Answer 1

(1)

The Committee of Creditors (COC) plays a pivotal role in the corporate insolvency resolution
process (CIRP) under the Insolvency and Bankruptcy Code (IBC) 2016. 1The COC comprises
financial creditors who have submitted claims to the CIRP's interim resolution professional (IRP)
or resolution professional (RP). The COC is responsible for critical decisions concerning the
CIRP, such as appointing the RP, approving the resolution plan, and distributing the proceeds
from the sale of the corporate debtor's assets. The COC represents the interests of financial
creditors and aims to maximize their recovery. However, in practice, financial creditors often
have more say in the COC and decision-making, creating concerns about the power imbalance
and the protection of operational creditors' interests. Although the IBC mandates that all
creditors, including operational creditors, be treated equally, there have been instances where
operational creditors have not received equal treatment.

For instance, Paschim Bharat Vidyut Vitran Ltd. (PBVV) believes that the resolution plan passed
fails to cover all outstanding power dues and treats operational creditors unfairly compared to
financial creditors. This situation raises questions about whether operational creditors have a
voice in the resolution process and whether their interests are being adequately considered.

The case of Innoventive Industries Ltd. vs. ICICI Bank & Anr2 before the Supreme Court of
India addressed these concerns. In this case, Innoventive Industries challenged the constitution of
the COC, which did not include representation from operational creditors when appointing a
resolution professional for the company. The Supreme Court ruled that operational creditors
have a right to be heard by the COC and that the COC must offer a platform for them to express
their concerns. The Court emphasized that the COC cannot discriminate between financial and
operational creditors in its decision-making and must consider the interests of all stakeholders.

The Innoventive Industries case set a precedent for operational creditors to have a voice in the
resolution process and for the COC to consider their interests. This ruling has been cited in
numerous other cases, highlighting its significance in shaping the IBC resolution process and
promoting transparency and fairness. Therefore, it is essential that the COC considers the
interests of all creditors, including operational creditors, when making decisions. The COC must
ensure that the resolution plan includes provisions for the payment of outstanding dues to
operational creditors and that they are treated equally with financial creditors. In case of any
grievances, operational creditors may petition the adjudicating authority, as PBVV intends to do
in this situation.

In conclusion, the Innoventive Industries case has highlighted the importance of treating all
creditors equally and considering their interests in the resolution process. The COC must ensure
1
The Insolvency and Bankruptcy Code, 2016
2
Innoventive Industries Ltd. vs. ICICI Bank & Anr (2017) 1 SCC 356
that operational creditors have a voice and are protected, and the resolution plan should provide
for the payment of their dues. This approach promotes transparency, fairness, and the efficient
resolution of insolvency cases under the IBC.

(2)

Under the Insolvency and Bankruptcy Code, 2016 (IBC)3, a Committee of Creditors (CoC) is
formed to oversee the corporate insolvency resolution process. This committee is composed of
financial creditors who have extended credit to the corporate debtor, and a resolution plan must
be approved by a 66% majority vote of the CoC. However, operational creditors such as PBVV
are not eligible to join the CoC in this scenario, as only financial creditors are allowed to
participate. Nevertheless, PBVV has the right to file a petition with the National Company Law
Tribunal (NCLT) if it feels that its interests have been endangered by the resolution plan. PBVV
may claim that the resolution plan is not treating operational creditors fairly, which is a violation
of the IBC's principle of equality among all classes of creditors.

The case of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd.4 provides an example of
how operational creditors cannot be discriminated against in the distribution of the resolution
amount under the IBC. The NCLAT held that operational creditors must be treated equally with
financial creditors, as they are critical to the corporate debtor's operations and ecosystem.
Furthermore, the NCLAT stated that the IBC requires all creditors to be treated equally, and the
distribution of the resolution amount must be done equitably. Similarly, in the case of Committee
of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta5, the Supreme Court ruled that
the principle of equality must be followed when distributing the resolution amount among
creditors, and operational creditors cannot be disadvantaged in favour of financial creditors.

Therefore, PBVV may approach the NCLT to challenge the resolution plan on the grounds of
discrimination against operational creditors. PBVV may argue that the resolution plan violates
the principle of equality among all classes of creditors by favouring financial creditors over
operational creditors. While PBVV is not a financial creditor and cannot join the CoC, it still has
the right to contest the resolution plan before the NCLT.

In summary, although PBVV cannot be a part of the CoC, it can still exercise its rights by
seeking recourse through the NCLT if it believes its interests have been violated. PBVV can
argue that the resolution plan infringes on the principle of equality among all classes of creditors
by favouring financial creditors over operational creditors. The NCLT will evaluate PBVV's case
on its merits and provide a ruling accordingly.

3
The Insolvency and Bankruptcy Code, 2016
4
Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. (NCLAT)
5
Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta (Supreme Court)
Answer 2

As a homeowner who has invested in Techsuper Apartments, it is understandable to feel anxious

about the legal processes and the fate of your investment. But it is important to be aware of the
insolvency and bankruptcy laws in India that provide a framework for the resolution of bankrupt
companies, such as the Corporate Insolvency Resolution Process (CIRP) under the Insolvency
and Bankruptcy Code (IBC)6.The CIRP process involves several steps, beginning with the
appointment of an Insolvency Resolution Professional (IRP) who takes over control of the
company. The IRP is responsible for devising a resolution plan that outlines the revival proposal
for the company and the distribution of its assets among creditors. During the CIRP process, the
company is placed under a moratorium, which means that no legal proceedings can be initiated
against the company, and no assets can be attached to ensure that the company's assets are not
lost during the resolution process. The moratorium period lasts for 180 days, with an additional
90 days if necessary.

As a homebuyer, you are classified as a financial creditor under the IBC and have the right to
claim the amount paid to the builder. Your claim will be assessed alongside the claims of the
company's financial and operational creditors. In the case of Techsuper Apartments, you may
have paid a deposit or a construction-linked payment plan to the builder.

In the Pioneer Urban Land and Infrastructure Ltd. vs. Union of India7 case, the Supreme Court of
India ruled that homebuyers should be considered as financial creditors under the IBC. This
decision has helped homebuyers who were previously not recognized as creditors under the IBC.
It is important to note that the IRP's resolution plan may not always provide for a complete return
of your booking amount. Depending on the company's financial condition, the resolution plan
may recommend a reduction in the amount to be paid to creditors, including homebuyers.

The IRP prepares the resolution plan after a thorough examination of the company's financial
position, with the aim of reviving the company and distributing its assets equitably among
creditors. The plan may include debt restructuring, asset sales, or other measures to revitalize the
company.

If you believe your rights as a creditor have been violated, you have the right to challenge the
resolution plan before the National Company Law Tribunal (NCLT). The NCLT is a specialized
court that deals with business insolvency and bankruptcy cases. To challenge the resolution plan,
you must file an application with the NCLT within the specified time frame, providing clear
grounds for the challenge and supporting documents and evidence.The NCLT will review the
application and make a decision based on its merits. If the NCLT rejects the resolution plan, the
company may be liquidated, and its assets sold to reimburse creditors.

6
Insolvency and Bankruptcy Code, 2016. (n.d.). Insolvency and Bankruptcy Board of India. Retrieved from
https://www.ibbi.gov.in/uploads/legalframwork/2019-07-06-172157-ibc-2016.pdf
7
Pioneer Urban Land and Infrastructure Ltd. vs. Union of India. (2019)
Conclusion

As a homebuyer who has invested in Techsuper Apartments, you are recognized as a financial
creditor under the IBC and have the right to make a claim with the IRP for the money paid to the
builder. However, the resolution plan may not always provide for a full refund of your booking
fee. If you believe your creditor rights have been violated, you have the right to dispute the
resolution plan before the NCLT, which has the authority to approve or reject the plan and direct
the IRP to make changes to protect the rights of all stakeholders, including homebuyers.

Answer 3

1. When a company or an individual faces financial distress, insolvency can be a legal solution to
handle the situation. The process involves the appointment of an Insolvency Professional (IP) by
the court to oversee the proceedings.

As a court-appointed officer, the IP has the responsibility to act in an unbiased and honest
manner, taking into account the interests of all parties involved, including creditors, debtors, and
shareholders. The IP must comply with the legal requirements, be accountable and transparent,
and report to the court on the progress of the insolvency process.8

The purpose of insolvency is to manage the distressed company's or individual's assets and
liabilities, safeguarding the interests of all parties involved. The IP manages the cash flow, deals
with creditors, and explores restructuring or liquidation options.

The IP's primary duty is to ensure that all parties involved are treated fairly, and the assets are
distributed according to the law. They play a critical role in preserving the value of the distressed
company's or individual's assets.In essence, the court appoints an IP to supervise the insolvency
process of a financially distressed company or individual. The IP is a neutral and impartial
officer, responsible for ensuring that the interests of all parties are safeguarded, and the legal
requirements are met.9

2. When a company goes through financial difficulties, it may seek the assistance of an
Insolvency Professional (IP) to act as its Interim Resolution Professional (IRP). As the IP, you
will be responsible for overseeing the management of the company's assets and liabilities during
the insolvency process. If Company A approaches you to serve as the IRP for Company B, it is
crucial to understand the relationship between the two firms under the Insolvency and
Bankruptcy Code (IBC). Company B is the company experiencing financial difficulties, while
Company A is the firm interested in serving as the IRP.

8
"Insolvency Professional" by Insolvency and Bankruptcy Board of India, https://ibbi.gov.in/insolvency-professionals
9
"Insolvency Professionals" by Ministry of Corporate Affairs, India,
https://www.mca.gov.in/MinistryV2/insolvencyprofessionals.html
  To ensure that the insolvency process is fair and transparent, it is your responsibility as
the IP to ensure that Company A meets the IBC's eligibility conditions for serving as an
IRP. This includes verifying that the company meets the IBC's requirements for
qualifications and experience.10
 Once you have confirmed that Company A is qualified, you can issue the consent form
that formally appoints Company A as the IRP for Company B. The consent form outlines
the terms and conditions of the appointment, including the IRP's obligations and
deadlines for completing the insolvency process.11
 Throughout the insolvency process, the IRP must remain impartial and act in the best
interests of all parties involved, ensuring that assets are managed and distributed in
compliance with the law. As the IP overseeing the insolvency process, you are
responsible for monitoring the IRP's operations and ensuring that all actions taken are in
accordance with the IBC.

3. The Insolvency and Bankruptcy Code (IBC)12 is a crucial framework that aims to rescue
struggling corporations while maximizing recovery for all creditors. It recognizes two types of
creditors- financial and operational- and treats them differently.

Financial creditors, such as banks and other financial entities, have a higher priority in the
repayment hierarchy. Their claims are collateralized, and they are represented on the Committee
of Creditors (CoC), which approves or rejects the corporate debtor's resolution plan. On the other
hand, operational creditors, such as suppliers and contractors, have unsecured claims and rank
lower in the repayment hierarchy. They are not represented in the CoC and have less influence in
the process.

Difference between financial and operational creditors

The distinction between financial and operational creditors has been recognized in various court
cases, including the Innoventive Industries Ltd. v. ICICI Bank13 case. In this case, the Supreme
Court ruled that financial creditors have the authority to initiate bankruptcy proceedings against
the corporate debtor, while operational creditors do not have such a right.

10
Insolvency and Bankruptcy Code, 2016." Ministry of Corporate Affairs, Government of India, 2016,
https://www.mca.gov.in/Ministry/pdf/TheInsolvencyandBankruptcyofIndia.pdf.
11
"Appointment of Insolvency Professional as Interim Resolution Professional." Insolvency and Bankruptcy Board of India,
https://www.ibbi.gov.in/uploads/resources/2830ad2a2f30b4a0b4c202fac9e00b58.pdf.

12
Insolvency and Bankruptcy Code, 2016. Retrieved from https://ibbi.gov.in/uploads/resources/IBC.pdf
13
Innoventive Industries Ltd. v. ICICI Bank (2017) 1 SCC 1.
The IBC's goal is to preserve the corporate debtor as a going concern and ensure maximum
recovery for all creditors. The distinction between financial and operational creditors plays a
crucial role in achieving these objectives. While financial creditors have a higher priority and
more influence in the process, operational creditors still have an opportunity to recover their dues
with a lower priority.

Conclusion

The IBC recognizes the importance of differentiating between financial and operational creditors
to achieve its primary objectives. The rights and priorities of each creditor class are clearly
defined, ensuring a fair and equitable process for all parties involved.