The Supreme court while hearing an appeal regarding the resolution plan, held that section 30 of the Insolvency and Bankruptcy code only seeks to amplify the consideration of the Committee of creditors, keeping in mind the equitable distribution to every creditor. This judgment was passed in the case of India Resurgence Arc Private Limited Vs. M/S. Amit Metaliks Limited & Anr. [C.A.No.1700/2021] by a Double Bench consisting of Hon’ble Justice Vineet Saran And Hon’ble Justice Dinesh Maheshwari.
This appeal was filed by the appellant under section 62 of the Insolvency and Bankruptcy Code,2016 seeking to question the order of NCLAT which rejected the appeal of order passed by NCLT, Kolkata which approved the resolution plan in the corporate insolvency resolution process concerning the corporate debtor-respondent no.2. The appellant company was the assignee of the rights title and interest carried by Religare Finvest Limited as secured financial creditor of the corporate debtor, having 3.94% of voting share in the Committee of Creditors. When the resolution plan submitted by the respondent No. 1 was taken up for consideration by the CoC, the appellant expressed reservations on the share being proposed, particularly with reference to the value of the security interest held by it; and chose to remain a dissentient financial creditor. a substantial majority of other financial creditors voted in favour of the resolution plan and, therefore, the resolution plan got the approval of 95.35% of voting share of the financial creditors. The adjudicating authority after examination stated its complete satisfaction and proceeded to approve the resolution plan. Against the order so passed by the Adjudicating Authority, the appellant preferred an appeal under Section 61(1) read with Section 61(3) of the Code. The appellate authority took note of the grievances and arguments of the appellant and elucidates on the equitable treatment of the creditors and their protection against each other.
The supreme court after hearing the submissions of the appellant held that the submission were in relation to section 30 of the code which dealt with the processes of submission of resolution plan. It was held that the process of consideration and approval of resolution plan’s scope of juricial review in limited to section 30(2) for the appellate authority and section 30(2) r/w section 61(3) for the Appellate authority.
It was held by the supreme court that financial proposal in the resolution plan forms the core of the business decision of Committee of Creditors. When 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. Section 30(4) of the code 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. Any 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.
The supreme court held that the amount which is to be paid to different classes of creditors is the commercial wisdom of the Committee of Creditors; and a dissenting secured creditor like the appellant cannot suggest a higher amount to be paid to it with reference to the value of the security interest. Furthermore section 30(2)(b) of the code stipulates sufficiently the limitation on the extent of the amount receivable by a dissenting financial creditor.
The supreme court concluded by holding, “Viewed from any angle, the submissions made on behalf of the appellant do not merit acceptance and are required to be rejected.”