to a Supreme Court judgment, the Tribunal emphasized that claims as provided in the Resolution Plan are binding on all stakeholders. Consequently, the Tribunal rejected the Applications based on this principle.

Issue 3: Treatment of Dissenting Financial Creditors:
The Tribunal analyzed Section 30(2)(b) of the Insolvency and Bankruptcy Code, which outlines the payment of debts of Dissenting Financial Creditors in the event of liquidation. The provision mandates fair and equitable distribution to such creditors. The Tribunal observed that any increase in the claim amount of Assenting Financial Creditors due to Bank Guarantee invocation was a commercial decision of the Committee of Creditors. The decision to include the invoked amount of the Bank Guarantee to fund-based debts was deemed a commercial decision, and the Resolution Plan's terms governed such matters.

Issue 4: Invocation of Bank Guarantee and its Impact:
The Respondent highlighted the terms of the Resolution Plan regarding Bank Guarantee invocation and its impact on the Resolution Plan. The Tribunal noted that any revision in the amounts of Assenting Financial Creditors due to Bank Guarantee invocation was as per the terms of the Resolution Plan. Referring to a specific clause in the Resolution Plan, the Tribunal emphasized that the Resolution Plan, once approved, stands frozen and binding on all stakeholders, including Financial Creditors. Therefore, the Tribunal rejected the Applications, citing the frozen nature of the Resolution Plan post-approval.

In conclusion, the Tribunal dismissed the Applications seeking modification of the payment terms under the Resolution Plan, emphasizing the binding nature of an approved Resolution Plan and the equitable treatment of creditors as per the Code's provisions.

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