Tribunal Upholds Insolvency Resolution Plan, Emphasizes Commercial Wisdom

The Tribunal affirmed the approval of the Resolution Plan by the Adjudicating Authority under Section 30 of the Insolvency and Bankruptcy Code, unanimously supported by the Committee of Creditors. It dismissed the Intervention Application by M/s. Alfa Technology & Services due to lack of proper representation. The Tribunal upheld the Resolution Plan's distribution as non-discriminatory, emphasizing the Commercial Wisdom of the Committee of Creditors. It concluded that the Operational Creditors were paid in accordance with the Code, dismissing the Appeal and suggesting a review for potential minimum entitlement for Operational Creditors beyond liquidation value.

---

---

Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority.
2. Dismissal of the Intervention Application by M/s. Alfa Technology & Services.
3. Alleged discrimination against Operational Creditors in the Resolution Plan.
4. Commercial wisdom of the Committee of Creditors (CoC).
5. Applicability of Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016.
6. Judicial review and scope of the Adjudicating Authority and Appellate Tribunal.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan by the Adjudicating Authority:
The Appeals challenged the Impugned Orders dated 04.11.2019 & 11.11.2019, wherein the Adjudicating Authority (NCLT, Mumbai Bench) approved the Resolution Plan under Section 30 of the Insolvency and Bankruptcy Code, 2016. The Resolution Plan was unanimously approved by 100% vote of the Members of the CoC.

2. Dismissal of the Intervention Application by M/s. Alfa Technology & Services:
MA 3432/2019, filed by M/s. Alfa Technology & Services seeking intervention in MA 3271/2019, was dismissed on the ground that the Applicant lacked locus standi due to the absence of a proper Power of Attorney. The Adjudicating Authority noted that the Applicants had not filed the proper Power of Attorney representing the other Petitioners.

3. Alleged discrimination against Operational Creditors in the Resolution Plan:
The Appellants, who are Operational Creditors, contended that the Resolution Plan was discriminatory as it provided 54.29% of the admitted Claim to Secured Financial Creditors, 11.42% to Unsecured Financial Creditors, 20% to Workmen and Employees, 100% to Farmers, and only 1% to the Appellants. The Tribunal found that Farmers, being integral to the Sugar Industry, were justifiably given 100% of the dues to ensure the Corporate Debtor remained a Going Concern.

4. Commercial wisdom of the Committee of Creditors (CoC):
The Tribunal emphasized that the Commercial Wisdom of the CoC is non-justiciable. It cited judgments such as 'K. Sashidhar Vs. Indian Overseas Bank & Ors.' and 'Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta,' which uphold the CoC's discretion in determining payments to different classes of Creditors.

5. Applicability of Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016:
The second Respondent argued that Operational Creditors were entitled to 'NIL' payment as per Section 30(2)(b) of the Code. The Tribunal agreed that the Resolution Plan adhered to the provisions of Section 30(2)(b) and Regulation 38 of the Corporate Insolvency Process Regulations, which entitles Operational Creditors to receive payments as per Section 53 of the Code.

6. Judicial review and scope of the Adjudicating Authority and Appellate Tribunal:
The Tribunal reiterated that the scope of judicial review by the Adjudicating Authority and Appellate Tribunal is limited to ensuring compliance with Section 30(2) of the Code. It cannot interfere with the Commercial Wisdom of the CoC. The Tribunal cited 'Kalpraj Dharamshi & Anr. Vs. Kotak Investment Advisors Ltd. & Anr.' to emphasize the limited judicial review available.

Conclusion:
The Tribunal dismissed the Appeal, affirming that the Operational Creditors were paid as per the Code and the Resolution Plan was approved by the CoC's Commercial Wisdom. The Tribunal suggested that the Government and IBBI may examine some minimum entitlement for Operational Creditors based on the amount realized in the Resolution Plan over and above the liquidation value.

---