Excel Engineering Vs Vivek Murlidhar Dabhade (NCLAT Delhi)
NCLAT Delhi held that there is no embargo for the classification of the ‘Operational Creditors’ into separate/different classes for deciding the way in which the money is to be distributed to them by the CoCs.
Facts-
Appellants, herein, are the ‘Operational Creditors’ of the ‘Corporate Debtor’ are seeking intervention in the Application preferred by the resolution professional seeking approval of the resolution plan.
It is contended that total amount of the ‘Operational Debt’ from ‘Operational Creditors’ other than Employees, Workmen and Farmers is Rs.63,45,09,539/- as against the total debt of Rs.193,58,53,515/-, which is 32.78% of the total debt. It was argued that the approved Resolution Plan was discriminatory as it paid 100% to Farmers as against mere 1% of the total admitted Claim of the Appellants, which is discriminatory.
Conclusion-
‘Corporate Debtor’ is a Sugar Industry and the Farmers are an integral part of the Sugar Industry. More than 4500 Farmers and their families are dependent on the ‘Corporate Debtor’ factory for their survival and the plan would not be implementable without making payments to the Farmers as the dues have been pending for the last two years. The Minutes of the CoC meeting shows that even the ‘Secured Financial Creditors’ accepted that 100% payment should be made to the Farmers who are the backbone of the Sugar Industry.
Section 53 of the Code categorically provides different priorities of payments for Employees, Statutory Dues and other ‘Operational Creditors’. Such a classification would depend upon the facts and circumstances and the nature of the industry, and the Modus Operandi of the functioning of the ‘Corporate Debtor’.
This Tribunal is of the considered opinion that there is no embargo for the classification of the ‘Operational Creditors’ into separate/different classes for deciding the way in which the money is to be distributed to them by the CoCs. We are of the view that the ‘Operational Creditors’ were paid as per Section 30(2)(b) of the Code coupled with Regulation 38 of the Corporate Insolvency Process Regulations as the ‘Operational Creditors’ are entitled to receive only such money that are payable to them as under Section 53 of the Code.
We are of the earnest view that some minimum entitlement to the ‘Operational Creditors’ may be examined by the Government and the IBBI, based on the amount realised in the Resolution Plan over and above the liquidation value.
FULL TEXT OF THE NCLAT JUDGMENT/DELHI ORDER
1. Challenge in these Appeals is to the Impugned Orders dated 04.11.2019 & 11.2019 passed by the Learned Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Mumbai) in C.P. (IB) No. 2956/2018, whereby the Adjudicating Authority has accorded approval to the Resolution Plan.
2. MA 3432/20 19 was preferred by M/s. Alfa Technology & Services’, in his representative capacity seeking intervention of the Applicants in MA 327 1/2019, which was dismissed by the Adjudicating Authority on the ground that the Applicant has no locus standi to represent the other Petitioners in the absence of a proper Power of Attorney. MA 327 1/2019 was preferred by the Resolution Professional seeking approval of the Resolution Plan under Section 30 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as ‘The Code’). Rejecting the Intervention Application, MA3432/2019, the Adjudicating Authority has observed as follows:
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3. It is submitted by the Learned Counsel for the Appellants that they are the ‘Operational Creditors’ of the ‘Corporate Debtor’ who had filed MA 3432/2019 seeking intervention in the Application MA 327 1/2019 preferred by the Resolution Professional seeking approval of the Resolution Plan. It is contended by the Learned Counsel that the total aggregate amount of the ‘Operational Debt’ from ‘Operational Creditors’ other than Employees, Workmen and Farmers is Rs.63,45,09,539/- as against the total debt of Rs.193,58,53,515/- which is 32.78% of the total debt. It is argued that the share of ‘Operational Creditors’ other than Workmen, Employees and Farmers being 32.78% of the total debt, no notices of the Meeting of the CoC was ever given to the Appellants and other ‘Operational Creditors’ thereby denying them an opportunity to participate in the Meetings; that no copy of the Resolution Plan, Valuation Report or the Information Memorandum has ever been furnished to the ‘Operational Creditors’ that the fair Liquidation Value of the ‘Corporate Debtor’ is not the correct value; that the Resolution Plan approved by the Adjudicating Authority vide Order dated 11.11.2019 is discriminatory in nature as 54.29% of the admitted Claim is to be distributed to ‘Secured Financial Creditors’, 11.42% of the admitted Claim to ‘Unsecured Financial Creditors’, 20% to Workmen and Employees, 100% to Farmers as against mere 1% of the total admitted Claim of the Appellants, which is unfair discriminatory and illegal; that Farmers do not form a class by themselves under the Code and that being so, the approved Resolution Plan provides for only 1% of the total debt owed to the Appellants as against 100% of the dues distributed to the Farmers.
4. It is strenuously contended by the Learned Counsel for the Appellants that the Impugned Order is in contravention of the ratio laid down by the Hon’ble Supreme Court & this Tribunal in the following Judgements:
