Setback to SREI Infrastructure Finance: NCLAT approves ArcelorMittal’s Resolution Plan for Odisha Slurry

Setback to SREI Infrastructure Finance: NCLAT approves ArcelorMittal’s Resolution Plan for Odisha Slurry

National Company Law Appellate Tribunal (NCLAT) approved ArcelorMittal’s Resolution Plan for Odisha Slurry.

The Appellant challenged the Resolution Plan of Arcelor Mittal India Pvt. Ltd. (AMIPL) on the ground that the Plan is discrimination in the manner of distribution between the similarly situated secured creditors and also with respect to unsecured creditors. The Plan approved by the COC has permitted abatement of the suit filed before the Learned Sealdah Court which is pending before the High Court at Calcutta in Appeal wherein an order of status quo is subsisting relating to the transfer and alienation of the pipeline which is the only asset of the Corporate Debtor. The Plan failed to consider the usage charges receivable by the Corporate Debtor under the Right to Use Agreement (RTU) from ArcelorMittal Nippon Steel India Ltd. (AMNSIL) formerly known as Essar Steel India Ltd. which is owned by the Successful Resolution Applicant i.e. (AMIL). The plan is seeking to discharge the liability of AMNSIL, in respect of the usage charges by payable by AMNSIL to the Corporate Debtor for the CIRP of AMNSIL.

Advocate Abhijeet Sinha, appearing for the appellant, contended that the Appellant despite being a Secured Financial Creditor has not only being treated differently as compared to similarly situated secured Financial Creditors but is subjected to hostile discrimination given that other Secured Financial Creditors have received a higher proportion of their admitted claims as compared to the Appellant. 

The respondent contended that the payment, proposed to Essar Steel India Ltd. (ESIL) under the resolution plan is not in violation of code or any other law. It is reiterated that the appellant and the other financial creditors are receiving 100% of the total principal amount owed to them by the Corporate Debtor and the proposal has been accepted and unanimously approved by the members of the COC by applying their commercial wisdom and no provision of law has been violated on account of the same. 

The two member bench of Justice Jarat Kumar Jain and Mr. Kanthi Narahari noted that the commercial wisdom of the COC is paramount. The plan has been unanimously approved by the members of COC by a vote of 100% after applying their commercial wisdom. It is a well settled law that the Wisdom of the COC cannot be questioned unless and otherwise it is against the principles of applicable laws.

The tribunal having held that the plan was approved by the COC by a vote of 100% in its meeting and approved by the Adjudicating Authority, in toto, it did not find any infirmity or illegality in the order passed by the Adjudicating Authority approving the Resolution Plan. 

The tribunal while dismissing the appeal refused to interfere with the rejection of the applications filed by the Appellant before the Adjudicating Authority and upheld the rejections of the applications by the Adjudicating Authority.

Case title: SREI Infrastructure Finance Ltd. v/s Shri Ashish Chhawchharia Resolution Professional of M/s. Odisha Slurry Pipeline Infrastructure Limited and Ors.

Citation: Company Appeal (AT) (Ins) No. 591 of 2020

Click here to read the Order/Judgment

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