NCLAT upheld the approval of the Resolution Plan, which ensured full payment of workers' provident fund and gratuity, and dismissed the appeal, affirming the commercial wisdom of the Committee of Creditors.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench headed by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka reviewed an appeal and upheld the Resolution Plan approved by the Committee of Creditors (CoC), affirming that the plan complied with the provisions of the Insolvency and Bankruptcy Code (IBC), and emphasized that the commercial wisdom of the CoC cannot be judicially reviewed, particularly when the workers’ claims for provident fund and gratuity had been fully addressed in the plan.
The NCLAT heard an appeal challenging an order passed by the National Company Law Tribunal (NCLT) on 02.05.2024, which approved the Resolution Plan in the Corporate Insolvency Resolution Process (CIRP) of M/s Adico Forge Pvt. Ltd. The appellant, a union representing the workmen, had filed the appeal, arguing that the Resolution Plan did not adequately secure the workers' rights, including continued employment, termination benefits, and the payment of provident fund and gratuity dues. The workers’ claim, amounting to Rs. 8,19,47,918, had been admitted during the CIRP, and the Resolution Plan was approved by the Committee of Creditors (CoC) with a 92.87% vote share.
The Resolution Professional (RP) filed an application seeking approval of the Resolution Plan, which the NCLT had allowed. The appellant contended that the plan did not fully address the workers’ entitlement to provident funds and gratuity, and it sought additional provisions in the Resolution Plan to secure these dues. However, the respondent, the Successful Resolution Applicant (SRA), submitted that the Resolution Plan fully addressed the workers' claims, including the provident fund and gratuity, and the entire admitted claim had been paid in full. The SRA provided an affidavit, detailing that the plan included payment of provident fund and gratuity at actuals, along with other dues due to the workers.
Upon hearing the arguments, the NCLAT noted that the Resolution Plan had been approved by the CoC and complied with the relevant provisions of the Insolvency and Bankruptcy Code (IBC), particularly Section 30(2). The NCLAT emphasized that its jurisdiction in approving the Resolution Plan was limited to ensuring compliance with the IBC, as laid out in the Supreme Court's decision in K. Sashidhar v. Indian Overseas Bank and Others, REEDLAW 2019 SC 02502, which emphasized that the commercial wisdom of the CoC could not be challenged by the adjudicating authority. The NCLAT found no merit in the appellant's arguments, as the full payment of provident fund and gratuity had been addressed in the Resolution Plan. Consequently, the NCLAT dismissed the appeal, affirming the NCLT’s order approving the Resolution Plan, and disposed of any pending applications.
Ms. Gayatri Singh, Sr. Advocate with Ms. Hamza Lakdawala and Ms. Abiha Zaidi, Advocates represented the Appellant.
Mr. Abhirup Dasgupta and Ms. Jayashree Shukla Dasgupta, Advocates appeared for Respondent No. 3.
Mr. Kunal Kannungo, Advocate appeared for the Respondent.
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