Pani Logistics Vs Vikash G Jain RP of Sona Alloys Pvt. Ltd. (NCLT Ahmedabad)
NCLT Ahmedabad held that conjoint reading of Section 30 & Section 53 of IBC shows that the Financial Creditors are placed at a higher priority than Operational Creditors. Hence, as the Financial Creditors have not been paid in full, the Operational Creditors cannot claim a higher amount.
Facts- The present application is filed by M/s. Pani Logistics against Mr. Vi kash G Jain, Resolution Professional and Committee of Creditors of M/s Sona Alloys Private Limited (under CIRP) and M/s MTC Business Private Limited, the Successful Resolution Applicant in the CI RP of M/s. Sona Alloys Private Limited u/s 60(5) r.w Section 31(2) of IBC, 2016 claming to reject the Resolution Plan (Annexure-A1) submitted by the Resolution Applicant (Respondent No.3, MTC Business Pvt. Ltd.) and to direct the Respondent No.1, Resolution Professional to issue Public Announcement for submission of fresh Resolution Plans.
Conclusion- The conjoint reading of Section 30 & Section 53 of IBC shows that the Financial Creditors are placed at a higher priority than Operational Creditors. The Secured Financial Creditors are covered by Section 53(1)(b)(ii), the Unsecured Financial Creditors are covered by Section 53(1)(d). The Operational Creditors are to be considered thereafter having lower priority and are covered by Section 53(1)(f). Since the Financial Creditors have not been paid in full, the Operational Creditors cannot claim a higher amount. No violation of the provisions of the IBC, 2016 and Regulations there under is noticed in the distribution of resolution proceeds to Financial Creditors and Operational Creditors.
FULL TEXT OF THE NCLT JUDGMENT/ORDER
1. The present application is filed by M/s. Pani Logistics against Mr. Vi kash G Jain, Resolution Professional and Committee of Creditors of M/s Sona Alloys Private Limited (under CIRP) and M/s MTC Business Private Limited, the Successful Resolution Applicant in the CI RP of M/s. Sona Alloys Private Limited u/s 60(5) r.w Section 31(2) of IBC, 2016 claming following reliefs:
“i. Reject the Resolution Plan (Annexure-A1) submitted by the Resolution Applicant (Respondent No.3, MTC Business Pvt. Ltd.);
i. Direct the Respondent No.1, Resolution Professional to issue Public Announcement for submission of fresh Resolution Plans;
ii. Pass any other order / directions as this Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the case .
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 benovalent 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 Credtiors 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 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 then the statutory dues.
