NCLAT observed that its intervention in the resolution plan allocation of funds to the operational creditor is unwarranted if above the liquidation value threshold.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) were hearing an appeal and held
the resolution plan's allocation of funds to the operational creditor was not grounds for interference, as it did not fall below the liquidation value prescribed by the Insolvency and Bankruptcy Code (IBC).
The appeal, stemming from a dispute between an operational creditor and a corporate debtor, challenged an order issued by the National Company Law Tribunal, Kolkata Bench. This order, dated 08.06.2023, approved a resolution plan submitted by Jupiter Wagons Limited and facilitated by the resolution professional.
The dispute had its roots in a lease agreement dating back to 1947, where the appellant had leased land to various entities, eventually assigned to the corporate debtor, Stone India Ltd.
Over the years, there were disputes regarding rent payments and possession rights, leading to legal battles that reached the Supreme Court. The Supreme Court's orders mandated rent payments and maintained the corporate debtor's possession status quo.
Amidst this legal backdrop, the corporate debtor entered the Corporate Insolvency Resolution Process (CIRP) in 2021. The appellant claimed unpaid occupational charges dating back to 1977 totalling Rs. 98,39,70,929.51, of which Rs. 12,86,73,543.20 was admitted by the resolution professional.
The resolution plan submitted by Jupiter Wagons Limited was approved by the Committee of Creditors (CoC) with a 100% vote share. However, the appellant contested the plan, arguing that the amount allocated to them (Rs. 42,37,569) was inadequate compared to their claimed amount.
During the legal proceedings, the resolution professional defended the plan, highlighting the continued possession of the disputed land by the corporate debtor under court orders and the payments made to the appellant as per the resolution plan.
The Appellate Tribunal examined the arguments and found no grounds to interfere with the adjudicating authority's decision. It emphasized that the resolution plan did not alter the ongoing legal proceedings regarding possession rights, which would be decided independently. Additionally, it upheld the CoC's commercial judgment in approving the resolution plan.
In conclusion, the appeal was dismissed, affirming the approval of the resolution plan while clarifying that it did not impact pending legal proceedings regarding possession rights.
Click on the Citation to Read/Download the Judgment