TaxTMI 
TaxTMI 
2023 (7) TMI 213
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....dvocates for R-2. Mr. Namit Saxena and Mr. Avnish Maithani, Advocates for R-3. Mr. Aditya Vikram Singh and Mr. Vasu Manchanda, Advocates for R-4. Ms. Ankita Bajpai, Advocate for R-1. JUDGMENT ASHOK BHUSHAN , J : 1. These two Appeals raising common questions of fact and law have been heard together and are being decided by this common Judgment. 2. Company Appeal (AT) Ins. No. 613 of 2022 has been filed challenging the Order dated 03.02.2022 passed by National Company Law Tribunal, Cuttack Bench by which order the Application filed by the Resolution Professional for approval of the Resolution Plan has been allowed and the Resolution Plan submitted by the Resolution Applicant has been approved. 3. Company Appeal (AT) Ins. No. 795 of 2022 has been filed against the Order dated 07th April, 2022 passed by National Company Law Tribunal, Kolkata Bench by which order the Resolution Plan submitted by the Resolution Applicant has been approved by the Adjudicating Authority. 4. We may now proceed to notice the brief facts giving rise to these Appeals. 5. Company Appeal (AT) Insolvency No. 613/2022: -Corporate Insolvency Resolution Process was initiated against the Corporate Debtor by....
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....rocess for Corporate Persons) Regulations, 2016, Operational Creditor must be given fair and equitable treatment in the distribution of the amount whereas the amount allocated to the Appellant in both the Appeals is 0.5 and 1% respectively of their entire admitted claim. It is submitted that Resolution Plan approved by the Adjudicating Authority is discriminative in the distribution of the proposed amount to the Operational Creditor vis-à-vis Financial Creditors. Financial Creditors have been given much higher amount. It is further submitted that Resolution Plan is in contravention of the OERC Distribution (Conditions of Supply) Code, 2019. It is submitted that Electricity Charge is a charge under the premises which is recoverable from the licensee/supplier. It is submitted that payment of electricity charge thus can not be denied as per the Regulations framed under the Electricity Act, 2003. Electricity Charge is statutory dues. The challenge for Commercial Wisdom of the CoC can be entertained by this Court in exercise of its jurisdiction. This Court can interfere in the Impugned Order to protect the interest of the Operational Creditors. 9. Learned Counsel appearing for R....
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....qual to those workmen dues. The Operational Creditor can not claim payment equal to the Financial Creditor which is law well settled. We may refer to the Judgement of the Hon'ble Supreme Court in 2020 8 SCC 531, CoC of Essar Steel India Ltd. Vs. Satish Kumar Gupta & Ors. where the Hon'ble Supreme Court has laid down that equality in the payment under the Resolution Plan has to be under some class of creditors. In paragraph 88 and 90, following has been laid down: "88. By reading paragraph 77 (of Swiss Ribbons) de hors the earlier paragraphs, the Appellate Tribunal has fallen into grave error. Paragraph 76 clearly refers to the UNCITRAL Legislative Guide which makes it clear beyond any doubt that equitable treatment is only of similarly situated creditors. This being so, the observation in paragraph 77 cannot be read to mean that financial and operational creditors must be paid the same amounts in any resolution plan before it can pass muster. On the contrary, paragraph 77 itself makes it clear that there is a difference in payment of the debts of financial and operational creditors, operational creditors having to receive a minimum payment, being not less than liquidation value, ....
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....bsp; .... 6. Other Debts and Dues Total Quite clearly, secured and unsecured financial creditors are differentiated when it comes to amounts to be paid under a resolution 98 plan, together with what dissenting secured or unsecured financial creditors are to be paid. And, most importantly, operational creditors are separately viewed from these secured and unsecured financial creditors in S.No.5 of paragraph 7 of statutory Form H. Thus, it can be seen that the Code and the Regulations, read as a whole, together with the observations of expert bodies and this Court's judgment, all lead to the conclusion that the equality principle cannot be stretched to treating unequals equally, as that will destroy the very objective of the Code - to resolve stressed assets. Equitable treatment is to be accorded to each creditor depending upon the class to which it belongs: secured or unsecured, financial or operational." 14. The principle of equality is applicable only in same class of creditors. 15. This Tribunal in a case arising out of similar facts in Comp....
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....ection 30(2)(b) of the Code, inasmuch as it provided for a minimum payment of a "liquidation value" to the operational creditors and nothing more, and concluded as follows: "18. value guaranteed to operational creditors under a resolution plan 18.1. Section 30(2)(b) of the Code requires the RP to ensure that every resolution plan provides for payment of at least the liquidation value to all operational creditors. Regulation 38(1)(b) of the CIRP Regulations provides that liquidation value must be paid to operational creditors prior in time to all financial creditors and within thirty days of approval of resolution plan by NCLT. The BLRC Report states that the guarantee of liquidation value has been provided to operational creditors since they are not allowed to be part of the CoC which determines the fate of the corporate debtor. (BLRC Report, 2015). 18.2. However, certain public comments received by the Committee stated that, in practice, the liquidation value which is guaranteed to the operational creditors may be negligible as they fall under the residual category of creditors under Section 53 of the Code. Particularly, in the case of unsecured operational creditors, it was....
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....nd nature of the creditors. Similarly, the approved resolution plan in Alchemist Asset Reconstruction Co. Ltd. v. Hotel Gaudavan (P) Ltd. [Alchemist Asset Reconstruction Co. Ltd. v. Hotel Gaudavan (P) Ltd., 2017 SCC OnLine NCLT 13223] provided for payment of all existing dues of the operational creditors without any write-off. The Committee felt that the interests of operational creditors must be protected, not by tinkering with what minimum must be guaranteed to them statutorily, but by improving the quality of resolution plans overall. This could be achieved by dedicated efforts of regulatory bodies including the IBBI and Indian Banks' Association. 18.5. [Ed.: The matter between two asterisks has been emphasised in original.] Finally, the Committee agreed that presently, most of the resolution plans are in the process of submission and there is no empirical evidence to further the argument that operational creditors do not receive a fair share in the resolution process under the current scheme of the Code. Hence, the Committee decided to continue with the present arrangement without making any amendments to the Code. [Ed.: The matter between two asterisks has been emphasis....
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.... different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors." 16. This tribunal had noticed about the meagre payment to Operational Creditor in most of the Resolution Plan. Tribunal has made observations in the said judgment drawing attention to the fact of the legislative scheme and to consider as to whether any changes are required or not. Following has been observed in Paragraph 31 of above Judgment: "31. The Operational Creditors normally had claims pertaining to supply made to the Corporate Debtor, which amounts normally as compared to the Financial Creditors' claim are less. Operational Creditors consist of various type of industries including MSMEs, public sector organization and small entities. Altogether denying their claim or receiving ineligible amount in the Resolution Plan causes hardship and misery to the Operational Creditors. Even the statutory dues, which by virtue of law as it exists today are dealt in the same manner, resulting in no payment or negligible payment and some time even less than ....