Approval of RP with 100% voting and with slight modifications in amount to be paid to workmen was to be upheld: NCLAT

Case Details: Nitin Gupta v. Applied Electro-Magnetics (P.) Ltd. - [2022] 137 taxmann.com 441 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Justice Ashok Bhushan, Chairperson & Dr Alok Srivastava, Technical Member
  • RK Gupta, Adv. for the Appellant.
  • Abhishek Anand, Kunal Godhwani, Sahil Bhatia, V. Seshagiri, Manish Kaushik & Anubhav Gupta, Advs. for the Respondent.

Facts of the Case

In the instant case, the appellant was appointed as manager R&D (Railway projects) by the respondent – the corporate debtor. As the respondent didn’t pay his salary and other related amounts, the appellant sent a demand notice demanding debt due from the corporate debtor.

Thereafter, the appellant filed an application u/s 9 of the IBC as an operational creditor for initiation of the CIRP against the corporate debtor. CIRP was initiated against the corporate debtor and respondent no.- 2 was appointed as Resolution Professional (RP).

The Adjudicating Authority (NCLT) by the impugned order approved the resolution plan submitted by Resolution Professional. Thereafter, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

The appellant submitted that under the resolution plan, workmen had not been paid their dues in accordance with the provisions of IBC but had been only allocated 15% out of 24 months dues of the period preceding to CIRP commencement. Further, the appellant claimed that the dues of employees of the past 12 months preceding the date of insolvency commencement had not been paid in full but only 10% of the amount admissible was paid to them.

It was found that a successful resolution plan had been considered by CoC and approved by a majority of 100% of members’ voting share in CoC according to provisions of section 30(4) of the IBC.

NCLAT Held

The NCLAT held that since the approved resolution plan complied with the provisions of IBC with slight modification in the amount proposed to be paid to workmen in relation to their dues including provident fund, approval of the resolution plan by the Adjudicating Authority was to be upheld with the said modifications.

List of Cases Reviewed

• • Order of (NCLT – New Delhi) in CA No. (371/C-II/ND/2018 in CP (IB) – 334/(ND)/2017, dated 2-4-2019 (para 30) affirmed.
  • H. Gangahanume Gowda v. Karnataka Agro Industries Corporation Ltd. [2003] 3 SCC 40 (para 20) distinguished.
  • Sikander Singh Jamuwal Resloution Professional v. Vinay Talwar [2022] 137 taxmann.com 238 (NCLT – New Delhi) (para 30) followed.

List of Cases Referred to

• • H. Gangahanume Gowda v. Karnataka Agro Industries Corporation Ltd. [2003] 3 SCC 40 (NCLT – New Delhi) (para 8)
  • ‘State Bank of India v. Moser Baer Karamchari Union [2019] 108 taxmann.com 251 (NCLAT – New Delhi) (para 8)
  • Meera Mishra v. Satish Kumar [2019] 2 SCC 375 (para 12)
  • Swiss Ribbons (P.) Ltd. v. Union of India [2019] 101 taxmann.com 389/152 SCL 365 (SC) (para 18)
  • K. Shashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 (SC) (para 21)
  • Sikander Singh Jamuwal Resloution Professional v. Vinay Talwar [2022] 137 taxmann.com 238 (NCLT – New Delhi) (para 21)
  • Venus Recruiters (P) Ltd. v. Union of India [2020] 121 taxmann.com 346 (Delhi) (para 28)
  • Innoventive Industries Ltd. v. ICICI Bank Ltd. [2017] 84 taxmann.com 320/143 SCL 625 (SC) (para 28).