Insolvency and BankruptcyNCLATRulingsTribunal & Appellate

NCLAT states equal treatment given to ‘Operational Creditors’ & ‘Financial Creditors’ under Resolution plan, grants no relief to GAIL, BHEL & others

Bharat Petroresources Ltd. vs. Monnet Ispat & Energy Ltd. & Anr. (Company Appeal (AT) (Insolvency) No. 550 of 2018)

NCLAT dismisses appeals against CIRP approved by AA; says Resolution Plan is compliant and ensures that the interests of all stakeholders are balanced and thus cannot be interfered with.

In the present appeals, the ‘Resolution Plan’ submitted by ‘Consortium of Aion Investment II Private Limited & JSW Steel Limited’ (‘Successful Resolution Applicant’) which was approved by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai in the CIRP initiated against ‘Monnet Ispat & Energy Limited’- (‘Corporate Debtor’) is being challenged. The Appellant – Bharat Heavy Electricals Limited states that the impugned Order is contrary to Section 30(2)(e) of the ‘I&B Code’, as it seeks to extinguish all rights and obligations of the Appellant in respect of the claim, not provided for in the ‘Resolution Plan’ prior to the Insolvency Commencement Date and thus, the Appellant is left remediless in so far as its claim which is not provided for in the ‘Resolution Plan’ is concerned. Appellant further submits that the ‘Resolution Plan’ is unfair and discriminatory against the ‘Operational Creditors’. It is also submitted that the claim of ‘Gail (India) Limited’ and ‘Bharat Petro Resources Limited’ arises on account of non-payment of cash calls (request in the nature of re-imbursement) by the ‘Corporate Debtor’ for its contribution under a ‘Joint Operating Agreement’ and a ‘Production Sharing Agreement’ for exploration and exploitation of petroleum resources. Successful Resolution Applicant’ contends that the ‘Resolution Plan’ is compliant with provisions of the ‘I&B Code’, and not discriminatory. IFCI Ltd. is aggrieved as the Plan does not give equal treatment to dissenting/assenting and secured/unsecured financial creditors. IFCI Ltd. further submits that Appellant has been wrongly categorized as ‘Unsecured Financial Creditor’ despite having exclusive mortgage over property of the ‘Corporate Debtor’. 

NCLAT observes that the ‘Interim Resolution Professional’ is empowered under Section 18(1) (b) to receive and collate all the claims submitted by creditors. NCLAT further observes that the claim(s) relates to the debt payable to a creditor(s) before initiation of the ‘Corporate Insolvency Resolution Process’ and do not relate to any amount payable during the ‘Corporate Insolvency Resolution Process’. NCLAT finds that any claim of the Appellant towards future claim accrued after the Insolvency Commencement Date, cannot be considered under Section 18(1) (b) by the ‘Resolution Professional’. NCLAT states that the Appellant- ‘Bharat Petroresources Limited’ cannot assail the order of approval of plan (dated 25th July, 2018) passed under Section 31 of the ‘I&B Code’ merely on the ground that the future claim has not been collated by the ‘Resolution Professional’. 

NCLAT further observes that ‘Gail (India) Limited’ filed two claims as ‘Operational Creditor’ and although the claims were filed by the Appellant within time, instead of filing the claim in Form B, on wrong presumption they were filed in Form-F. NCLAT finds that the ‘Bharat Petroresources Limited’ filed claim in Form B and such claim has been accepted by the ‘Resolution Professional’ treating it as ‘operational debt’. The claims of Gail was not accepted by the ‘Interim Resolution Professional’ who has not allowed any amount as Gail committed the mistake of filing the wrong form and it cannot allege any wrong committed by the ‘Resolution Professional’. NCLAT observes that the ‘Operational Creditors’ and the ‘Financial Creditors’ having given almost same treatment, no interference is called for on the ground that ‘Gail (India) Limited’ has not been treated as ‘Operational Creditor’.

RP places reliance on the decision of NCLAT in “Binani Industries Limited vs. Bank of Baroda & Anr.─ Company Appeal (AT) (Insolvency) No. 82 of 2018 etc.”  and the Hon’ble Supreme Court decision in “Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.─ Writ Petition (Civil) No. 99 of 2018”, and contends that, 

the ‘Resolution Plan’ of the ‘Successful Resolution Applicant’ (as approved by the Adjudicating Authority) ensures that roughly the same treatment is given to the ‘Financial Creditors’ and the ‘Operational Creditors’ with ‘Financial Creditors’ receiving 26.26% recovery and ‘Operational Creditors’ receiving 21.77% recovery. Therefore, the ‘Resolution Plan’ being compliant along with ensuring that the interests of all stakeholders are balanced in addition to the fact that the ‘Resolution Plan’ of the ‘Successful Resolution Applicant’ has been completely implemented and the ‘Successful Resolution Applicant’ now has a vested right in its successful implementation, no adverse consequences can be visited upon the ‘Successful Resolution Applicant’ and the ‘Successful Resolution Applicant’ cannot now be made to redistribute payments under its ‘Resolution Plan’.”

NCLAT states that no relief can be granted to BHEL since BHEL did not choose to prefer any application under Section 60 (5) against the decision of the ‘Resolution Professional’. NCLAT which rightly rejected the application in absence of any evidence on record in support of further claim. NCLAT observes that since IFCI Ltd. accepted its status as an ‘Unsecured Creditor’ in reference to its claim and accepted all the payments under the ‘Resolution Plan’, it is not open for ‘IFCI Limited’ to object to treat its claim as ‘Unsecured Financial Creditor’ nor can object to the ‘Resolution Plan’ and no relief can be granted. NCLAT thus dismisses the appeals and grants no relief to the appellants.

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *