NCLT rejects payment discrimination petition by dissenting creditors of Jyoti Structure
Any increase in the claim amount of the assenting Financial Creditors (FCs) due to the invocation of Bank Guarantees as per the terms of resolution plan cannot be a ground for challenge by the dissenting FCs on grounds of discrimination. The Mumbai bench of the National Company Law Tribunal (NCLT) said this while rejecting the petitions filed by dissenting/abstaining financial creditors — Union Bank of India, Bank of Maharashtra (Abstaining) and Central Bank of India (Dissenting) – in the Jyoti Structure Corporate Insolvency Resolution Process (CIRP).
The petitioners had moved the NCLT citing discrimination in payment under the Resolution Plan on the basis of the Assenting and Dissenting/Abstaining Financial Creditor and had prayed that the resolution plan should be modified to the extent that all Secured Financial Creditors be treated equally for payment of plan value subject to their individual exposure with the same terms as that of Assenting FCs.
The petitioner banks had alleged that there was glaring inequality in the payment between the Assenting/ Dissenting FCs and Operational Creditors (OCs). OCs were paid 10% more than that of the Dissenting/ Abstaining FCs and Assenting FCs are getting around 18 times more under the Resolution Plan.
The monitoring committee of resolution plan of Jyoti Structures Limited (represented by resolution professional Vandana Garg being Chairperson and resolution applicant Sharad Sanghi, SBI, ICICI Bank and IDBI Bank), which was one of the respondents in the case, argued that the revision in the amount of Assenting FCs was due to invocation of bank guarantee and that the revision was as per the terms of resolution plan.
“Clause F (3) of the Resolution Plan specifically mentions that if a bank guarantee is issued by the lender and invoked after the approval of Resolution Plan by the NCLT, then the said invoked amount shall be added to the fund-based debts extended by the issuing bank and Net Present Value (NPV) of the invoked bank guarantee amount will be added to the NPV of the overall amount of Rs 3,674 crores payable to the Secured FCs,” argued the monitoring committee before the NCLT bench.
Giving the verdict in favour of the respondents, the NCLT reiterated that the decision to include the invoked amount of the bank guarantee to the fund-based debts is a commercial decision of the Committee of Creditors (CoC), and that the invocation bank guarantee and the revision in the amounts of Assenting FCs is as per the terms of the Resolution Plan.
It also cited what the Supreme Court had held in the matter of Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Co. Ltd that resolution plan once approved by the adjudicating authority shall stand frozen and binding on all stakeholders including financial creditors.
Also read: Jyoti Structure road to recovery
