Balaji Associates Vs V. Venkatachalam (NCLAT Delhi)
The appeals before the National Company Law Appellate Tribunal, Delhi Bench, arose from challenges under Section 61(3) of the Insolvency and Bankruptcy Code, 2016 to an order approving a resolution plan for a power generation company undergoing Corporate Insolvency Resolution Process (CIRP). The Adjudicating Authority had approved the resolution plan after it was endorsed by the Committee of Creditors (CoC) with a 75.91% voting majority, finding that it satisfied the requirements of Section 30(2) of the Code. The successful resolution applicant consortium had taken over the corporate debtor, and the plan had already been implemented.
Multiple operational creditors, including contractors supplying manpower, fuel, logistics, civil works, and ancillary services, challenged the approval on grounds of alleged discrimination, non-payment or inadequate payment of their dues, non-disclosure of key assets such as a Power Purchase Agreement (PPA), improper valuation, denial of participation in CoC meetings, and material irregularities by the Resolution Professional. They also claimed parity with the employees and workmen of the corporate debtor and questioned the eligibility and competence of the resolution applicants.
The Tribunal rejected these contentions. It held that the relationships between the appellants and the corporate debtor were purely contractual and commercial, and therefore, contractual manpower or service providers could not claim parity with the corporate debtor’s own employees or workmen. It was noted that operational creditors whose aggregate dues were less than 10% of total admitted claims had no statutory right to participate in CoC meetings under Section 24 of the Code. The Tribunal further found that the resolution plan provided operational creditors with payouts proportionate to their claims and, in many cases, higher than what they would have received in liquidation.
