IBC – Operational Debtor – Dues not disclosed by the CD and also not obtained by IRP / RP.
The Petitioner – a public limited company – is also registered under MSME Act, 2006. It had availed loan from M/s Indian Overseas Bank. However, on account of non-payment of loan, it was declared as NPA.
On 24.3.2017, the Bank assigned the debt to M/s. Alchemist Asset Reconstruction Company Ltd (Financial Creditor / FC).
Financial Creditor filed section 7 IBC application in the NCLT for CIRP.
On 6.12.2021, the Resolution Plan was approved by the NCLT. As per the RP, the FC was partially benefited and the operational creditors would be paid pro rata at 1% of the value of their claim. However, the Electricity Board did not make any claim for its electricity arrears before the IRP in pursuance of the public notice. The petitioner also did not disclose electricity arrears.
On 19.01.2022, the Tamil Nadu Electricity Board issued demand notice for Rs.32,86,061/- as arrears from June, 2019. The petitioner replied that the said outstanding dues stood extinguished in view of approval of RP. The electricity connection was disconnected.
The application dated 24.2.2022 for temporary connection was declined till payment of electricity arrears.
The petitioner has filed the writ petition challenging the demand of electricity charges is illegal.
The object of IBC evidently is to minimize the loss of various categories of creditors even as it attempts to salvage the corporate debtor from its commercial extinction.
Plan approved by the CoC should be based on complete disclosure of information and that its treatment of the interest of the operational creditor must be just, fair and equitable and that its allocation for the operational creditors is not less than that which the operational creditors might have obtained in a liquidation proceeding of the corporate debtor.
Any Resolution Plan, even though approved by the Adjudicating Authority, yet, if it does not satisfy the triple criteria as mentioned in para 32 of the judgment, there will be difficulty in attaching finality.
It is time the IRPs and the RPs realized that their office is not an office of comfort, but an onerous one for it is on their diligence and integrity the successful working of the IBC rests. They should not forget that their claim figures first when the resolution plan goes for a shower under the waterfall. Sadly, not many seem to have realized the significance of their duty and how their abject callousness drowns the operational creditors into poverty, more particularly, the MSME operational creditors.
https://rb.gy/il43qi
Judgment dated 7.6.2024 of the Madras High Court in Writ Petition No.29845 of 2022 of The National Sewing Thread Co. Ltd Vs. The Superintending Engineer and another
