2022 (4) TMI 208 - AT - Insolvency and Bankruptcy

Tribunal upholds Resolution Plan, emphasizes limited jurisdiction, Operational Creditors receive 4.48%. Previous appeal finality noted.

The Tribunal dismissed the Appeal, upholding the approved Resolution Plan and emphasizing the limited jurisdiction to interfere with the Committee of ... Seeking approval of the Resolution Plan - Section 31 of I&B Code - HELD THAT:- This Tribunal has a very limited jurisdiction to interfere except if there is any substantial evidence to establish that there was any material irregularity or if there was anything contrary to the law time being in force. The review is to be seen within the four corners of Section 30(2) of the Code only. Moreover, it is seen from the record that the Adjudicating Authority has approved the Resolution Plan way back on 10/07/2019 and the Resolution Plan has also been implemented and we do not wish at this belated stage to set the clock back, apart from holding that the Appellant cannot seek mandamus for directing the CoC to revisit its commercial wisdom at such a belated stage. This Appeal is dismissed. Issues Involved:1. Protection of Operational Creditors' interests.2. Commercial wisdom of the Committee of Creditors (CoC).3. Jurisdiction of the Tribunal to interfere with the CoC's decisions.4. Compliance with the Insolvency and Bankruptcy Code, 2016.Issue-wise Detailed Analysis:1. Protection of Operational Creditors' Interests:The Appellant argued that the interests of the Operational Creditors should be protected, referencing the Supreme Court's judgment in the case of 'Committee of Creditors of Essar India Limited' Vs. 'Satish Kumar Gupta & Ors.' The Appellant emphasized that the Code aims to ensure the Corporate Debtor operates as a going concern during the Insolvency Resolution Process, requiring payments to Operational Creditors. The Appellant contended that they were given a meager 4.48% of the total admitted claim, whereas Financial Creditors received significantly higher payments.2. Commercial Wisdom of the Committee of Creditors (CoC):The Respondent/CoC argued that the Resolution Plan was non-discriminatory and compliant with Sections 30(2) and 53 of the Code. They cited the Supreme Court's rulings in 'K Sashidhar' Vs. 'Indian Overseas Bank & Ors.' and 'Ghanashyam Mishra and Sons Private Limited' Vs. 'Edelweiss Asset Reconstruction Company Limited' to support their stance that the commercial wisdom of the CoC is not justiciable and should not be interfered with by the Tribunal.3. Jurisdiction of the Tribunal to Interfere with the CoC's Decisions:The Tribunal noted that its jurisdiction to interfere with the CoC's decisions is limited. The Tribunal can only review whether the Resolution Plan meets the requirements of Section 30(2) of the Code. The Tribunal emphasized that it cannot interfere with the commercial decisions of the CoC unless there is substantial evidence of material irregularity or actions contrary to the law.4. Compliance with the Insolvency and Bankruptcy Code, 2016:The Tribunal observed that the Resolution Plan provided for payments to Operational Creditors in a manner consistent with Section 53 of the Code. The total payments received by Financial Creditors under the Resolution Plan were 23.22% of the admitted claims, while direct Financial Creditors received 29.50% of their admitted debt. Given that the liquidation value of the Appellant's claim was 'NIL,' the Tribunal found the distribution in the Resolution Plan to be compliant with the Code.Conclusion:The Tribunal dismissed the Appeal, noting that the Resolution Plan had been approved and implemented, and it would not be appropriate to revisit the CoC's commercial wisdom at this late stage. The Tribunal also referenced a previous dismissal of a similar appeal against the same Impugned Order, which had attained finality. The Tribunal directed the Registry to upload the Judgment on its website and send a copy to the Adjudicating Authority.Final Order:The Appeal is dismissed with no order as to costs.