2026 (1) TMI 725 - AT - IBC

Classification of claim as financial debt u/s5(8) IBC - RP's creditor list binding; plan upheld, appeal dismissed; DRT execution allowed

Whether the appellant's claim constituted 'financial debt' under s.5(8) IBC and thus should have been classified as a financial creditor: the Tribunal ... Approval of Resolution Plan - financial debt within the meaning of Section 5, sub- section (8) of the IBC or not - claim of the Appellant was accepted as ‘other creditors’ on the total principal amount and the treatment of the Appellant has been given in the approved Resolution Plan as other creditors - HELD THAT:- In the case of Greater Noida [2024 (2) TMI 681 - SUPREME COURT (LB)], the Greater Noida has filed an IA challenging to the categorization of it as an Operational Creditor, in which the Greater Noida claimed it to be a secured creditor. An IA No.344 of 2021 was filed by Greater Noida, challenging the decision of the RP, which came to be rejected by the NCLT. The Appeal having been dismissed by NCLAT, an Appeal was filed in the Hon’ble Supreme Court. In the present case, the categorization regarding non-inclusion of the Appellant as Financial Creditor in a class was never questioned by the Appellant, although List of Creditors was uploaded by RP, where Appellant was not included as creditor in a class. Further, the Appeal has been filed challenging the order approving the Resolution Plan, which has been submitted on the basis of List of Creditors as uploaded by the RP and shared with the Resolution Applicant formulating the Resolution Plan on the basis of List of Creditors as shared. The Appellant’s claim was included in the category of other creditors, hence, the treatment of the Appellant in the Plan was in other creditors. The treatment of the Appellant in the category of other creditors, cannot be said to violate the provision of Section 30, sub-section (2) of the IBC. Reliance also placed on judgment of this Tribunal in Canara Bank vs. Sh. Vivek Kumar [2025 (5) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI]. In the above case, Canara Bank has filed its claim in Form-C as Financial Creditor on the basis of it having given housing loan to the Borrower for purchasing residential units. The RP rejected the claim of Canara Bank as Financial Creditor, which was challenged by filing IA No.836 of 2023, which came to be rejected on 10.02.2023, which order came to be challenged before this Tribunal and this Tribunal by its judgment dated 09.01.2025 allowed the Appeal and set aside the order and remitted the matter to NCLT for reassessment of the case. The judgment of this Tribunal in Canara Bank is distinguishable from the present case due to two distinguishing features. Firstly, the Canara Bank filed its claim as a Financial Creditor and RP having rejected the claim as Financial Creditor, the decision of RP was agitated by filing an IA No.836 of 2023, which was rejected by the Adjudicating Authority giving rise to the Appeal. In the Canara Bank’s case, the Resolution Plan was not approved and the said matter was still pending before the Adjudicating Authority, whereas in the Appeal before us, challenge to the Appellant in other creditors on the basis of List of Creditors uploaded by the RP, was never questioned by the Appellant - the judgment of this Tribunal in Canara Bank relied by the Appellant is clearly distinguishable and does not help the Appellant. There are no ground to interfere with the order dated 24.04.2023 approving the Resolution Plan in the CIRP of the CD - the approval of Resolution Plan and treatment of the claim of the Appellant in the Resolution Plan of the CD, shall not preclude the Appellant from taking steps for execution of Decree obtained from Debt Recovery Tribunal against the Borrower. Appeal dismissed. Issues: Whether the Court should interfere with the Adjudicating Authority's order approving the resolution plan and the treatment of a claimant as an 'other creditor' (rather than a financial creditor) when the claim was filed and admitted in the category of other creditors and the claimant did not earlier challenge its categorisation before the Adjudicating Authority.Analysis: The Court examined whether the resolution plan complied with statutory requirements in Section 30(2) of the Insolvency and Bankruptcy Code and whether there were grounds to disregard the commercial wisdom of the Committee of Creditors in approving the plan. The Court noted that the claimant had filed its claim as an other creditor and that the List of Creditors published during CIRP did not include the claimant as a creditor in a class (financial creditors). The claimant's interlocutory application questioned only partial admission of the monetary claim and was not listed or decided prior to approval of the plan. The Court applied the principle of limited judicial scrutiny of a resolution plan, recognising that interference is permissible only where the plan fails to meet the specific requirements of Section 30(2) or otherwise contravenes law. The Court distinguished precedents where the claimant had timely challenged categorisation or where the plan omitted material information affecting a creditor's right to participate in CoC deliberations. In the present facts, the treatment of the claimant as an other creditor in the approved plan was based on the List of Creditors used by the resolution applicant and was not shown to violate Section 30(2) or other statutory requirements. The Court also observed that the claimant remained free to pursue execution of any decree obtained against the borrower outside the CIRP.Conclusion: The appeal is dismissed and there is no interference with the Adjudicating Authority's order approving the resolution plan; the challenge to the claimant's categorisation as an other creditor is not sustained. The claimant is not prevented from pursuing execution of its decree against the borrower.