TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 894
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.... 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 as against the asset value (Liquidation Value) of R....
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.... 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', we find that the Appellant- 'Hero Fincorp Limited' has been provided with 32.34% of its admitted claim as it has dissented with the plan. On the other hand, 'Tata Capital Financial Services Ltd.' has been provided with 75.63% of its admitted claim and other 'Financial Creditors' i.e. 'Indian Overseas Bank' has been provided with 45% of its admitted claim; the 'Bank of Baroda' has been provided with 45% of....
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....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 Tribunal in "Central Bank of India (Supra)" the Insolvency and Bankruptcy Board of India also amended/repealed the Regulation 38 aforesaid having found it discriminatory." 10. (Un-amended/ old) Regulation 38 having held to be discriminatory was substituted on 5th October, 2018 by new Regulation 38. Sub-clause (c) of clause (1) of Regulation 38 shows that the liquidation value payable to dissenting financial Creditors has been d....
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....gether 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), the Hon'ble Supreme Court observed that "the NCLAT while looking into viability and feasibility of resolution plans as approved by the committee of creditors, always gone into whether the operational creditors are given roughly the same treatment as financial creditors, and if they are not, such plans are either rejected or modified so that the operational creditors' rights are safeguarded". 14. In the present case, the 'Resolution Plan' approved by the 'Committee of Creditors'....
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....nt' 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 xxx (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan─ Xxx &nb....
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....er, 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 been made in Regulation 38 since amended Section 30(2) (b) came into force i.e. 16th August, 2019. 21. The Regulation 38 including clause (1A) therein as amended on 5th October, 2018 is still applicable, which reads as follows: "38. Mandatory contents of the resolution plan.─ (1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. [(1A) 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,....