TaxTMI 
TaxTMI 
2020 (10) TMI 225
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....or the following reliefs: a) That this Hon'ble Tribunal be pleased to allow Miscellaneous Application filed by the Applicant and accordingly direct the Resolution Applicant to revise the Resolution Plan to the extent of revising and improving the settlement of claim amount to be offered to the Applicant and the 2nd charge holders as the offer of 0.5% on principal outstanding envisaged under the proposed Resolution Plan is very low; b) That this Hon'ble Tribunal be pleased to direct to the Resolution Applicant to increase the settlement of the claim amount of the Applicant; c) Pending the hearing and final disposal of the present Miscellaneous Application, this Hon'ble Tribunal be pleased to restrain the Resolution Professional from seeking approval of proposed Resolution Plan jointly submitted by Alpha Buildhome Pvt. Ltd. and M/s Constantia Corporate Shared Services Pvt. Ltd. d) This Hon'ble Tribunal be pleased to stay any further steps to be taken by Resolution Professional and the Committee of Creditors in the approval of Proposed Resolution Plan jointly submitted by Alpha Buildhome Pvt. Ltd. and M/s Constantia Corporate Shared Services Pvt. Lt....
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.... basis even the Operational Creditors were placed in a better position than the Second Charge Holders. 5. The Respondent No. 1 (R1) filed reply to the Application and contended as below: - a) The Corporate Debtor was non-functional since 2005 and the liquidation value of the assets of the Corporate Debtor is Rs. 4,00,00,000/- approximately and the Resolution Plan is for a sum of Rs. 32,28,00,000/-. b) It is a fact that in the 6th CoC meeting held on 22.01.2020, the issue of improvement of offer of 0.5% on the principal outstanding to the second charge holders was discussed and the Resolution Applicants were asked to consider an improvement in the offer. However, in the revised Resolution Plan submitted on 01.02.2020, the Resolution Applicants only added a note stating that the settlement amount of Rs. 11,03,24,869/- under the distribution of payment to Financial Creditors may be made as mutually agreed by the CoC and in fact the Resolution Applicants have not made any improvement in the offer of 0.5% proposed to the second charge holders. However, the Resolution Plan was approved by the CoC with a voting share of 93.06%. c) The Plan has been approved w....
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....e, the Applicant may hardly get any amount. 7. On hearing the Counsel for the Applicant and Respondents and ongoing through the pleadings the following are the observations of this Bench: a) Admittedly the liquidation value payable to the Applicant is "NIL". However, in the distribution mechanism as provided in the Resolution Plan, the Applicant is getting a sum of Rs. 1,81,676/- b) Even though the Resolution Applicants have agreed to consider the improvement of payment for the second charge holders, the Resolution Applicants after consideration informed the CoC that any improvement has to be made by CoC only and they are not in a position to improve offer of payment to creditors of Rs. 11,03,24,869/-. So, the request of the second charge holders was not considered by the Resolution Applicants as well as the CoC while deciding the distribution pattern. c) The Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. (MANU/SC/1577/2019), has held that the CoC is sufficiently empowered to decide the manner of distribution of funds proposed in the Resolution Plan, after taking into consideration the securit....
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....t the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operation....
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.... plan. This being so, it is also not possible to accept the submission of Shri Sibal, that "feasibility and viability" of a resolution plan will not include distribution of the amount of debt under the said plan.... All that was left for distribution by ArcelorMittal was distribution inter se between secured financial creditors which was then done by a majority of 92.24%, as has been seen above based upon the value of their respective security interests.... ... 92....Full freedom and discretion has been given, as has been seen hereinabove, to the Committee of Creditors to so classify creditors and to pay secured creditors amounts which can be based upon the value of their security, which they would otherwise be able to realise outside the process of the Code, thereby stymying the corporate resolution process itself. ... 94.The NCLAT judgment which substitutes its wisdom for the commercial wisdom of the Committee of Creditors and which also directs the admission of a number of claims which was done by the resolution applicant, without prejudice to its right to appeal against the aforesaid judgment, must therefore be set aside." d) Section....