Tribunal Upholds Resolution Plan under Insolvency Law

The Tribunal upheld the resolution plan, finding it compliant with the Insolvency and Bankruptcy Code. It emphasized the commercial wisdom of the Committee of Creditors in approving the plan, ensuring operational creditors received at least the amount they would in liquidation. The Tribunal dismissed the appeal, with modifications to ensure compliance with West Bengal Electricity Regulatory Commission Regulations for a new power connection, including a fresh security deposit and applicable charges.

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Issues Involved:
1. Adequacy of claims settlement for operational creditors under the approved resolution plan.
2. Jurisdiction and applicability of WBERC Regulations concerning the Power Purchase Agreement (PPA) and past dues.

Detailed Analysis:

1. Adequacy of Claims Settlement for Operational Creditors:

The Appellant contested the approval of the resolution plan by the Adjudicating Authority (NCLT, Kolkata) on the grounds that it inadequately addressed the claims of operational creditors, specifically the Damodar Valley Corporation (DVC), which received only 0.16% of its admitted claims. The Appellant argued that the total dues, including arrears, amounted to Rs. 39,08,27,846, but the resolution plan only allocated Rs.0.14 crore for all operational creditors.

The Tribunal noted that the liquidation value of the corporate debtor was Rs. 6.52 crore, and in the event of liquidation, operational creditors would receive nothing due to the higher priority claims of financial creditors amounting to Rs. 411.16 crores. The resolution plan provided Rs.0.14 crore for operational creditors, which was proportionately distributed, with DVC receiving Rs.0.03 crore. This allocation was deemed compliant with Section 30(2)(b) of the IBC, which requires that operational creditors receive at least the amount they would get in liquidation.

The Tribunal emphasized the primacy of the commercial wisdom of the Committee of Creditors (CoC) in approving the resolution plan, as upheld by the Supreme Court in various judgments, including Ghanashyam Mishra & Sons Private Limited vs. Edelweiss Asset Reconstruction Company Ltd. and Pratap Technocrats (P) Ltd. vs. Reliance Infratel Ltd. The Tribunal concluded that the resolution plan's allocation to operational creditors was fair and equitable under the IBC framework.

2. Jurisdiction and Applicability of WBERC Regulations:

The Appellant argued that disputes regarding the PPA and past dues should be adjudicated under the Electricity Act and West Bengal Electricity Regulatory Commission (WBERC) Regulations, not under the IBC. The Appellant cited Supreme Court judgments in Embassy Property Developments Private Ltd. vs. State of Karnataka and Gujarat Urja Vikas Nigam Limited vs. Amit Gupta to support this claim.

The Tribunal distinguished the present case from Embassy Property Developments, noting that the dispute concerned pre-CIRP dues, which were addressed under the IBC in the resolution plan. The Tribunal held that the resolution plan's provisions, including the extinguishment of past dues and the requirement for a new power connection under WBERC Regulations, were appropriate. The Tribunal also clarified that the new connection would be subject to the prevailing tariff rates and conditions at the time of the agreement.

Conclusion:

The Tribunal upheld the resolution plan approved by the CoC and the Adjudicating Authority, finding no legal infirmity. The Tribunal confirmed that the resolution plan complied with the IBC provisions and that the commercial wisdom of the CoC in making business decisions should not be interfered with. The appeal was dismissed with modifications to ensure the new power connection complied with WBERC Regulations, requiring a fresh security deposit and other applicable charges.

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