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2024 Supreme(Online)(NCLAT) 892
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Arun Baroka (Member (Technical)) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,
ADICO FORGE KAMGAR SANGATHANA – Appellant
Versus
CA RAMCHANDRA DALLARAMCHOUDHARY & ORS – Respondent
1645/ND/2024 COMPANY APPEAL(AT)(INS)
The court affirmed that a Resolution Plan must comply with the Insolvency and Bankruptcy Code, ensuring all workers' claims are addressed, and that the NCLT's approval of such plans is limited to compliance checks without evaluating commercial decisions.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 30(2) - Corporate Insolvency Resolution Process - Approval of Resolution Plan - Appeal against approval of Resolution Plan by NCLT - Resolution Plan adequately addresses workers' claims including provident fund and gratuity, thus meeting compliance requirements - No grounds found to interfere with NCLT's order. (Paras 6, 8, 9)
(B) Jurisdiction of NCLT - Limited to examining compliance with IBC provisions - Cannot evaluate commercial decisions of Committee of Creditors - Commercial wisdom of creditors is non-justiciable. (Paras 8, 9)
Facts of the case:
The Appeal challenges the NCLT's order approving the Resolution Plan for M/s Adico Forge Pvt. Ltd., initiated by a Financial Creditor. The workers' total claim of Rs.8,19,47,918/- was admitted, and the Resolution Plan was approved with 92.87% votes in favor.
Findings of Court:
The court found that the approved Resolution Plan satisfactorily addressed the workers' claims, including provident fund and gratuity dues, and complied with IBC provisions.
Issues: The main issues were whether the Resolution Plan secured workers' rights and complied with IBC provisions.
Ratio Decidendi: The court held that the approved Resolution Plan met all legal requirements, and the NCLT's approval was justified as it did not interfere with the creditors' commercial decisions.
Result: Appeal dismissed.
JUDGMENT
This Appeal has been filed challenging order dated 02.05.2024 passed by National Company Law Tribunal, Mumbai Bench, Court-III in IA No.5826/2023 filed by the Resolution Professional (“RP”) for approval of the Resolution Plan. By the impugned order, the Adjudicating Authority allowed the application and approved the Resolution Plan. Aggrieved by which order this Appeal has been filed.
2. Brief facts necessary to be noticed for deciding the Appeal are:
(i) On an application filed by Financial Creditor, Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor - M/s Adico Forge Pvt. Ltd. commenced vide order dated 23.06.2023.
(ii) The Appellant – Union filed their claim with the Interim Resolution Professional (“IRP”). Total claim of the workers of Rs.8,19,47,918/- was admitted, which was communicated by the RP to the Appellant by email dated 06.12.2023.
(iii) A Resolution Plan was submitted by the Respondent – Trinity India Forgetech Pvt. Ltd. (Respondent No.3 herein), which Plan came to be approved by the CoC in the 9th Meeting with 92.87% vote shares.
(iv) IA No.5826 of 2023 was filed by the RP for approval of the Plan. The Adjudicating Authority by the impugned order has allowed the Application and approved the Resolution Plan. Aggrieved by which order, this Appeal has been filed.
3. Heard learned Counsel for the parties and perused the records.
4. The learned Counsel for the Appellant challenging the order contends that the Resolution Plan does not secure rights of the workmen, which include, but are not limited to continued employment after the Successful Resolution Applicant (“SRA”) took over the Corporate Debtor (“CD”) or retiral/ termination benefits. The learned Counsel for the Appellant also contended that the Resolution Plan also need to take care of the provident fund and gratuity to which the workers are entitled and the same have to be paid in full.
5. When the Appeal was heard on 10.09.2024, the learned Counsel for the SRA took time to file an affidavit on behalf of the SRA and the same was filed on 28.09.2024. The learned Counsel for the SRA submits that entire claim of the workmen, which was filed in the CIRP of the Corporate Debtor has been admitted. The learned Counsel for the SRA submits that the Resolution Plan provides for payment of provident fund and gratuity dues of the Corporate Debtor at actuals. The Resolution Plan fully takes care of claim of the workmen and the dues of the workmen having been accepted in full and paid in full in the Resolution Plan, no grievance can be raised by the learned Counsel for the Appellant. The learned Counsel for the SRA in affidavit, which has been filed, in paragraphs 12, 13 and 14 has pleaded as follows:
“12. I say that the approved Resolution Plan provides for payment to the Operational Creditors of the Corporate Debtor in accordance with Section 30(2) of the IBC. I further say that Clause 6.6 (iii) of the approved Resolution Plan provides for payment of Provident Fund and Gratuity dues of the Corporate Debtor at actuals. The relevant extract of the Resolution Plan showing Clause 6.6 (iii) is annexed herewith and marked as ANNEXURE - 1.
13. I say that as per the approved Resolution Plan, the Appellant is being paid the entire admitted claim amount of TNR 8,19,47,9 18/- (inclusive of Provident Fund and Gratuity), as recorded in Para 21 of the Impugned Order. As mentioned above, the sum of INR 8,19,47,918/- includes the Provident Fund and Gratuity claimed by the Appellant.
14. I say that in addition to the Provident Fund and Gratuity claimed by the Appellant, the books of the Corporate Debtor reflect a sum of INR 1,86,03,300/- as due and payable towards Provident Fund, which is also being paid in full under the approved Resolution Plan.”
6. The entire admitted claim in question for provident fund and gratuity having been paid in the Resolution Plan, we do not find any ground to interfere with the order of the Adjudicating Authority of approving the Reso
