Tribunal Upholds Resolution Plan Despite Procedural Lapses

The Tribunal upheld the approved resolution plan despite the Resolution Professional's failure to comply with mandatory notice provisions under Section 24(3)(c) of the Insolvency and Bankruptcy Code. The Operational Creditors' claims were not sufficient to impact the plan's validity, as they lacked voting rights as per Section 24(4). The RP was found to have neglected duties by not issuing notices, resulting in a penalty of Rs. 1 Lakh to be paid to the appellants. The appeal was resolved in favor of the approved resolution plan, with the RP facing consequences for non-compliance.

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Issues Involved:
1. Compliance with Section 24(3)(c) and Section 24(4) of the Insolvency and Bankruptcy Code (IBC).
2. Validity of the approved resolution plan.
3. Dereliction of duty by the Resolution Professional (RP).

Summary:

Issue 1: Compliance with Section 24(3)(c) and Section 24(4) of the IBC
The appellants, who are Operational Creditors, argued that the RP failed to comply with Section 24(3)(c) of the IBC by not issuing notice to them for meetings of the Committee of Creditors (CoC), despite their claims exceeding 10% of the total debt. The Tribunal acknowledged that Section 24(3)(c) mandates the RP to give notice of each CoC meeting to Operational Creditors if their aggregate dues are not less than 10% of the debt. The Tribunal emphasized that the provision is mandatory and non-compliance constitutes a dereliction of duty by the RP.

Issue 2: Validity of the Approved Resolution Plan
Despite the non-compliance with Section 24(3)(c), the Tribunal decided not to set aside the resolution plan, which was approved by a 96.38% voting share of the CoC. The Tribunal noted that the Operational Creditors, even if present in the meetings, would not have had the right to vote as per Section 24(4) of the IBC. The Tribunal also considered the appellants' claim that they might have received an additional 1-2% of the amount, which was deemed too meager to invalidate the resolution plan.

Issue 3: Dereliction of Duty by the RP
The Tribunal found that the RP's failure to issue notices to the Operational Creditors constituted a dereliction of duty. Consequently, the RP was ordered to pay costs of Rs. 1 Lakh to the appellants in equal proportion within 30 days.

Conclusion:
The appeal was disposed of with the Tribunal affirming the resolution plan approved by the CoC, while also penalizing the RP for non-compliance with mandatory notice provisions under Section 24(3)(c) of the IBC.

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