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2026 (1) TMI 529
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.... R2., Mr. Dhruv Dewan, Advocate for R4., Mr. Rajeev Kumar Panda, Advocate for R1., Mr. Siddharth Sangal, Ms Richa Mishra, Advocates for R5. JUDGMENT [Per: Arun Baroka, Member (Technical)] The present Appeal is filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, (the "Code") against the order dated 23.12.2021 ("Impugned Order") passed by the Hon'ble National Company Law Tribunal, Court-I, Mumbai Bench ("Ld. Adjudicating Authority, Mumbai") in IA 2028 of 2021 in CP No. 1137/MB/2017. 2. The brief facts relevant to decide the case are as under:- a) On 04.07.2017 C.P. No.1137/MB/2017 was filed by State Bank of India against Jyoti Structures Ltd., and the same was admitted by Ld. Adjudicating Authority, Mumbai b) On 26.03.2018 to 27.03.2018 the e-voting on the Resolution Plan by the COC was held: o 62.66% of CoC members voted in favour of Resolution Plan; o 23.12% voted against the Resolution Plan, and o 14.21% of CoC members abstained from voting. The Bank of Maharashtra abstained from voting for the Resolution Plan, while Central Bank of India cast a dissenting vote. IDBI Trusteeship Services (0.04%),....
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.... of the Code only provides for the minimum amount payable, and that the said provision does not permit inequitable, unfair and discriminatory treatment between Assenting Secured Financial Creditors and Dissenting / Abstaining Secured Financial Creditors when it comes to payment/distribution of the resolution amount? (iii) Whether the Adjudicating Authority, Mumbai erred in dismissing IA 2028 of 2021 in CP No. 1137/MB/2017 filed by the Appellant by relying on the decision in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657? 5. The admitted claim of Bank of Maharashtra is to the extent of Rs. 184,55,84,031/-, out of which the liquidation value proposed to be paid proportionate to their exposure is of Rs. 27,51,67,000/-. The admitted claim of Central Bank of India is to the extent of Rs. 144,10,31,047/- out of which the liquidation value proposed to be paid proportionate to their exposure is of Rs. 21,48,51,000/-. 6. Appellants claim that the inequitable, unfair and discriminatory treatment in payment of resolution value is evident from the following: S. No. Particulars Amount Admitted Amount Paid under Plan P....
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.... members of the CoC will be forced to vote in favour of a plan, which may not really be in the best interests of all stakeholders and achieve the object of the Code of maximisation of the assets and revival of the Corporate Debtor. 10. Appellant places its reliance on Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531 (para 90), wherein the Hon'ble Supreme Court has observed that equitable treatment is to be accorded to each creditor depending upon the class to which it belongs: secured or unsecured, financial or operational. Appellant has also relied on Central Bank of India Vs Resolution Professional of Sirpur Paper Mills Ltd and Others 2018 SCC OnLine NCLAT 1034. Appellant has also relied on RBL Bank Ltd Vs Sical Logistics Ltd, Company Appeal (AT) (CH) (Ins) No.36/2024, which is similar to the above cited judgment. 11. Appellant also contends that the decision in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657 has no application to the present case in as much as the Appellant is not seeking to make any claims which are not part of the resolution plan, but is only seeking for proper distributi....
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....ich also stands deleted, we set aside the impugned order and hold that the "Resolution Plan being in conformity with Section 30(2) warranted approval by the Adjudicating Authority. 25. However, we make it clear that to make the "Resolution Process successful, though it is open to the 'Committee of Creditors to change its opinion by assenting in favor of one or other plan, we further hold that the Committee of Creditors' once voted in favour of the Resolution Plan cannot change its views. 26. In the result, the case is remitted to the Adjudicating Authority, Mumbai Bench, Mumbai to approve the plan in terms of Section 31 of the Insolvency and Bankruptcy Code, 2016 with modification, i.e that the plan is to be implemented within the period of 12 years as offered by the Successful Resolution Applicant. The appropriate order be passed on an early date preferably within two weeks from the date of the production of the copy of this order" (Emphasis supplied) 14. Respondent No.2, which is the Successful Resolution Applicant, also canvases arguments similar to the arguments presented by the RP that the Appellant is effectively seeking to challenge the resolu....
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....so been accepted by the Adjudicating Authority in the impugned order. Respondent No.2/SRA brings to our notice that the provision relating to payment to dissenting Financial Creditors as is being claimed was not existing in Section 30(2) of the Code at the time of the approval of the resolution plan by the CoC. 16. Furthermore, Regulation 38 of the CIRP Regulations, contained the following as mandatory contents of the resolution plan: "... (c) liquidation value due to dissenting Financial Creditors and provide that such payment is made before any recoveries are made by the Financial Creditors who were voted in favour of the resolution plan." 17. SRA - Respondent No.2 has also relied on the judgment of Jaypee Kensington Boulevard Apartments Welfare Association vs. NBCC (India) Ltd., (2022) 1 SCC 401, wherein it was held that the amount prescribed under the code and CIRP Regulations was the amount payable to dissenting Financial Creditors, which we will deal in hereinafter. Furthermore, Appellant relies on the judgement of Appellate Tribunal in Facor Alloys Limited and Anr. Vs. Bhuvan Madan, 2020 SCC OnLine NCLAT 789 wherein it was noted that the only requirem....
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....lution Plan and arising from the business operations of the Company, before any recoveries are made by the Financial Creditors who voted in favor of the Final Resolution Plan." 20. Respondent No. 4/Corporate Debtor has also relied on the judgment of Hon'ble Supreme Court in Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531 wherein it has held that: "... 129. As has been held in this judgment, it is clear that Explanation 1 has only been inserted in order that the Adjudicating Authority and the Appellate Tribunal cannot enter into the merits of a business decision of the requisite majority of the Committee of Creditors. As has also been held in this judgment, there is no residual equity jurisdiction in the Adjudicating Authority or the Appellate Tribunal to interfere in the merits of a business decision taken by the requisite majority of the Committee of Creditors, provided that it is otherwise in conformity with the provisions of the Code and the Regulations, as has been laid down by this judgment." [Emphasis supplied] And claims that there cannot be any interference with the commercial wisdom of the CoC provided the pa....
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....alue subject to their individual exposure with the same terms as that of Assenting Financial Creditors. b) That the Monitoring Agency (MA) be given a direction to consult with all Secured Financial Creditors (SFCs) forming part of erstwhile COC by convening a Joint meeting and file a report within a period of three weeks with regard to their stand for treatment of all Secured Financial Creditors at par without discriminating their payment under the Resolution Plan on the basis of Assenting / Financial Creditors. c) That till the said report is filed by MA the implementation of Resolution Plan (exclusive of compliances part of pre-condition) and the enforcement of Financing documents be stayed for a period of three weeks. d) That in the event that definitive documents have already been executed between the parties, appropriate direction be issued to the signatories to execute an Addendum Agreement incorporating with regard to the sharing of plan value ordered to be modified by this Hon'ble Tribunal. e) That it be ordered that the share of Bank of Maharashtra i.e. Rs. 78.34 Crores out of balance amount of Rs. 579.72 Crores for which this Dissen....
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....Tribunal in proportion to the payments getting released to the Assenting Financial Creditors year wise under the Resolution Plan; e) Pending the hearing and disposal of this Appeal, pass an order granting stay of the Resolution Plan (exclusive of compliances part of pre-condition) and the enforcement of Financing documents; f) Interim and Ad-interim relief in terms of prayer clause (d) and (e); and g) Pass such other or further order(s) as this Hon'ble Appellate Tribunal deems fit and proper in the facts and circumstances of the present case. 26. We observe that resolution plan of the Corporate Debtor was approved by NCLT on 27.03.2019. The IA No. 2028 of 2021 was filed before the NCLT on 07.09.2021 by the Appellant praying that the discrimination in payment under the Resolution Plan on the basis of the Assenting and Dissenting / Abstaining Financial Creditor be modified to the extent that all Secured Financial Creditors (SFCs) inter alia Applicant be treated equally for payment of Plan value subject to their individual exposure with the same terms as that of Assenting Financial Creditors. This IA No. 2028 of 2021 was dismissed by NCLT on 23.12.202....
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....e observe that the Resolution Plan was approved by the CoC with 81.31% on 27.03.2018/06.04.2018, and the same was approved by the Adjudicating Authority on 27.03.2019. However, the I.A. Nos. 2028/2021 & 2035/2021 before AA were preferred by the appellants only in September 2021 i.e. after more than 3 years 6 months from approval of the Resolution Plan by the СoC and after more than 2 years 6 months from approval of the Resolution Plan by the Adjudicating Authority as noted by as earlier herein. Thus, the said IAs were much belated and unjustified and ought not to have been entertained at all because of acquiescence and gross delay on the part of the Appellants. We are also convinced with the arguments of R5/SBI that the Appellants, that in order to create appellate jurisdiction, the Appellants approached the Adjudicating Authority by filing the IA Nos. 2028/2021 & 2035/2021 despite knowing fully that the Adjudicating Authority does not have the power/jurisdiction to change/modify the approved Resolution Plan and thus, the said power/jurisdiction could not have been exercised by way of appellate jurisdiction before this NCLAT. 28. Perusal of the submissions of the SRA and R....
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..... 'Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants approval under Section 31 could be continue." 30. The above judgment reaffirms the binding nature of the resolution plan as per Section 31 of the Code and we observe that the Appellant cannot be permitted to take recourse to any other mode or manner to satisfy the payment or recover the amounts payable to it other than what was envisaged under the resolution plan. We note that the resolution plan stands frozen upon its approval. By seeking amounts other than in the resolution plan, the resolution applicant could not be saddled with liabilities which were not foreseen by it. The present situation is similar to Ghanashyam Mishra & Sons Private Limited (supra) and therefore as claimed by the Appellants. it cannot be said that the judgment is not applicable in this case. 31. It was also argued by the Appellants that in the event that the discrimination in payment is ....