The Marginalization Of Operational Creditors: A Critical Study Of NCLAT's Decision In Rajat Metaal Polychem Pvt. Ltd. V. Neeraj Bhatia And Anr.
- IJLLR Journal
- Feb 14
- 2 min read
Teesha Deb, National Law University Odisha
I. Introduction
The Insolvency and Bankruptcy Code, 2016 (IBC), stands as a transformative legal framework in India, streamlining corporate insolvency to prioritize efficiency, creditor recovery, and economic stability. Despite its monumental success in resolving financial distress and bolstering investor confidence, the Code has drawn sustained criticism for its inequitable treatment of operational creditors. These stakeholders, often suppliers or service providers vital to a corporate debtor’s functioning, are relegated to a secondary role in resolution proceedings, frequently excluded from meaningful payouts. This marginalization reflects an underlying tension between the IBC’s commercial objectives and its commitment to equitable treatment.
The recent judgment in Rajat Metaal Polychem Pvt. Ltd. v. Neeraj Bhatia & Anr. exemplifies this debate. By approving a Resolution Plan that allocated no payment to operational creditors, the decision reaffirms the primacy of financial creditors while exposing systemic inequities in creditor hierarchies. Although the ruling conforms to statutory mandates and established judicial precedents, it reignites pressing questions about the fairness of liquidation value standards, the unchecked dominance of the Committee of Creditors (CoC), and the broader implications for stakeholder equity.
This article critically examines the judgment, placing it within the broader context of evolving jurisprudence under the IBC. It explores whether the current legal framework sufficiently balances the interests of all stakeholders or whether legislative reforms are imperative to prevent operational creditors from being perpetually disadvantaged in India’s insolvency landscape.
II. Factual Background: Operational Creditors and the NIL Payment Debate
In the present case, the corporate debtor, Vinayak Rathi Steels Rolling Mills Pvt. Ltd., entered into insolvency on June 16, 2020, following a petition under section 7 of the IBC by its financial creditor, Jammu and Kashmir Bank. Subsequently, a public announcement by the Interim Resolution Professional invited claims from creditors. Rajat Metaal Polychem Pvt. Ltd., an operational creditor, submitted a claim amounting to ₹1.54 crore. However, only ₹93 lakh of this claim was admitted by the Resolution Professional (RP).
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