Insolvency and Bankruptcy Code, 2016: s. 30(4) – Resolution plan – Approval of, in the corporate insolvency resolution process – Resolution plan submitted by resolution applicant taken up for consideration by the CoC – Appellant expressed reservations on the share proposed particularly with reference to the value of security interest held by it and chose to remain dissentient financial creditor – Resolution plan as approved by the vast majority of voting share in the CoC was submitted for approval by resolution professional to the Adjudicating Authority – Adjudicating Authority found the plan to be feasible and viable with judicious distribution of financial bids by CoC to the stakeholders according to their entitlement – Adjudicating Authority approved resolution plan – Appellant unsuccessfully challenged the same before the Appellate Authority – Hence the instant appeal – Held: The matter of the process of consideration and approval of resolution plan is essentially that of the commercial wisdom of CoC and the scope of judicial review remains limited within the four-corners of s.30(2) of the Code for the Adjudicating Authority; and s.30(2) read with s.61(3) for the Appellate Authority – The financial proposal in the resolution plan forms the core of the business decision of CoC – Once it is found that all the mandatory requirements have been duly complied with and taken care of, the process of judicial review cannot be stretched to carry out quantitative analysis qua a particular creditor or any stakeholder, who may carry his own dissatisfaction – The proposal for payment to the appellant is at par with the percentage of payment proposed for other secured financial creditors – Therefore, no case of denial of fair and equitable treatment or disregard of priority is made out – Judicial review.
Dismissing the appeal, the Court
HELD: 1.1 The matter as regards the process of consideration and approval of resolution plan is essentially that of the commercial wisdom of Committee of Creditors and the scope of judicial review remains limited within the four-corners of Section 30(2) of the Code for the Adjudicating Authority; and Section 30(2) read with Section 61(3) for the Appellate Authority. [Para 10][623-B-C]
1.2 The financial proposal in the resolution plan forms the core of the business decision of Committee of Creditors. Once it is found that all the mandatory requirements have been duly complied with and taken care of, the process of judicial review cannot be stretched to carry out quantitative analysis qua a particular creditor or any stakeholder, who may carry his own dissatisfaction. In other words, in the scheme of IBC, every dissatisfaction does not partake the character of a legal grievance and cannot be taken up as a ground of appeal. [Para 11][624-F-G] K. Sashidhar v. Indian Overseas Bank and Ors. (2019)
12 SCC 150 : [2019] 3 SCR 845; Maharashtra
Seamless Limited v. Padmanabhan Venkatesh and Ors. (2020) 11 SCC 467 – referred to.
2.1 The provisions of amended sub-section (4) of Section
30 of the Code, on which excessive reliance is placed on behalf of the appellant do not make out any case for interference with the resolution plan at the instance of the appellant. The NCLAT was right in observing that such amendment to sub-section (4) of Section 30 only amplified the considerations for the Committee of Creditors while exercising its commercial wisdom so as to take an informed decision in regard to the viability and feasibility of resolution plan, with fairness of distribution amongst similarly situated creditors; and the business decision taken in exercise of the commercial wisdom of CoC does not call for interference unless creditors belonging to a class being similarly situated are denied fair and equitable treatment. [Para 12][625-A-D]
2.2 In regard to the question of fair and equitable treatment, though the Adjudicating Authority as also the Appellate Authority have returned concurrent findings in favour of the resolution plan. The proposal for payment to the appellant is at par with the percentage of payment proposed for other secured financial creditors. No case of denial of fair and equitable treatment or disregard of priority is made out. [Para 12.1][625-D-E]
2.3 The repeated submissions on behalf of the appellant with reference to the value of its security interest neither carry any meaning nor any substance. What the dissenting financial creditor is entitled to is specified in the later part of sub-section (2)(b) of Section 30 of the Code . [Para 13][625-F-G]
Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors. (2020) 8 SCC 531 : [2019] 16 SCR 275; Jaypee Kensington Boulevard Apartments Welfare Association and Ors. v. NBCC (India) Ltd. and Ors. [2021] 5 SCALE 142 – relied on.
3. The limitation on the extent of the amount receivable by a dissenting financial creditor is innate in Section 30(2)(b) of the Code. It has not been the intent of the legislature that a security interest available to a dissenting financial creditor over the assets of the corporate debtor gives him some right over and above other financial creditors so as to enforce the entire of the security interest and thereby bring about an inequitable scenario, by receiving excess amount, beyond the receivable liquidation value proposed for the same class of creditors. [Para 15][628-G-H; 629-A-B]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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