Tribunal Upholds Resolution Plan under IBC, Emphasizes Legal Compliance & Stakeholder Interests

The tribunal affirmed the resolution plan, finding it compliant with the IBC. Judicial review was limited to ensuring legal compliance and stakeholder interests. The appeal challenging the plan's approval was dismissed as the concerns raised were deemed irrelevant.

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Issues Involved:

1. Contravention of laws in the approved resolution plan.
2. Disparity in treatment between operational creditors and financial creditors.
3. Legality of provisions for future dues and fresh electricity connection in the resolution plan.
4. Compliance of the resolution plan with Section 30(2) of the IBC.
5. Judicial review and commercial wisdom of the Committee of Creditors (CoC).

Detailed Analysis:

1. Contravention of laws in the approved resolution plan:

The Appellant/DVC argued that the approved resolution plan contravenes existing laws, specifically the extant laws regarding the supply of electricity, and hence should be quashed. The Appellant highlighted that future dues have been waived in the resolution plan, which is not legally tenable. The resolution plan included provisions for deemed renewal of licenses and fresh power connections which the Appellant contended were beyond the legal scope of the Insolvency and Bankruptcy Code (IBC).

2. Disparity in treatment between operational creditors and financial creditors:

The Appellant contended that the resolution plan arbitrarily favored financial creditors over operational creditors. The Appellant received a meager amount against its substantial admitted claim, arguing that the disparity was without any concrete reason and violated the principles laid down in Section 30(2) of the IBC. The Appellant also highlighted that the treatment of operational creditors in the resolution plan did not meet the requirements of Regulation 38(1)(a) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

3. Legality of provisions for future dues and fresh electricity connection in the resolution plan:

The Appellant argued that the resolution plan's provisions for future dues and fresh electricity connections were not in accordance with the legal provisions under the Electricity Act and WBERC Regulations. The Appellant cited specific paragraphs of the resolution plan that directed the restoration of essential services and fresh power connections, which they claimed could not be mandated through the resolution plan under the IBC.

4. Compliance of the resolution plan with Section 30(2) of the IBC:

The Appellant asserted that the resolution plan did not satisfy the conditions laid out in Section 30(2) of the IBC, particularly subsections (b) and (e), which pertain to the payment of debts to operational creditors and compliance with the provisions of law. The Appellant argued that the adjudicating authority's approval of the resolution plan lacked a detailed examination of its terms and did not ensure compliance with the legal requirements.

5. Judicial review and commercial wisdom of the Committee of Creditors (CoC):

The Respondents argued that the resolution plan was compliant with the IBC provisions and had been approved by the CoC, whose commercial wisdom is paramount and beyond judicial review except within the limited scope defined by Section 30(2) of the IBC. They cited the Supreme Court's judgment in the case of India Resurgence ARC Private Limited vs. Amit Metaliks Ltd. & Another, which upheld the resolution plan and emphasized the limited scope of judicial review of CoC's decisions.

Judgment:

The tribunal noted that the resolution plan had been affirmed by the Supreme Court, which found it compliant with the IBC provisions. The tribunal emphasized the limited scope of judicial review, which is confined to ensuring that the resolution plan does not contravene any provisions of law and that the interests of all stakeholders, including operational creditors, are taken care of. The tribunal also noted the Respondents' statement that the Successful Resolution Applicant was not interested in seeking a fresh electricity connection from the Appellant/DVC, rendering the Appellant's concerns about future dues and fresh connections irrelevant.

In light of these findings, the tribunal dismissed the appeal, stating that the challenge to the approval of the resolution plan could not be sustained and that the grievance regarding the directions for a new connection was irrelevant. The appeal was disposed of without any order as to costs.

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