TaxTMI 
TaxTMI 
2019 (9) TMI 894
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....d Bankruptcy Code, 2016 ("I&B Code" for short), the revised 'Resolution Plan' submitted by Mr. Rahul Jain has been approved by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi by impugned order dated 17th October, 2018. The Appellant- 'Hero Fincorp Limited'- ('Financial Creditor') has challenged the approved plan as discriminatory. 2. According to the learned counsel for the Appellant, 'Hero Fincorp Limited' is a 'Secured Financial Creditor', but it has been discriminated with similarly situated 'Financial Creditors'. 3. It was submitted that other 'Secured Financial Creditors' have been provided with higher percentage of their claim amount, whereas the Appellant- 'Hero Fincorp Limited' has been allowed lesser percentage of its admitted claim. 4. Learned counsel appearing on behalf of the 'Successful Resolution Applicant' (now 'Corporate Debtor') submitted that the 'Committee of Creditors' in its meeting held on 13th March, 2018 with the majority of 78.55% of their voting shares approved the 'Revised Resolution Plan'. In terms of the 'Resolution Plan', the 'Successful Resolution Applicant' has offered upfront payment of Rs. 54 Crores a....
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.... 0.44 0.44 0.44 0.44 24.58 Kotak Mahindra Prime Ltd. 11.43 2.85 2.85 2.85 2.85 24.93 M&M Financial Services Ltd. 7.45 1.86 1.86 1.86 1.86 24.97 Total Car Loan 33.33 8.31 8.31 8.31 8.31 24.93 % of claim in total FCs claim (D) 0.29 D. Total Secured Financial Creditors 11908.73 3606.27 4400.65 4971.45 5226.67 E. Unsecured Loan from NBFC 429.68 0 21.49 21.49 21.49 5.00 F. Unsecured Loan other than NBFC 775.54 0 38.77 38.77 38.77 5.00 G. Total Financial Creditors: (A+B+C) 13112.16 4460.91 5031.71 5286.93 H. Operationa l Creditors & WC 0 93.09 68.29 113.07 I. Total Fund offered to be infused 4554.00 5100.00 5400.00 5. From the tabulated chart given by the 'Successful Resolution Applicant'/ 'Corporate Debtor', w....
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.... the Resolution Plan should provide liquidation value to the 'Operational Creditors' (clause (b) of regulation 38(1)) or liquidation value to the dissenting Financial Creditors (clause (c) of regulation 38(1)). Such regulation being against Section 240 (1) cannot be taken into consideration and any Resolution Plan which provides liquidation value to the 'Operational Creditor(s)' or liquidation value to the dissenting 'Financial Creditor(s)' in view of clause (b) and (c) of Regulation 38(1), without any other reason to discriminate between two set of creditors similarly situated such as 'Financial Creditors' of the 'Operational Creditors' cannot be approved being illegal." 9. The aforesaid Regulation 38 also fell for consideration before this Appellate Tribunal in "Binani Industries Limited v. Bank of Baroda & Anr.─ Company Appeal(AT) (Insolvency) No. 82 of 2018 etc." wherein this Appellate Tribunal held: "28. Therefore, the Appellant- 'Rajputana Properties Private Limited' cannot take plea that dissenting 'Financial Creditors' can be discriminated on the basis of Regulation 38. At this stage, it is desirable to notice that after the decision of this Appellate Trib....
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.... resolution plan shall be given priority in payment over financial creditors. (1-A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor. 72. The aforesaid Regulation further strengthens the rights of operational creditors by statutorily incorporating the principle of fair and equitable dealing of operational creditors' rights, together with priority in payment over financial creditors." 12. The impugned order approving the 'Resolution Plan' has been passed by the Adjudicating Authority on 17th October, 2018, but the Adjudicating Authority failed to notice that no 'Resolution Plan' can be approved discriminating the dissenting 'Financial Creditor' in terms with the post amended Regulation 38. It also failed to notice that this Appellate Tribunal much prior to the same, declared the un-amended (old) Regulation 38(1) (c), which stipulated liquidation value for the dissenting 'Financial Creditor', as illegal which resulted in amendment of Regulation 38. 13. In "Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors." (Supra), t....
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....U banks had higher stake in total claim value and liquidated value of assets. Having security of fixed assets, plant & machinery, debtors, inventory & personal guarantee etc. 5. NBFCs were having only security against specific Plant & Machinery & personal guarantee of promoters. 6. Resolution Plan has been fully implemented and financial creditors (except Hero Fincorp) have released the security to the Corporate Debtor. 18. Learned counsel appearing on behalf of the 'Successful Resolution Applicant' as also counsel for the 4th & 5th Respondents relied on amended Section 30(2) (b) of the Insolvency and Bankruptcy Code (Amendment) Act 2019, (26 of 2019) which came into force on 16th August, 2019 and read as follows: "30. Submission of resolution plan.─ Xxx xxx &....
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.... not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;" 19. It was submitted that as per Section 30 (2) (b) (ii), the 'Resolution Plan' allows to treat the 'Financial Creditors', who do not vote in favour of the 'Resolution Plan' separately. However, they have failed to notice that as per amended Section 30(2) (b) (ii), 'Resolution Applicant' may treat the dissenting 'Financial Creditor', but such treatment can be given in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the 'Corporate Debtor'. 20. The Insolvency and Bankruptcy Board of India has not provided for separate treatment to dissenting 'Secured Financial Creditors' who do not vote in favour of the 'Resolution Plan'. No such amendment has ....