Approval Of Resolution Plan Can't Be Interfered With Over 'NIL' Payment To Operational Creditors If Claims Have Been Properly Dealt With: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that since current legislative scheme does not mandate payment to Operational Creditors in event of the corporate debtor's liquidation, the Adjudicating Authority cannot interfere with the Resolution Plan approved by Committee of Creditors with 100% voting shares and in which the claims of the Operational Creditors have been properly dealt with. The present three appeals have been filed by the Operational Creditors against an order passed by the National Company Law Tribunal (NCLT) Mumbai by which it approved the Resolution Plan. The Appellants submitted that there is no consideration in the resolution plan as to how the claim of the operational creditor has been dealt with.Operational creditors are the creditors who provided goods and services to the corporate debtor and their claim was entitled to be considered with payment on priority. Per contra, the Respondents submitted that the liquidation value of the operational creditor being NIL after payment to the financial creditors, the operational creditors were not entitled for any payment under Section 30(2)(b) of the IBC, thus, the payment proposed i.e., 'NIL' to the operational creditor is in accordance with the Section 30(2)(b) of the IBC. The Tribunal observed that there is no doubt that Regulation 38 of the CIRP Regulations provides for the consideration of the interests of all stakeholders including financial and operational creditors in the resolution plan. In the present case, the Adjudicating Authority while approving the plan has clearly addressed the Appellants' treatment in the Plan. Considering the liquidation value of the corporate debtor was ₹1080 crores and average fair value was ₹16,068 crores, the Appellants will get nothing if the corporate debtor is liquidated. Therefore, in the present case, there is no breach of section 30(2)(b) of the IBC. The Tribunal observed that this tribunal acknowledges the current legislative scheme which does not mandate any payment to the Operational Creditors upon liquidation of the corporate debtor. This harsh reality was captured by the NCLAT in Damodar Valley Corporation and this judgment was also forwarded to the Central Government and the Board for consideration. The NCLAT's judgment in Hammond Power Solutions is distinguishable from the facts of the present case as in the present case unlike in the Hammond Power, all claims of the operational creditors have been properly dealt with. It further observed that the Supreme Court in Essal Steel held that the Adjudicating Authority should interfere with the approval of the Resolution Plan only when it breaches the provisions of the IBC. Since in the present case the plan was approved with 100% voting and no breach of section 30(2) of the IBC has been proven, the present Appeals deserve to be rejected. Accordingly, the present appeals were dismissed. Case Title: Masyc Projects Pvt. Ltd. Versus Pulkit Gupta, RP of Vadraj Cement Ltd. & Ors. Case Number:Company Appeal (AT) (Insolvency) No. 831 of 2025 Judgment Date: 12/08/2025 For Appellant: Mr. Kunal Tandon, Sr. Advocate with Mr. Yashvardhan, Mr. Kunal Godhwani, Ms. Kinjal Chadha, Ms. Kritika Nagpal and Ms. Natasha Singh, Advocates. For Respondents : Mr. Rishabh Parikh, Mr. Gaurav Mathur and Ms. Niyati Kohli, Advocates for SRA. Mr. Viraj Parikh, Mr. Vivek Shetty, Mr. Akhilesh Menzez, Mr. Nishant Upadhyay, Ms. Alankrita Sinha and Mr. Naveet R., Advocates for RP. Click Here To Read Order

Approval Of Resolution Plan Can't Be Interfered With Over 'NIL' Payment To Operational Creditors If Claims Have Been Properly Dealt With: NCLAT

Mohd Malik Chauhan

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