NCLAT upholds resolution plan approval after full payment of provident fund and gratuity claims under Section 30(2) IBC

NCLAT dismissed an appeal challenging approval of a resolution plan. The tribunal held that since the entire admitted claim for provident fund and gratuity was paid in full under the resolution plan, there were no grounds to interfere with NCLT's approval. NCLAT emphasized its limited jurisdiction in reviewing plans approved by Committee of Creditors, restricted to examining compliance with Section 30(2) of IBC. Citing SC precedent, the tribunal noted that commercial wisdom of creditors' collective business decisions is non-justiciable. Finding full compliance with IBC provisions and no error by the adjudicating authority, the appeal was dismissed.

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Issues:
Challenge to order approving Resolution Plan; Rights of workmen in Resolution Plan; Compliance with IBC provisions.

Analysis:
The Appeal challenges the order approving the Resolution Plan filed by the Resolution Professional. The Resolution Plan was approved by the Adjudicating Authority, leading to the filing of this Appeal. The Appellant, a workers' union, raised concerns about the Resolution Plan not adequately securing the rights of the workmen, including continued employment and retiral benefits. The Appellant emphasized the importance of the Resolution Plan addressing provident fund and gratuity entitlements of the workers.

During the hearing, the Successful Resolution Applicant (SRA) filed an affidavit confirming the full admission and payment of the workmen's claims in the Corporate Insolvency Resolution Process (CIRP). The SRA assured that the Resolution Plan covered provident fund and gratuity dues at actuals, as outlined in the approved Plan. The affidavit detailed the payment of the entire admitted claim amount, including provident fund and gratuity, leaving no grounds for grievance by the Appellant.

The Adjudicating Authority found that the Resolution Plan adequately addressed the provident fund and gratuity dues of the Corporate Debtor, as stipulated in Clause 6.6 (iii) of the Plan. The jurisdiction of the NCLT and NCLAT in such matters is limited to verifying compliance with Section 30(2) of the IBC. Reference was made to a Supreme Court judgment highlighting the non-justiciability of the commercial decisions of the Committee of Creditors (CoC) in approving Resolution Plans.

Given the full admission and payment of provident fund and gratuity dues in the Resolution Plan, the Adjudicating Authority's approval was deemed compliant with the IBC provisions. Consequently, the Appeal was dismissed, and any pending Interlocutory Applications were disposed of without costs. The judgment reaffirmed the importance of upholding the decisions of the CoC within the framework of the IBC, emphasizing the non-justiciability of their commercial wisdom in the resolution process.

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