TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 1656
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....ajaj, Advocates. JUDGMENT PER: SHREESHA MERLA, MEMBER (T) 1. Challenge in these Appeals under Section 61(3) of the Insolvency and Bankruptcy Code, 2016 (herein referred as 'the Code') is to the Impugned Order dated 17.10.2019 passed by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad) in I.A. No. 703 of 2019 in C.P. (IB) NO. 275/7/HDB/2018. By the Impugned Order, the Adjudicating Authority has allowed the IA filed by the RP seeking approval of the Resolution Plan; observing that it meets the requirement as referred to in Section 30(2) of the Code. 2. Succinctly put, the facts in brief are that the Adjudicating Authority has admitted CP (IB) No. 275/7/HDB/2018 vide order dated 09.11.2018 filed by Indian Opportunities III Pte Limited and one another and initiated Corporate Insolvency Resolution Process (CIRP) against the 'Corporate Debtor' 'M/s Sai Wardha Power Generation Limited'. Mr. V Venkatachalam was appointed as the Resolution Professional (RP). The RP preferred I.A. No. 703 of 2019 under Section 30 (6) and 31 of the Code r/w Regulation 39(4) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 r/w Rule 11 of N....
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....ifiable. * It is submitted that the Appellant was never informed about any of the proceedings being conducted by the Resolution Professional or by the CoC. A copy of the Resolution Plan was also not supplied to the Appellant. The Appellant was denied participation and information about the entire process of the CIRP. * The Adjudicating Authority failed to appreciate that the Resolution Plan is in contravention of the law time being in force and also failed to appreciate that the plan had discriminated amongst the Financial Creditors and Operational Creditors. There are material irregularities in the exercise of the powers of the RP. The classification of the Appellant as 'Other Operational Creditors' other than employees and workman is illegal and the Adjudicating Authority has erroneously allowed and approved this Resolution Plan which is in contravention of the provisions of the Code. * It is strenuously argued that such an unfair discrimination made out against the Appellant is totally unjustifiable. The RP admitted a claim of Rs. 5002,48,82,331. The Financial Creditors were paid an amount of Rs. 635,00,00,000 against an admitted claim of Rs. 1844.69 Crores, of which the O....
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....tion for filing the Application has been stated to be the execution of the PPA i.e. on February 2, 2020, but the approval of the Resolution Plan and successful implementation is prior to the execution of the PPA. * The proceedings before the MERC were pending prior to the initiation of CIRP and the MERC order dated January 9, 2019 led to the crystallization of the PPA, which is the core value of the maximizing factor for the 'Corporate Debtor'. * It is submitted that the RP whilst discharging his duties acted in accordance with the Code and Rules and Regulations made thereunder and seeks for dismissal of the Appeal with costs. 5. Submissions of the 3rd and 4th Respondents/ the Successful Resolution Applicants: * It is submitted that the relationship between the Appellant and the 'Corporate Debtor' was purely contractual and commercial in nature. There was no discrimination made against the Appellant herein. The workman of the Appellants were not the workmen of the 'Corporate Debtor' and there cannot be any parity between them. * Non-inclusion of unsecured Operational Creditors with claims lesser than 10% of the total admitted claims of the 'Corporate Debtor' was not entitl....
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....ndated under Sections 17, 18, 20 & 25 of the Code, as a result of which, the 'Corporate Debtor' and the Operational Creditors have suffered a loss of Rs. 500 Crores. The PPA was signed immediately after the Resolution Process i.e. on 02.07.2020, the benefit of which is now being taken by the Resolution Applicants to deceive the Operational Creditors of their dues. 9. It is the case of the Appellant that these Agreements are indispensable assets of the 'Corporate Debtor' which are certain to attract good investment towards the acquisition of the 'Corporate Debtor' through CIRP. However, such facts in spite of being in the knowledge of the IRP, RP and the CoC were not disclosed either in the Information Memorandum or in the Expression of Interest. The non-disclosure has caused an irreparable loss to the Operational Creditors since it has devalued the 'Corporate Debtor' and circumscribed the maximization of the assets of the 'Corporate Debtor', affecting the interests of the Operational Creditors. 10. Ld. Counsel for the Appellant has relied on the Judgment of this Tribunal in Company Appeal (AT) (Ins) No. 601 of 2020 'Gujarat Urja Vikas Nigam Ltd. Vs. Yes Bank Limited' which was up....
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...., we are of the earnest view that there is no material irregularity in accordance with Section 61(3)(ii) of the Code. 12. It is seen from the record that the Information Memorandum was provided to the CoC. At no point of time was any objection ever raised that the Information Memorandum contained inadequate information. There are no substantial grounds stated as to why the CoC would intentionally downgrade the value of the 'Corporate Debtor'. 13. The following table specifies the values arrived at by the two valuers:- Valuer Duff & Phelps India Pvt. Ltd. Ernst & Young Merchant Banking Services Pvt. Ltd. Average Valuation Liquidation Value 585.50 Crores 608.50 Crores 597.00 Crores Fair Value 1,161.00 Crores 1,897.60 Crores 1,529.30 Crores 14. It is the case of the Appellant that there is a difference of approximately Rs. 932 in the Liquidation Value and in the Fair Value and 737 Crores in Fair Values. However, instead of appointing a third valuer, the RP did not take any steps to ensure maximization of the assets of the 'Corporate Debtor'. It is seen from the record that the CoC by a Majority of 94.29% approved the appointment of the aforenoted valuers stipulated unde....
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....en per cent. of the debt. (4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings: Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting. (5) [Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor] who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors: Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor. (6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor. (7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board. (8) The meetings of the committee of creditors shall be conducted in such manner as may be specified." ....
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.... its business decision." [emphasis supplied] 21. The Hon'ble Supreme Court in 'Ghanashyam Mishra and Sons Private Limited' Vs. 'Edelweiss Asset Reconstruction Company Limited Through the Director & Ors.', (2021) 166 SCL 237 (SC), dealing with the issue of commercial wisdom CoC and the jurisdiction of the Tribunal to interfere in the same has observed as follows:- "150. It will therefore be clear, that this Court, in unequivocal terms, held, that the appeal is a creature of statute and that the statute has not invested jurisdiction and authority either with NCLT or NCLAT, to review the commercial decision exercised by CoC of approving the Resolution Plan or rejecting the same. 151. The position is clarified by the following observations in paragraph 59 of the judgment in the case of K. Sashidhar (supra), which reads thus: "59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors....." 152. This Court in Committee of Creditors of E....
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....e satisfied. That factor is that the Resolution Plan has provisions for its implementation. The scope of interference by the adjudicating authority in limited judicial review has been laid down in Essar Steel [Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531], the relevant passage (para 54) of which we have reproduced in earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the appellate authority ought to have interfered with the order of the adjudicating authority in directing the successful resolution applicant to enhance their fund inflow upfront." 155. This Court observed, that the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the Resolution Plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront. 156. It would thus be clear, that the legislative scheme, as interpreted by various decisions o....
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....LVENCY) NO.1309 OF 2019 * It is the case of the 'Appellant' that they are engaged in the business of providing skilled and unskilled workers for addressing works like gardening, housekeeping, repair and other miscellaneous work. It is strenuously argued that the Appellant provided vehicles for the transportation of the staff of the 'Corporate Debtor' alongwith manpower required for transportation of coal etc. It is the case of the Appellant that these workmen were not treated in parity with the workmen of the 'Corporate Debtor' and also that they were not kept informed about the CIRP proceedings and came to know about the same only when they were asked to submit the claim by the 'Resolution Professional'. * The 'Tribunal' is of the earnest view that this is a contractual relationship which is commercial in nature and hence the services rendered by the workmen cannot be treated at part with the employees of 'Corporate Debtor'. Moreover, it is seen from the record that the 'Resolution Plan' proposes to pay out to the Appellant that proportional share which is a value higher than the amount the Appellant would be entitled to, in the event of liquidation of the company. It is reite....
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.... the 'Corporate Debtor'. The total claims of the Appellant herein is to the tune of Rs. 2,06,500/. It is argued that they were not kept informed about the CIRP proceedings against the 'Corporate Debtor and came to know about the same only when they were asked to submit the claim by the 'Resolution Professional'. * As the claim of the 'Appellant' is less than 10% of the total admitted claim against the 'Corporate Debtor' as per Section 24(c) of the Code, they cannot be allowed to participate in the COC Meeting. Hence, the knowledge of the proceedings would be only subsequent to the 'notice' issued by the RP seeking submissions of Claims. * Keeping in view the ratio of the Hon'ble Apex Court in the case of K. Sashidhar Vs Indian Overseas Bank and Ghanashyam Mishra Vs Edelweiss Asset Reconstruction (Supra), this 'Tribunal' is of the considered view that there are no substantial grounds to set the clock back especially in the light of the fact that the 'Resolution Plan' has been implemented two years ago and the change in the Management of the 'Corporate Debtor' has also been effectuated and the interest of the Appellant has also been fully considered. * For all the above noted r....
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....grounds to set the clock back especially in the light of the fact that the 'Resolution Plan' has been implemented two years ago and the change in the Management of the 'Corporate Debtor' has also been effectuated and the interest of the Appellant has been fully considered. * For all the above noted reasons the 'Appeal' is dismissed. No order as to costs. COMPANY APPEAL (AT) (INS) No.1313 of 2019 * It is the case of the 'Appellant' that he is providing the services of transportation of wet ash from silos to private stone quarries as per 'work order' issued by the 'Corporate Debtor'. It is also the case of the Appellant that work awarded to the Appellant by the Corporate Debtor is an essential work and was conducted on a day to day basis by the Appellant. It is also the case of the Appellant that he is an unsecured Operational Creditor and there was a contractual relationship between the Corporate Debtor and the Appellant. * This Tribunal is of the earnest view that the Resolution Plan approved by the COC, aims to pay the Appellant proportional share of the total overall operational claim of the 'Corporate Debtor, which is higher than the liquidation value, which the Appellan....
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....ractual relationship which is commercial in nature and hence the services rendered by the workmen cannot be treated at part with the employees of the 'Corporate Debtor'. * Keeping in view the ratio of the Hon'ble Apex Court in the case of K. Sashidhar Vs Indian Overseas Bank and Ghanashyam Mishra Vs Edelweiss Asset Reconstruction (Supra) this 'Tribunal' is of the considered view that there are no substantial grounds to set the clock back especially in the light of the fact that the 'Resolution Plan' has been implemented two years ago and the change in the Management of the 'Corporate Debtor' has also been effectuated and the interest of the Appellant has been fully considered, for all the above noted reasons the 'Appeal' is dismissed. No order as to costs. COMPANY APPEAL (AT) (INS) No.1316 of 2019 * It is the case of the 'Appellant' that he is providing the services of transportation of fly ash as per 'work order' issued by the 'Corporate Debtor'. It is also the case of the Appellant that work awarded to the Appellant by the Corporate Debtor is an essential work, contractual in nature and was conducted on a day to day basis by the Appellant. It is also the case of the Appellan....
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.... Plan' has been implemented two years ago and the change in the Management of the 'Corporate Debtor' has also been effectuated and the interest of the Appellant has been fully considered. * For all the above noted reasons the 'Appeal' is dismissed. No order as to costs. COMPANY APPEAL (AT) (INS) No.1319 of 2019 * It is the case of the 'Appellant' that he was engaged by the Corporate Debtor to carry out the work with respect to water pipelines Naingaon to New Reservoir Pump House. It is the case of the Appellant that the pay out is higher than the amount the Appellant would have got in the event of liquidation of the Corporate Debtor. * Considering the contractual relationship which is also commercial in nature between the Corporate Debtor and the Appellant, the Appellant cannot claim parity alongwith other workmen of the Corporate Debtor. * This Tribunal is of the earnest view that the Resolution Plan approved by the COC, aims to pay the Appellant proportional share of the total overall operational claim of the 'Corporate Debtor, which is higher than the liquidation value, which the Appellant would be entitled to in the event of the liquidation of the Corporate Debtor. *....
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....rucks, supervisors and drivers to the Corporation Debtor from time to time. * The Appellant claims parity alongwith the workmen and employees of the Corporate Debtor for payment of full amount as admitted and sought to be paid out to the workmen of the Corporate Debtor. * The Tribunal is of the earnest view that this is a contractual relationship which is commercial in nature and hence the services rendered by the workmen cannot be treated at part with the employees of the 'Corporate Debtor'. * Considering the contractual relationship between the Corporate Debtor and the Appellant, the Appellant cannot claim parity alongwith other workmen of the Corporate Debtor. * This Tribunal is of the earnest view that the Resolution Plan approved by the COC, aims to pay the Appellant proportional share of the total overall operational claim of the 'Corporate Debtor, which is higher than the liquidation value, which the Appellant would be entitled to in the event of the liquidation of the Corporate Debtor. * Keeping in view the ratio of the Hon'ble Apex Court in the case of K. Sashidhar Vs Indian Overseas Bank and Ghanashyam Mishra Vs Edelweiss Asset Reconstruction this 'Tribunal' (Su....