SREI Infrastructure Finance Ltd. vs Shri Ashish Chhawchharia & Ors.

Per: Kanthi Narahari Member (T)

The present Appeal is filed against the order dated 02.03.2020 passed in IA/188/2019 in TP No.41 of 2019 in CP No.352 of 2018 passed by the Adjudicating Authority (NCLT, Cuttack Bench) whereby the Adjudicating Authority allowed the approval of Resolution Plan in IA/188/2019 and dismissed CA No.194 of 2019 and 12 of 2020 filed by the Appellant herein. Aggrieved by the dismissal of the Applications of the Appellant the Appellant filed the present Appeal.

Shri Abhijeet Sinha Learned Counsel appeared for the Appellant submitted the brief facts.

It is submitted that the Appellant challenged the Resolution Plan of Arcelor Mittal India Pvt. Ltd. (for short AMIPL) on the ground that the Plan is discrimination in the manner of distribution between the similarly situated secured creditors and also with respect to unsecured creditors. The Plan approved by the COC has permitted abatement of the suit filed before the Learned Sealdah Court which is pending before the Hon’ble High Court at Calcutta in Appeal wherein an order of status quo is subsisting relating to the transfer and alienation of the pipeline which is the only asset of the Corporate Debtor. The Plan failed to consider the usage charges receivable by the Corporate Debtor under the Right to Use Agreement (RTU) from Arcelor Mittal Nippon Steel India Ltd. (for short AMNSIL) formerly known as Essar Steel India Ltd. which is owned by the Successful Resolution Applicant herein i.e. (AMIL). The plan is seeking to discharge the liability of AMNSIL, in respect of the usage charges by payable by AMNSIL to the Corporate Debtor for the CIRP of AMNSIL.

The Learned Counsel submitted that the Appellant being a Secured Financial Creditor is being treated differently to other similarly situated Secured Financial Creditor namely banks.

The Learned Counsel further submitted that the Essar Steel India Ltd. (ESIL) owned a 253 kilometers pipeline for carrying slurry from Paradip to Dibuna to its Plant. For raising further finance, ESIL had transferred the ownership of the pipeline under business Transfer Agreement dated 27.02.2015 (BTA) to the Corporate Debtor and thereafter entered into a Right to Use (RTU) Agreement dated 30^th March 2015 for use of the pipeline upon payment of usage charges.

The Appellant in its usual course of its business of lending providing Financial Assistance in form of loan to OSPIL (Corporate Debtor) for a principal amount of Rs.136.5 Crores by way of loan and Supplementary Agreement dated 28.03.2015 and 30.03.2015 respectively. The CD further required credit facilities and the Appellant disbursed further credit facility and provided a sum of Rs.290 by way of Loan agreement and Supplementary Agreement both dated 20.06.2015.

It is submitted that the majority lenders of ESIL and the Corporate Debtor (OSPIL) are the same. The Finance for the Corporate Debtor was obtained primarily on the basis of ownership of the pipeline. It was an obligation of ESIL to continue to pay the usage charges as the pipeline was being used by ESIL. However, ESIL had sought to revoke the BTA which had resulted in the Appellant filing a title suit being T.S.No.177 of 2016 before the Learned City Civil Court Sealdah Kolkota challenging the purported Deed of Cancellation dated 24.06.2016 and to ensure that the Slurry Pipe and its benefit stood vested in the Corporate Debtor. The Hon’ble High Court of Calcutta was pleased to pass an order directing a status quo with regard to the alienation and transfer in respect of Slurry Pipe.

It is pertinent to note that ESIL who is also a shareholder of the corporate Debtor agreed to grant a loan to the Corporate Debtor aggregating Rs.537 Crores.

It is submitted that pursuant to CIRP in respect of CD at the instance of IDBI Bank Ltd., the Appellant duly filed its form C with the Resolution Professional by which the Appellant filed its claim of Rs.549,76,10,988/-. Several communications exchanged between the representatives of the Appellant and the Respondent Resolution Professional by which the Appellant had duly clarified all the queries raised by the RP. While so, by e-mail dated 15.07.20109 the RP informed that the claim of the appellant has been provisionally accepted. By the same email the RP held that the appellant to be a related party to the Corporate Debtor. It is submitted that a separate appeal is filed before this Tribunal aggrieved by the decision of the RP.

It is submitted that the distribution under the Resolution Plan is designated to discrimination against the appellant and other classes of financial Creditors without any regard for priority among creditors security interest or proportion of admitted claims. The Learned Counsel referred to the chart showing the percentage wise allotment made.

It is submitted that the appellant a secured Financial Creditor is being treated differently from similarly situated secured financial creditors and is receiving lesser than them. However, the Respondents i.e. the RP, COC and AMIPL sought to be justified by alleging that all financial Creditors are receiving 100% of their principal claim and that this is allegedly justifiable and is under the shelter of commercial wisdom.

The said justification contentions are incorrect for the reason that in the present case the claims have been admitted by the RP and once a claim has been admitted, the COC is constituted on the basis of such claim and this position continues till the conclusion of the proceedings. No distinction can be made between principle and interest as per the terms of financial debt as defined under Section 5(8) of the I&B Code 2016 which makes no such distinction. It is contended that the IBC does not permit an admitted claim to be relooked or divided on the basis of principle and interest.

It is a settled law that the commercial wisdom of the COC that decides the amounts to be paid to different classes and sub classes of creditors but the same shall be in accordance with the Provisions of the Code and Regulations thereunder. It is equally settled that the decision of the COC cannot be contrary to any law or illegal. The COC must necessarily take into account the key features of the code and should conduct themselves in a fair and equitable manner. The commercial wisdom of COC is different from illegality. The plan has to stand the test of legality and fairness as would be evident from section 31 of IBC 2016.

Further in terms of Clause 3(VIII) of the Plan which is under challenge, the right of the appellant to proceed against the guarantors would stand extinguished and the guarantees would stand assigned to the Resolution Applicant which is impermissible in as much as, the right of the appellant under the Deed of Guarantee executed by Anshuman Ruia in favor of the Appellant is beyond the scope of the proceeding. The same is not relatable to the Corporate Debtor.

Further the plan provides for abatement of the title suit being TS No.177 of 2016pending before the Learned Sealdah Court. As such clause 3(VI) of the Plan under challenge which records that the suit pending before the Sealdah Court filed by the appellant would be abated. It is submitted that the Hon’ble Adjudicating Authority does not have the jurisdiction to declare abatement of another proceeding in as much as it seeks to protect the successful resolution applicant and its group concern from having to make payment of Rs.1800 crores calculated as per the RTU Agreement till February 2020.

It is submitted that the claim of the Appellant was secured by way of charge against the pipeline, the pipeline being used by ESIL which was also under CIRP and the present Resolution Applicant for this CD is also the Successful Resolution Applicant of ESIL. It is submitted that the Appellant has been discriminated as it has only been paid 58% of its claim admitted by the Resolution Professional whereas all other Financial Creditors have been paid 72%.

The Learned Counsel submitted that while approving the Resolution Plan vide order dated 02.03.2020, the Hon’ble Adjudicating Authority did not consider the necessity to maximise the value of the assets of the Corporate Debtor or balance the interest of the stakeholders. As stated supra, the Appellant despite being a Secured Financial Creditor has not only being treated differently as compared to similarly situated secured Financial Creditors but is subjected to hostile discrimination given that other Secured Financial Creditors have received a higher proportion of their admitted claims as compared to the Appellant.

In view of the aforesaid reasons, the Learned Counsel prayed this Bench to set aside and quash the Impugned Order dated 2^nd March 2020.

The Learned Senior Counsel appeared for the 1^st Respondent submitted the brief facts with respect to the CIRP of the Corporate Debtor.

It is submitted that the Adjudicating Authority (NCLT, Cuttack Bench) vide its order dated 14.05.2019 directed that the CIRP of the Corporate Debtor be commenced and appointed this Respondent as IRP of the Corporate Debtor. It is submitted that pursuant to issuance of EOI two Resolution Plans one from AMI and other from Thriveni Earth Movers Pvt. Ltd. were received. However, the COC approved the plan of the AMIPL with 100% of the voting share of the COC and after approval of the Plan by the COC this respondent made an application before the Learned Adjudicating Authority for its approval. By the order dated 2^nd March 2020 the Plan has been approved by the Hon’ble Adjudicating Authority. It is submitted that the entire CIRP of the Corporate Debtor was conducted in accordance with the provisions of the Code.

It is submitted that the Appellant is a related party Financial Creditor of the Corporate Debtor and the same has been upheld by the Hon’ble Adjudicating Authority (NCLT, Cuttack) vide order dated 29.11.2019. the appellant was not allowed to participate in the meetings of COC or vote on matters placed for vote at the COC.

The Learned Senior Counsel submitted that the Resolution Plan has been unanimously approved by the Members of COC by vote of 100% after applying their commercial wisdom. It is submitted that the commercial wisdom of the COC is of paramount status and is non-justiciable. The Learned Counsel referred to the Judgment of the Hon’ble Supreme Court in the matter of K Sasidhar v Indian Overseas Bank at Para 33.

The Learned Senior Counsel also referred to the Judgment of Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. and Ors v Union of India and Ors. reported in 2019 SCC online SC 73 at Para 44. The Learned Counsel also referred to the Judgment of this Tribunal in Standard Chartered Bank v Satish Kumar Gupta RP of Essar Steel Ltd. and Ors (2019) SCC Online NCLAT 388 as follows:

It is to be seen that whether the Resolution Plan is feasible, viable and maximizes the value of the Corporate Debtor is commercial in nature and is to be made by the Committee of Creditors by applying their Commercial wisdom and such decision is non-justiciable. In this regard, the Learned Counsel refer to Section 31(1) of the I&B Code, 2016.

It is submitted that the Resolution Plan does not discriminate amongst the Creditors of the Corporate Debtor and the distribution methodology is not in violation of applicable law. In the Plan a summary of its total financial proposal has been made in Section III (A) (.1) in a Tabular Format. According to the particulars of the tabular column it shows that the appellant’s debt to be permanently settled, discharged and extinguished in full and reduced to nil by payment of Rs.3,216,000,000.00 (Upfront SIFL Debt Discharge amount being 100% of the principal amounts verified and admitted by the Resolution Professional).

It is submitted that the manner of distribution of Proceeds under the Resolution Plan lies with the Members of COC and the learned Counsel referred to the Judgment of the Hon’ble Supreme Court in Committee of Creditors of Essar Steel India Ltd. V Satish Kumar Gupta RP and ors. (Civil appeal NO.8766-67 of 2019) at Para 40.

With regard to the allegation of the Appellant that the members of the COC have failed to maximise the value of the assets of the Corporate Debtor and have failed to take into account the fact that the Corporate Debtor is entitled to receive an amount of Rs.1800 Crores from Essar Steel India Ltd in the form of right to use charges. In response the learned Counsel submitted that the members of the COC being fully aware of the arrangement between the Corporate Debtor and the ESIL and taken care of all aspects while approving the plan by the COC.

With regard to withdrawal of title proceedings pursuant to approval of the resolution Plan it is submitted that it is not in contravention of any law. It is submitted that the provisions under the resolution plan indicates that the proceedings initiated by the appellant in relation to title of pipeline assets of the corporate debtor being TS No.177 of 2016 filed before the Civil Judge, will need to be withdrawn and it is not in violation of provisions of the Code or any other applicable law. The relevant excerpt from Resolution Plan is as under:

It is further submitted that the right to proceed against guarantors may be extinguished under a Resolution Plan if the same is approved by the Committee of Creditors. Relying upon the decisions of the NCLT Benches it is submitted that no judicial precedents suggest that the Committee of Creditors are prohibited to extinguish the right to proceed against the Guarantors.

It is submitted that the payment proposed to Essar Steel India Ltd. (ESIL) under the resolution plan is not in violation of code or any other law. It is reiterated that the appellant and the other financial creditors are receiving 100% of the total principle amount owed to them by the Corporate Debtor and the proposal has been accepted and unanimously approved by the members of the COC by applying their commercial wisdom and no provision of law has been violated on account of the same.

In view of the aforesaid reasons, the Learned Counsel also relied upon the decisions which will be dealt in later part of the Judgment.

Shri Arun Kathpalia, Learned Senior Counsel appearing for the 2^nd Respondent submitted brief facts in support of his case. It is submitted that the Hon’ble Adjudicating Authority approved the Resolution Plan under Section 31 of the I&B Code, 2016 on 30^th November 2019 in respect of AMIPL. Upon consideration and evaluation of the plans submitted by the prospective resolution applicants, the resolution plan submitted by AMIPL came to be approved by 100% positive vote of Committee of Creditors at its 8^th Meeting held on 06^th December, 2019. Further the plan provided for 100% of the verified and admitted principle amount due to each financial creditor of the corporate debtor as admitted by the resolution professional including the secured and unsecured institutional financial creditors, the appellant Essar Steel India Ltd. and Paradip steel Co. Ltd. (PSCL).

It is submitted that the approved plan has provided for equal treatment of all admitted financial debts including those of a sub servant nature and those payable to related parties of the corporate debtor as in the case of present appeal. The appellant received a payment approximately Rs.321,60,00,000 in full and final settlement of the purported amounts due to it from the Corporate Debtor.

The Learned Senior Counsel submitted that the appeal is a mala fide attempt by an erstwhile related party of the Corporate Debtor to frustrate the CIR process. It is also stated that he learned Adjudicating Authority vide its order dated 29.11.2019 had upheld the decision of the Resolution Professional to classify the appellant as a related party of the corporate debtor in terms of Section 25(5) of the Code by virtue of its relationship with the Corporate Debtor through its wholly owned subsidiary i.e. SAIML, which in turn acts as the settlor, contributory and investment manager of one SMAIT-IGOF which holds 69.81% shareholding in the Corporate Debtor.

With regard to the Commercial wisdom of the Committee of Creditors, the Learned Counsel relied upon the Judgment of the Hon’ble Supreme Court dated 15.11.2019 in the matter of Committee of Creditors of Essar Steel India Ltd. v Satish Kumar Gupta & Ors. 2019(16) SCALE, 319 at Para 38 and 40. Further the Learned Counsel referred to the same judgment on the point that the scope of Judicial Review over the commercial wisdom of the Committee of Creditors is limited as held at Para 42.

Relying upon the above Judgment the Learned Senior Counsel submitted that the commercial wisdom of the Committee of Creditors cannot be interfered with for the reason that the CIR process which has been successfully concluded in accordance with the Provisions of the Code.

With regard to pending RTU charges due to the Corporate Debtor from ESIL is purely an afterthought for the reason that the RTU charges had remained due and pending from ESIL to the Corporate Debtor for a substantial period of time prior to the commencement of CIR process. It is pertinent to note that during such period the affairs of the Corporate Debtor were being conducted by SAIML which is a wholly owned subsidiary of appellant in its capacity as the Settlor, Investment Manager and contributory of SMAIT which in turn was the majority shareholder of the Corporate Debtor. Notwithstanding the same, the appellant failed to take any steps during the said period to ensure that appropriate efforts were made to secure the recovery of charges due to the Corporate Debtor.

With regard to order of the Hon’ble High Court of Calcutta dated 11.02.2020 it is submitted that the same has no bearing on either the title of the Slurry Pipeline or the validity of the approved Resolution Plan. It is submitted that the Hon’ble High Court has not passed any orders with regard to either title of the Slurry Pipeline Asset or the right of the Corporate Debtor to receive RTU charges from ESIL. Accordingly, the order dated 11.02.2020 does not in any manner substantiate any of the purported averments made by the Appellant either before the learned Adjudicating Authority or this Tribunal. It is also submitted that the said order has no bearing on the legality and validity of the approved Resolution Plan.

The Learned Senior Counsel further submitted that the appellant has filed the civil suit bearing TS No. 177 of 2016 before the Learned Civil Judge Senior Divisional Sealdah in its purported capacity as the lender to the Corporate Debtor. By virtue of the implementation of the approved resolution plan on 8^th July 2020 and the receipt of full and final settlement of Rs.321,60,00,000/- by the Appellant the purported debt due from the Corporate Debtor to the Appellant stand extinguished in full.

It is submitted that the Committee of Creditors in due exercise of its Commercial wisdom approved the Resolution Plan. It is trite that while security interest is a relevant factor while determining the distribution of proceeds, it is in no manner a mandatory requirement to be accounted for. The Committee of Creditors in its commercial wisdom can agree to and formulate any other distribution mechanism as may be feasible and relevant to the facts of each case. In this regard the learned Senior Counsel relied upon the Judgment of the Hon’ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Ltd. v Satish Kumar Gupta & Ors. Para 46 and 83.

It is submitted that the Appellant misrepresented and concealed the facts in the purported table setout at paragraph VII(T) of the Appeal wherefrom it is shown that the Appellant receiving a recovery of only 58% of its total admitted debt, while a higher recovery is being made available to other stakeholders. It is submitted that the Appellant has conveniently chosen not to set out the details of principal and interest components of its total admitted debt. It is submitted that the interest component of the total admitted debt of the Appellant is proportionately higher in comparison to the interest component of the institutional Financial Creditors, notwithstanding the fact that the debt facilities of the institutional Financial Creditors and the purported debt facilities of the Appellant were all extended to the Corporate Debtor within the same time period of approximately 6 months.

It is submitted that each Financial Creditors of the CD receiving a different percentage of recovery on their total admitted debt ranging from 52% to 85% on account of different in disparity of interest Component of the Creditors.

In view of the aforesaid submissions, the Learned Senior Counsel submitted that the appeal is devoid of merits and liable to be rejected.

The Learned Senior Counsel appearing for the 3^rd Respondent submitted that the Appeal is a hopeless attempt to scuttle the Resolution Process of OSPIL and the Appellant has been attempting to do from the inception of initiation of CIRP.

With regard to discrimination of the Resolution Plan as it offers different recoveries to similarly situated Creditors, the Learned Counsel submitted that all the Financial Creditors have received equal treatment and the Financial Creditors are being paid 100% of their principal amount as admitted by the RP and the said criterion has been endorsed by the COC in its Commercial Wisdom by a vote of 100%.

It is submitted that there is no statutory mandate to consider interest rates while deciding distribution of proceeds under Section 30(2). The said provision provides that the distribution shall be fair and equitable and there is no statutory mandate either to provide for numerically equal amounts or to account for the interest component of financial debts. It is submitted that in the present case admittedly no Financial Creditor whether secured or unsecured has been permitted to recover the interest component and therefore there arises no question of discrimination treatment. The Resolution applicant paid Rs.321.6 crores despite initial objection from some COC Members that as a related party it should get nothing and despite pending appeal before this Tribunal which challenges the status of appellant as a financial Creditor of Corporate Debtor. Further, Regulation 37 of the IBBI (Insolvency Resolution Process for the Corporate persons) Regulations, 2016 (CIRP Regulations) clearly envisages that measures such as alteration of interest rates or other terms of loan may be envisaged as a part of the Resolution Plan. It is submitted that when it comes to a settlement of financial dues in order to examine the fairness of a proposal, a distinction can be made between the principal sum and interest.

It is submitted that any difference in recovery is solely attributable to the exorbitant interest rates charged by the Appellant as compared to other Secured Financial Creditors. The Learned Adjudicating Authority has rightly noted that this difference arose since the other Financial Creditors were constrained by RBI guidelines to charge reasonable interest rates whereas the Appellant was not. Further the Hon’ble Adjudicating Authority has rightly held that the Appellant cannot seek benefit of the exorbitant interest rates charged, especially when the Corporate Debtor was already under severe financial distress and that permitting such recoveries would defeat the spirit of the I&B Code. It is stated that there was no dismantry treatment since none of the Financial Creditors recovered interest.

With regard to the Commercial Wisdom of the COC it is submitted that the same cannot be interfered with for the reason that the COC has been given paramount status without any judicial intervention as laid down by the Hon’ble Supreme Court in Essar Steel Judgment and K Sashidhar v Indian Overseas bank and Others (2019) SCC online SC 257. Further, Section 30(2) of the I&B Code, 2016 clearly provides the minimum amount payable to the particular creditor (financial or operational)

It is submitted that with regard to recovery of the alleged RTU charges, the RTU Agreement was cancelled by a Cancellation Deed dated 24.06.2016 which came into effect on 30^th June 2016 to which the Corporate Debtor was a party. As a result, the dues under the Cancellation Deed stood discharged i.e. no RTU charges were recoverable. The cancellation relates back to 2016 much prior to the resolution process of the Corporate Debtor.

It is submitted that it is no longer res integra following the Judgment in the Essar Steel that a Resolution Applicant starts running the business of the Corporate Debtor on a fresh slate. The Hon’ble Supreme Court held that a successful resolution applicant cannot suddenly be faced with undecided claims after the resolution plan submitted by him has been accepted as this would amount to hydra head popping up. Therefore, all pending litigations must necessarily come to an end in terms of the settlement as contemplated under the Resolution Plan.

It is submitted that the Resolution Plan contemplates discharge of debt of Appellant followed by Assignment of Personnel Guarantees. As stated supra, the COC has decided that all the guarantees shall be assigned to the successful Resolution Applicant and the debt of the relevant creditors shall be extinguished upon payment in terms of the Resolution Plan

In view of the afore stated submissions the Learned Senior Counsel prayed this Bench to dismiss the Appeal.

Heard the Learned Counsel and Senior Counsel for the respective parties at length, perused pleadings, documents and citations relied upon by them. After analyzing the pleadings, the issue that felt for consideration whether the Appellant has made out any prima facie case in its favor or not.

Now we deal with the issue.

The bone of contention of the Appellant is that the plan of OSPIL-Corporate Debtor is discriminates in the matter of distribution of money between similarly placed Financial Creditors, negates personal guarantee of promoter provided to the Appellant, permits abatement of the title suit being TES No.177 of 2016 filed by the Appellant and pending before the Sealdah Court, Kolkota. Further the Appellant contended that the plan fails to consider the user charges that were due and payable by the Essar Steel India Ltd. (ESIL) to the Corporate Debtor under the Right to use Agreement. The Appellant filed an application before the Adjudicating Authority and the Grounds made therein that the appellant is one of the largest financial creditor of the corporate debtor with an admitted claim of Rs.549.76 crores and the appellant is a secured Financial Creditor to the Corporate Debtor and stated that the Plan as approved by the COC has failed to maximize the value of the assets of the Corporate Debtor. The Respondents filed reply to the said application. The Application has been adjudicated by the Learned Adjudicating Authority and the Learned Adjudicating Authority by the order dated 2^nd March 2019 while approving the Resolution Plan submitted by the Resolution Professional rejected the applications filed by the Appellant. As stated supra, the Appellant challenged the Resolution Plan of the successful resolution application i.e. AMIL on the aforesaid reasons. The Adjudicating Authority at para 13 of the order dated 02.03.2020 observed as under:

Since the issue revolves around the Resolution Plan we refer to the applicable Provisions of Law. Section 30 of the I&B Code, 2016 empowers for submission of resolution plan. Sub Section 1 of Section 30 reads as under:

As per the above Provisions of law, it is clear that the Committee of Creditors may approve the Resolution plan by a vote of not less than 66%. In the present case, it is an admitted fact as per the order of the Adjudicating Authority that the Resolution Plan submitted by M/s. Arcelor Mittal India Pvt. Ltd. (AMIPL) the Resolution Applicant was approved by 100% of voting in the 8^th COC meetings held on 06.12.2019.

The I&B Code, 2016 provides for approval of Resolution Plan under Section 31. Sub section 1 of Section 31 reads as under:

From the above Provision of Law, it is unequivocal that the Adjudicating Authority if satisfied, that the plan complaint all Provisions of Law may approve the Resolution Plan. As stated supra, the Resolution Plan was approved by the Adjudicating Authority and as per the above Provisions the Plan shall binding on the Corporate Debtor and its employees, members and creditors. Therefore, the Law specifically gives the powers under this statue that once the Resolution Plan is approved by the Committee of Creditors under Sub Section 4 of Section 30 the same is in accordance with law. The Adjudicating Authority may approve the Resolution Plan and the same is binding on Creditors, etc. It is to state that the I & B Code, 2016 is a special Legislation and has overriding effect of other laws as per Section 238 of the Code.

Now, we will consider the grievances of the Appellant. The Learned Counsel for the Appellant contended that the Plan is not fair and equitable and does not ensure maximization of the value of the assets of the Corporate Debtor for the reason that the Right to Use charges in respect of the slurry pipeline asset are to be payable by Essar steel India Ltd. to the Corporate Debtor, however, the Committee of Creditors took the stand that RTU charges that were otherwise outstanding under the RTU Agreement are not payable by ESIL in the Corporate Insolvency Resolution Process of ESIL, while acknowledging and accepting that such charges are payable. We have gone through the pleadings. The issue with regard to Right to Use charges, is concerned, to unfold the issue, we refer the RTU Agreement dated 30^th March 2015. Prior to the RTU Agreement there is a Business Transfer Agreement (BTA) dated 27.02.2015 entered between Essar Steel India Ltd. and OSPIL Corporate Debtor. The Right to Use Agreement entered between OSPIL Corporate Debtor and Essar Steel India Ltd. wherein clause 4 envisages payment of usage charges. The contention of the Appellant that the Resolution Applicant failed to administer payment of the outstanding RTU charges owed to the Corporate Debtor under the said Agreement and contended that the Resolution Applicant acted in a prejudicial manner. It is an admitted fact after entering into a Business Transfer Agreement dated 27.02.2015, the Business Transfer Agreement was cancelled vide Deed of Cancellation executed on 24.06.2016 came into effect on 30.06.2016. Pursuant to the Business Transfer Agreement the business of Slurry Pipeline of ESIL has to be transferred to the Corporate Debtor, however, in view of Cancellation of Business Transfer Agreement the Appellant challenged the said Cancellation of Agreement dated 27.02.2015 before the Civil Court. Hence, the matter is sub judice.

It is an admitted fact that the ESIL was also under Insolvency and the Appellant has not filed any claim in respect of the RTU charges with the Resolution Professional of ESIL. It is also an admitted fact that the CIR process of Corporate Debtor that is OSPIL commenced on 14.052019 that is after the completion of CIR Process of ESIL on 8^th March, 2019. Accordingly, it was submitted that there was no occasion for the RP of CD to file a claim in respect of the pending RTU charges with the Resolution Professional of ESIL. As stated supra, the issue is sub judice. Therefore, this Tribunal is not inclined to go into the aspect.

Further, the plan has been approved and dealt with all the aspects. Once the plan is approved with 100% voting, the same cannot be interfered.

Whether any discrimination treatment made in the payment to the Financial Creditor under the Resolution Plan. As contended by the Learned Counsel for the Appellant, there is a discrimination with regard to the payment to the Appellant and other Financial Creditors who are similarly placed. It is an admitted fact that the Secured Financial Creditors clearly had a superior charge over the Appellant and it is from the records that the Appellant only had residual charge over the 253 kilometers pipeline of the Corporate Debtor. Despite the charge by the Appellant on the pipeline of the Corporate Debtor it is seen that the Appellant was not discriminated and treated on par with other Financial Creditors. In this regard, a beneficial reference is drawn to Regulation 37 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Regulation 37 was inserted vide Notification dated 24.01.2019. The Regulation prescribes for the measures for the Insolvency Resolution of the Corporate Debtor for maximization of value of its assets including but not limited to the following. Sub Clause (f) and (g) permits the resolution Applicant for reduction in the amount payable to the Creditors and extension of maturity date or change in the name interest rate or other terms of a debt due from the Corporate Debtor. The contention of the Respondent is that the Appellant charged exorbitant rate of interest, whereas the other Secured Financial Creditors such as Banks have charged reasonably in accordance with their guidelines. The Regulations clearly empowers the Resolution Applicant for reduction in the debt amount and change in the interest. However, we have not come across any discrimination made to the Appellant with regard to its payment and treatment on par with the other Secured Creditors. It is also not out of place to mention that as per the settled norms, if the Successful Resolution Applicant intend to take over the company of the Corporate Debtor as a going and a going concern there shall be a haircut in the payment and also in respect of interest. It is also a settled position that One Time Settlement (OTS) of debt based on payment of the principal amount is not a new concept. However, from the records, it is seen that the Resolution Applicant i.e. AMIPL has paid 100% of the Principal admitted claim of each of the Financial Creditor of Corporate Debtor. The Appellant was made an upfront payment of the entire principal sum of Rs.321.6 Crores. As stated supra once the resolution plan is approved it becomes binding on all the stakeholders including the Creditors. Further, it is a settled position that all the claims prior to the insolvency commencement date stands extinguished in terms of the payment made under the Resolution Plan.

Further the Hon’ble Supreme Court in Committee of Creditors of Essar Steel India Ltd. v Satish Kumar Gupta RP of Essar Steel and Ors. 2019 (16) SCALE 319 held as under:

Further the Hon’ble Supreme Court took note of the fact that the Bankruptcy Law Reforms Committee Report of 2015 states “the appropriate disposition of a defaulting firm is a business decision and only the Creditors should make it”.

To buttress the above stand, it is important to note that the commercial wisdom of the COC is paramount. As stated supra, the plan has been unanimously approved by the members of COC by a vote of 100% after applying their commercial wisdom. It is a well settled law that the Wisdom of the COC cannot be questioned unless and otherwise it is against the principles of applicable laws.

The Hon’ble Supreme Court in K Sasidhar v Indian Overseas Bank and Ors. reported in 2019(12) SCC 150 held as under:

Further the Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. & another v Union of India and Ors. reported in 2019 SCC Online SC 73 held as under:

Further this Tribunal in Standard Chartered Bank v Satish Kumar Gupta RP of Essar Steel Ltd. and Ors. reported in 2019 SCC Online NCLAT 388 held as under:

As stated supra, as per sub section 1 of section 31 of the I&B Code, if the Adjudicating Authority is satisfied that the Resolution Plan as approved by the COC under sub section 4 of section 30 meets the requirements, shall be binding on the Corporate Debtor, its employees, members, creditors, etc.

The Hon’ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Ltd. v Satish Kumar Gupta RP of Essar Steel Ltd and Ors. held as under:

With regard to the extinguishment of liability of the Guarantor the Learned Counsel for the Appellant submitted that the Appellant is only the Financial Creditor whose loan to the Corporate Debtor is secured by a personal guarantee from one Mr. Anshuman Ruia, Promoter of the Corporate Debtor and whereas the Resolution Plan submitted by the 3^rd Respondent herein seeks to protect the Promoter which is contrary to the spirit of the IBC. Having approved the plan by the Committee of Creditors by applying its Commercial Wisdom, which extinguishes the right to proceed against the Guarantors. Since as per the decision of the Hon’ble Supreme Court the wisdom exercised by COC for the issue of guarantee cannot be interfered with by the NCLT or NCLAT. As stated supra, the approved Resolution Plan is not rendered invalid or illegal in any manner and the approved Resolution Plan does not extinguish the personal guarantee and only assigns the same in favor of AMIPL on account of AMIPL having fully settled the debt of the Appellant in relation to the Corporate Debtor and thereby automatically stepping into the shoes of the Appellant for the said debt.

As the law laid down by the Hon’ble Supreme Court with respect to the Commercial Wisdom of the COC, we do not find any contravention with regard to the rules and regulations of the I&B Code and we are also of the view that the Committee of Creditors acted in the interest of all the stakeholders. Therefore, we do not interfere with the decision of the Committee of Creditors.

Having held that the plan approved by the COC by a vote of 100% in its meeting and approved by the Adjudicating Authority, in toto, we do not find any infirmity or illegality in the order passed by the Adjudicating Authority approving the Resolution Plan. Further, we are not inclined to interfere with the rejection of the applications filed by the Appellant herein before the Adjudicating Authority. The Adjudicating Authority rejected the applications filed by the Appellant demands no interference. Accordingly, we uphold the rejections of the applications by the Adjudicating Authority.

The other contentions of the Appellant do not substantiate and lack of merit to be interfered by this Tribunal. Taking an overall perspective stand, the appeal is liable to be dismissed. Accordingly, the Appeal stand dismissed. However, no orders as to cost. Applications if any pending as on today stands disposed of.