Important question on the right of financial creditor to the minimum value of its security asset is referred to the larger Bench of the Supreme Court
Judgment dated 3.1.2024 in Civil Appeal No.9133 of 2019 of DBS Bank Limited Singapore Vs. Ruchi Soya Industries Ltd and another with connected matter.
IBC – Sections 30(2)(b)(ii) – Pre & Post-2019 Amendment – Dissenting Financial Creditor having first charge on all assets of CD – Distribution of Assets in the Resolution Plan.
The appellant DBS Bank Ltd Singapore had given Rs.243 crores to the Corporate Debtor M/s. Ruchi Soya Industries Ltd with exclusive first charge on its assets.
On 15.12.2017, CIRP was initiated against the Corporate Debtor and the Resolution Professional was appointed.
The Resolution Professional admitted the claim of the appellant for Rs.242.96 crores.
On 20.03.2019, Patanjali submitted resolution plan for Rs.4134 crores against aggregate claims of Rs.8398/- crores.
On 12.4.2019, the appellant informed CoC about greater value of assets compared to collaterals of other creditors and also to consider liquidation value of its security in distribution of proceedings in a fair and equitable manner.
On 30.04.2019, the Resolution Plan was approved by 96.95% of the CoC and the dissenting vote of the appellant as financial creditor.
On 24.7.2019, the NCLT granted provisional approval and rejected the application of the appellant challenging the distribution. The appellant will receive Rs.119 crores against liquidation value of its security at Rs.217.86 crores. This was challenged before NCLAT.
In the meanwhile, Section 30(2)(b) was amended. It was provided that the operational and dissenting financial creditors shall not be paid amount lesser than the amount to be paid to the creditors and the amendment was made applicable to the pending proceedings.
On 30.8.2019, the appellant requested CoC to re-consider the distribution plan. CoC rejected the said request on the ground of pendency of its appeal.
On 4.9.2019, the NCLT finally approved the distribution plan. This was challenged before the NCLAT. NCLAT dismissed both the appeals.
