NCLAT Affirms 'Nil' Payment To Operational Creditors In Resolution Plan
Tazeen Ahmed
21 Sep 2024 10:41 AM GMT
The National Company Law Appellate Tribunal, New Delhi bench, presided by Justice Ashok Bhushan, upheld the Resolution plan, which proposed NIL payment to the operational creditors in the event of Liquidation, reiterating its decision in Rajat Metaal Polychem Pvt. Ltd. vs. Mr. Neeraj Bhatia and Anr., which held that no exception can be taken to such Plans, which provide payment to...
The National Company Law Appellate Tribunal, New Delhi bench, presided by Justice Ashok Bhushan, upheld the Resolution plan, which proposed NIL payment to the operational creditors in the event of Liquidation, reiterating its decision in Rajat Metaal Polychem Pvt. Ltd. vs. Mr. Neeraj Bhatia and Anr., which held that no exception can be taken to such Plans, which provide payment to Operational Creditor in accordance with Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016.
Background Facts:
CIRP against the Corporate Debtor commenced on 23.06.2023. The Appellant submitted a claim on 19.10.2023 in Form B for Rs.16,77,047, which was admitted by the Resolution Professional. A Resolution Plan was submitted and approved by the Committee of Creditors (CoC) with a 92.87% majority. The Resolution Professional filed application IA No.5826 of 2023 for approval of the Resolution Plan. On 02.05.2024, the Adjudicating Authority approved the Resolution Plan, leading to the present Appeal by the Operational Creditor, i.e., Sri Balaji Facility.
Observations by the NCLAT:
The NCLAT noted that the total claim of operational creditor which was admitted in the CIRP was Rs.9,54,85,539/- and the plan proposed 'nil' payment to all the operational creditors, even the payment towards government dues was also proposed as nil.
In this regard, the Tribunal observed that as per Section 30(2) of the IBC, an operational creditor is entitled to an amount not less than the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under Section 53.
The Tribunal placed reliance upon the case of Rajat Metaal Polychem Pvt. Ltd. vs. Mr. Neeraj Bhatia and Anr. [Company Appeal (AT) (Insolvency) No.1063 of 2022], where the Tribunal while dealing with a similar claim, held that:
“It is true that Operational Creditors as the law stands now are denied any payment when the amount payable to them in the event of Liquidation is NIL, but till the Legislature comes to the aid of the claim of Operational Creditor by amending the Legislative Scheme hands of the Courts are tied to take any other view in the matter.”
Noting the above, the Appeal was dismissed.
Case Title: Sai Balaji Facility vs. CA Ramchandra Dallaram Choudhary, RP for Adico Forge Pvt. Ltd. & Ors.
Case Number: Company Appeal (AT) (Insolvency) No. 1642 of 2024
Date of Judgment: 19.09.2024
