NCLAT directs to Modifies Resolution Plan  by compliance with provision of section 30(2)(b)(ii) of IBC [Read Order]

The Delhi bench of the National Company Law Appellate Tribunal ( NCLAT ) directed to modify the resolution plan passed by the adjudication authority by compliance with the provision of Section 30(2)(b)(ii) of Indian Bankruptcy Code ( IBC ).

The facts of the case was that, Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor – Television Home Shopping Network Limited commenced on 03.03.2023

The Appellant Gupta Textiles , an Operational Creditor, filed its claim in Form-B for an amount of Rs.1,41,16,647/-. The claim of the Appellant was admitted to the extent of Rs. 1,24,73,281/

The Financial Creditor – Centre for Economic and Social Inclusion Private Ltd. was the only Member of the Committee of Creditors (“CoC”), having 100% vote of share. Resolution Plan submitted by Respondent No.2, was approved by 100% vote share on 06.08.2023

The Financial Creditor also initiated arbitration proceedings as per the Loan Agreement in which an award dated 04.02.2020 was given. The Corporate Debtor having not made the payment, Section 7 application was filed by the Financial Creditor on 31.01.2022. Reply was filed by the Corporate Debtor to Section 7 application.

Accordingly the Resolution Professional (RP) submitted an Application for approval of the Resolution Plan. The Adjudicating Authority approved the Resolution Plan. Aggrieved by the order the appellant filed the appeal .

Nipun Gautam, Senior Counsel appearing for the Appellant argued that the Resolution Plan submitted by Respondent No.2 was not in compliance with Section 30, sub-section (2) (b).

Therefore It was submitted that under the Resolution Plan cash upfront amount, which has been offered to the Operational Creditor is contrary to Section 30 (2) (b) (ii).

Navin Pahwa, Counsel appearing for the respondent argued that Resolution Plan has been approved by 100% vote share of the CoC and the commercial wisdom of the CoC cannot be challenged by the Appellant.

Further submitted that the payment offered to the Operational Creditor is in compliance with Section 30, sub-section (2). The CoC has also noted that the return on funds involving partly paid amounts comes to around 12% per annum. The present Appeal does not raise any question of law, which warrants adjudication by this Tribunal.

After analyzing the submission of both parties the bench comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) observed that the distribution of the amount to the Operational Creditor (other than Government Departments) is clearly contrary to provisions of Section 30 (2)(b)(ii. The Adjudicating Authority has failed to advertise to Section 30, sub-section (2) (b) (ii) and failed to notice that the amount proposed to the Operational Creditor is clearly contrary to Section 30(2)(b)(ii).

Therefore the bench directed to modify the resolution plan passed by the adjudication authority by compliance with the provision of Section 30(2)(b)(ii) of Indian Bankruptcy Code (IBC).

To Read the full text of the Order CLICK HERE

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