TaxTMI 
TaxTMI 
2020 (4) TMI 513
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....18 along with CA(IB) Nos.366 & 367/KB/2019 on 9th May, 2019. The Resolution Plan, which has been approved, copy of the same has been filed by the Resolution Professional at Annexure - H with his Reply - Diary No. 13489. Inter alia, the contention of the Appellant is that the Resolution Plan approved is not in compliance with the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC - in short); that the provision of paying NIL amount to the Operational Creditors is not as per provisions of IBC and the law laid down in the Judgements of Hon'ble Supreme Court and this Tribunal; that the Operational Creditors deserved a similar treatment as Financial Creditors; that it is wrong on the part of Committee of Creditors (COC - in short) to approve a Resolution Plan which provided for payment only to members of the Committee and no other stakeholders. 2. The Operational Creditors - M/s. Navkar Transcare Pvt. Ltd. as well as one M/s. Veer Steel Processors have also sought to intervene raising similar grounds. 3. The Respondent No. 1 - Resolution Professional has filed Reply (Diary No. 13489) giving details as to how the CIRP proceeded and how the Respondents 4 and 5 submitted the....
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....;s dues also. However, we are keeping in view what is shown in the approved Resolution Plan (Plan Pages.33 and 34) where the plan proposed to pay the workmen/employees after verifying documentary evidence and other aspects as mentioned in the concerned pages. 5. Respondents 4 and 5 have also filed their Reply (Diary No. 13260) and opposed the Appeal and in substance are claiming that the Committee of Creditors took a commercial decision while accepting the Resolution Plan and the Resolution Plan meets requirements of the provisions of IBC and they are relying on the observations of the Adjudicating Authority for accepting the Resolution Plan. 6. On 11th November, 2019 when this Appeal had come up before us, the parties made submissions and we had passed the following Order:- "ORDER 11-11-2019 Counsel for the Appellant and Counsel for Respondent Nos.4 and 5 state that in the Resolution Plan, there is reference to settling claims of the Operational Creditors. Counsel for Respondent Nos.4 and 5 states that the Resolution Professional needs to give calculation of the liquidation value which will water down for the Operational Creditors. He states that once the details are availab....
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....he Upfront Payment under the Proposed Resolution Plan to such extent (Difference between Resolution Plan Payment to Operational Creditors and the Liquidation Value of the Operational Creditors) to pay the Operational Creditors to the extent of Liquidation Value in priority to any financial creditors and in any event be made before the expiry of 30 (thirty) days after the approval of a Successful Applicant by the NCLT." 8. In written submission filed by the Respondents 4 and 5 (Diary No. 16548), it is claimed (in Para - 3.2) that considering the liquidation value and the divisions in terms of Section 30 and Section 53 of IBC and even as per the said calculations, the assets available for distribution to the Operational Creditors as per the aforesaid Sections would be NIL. Respondents 4 and 5 are then claiming that the Adjudicating Authority and this Appellate Tribunal have scope of limited interference in the business decisions of the majority of the Committee of Creditors. According to them, Adjudicating Authority or this Tribunal cannot enter into business decisions of the requisite majority of the Committee of Creditors as has been held in the Judgement in the matter of Committe....
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....9] 101 taxmann.com 389/152 SCL 365 and Para - 46 of the Judgement is important which is as follows:- "46. This is the reason why Regulation 38(1A) speaks of a resolution plan including a statement as to how it has dealt with the interests of all stakeholders, including operational creditors of the corporate debtor. Regulation 38(1) also states that the amount due to operational creditors under a resolution plan shall be given priority in payment over financial creditors. If nothing is to be paid to operational creditors, the minimum, being liquidation value - which in most cases would amount to nil after secured creditors have been paid - would certainly not balance the interest of all stakeholders or maximise the value of assets of a corporate debtor if it becomes impossible to continue running its business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. There is no doubt whatsoever that ....
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....tors. Mrs. Madhavi Divan is correct in her argument that Section 30(2)(b) is in fact a beneficial provision in favour of operational creditors and dissentient financial creditors as they are now to be paid a certain minimum amount, the minimum in the case of operational creditors being the higher of the two figures calculated under sub-clauses (i) and (ii) of clause (b), and the minimum in the case of dissentient financial creditor being a minimum amount that was not earlier payable. As a matter of fact, pre-amendment, secured financial creditors may cramdown unsecured financial creditors who are dissentient, the majority vote of 66% voting to give them nothing or next to nothing for their dues. In the earlier regime it may have been possible to have done this but after the amendment such financial creditors are now to be paid the minimum amount mentioned in sub-section (2). Mrs. Madhavi Divan is also correct in stating that the order of priority of payment of creditors mentioned in Section 53 is not engrafted in sub-section (2)(b) as amended. Section 53 is only referred to in order that a certain minimum figure be paid to different classes of operational and financial creditors. I....
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.... taken into account that Corporate Debtor needs to be kept a going concern; that maximising the value of assets is necessary and that the interest of all stakeholders including Operational Creditors has been taken care of. The Judgment says that the Adjudicating Authority should look into "reasons given by the Committee of Creditors while approving the Resolution Plan". 11. If the minutes of the Committee of Creditors dated 14-3-2019 is perused (copy of which has been filed by the Respondent No. 1 with Annexure - C (Page 21 at 24), it can be appreciated that the meeting was held on 14th March, 2019 and the COC took up the revised Resolution Plan submitted on the same date and approved it. The observations of the COC with regard to Item No. 4 and Item No. 5 recorded in the minutes are as under:- "Item No. 4 RP has informed the CoC Members that the Corporate Insolvency Resolution Process of Marsons Limited (CD) will expire on 15/03/2019. On 14/03/2019, the matter was listed for further consideration and Hon'ble NCLT has fixed hearing date on 18/03/2019. Therefore, Resolution Plan approved by CoC members is to be submitted to Hon'ble NCLT, Kolkata Bench, Kolkata on 15/03/....