Company Appeal (AT) (Insolvency) No. 205 of 2023

Decided On: 03.04.2023

Appellants: Pani Logistics Vs. Respondent: Vikas G. Jain and Ors.

Hon'ble Judges/Coram:
Ashok Bhushan, J. (Chairperson) and Barun Mitra


1. Heard learned counsel for the Appellant as well as learned counsel appearing for the Respondent. This Appeal has been filed challenging order dated 06.02.2023 by which order the Adjudicating Authority has by separate order has disposed of I.A. No. 314/(AHM)/2021 as well as I.A. No. 431/(AHM)/2021. I.A. No. 314/(AHM)/2021 was filed by the Resolution Professional for approval of the Resolution Plan submitted by the Successful Resolution Applicant-MTC Business Pvt. Ltd. I.A. No. 431/(AHM)/2021 was filed by the Appellant raising objections to the Resolution Plan which too was rejected by separate order of the same date i.e. 06.02.2023. The Appellant before us is an Unsecured Financial Creditor who has vote share in the CoC of 0.264%. The plan has been approved by the CoC with more than 99% vote share. The objection which were raised by the Appellant before the Adjudicating Authority has been noticed in the order dated 06.02.2023 passed in I.A. No. 431/(AHM)/2021. Para 2 of the order notes objections, which are to the following effect:

"2. Applicant in present IA has made out case for rejection of the Resolution Plan mainly on the ground stated in para 22 to 27 of the IA No. 431 of 2021, which are reproduced below for benevolent reference:

"22. As per the provisions of the Code and the Regulations made thereunder, a Resolution Plan must fulfill the following criteria for it to be viable;

(a) The Resolution Plan must be fair and equitable in terms of settlement of claims of the Operational Creditors vis-as-vis the Financial Creditor.

(b) The Resolution Applicant must provide for performance security in accordance with Regulation 36B(4A) of the Regulations, 2016 and the same should be sufficient to ensure the performance of obligations by the Resolution Applicant according to the approved plan.

(c) The Resolution Professional is obligated to submit evidence of receipt of performance security (as required under Regulations 36B (4A) along with the certificate in Form H of the Schedule.

23. Contrary to the requirements mentioned above, the Resolution Plan submitted by the Respondent No. 3 does not ensure balancing the interest of all the stakeholders and is contrary to Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016. The Section 30(2)(b) of the Code requires that the Operational Creditors be paid at least the liquidation value and be treated fairly, Contrary to this, the Resolution Plan approved by the Committee of Creditors of the Corporate Debtor does not treat the operational creditors equitably and fairly as required by the mandate of the Code, 2016.

24. The Resolution Plan undermines the interest of the Operational Creditors. The Resolution Plan provides for payment of Rs. 365.85 Crores to the secured financial creditors as against the admitted claim of Rs. 1696.82 crore, while the application against the Resolution Professional for having rejected the claims are still pending before this Tribunal in I.A. No. 457, 458, 507, 508 of 2020. The claim of the secured financial creditors agreed upon by the Respondent No. 3 to be paid is equivalent to 21.56%

25. Contrary to the aforementioned settlement, the claims of the operational creditors is unjustly paid under the Resolution Plan and in contravention to the Code and the Regulations, 2016. As against the admitted claim of Rs. 114.7 Crores, only Rs. 0.19 Crores is approved by the Committee of Creditors to be paid as per the Resolution Plan to the Operational Creditors. This is equivalent to approximately 0.096% of the admitted claims of the Operational Creditors other than the statutory dues.

26. The Regulations stipulate that the performance security be provided by the Resolution Applicant pursuant to approval of the plan by the CoC. The Respondent No. 3 failed to provide sufficient performance security. As per the Resolution Plan, the Respondent No. 3 had agreed........