2021 Supreme(SC) 280

SUPREME COURT OF INDIA
Vineet Saran, Dinesh Maheshwari, JJ.
INDIA RESURGENCE ARC PRIVATE LIMITED - APPELLANT(S)
VERSUS
M/S. AMIT METALIKS LIMITED & ANR. - RESPONDENT(S)
Civil Appeal No. 1700 of 2021
Decided on : 13-05-2021

IMPORTANT POINTS
(1) Corporate Insolvency Resolution Process – Once it is found that all mandatory requirements have been duly complied with and taken care of, 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.
(2) A dissenting financial creditor would be receiving payment of amount as per his entitlement and that entitlement could also be satisfied by allowing him to enforce security interest, to the extent of value receivable by him.
(3) In scheme of IBC, every dissatisfaction does not partake character of a legal grievance and cannot be taken up as a ground of appeal.

Headnote:

(A) Insolvency and Bankruptcy Code, 2016 – Sections 30 and 62 – Corporate Insolvency Resolution Process – Approval of Resolution Plan – Appellant company is said to be assignee of rights, title and interest of secured financial creditor of corporate debtor – It does not appear if any objection to resolution plan was placed before Adjudicating Authority for consideration – As regards process of consideration and approval of resolution plan, matter is essentially that of commercial wisdom of Committee of Creditors and scope of judicial review remains limited within four-corners of Section 30(2) of Code for Adjudicating Authority and Section 30(2) read with Section 61(3) for Appellate Authority – Financial proposal in resolution plan forms core of business decision of Committee of Creditors – Once it is found that all mandatory requirements have been duly complied with and taken care of, 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 scheme of IBC, every dissatisfaction does not partake character of a legal grievance and cannot be taken up as a ground of appeal – NCLAT was right in observing that such amendment to sub-section (4) of Section 30 only amplified considerations for Committee of Creditors while exercising its commercial wisdom so as to take an informed decision in regard to viability and feasibility of resolution plan, with fairness of distribution amongst similarly situated creditors and business decision taken in exercise of commercial wisdom of Committee of Creditors does not call for interference unless creditors belonging to a class being similarly situated are denied fair and equitable treatment – Proposal for payment to all secured financial creditors (all of them ought to be carrying security interest with them) is equitable and proposal for payment to appellant is at par with 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 – Appeal dismissed. (Paras 5, 10, 11, 12, 12.1, 13.1 and 18)

(B) Insolvency and Bankruptcy Code, 2016 – Section 30 – Corporate Insolvency Resolution Process – What amount is to be paid to different classes or subclasses of creditors in accordance with provisions of Code and related Regulations, is essentially commercial wisdom of Committee of Creditors – A dissenting secured creditor like appellant cannot suggest a higher amount to be paid to it with reference to value of security interest – It has never been laid down that if a dissenting financial creditor is having a security available with him, he would be entitled to enforce entire of security interest or to receive entire value of security available with him – His dealing with security interest, if occasion so arise, would be conditioned by extent of value receivable by him – It has not been intent of legislature that a security interest available to a dissenting financial creditor over assets of corporate debtor gives him some right over and above other financial creditors so as to enforce entire of security interest and thereby bring about an inequitable scenario, by receiving excess amount, beyond receivable liquidation value proposed for same class of creditors. (Paras 14.1 and 15)

Facts of the case:

By way of this appeal under Section 62 of Insolvency and Bankruptcy Code, 2016, appellant India Resurgence ARC Private Limited seeks to question the order dated 02.03.2021 passed by National Company Law Appellate Tribunal, New Delhi2 in CA(AT) (Insolvency) No. 1061 of 2020, whereby the Appellate Authority rejected its challenge to the order dated 20.10.2020 passed by the National Company Law Tribunal, Kolkata Bench, Kolkata3in approval of the resolution plan in the corporate insolvency resolution process concerning corporate debtor VSP Udyog Private Limited (respondent No. 2 herein), as submitted by the resolution applicant Amit Metaliks Limited (respondent No. 1 herein).

Findings of Court:

If propositions suggested on behalf of the appellant were to be accepted, the result would be that rather than insolvency resolution and maximisation of the value of assets of the corporate debtor, processes would lead to more liquidations, with every secured financial creditor opting to stand on dissent. Such a result would be defeating the very purpose envisaged by the Code; and cannot be countenanced.

Result : Appeal dismissed.