NIL payment to OC’s if Liquidation Value is NIL, doesn’t contravene the provisions of S. 30(2)(b) of IBC, 2016: NCLAT, New Delhi


Status as on- 05/02/2023

Case Citation: Dharmindra Constructions Pvt. Ltd. & Anr. Versus Rajendra Kumar Jain Resolution Professional of Kudos Chemie Ltd. & Ors. In Company Appeal (AT) Insolvency No. 1477 of 2022 & I.A. No. 4658, 4610 of 2022

Background of the case:

Hon’ble National Company Law Tribunal, Chandigarh Bench (Hon’ble NCLT) has approved the Resolution Plan of Kudos Chemie Limited vide its order dated 17.03.2022 wherein the amount proposed for the payment of Operational Creditors was NIL and the Appellant Operational Creditor challenged the impugned order dated 17.03.2022 stating that the Operational Creditor in the Plan has not been allocated any amount hence the plan is not in accordance with the provisions of Insolvency & Bankruptcy Code, 2016.

In the Resolution Plan, the Resolution Applicant submitted that the amount due to Operational creditors shall be paid in compliance of provisions of Section 30(2)(b) of IBC, 2016 and Regulation 38(1) of IBBI (CIRP) Regulations, 2016.

Verdict by Hon’ble NCLAT:

As determined by Form H submitted by the Resolution Professional wich clearly indicate the Liquidation value of the Applicant is NIL. Even the Operational Creditor that is Government whose verified claim is Rs. 295.18 crore were paid as NIL, hence there is no error in the order in which no amount was allocated to the Appellant.

Hon’ble NCLAT while deciding the issue referred the judgement in the matter “Company Appeal (AT) Insolvency no. 22 of 2022, S. Chandriah vs. Sunil Kumar Agarwal” dated 22.07.2022 wherein it was it was decided that:

“Since present is a case where all stakeholders have been dealt with in the Plan. There is no requirement in statute that all stakeholders have to be necessarily made payment in the Resolution Plan.”

That Hon’ble Supreme Court in Essar Steel India Ltd. Committee of Creditors Vs. Satish Kumar Gupta, (2020) 8 SCC 531” also been noted and relied on the said judgement dated 22.07.2022.

Further it was held held that the Adjudicating Authority may not interfere with the merits of the commercial decision of the CoC. The limited judicial review available is to see that CoC has taken into account the fact that Corporate Debtor needs to be kept as a going concern, it needs to maximise the value, and interest of all the stakeholders including Operational Creditor havebeen taken care of.

Section 30(2) of IBC, 2016 provides as follows:

“30(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan—

(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than-

(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or

(ii) the amount that would have been paid to such creditors, if the amount to be

 distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with subsection (1) of section 53 in the event of a liquidation of the corporate debtor.

Explanation 1. — For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. ……………”


As per the law as exist today, the Operational Creditors are only entitled for minimum of the Liquidation Value and NIL payment to Operational Creditors in case the Liquidation Value is NIL, does not contravene the provisions of Section 30(2)(b) of Insolvency & Bankruptcy Code, 2016.

Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us at

Leave a Reply

Your email address will not be published. Required fields are marked *