Company Appeal (AT) (Ins) No.606 of 2019
Re: Hammond Power Solutions Private Limited v. Mr. Sanjit Kumar Nayak and Ors
In this case, the contention of the Appellant is that the Resolution Plan approved is not in compliance with the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC – in short); that the provision of paying NIL amount to the Operational Creditors is not as per provisions of IBC and the law laid down in the Judgements of Hon’ble Supreme Court and this Tribunal; that the Operational Creditors deserved a similar treatment as Financial Creditors; that it is wrong on the part of Committee of Creditors (COC – in short) to approve a Resolution Plan which provided for payment only to members of the Committee and no other stakeholders.
Hon’ble NCLAT relied on Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. to hold that it can be hardly said that there are any reasons given by the Committee to demonstrate that it has taken care of interest of all stakeholders. Para – 46 of the Judgement in the matter of “Essar Steel” requires to see “the reasons given by the Committee of Creditors while approving a resolution plan” from point of view stated in the paragraph. The reasons for giving NIL to Operational Creditors is not reflected from record. We have already reproduced portion from Part B – Financial Proposal with regard to what the approved Resolution Plan states regarding dues to the Operational Creditors. The proposal is based on the assessment that there is no liquidation value due to Operational Creditors. Although it is not stated but there is reason to doubt that the Resolution Applicants were aware of the liquidation value. There is no dispute that so many of the Operational Creditors have been left high and dry giving them nil amount which Hon’ble Supreme Court has observed that giving NIL to Operational Creditors “would certainly not balance the interest of all stakeholders or maximise the value of assets of the Corporate Debtor if it becomes impossible to continue running its business as a going concern.”
Hence Hon’ble NCLAT disposed off the appeal and directed for re-submission of resolution plan.