Back
2024 Supreme(Online)(NCLAT) 1056
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Infinity Interiors Private Limited – Appellant
Versus
Subodh Kumar Agarwal – Respondent
432/ND/2020 COMPANY APPEAL(AT)(INS)
Differential treatment among operational creditors in a resolution plan is permissible under the Insolvency and Bankruptcy Code if justified by the commercial wisdom of the Committee of Creditors.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 30(2)(b) - Appeals against the approval of a Resolution Plan - The Appellants, operational creditors, alleged discrimination in payment under the approved plan, favoring 'special operational creditors' - The court affirmed the commercial wisdom of the Committee of Creditors (CoC) in approving the plan, emphasizing that differential treatment among operational creditors is permissible if justified - No specific definition for 'special operational creditor' exists in the Code, but the classification was upheld for practical business considerations - The court ruled that the plan met legal requirements and did not violate the Code. (Paras 92-98)
(B) Commercial Wisdom - The court reiterated that the commercial wisdom of the CoC is paramount and non-justiciable, thus limiting judicial review on matters of business decisions made by the CoC. (Paras 68-71)
J U D G E M E N T
(11.12.2024)
NARESH SALECHA, MEMBER (TECHNICAL)
1. There are six appeals before us arising out of common Impugned Order dated 07.02.2020 under 61(3) of the Insolvency & Bankruptcy Code, 2016 (in short ‘Code’ ) passed by National Company Law Tribunal, Hyderabad Bench, Hyderabad (in short ‘ Adjudicating Authority ’) in IA No’s. 433, 447 and 448/2018 and IA Nos. 32, 61, 950, 960 and 961/2019 in CP (IB) No. 248/7/HDB/2017.
2. These six appeals have been filed against a common Impugned Order and have been tagged together, we shall deal all these six appeals in the following discussion.
3. At the initial stage, we will take note of the details of appeals mentioned herein :-
Company Appeal (AT) (Ins.) No. 426 of 2020, Company Appeal (AT) (Ins.) No. 430 of 2020, Company Appeal (AT) (Ins.) No. 432 of 2020, Company Appeal (AT) (Ins.) No. 710 of 2020, Company Appeal (AT) (Ins.) No. 438 of 2020 and Company Appeal (AT) (Ins.) No. 336 of 2020.
4. At this stage, we note that there are four Operational Creditors i.e., NCC in Company Appeal (AT) (Ins.) No. 426 of 2020; Consolidated Engineering company in Company Appeal (AT) (Ins.) No. 430 of 2020; Infinity Interior Private Limited in Company Appeal (AT) (Ins.) No. 432 of 2020; and Ahuja Furniture in Company Appeal (AT) (Ins.) No. 710 of 2020. All these four appeals have been filed by Operational Creditors who have supplied different services to the Corporate Debtor.
5. We also note that the issues of all four appeals are by and large same, in fact three appeals, namely, Company Appeal (AT) (Ins.) No. 430 of 2020, 432 of 2020 & 710 of 2020 have been argued by the same Counsel Mr. Uddyam Mukherjee, whereas Company Appeal (AT) (Ins.) No. 426 of 2020 has been argued by Ms. Priya Kumar. As such we will take into consideration the issues, pleadings of the Appellants and submissions of the Respondents along with our analysis herein after.
6. The two other appeals, namely Company Appeal (AT) (Ins.) No. 438 of
2020 has been filed by Laxmi Narayan Sharma, Suspended Director / Promoter of the Corporate Debtor who has challenged the approval of the Resolution Plan on entirely different grounds. Similarly, Company Appeal (AT) (Ins.) No. 336 of 2020 has been filed by EIH Limited who filed the appeal on the limited grounds of relegating him as related party and Promoter of the Corporate Debtor covered under Section 29A of the Code.
7. Hence, in fitness of things, first four appeals shall be dealt herein after and a common order will be pronounced. Other two appeals are being dealt in two different orders.
8. Pleadings are generally identical, in all these four appeals. The Corporate Debtor has been arrayed the Respondent in all four appeals at different Serial Nos i.e., Respondent No. 1 in Company Appeal (AT) (Ins.) No. 426 of 2020 and Respondent No. 2 in Company Appeal (AT) (Ins.) No. 430 of 2020, 432 of 2020 & 710 of 2020.
9. Committee of Creditors (‘CoC’) is the Respondent No. 2 in Company Appeal (AT) (Ins.) No. 426 of 2020, Respondent No. 4 in Company Appeal (AT) (Ins.) No. 430 of 2020 & 432 of 2020 and Respondent No. 5 in Company Appeal (AT) (Ins.) No. 710 of 2020.
10. BREP Asia II Indian Holding Co II (NQ) PTE. Ltd. i.e., SRA is the Respondent No. 5 in in Company Appeal (AT) (Ins.) No. 426 of 2020, Respondent No 3 in in Company Appeal (AT) (Ins.) No. 430 of 2020 and 710 of 2020.
11. Subodh Kumar Agrawal is the IRP and Respondent No. 1 in in Company Appeal (AT) (Ins.) No. 430 of 2020, 432 of 2020 & 710 of 2020.
12. Counsel for the other Respondents who appeared before us generally took the same line of pleadings as taken by the Respondents noted above.
Company Appeal (AT) (Ins.) No. 426 of 2020
13. NCC Ltd. is the Appellant herein and the Operational Creditor of M/s Golden Jubilee Hotels Pvt. Ltd. (‘ Corporate Debtor ’) the Respondent No. 1 herein, who submitted the claims of Rs. 51,75,95,253/- as on 14.03.2018 in form -B subsequent to public notice dated
