No Provision In IBC Mandates Treatment Of Unrelated Party At Par With Related Party: NCLAT Principal Bench, New Delhi

In West Coast Paper Mills Ltd. vs Bijay Murmuria & Ors., the NCLAT, Principal Bench, New Delhi, comprising Justice Rakesh Kumar Jain and Technical Members Naresh Salecha and Indevar Pandey, upheld that related party unsecured creditors are not entitled to parity with secured financial creditors under the IBC, 2016. \r

The appellant, having paid Rs. 7.15 crores on behalf of Fort Gloster Industries Ltd., argued for equal treatment with other financial creditors. The tribunal affirmed the Committee of Creditors' (CoC) and Adjudicating Authority's discretion, noting the resolution plan's compliance with IBC provisions. It cited M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder & Anr., stressing that differential payment is permissible under CoC's commercial wisdom. \r

The appeal was dismissed, confirming the appellant's status as a related party unsecured creditor.