| Application No | (Company Appeal(AT)(Insolvency) No. 1117 of 2019) |
| Applicant | Canara Bank, Dissenting CoC Member |
| Respondent | 1. Resolution Professional, Aristo Texcon. 2. North East Development Finance Corporation Ltd. (CoC) 3. Punjab National Bank (CoC) 4. Jagannath Financial Advisory Pvt. Ltd. (Successful Resolution Applicant) |
| Subject | Section 61 of the I & B Code, 2016, arising out of impugned order dated 20.08.2019 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Kolkata Bench, Kolkata) in CA(IB) No. 709/KB/2019 in CP(IB) No. (IB) 570/KB/ 2018] |
| Order Date | 03.01.2022 |
Case Summary :
Appeal filed by Dissenting Financial Creditor of Aristo Texcon Private Limited, the Corporate Debtor praying to the issue of the ‘Distribution’ of the ‘Resolution Fund’ to the Financial Creditors on the basis of the security value as there was absence of the commercial wisdom of the Members of the Committee of Creditors and the ‘Commercial Wisdom of the Resolution Applicant’ prevails over the Committee of Creditors.
The Hon’ble NCLAT dismissed the appeal stating that decision made by within the ambit of the ‘Committee of Creditors’ who in the present case had approved the Resolution Plan with a majority and the approved Resolution Plan does not suffer from any vice of material irregularities or patent illegalities in the eye of law.
Facts of the Case :
1. After compliance of Section 30(3) of the Code, by the Resolution Professional (herein referred to as “RP”), the Resolution Plan was approved by the Committee of Creditors by a majority of 75.70% and then the Adjudicating Authority on 28.2.2019 had approved the said Resolution Plan after considering the objections raised by Canara Bank, the Appellant.
2. The Appellant states that the ‘share’ given to them under ‘Resolution Plan’ is much less in comparison with the ‘security interest’ that it has over the Assets of the ‘Corporate Debtor’.
3. The RP took a stand that she had offered her prima facie opinion to the Committee of Creditors that a ‘Law’ has or has not been violated.
4. The RP added that it’s her duty to submit the ‘Resolution Plan’, before the ‘Committee of Creditors’ if the same follows the provision of the Code, who may or may not approve it, as she was a facilitator of the resolution process, whose administrative functions are overseen by the committee of creditors and by the Adjudicating Authority.
5. The RP further added that Resolution Plan had been discussed several times in the CoC Meeting and the Representative of Canara Bank took note of the same.
6. North East Development Finance Corporation Ltd. (CoC) counsel stated that the ‘Committee of Creditors’ had approved the ‘Resolution Plan’ where the distribution on pari passu (voting share) basis and that no discrimination was shown to any of the secured creditor.
7. Punjab National Bank (PNB), CoC’s counsel that by virtue of the amended Section 30 of the I&B Code, it is necessary that the ‘Dissenting Financial Creditor’ is paid, in the minimum, the value they would have received as per Section 53 of the Code, in the event the Corporate Debtor went for ‘liquidation’.
8. The Counsel for PNB The distribution of the amount was made very fairly by the ‘Committee of Creditors’ on the basis of the total dues of each respective creditor.
9. The Counsel for PNB added by referring the decision of Hon’ble Supreme Court in India Resurgence ARC Private Ltd V M/s Amit Metaliks Limited & Anr. that if the propositions suggested on behalf of the appellant were to be accepted, the result would be that rather than insolvency resolution and maximisation of the value of assets of the corporate debtor, the processes would lead to more liquidations, with every secured financial creditor opting to stand on dissent. Such a result would be defeating the very purpose of the Code.
Observation :
The Hon’ble NCLAT considered that decision made by within the ambit of the ‘Committee of Creditors’ who in the present case had approved the Resolution Plan with a majority and the approved Resolution Plan does not suffer from any vice of material irregularities or patent illegalities in the eye of law.
Judgement :
The Hon’ble NCLAT had dismissed the appeal based on its above contentions.
Rishi M
Article Assistant