NATIONAL COMPANY LAW APPELLATE TRIBUNAL,

PRINCIPAL BENCH, NEW DELHI

Company Appeal (AT) (Insolvency) No.405 of 2023
(Arising out of Order dated 01.03.2023 passed by the Adjudicating Authority
(National Company Law Tribunal), Kolkata Bench, Court-II, Kolkata in I.A. (IB)
No.471/KB/2022 in C.P. (IB) No.2078/KB/2029)

IN THE MATTER OF:

ICICI Bank Limited
Though its Authorized Signatory
Mr. Shashank Raj
Address: ICICI Bank Tower
Near Chakli Circle, Old Padra Road Vadodara
Gujarat 390007
Also at: ICICI Bank Tower, NBCC Place
Bisham Pitamah Marg
Pragati Vihar, New Delhi 110003 ... Appellant

Vs

1. BKM Industries Limited

Through its Resolution Professional
Mr. Pratim Bayal
Address: 18/1 Tarapukur Main Road
Ghosh Para, Agarpara
Kolkata, West Bengal - 700109

2. Committee of Creditors of
BKM Industries Limited
Led by State Bank of India
Address: Samriddhi Bhawan,
1 Strand Road
Kolkata, West Bengal - 700 001. ... Respondents

Present:

For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr. Udit
Mendiratta, Ms. Niharika Sharma, Mr. Shivkrit
Rai, Mr.Rajat Sinha, Mr. Tejas D. Jha, Advocates

For Respondents: Mr. Avrojyoti Chatterjee, Mr. Rajiv S. Roy, Mr.

Siddharth Dhingra, Mr. Zoyeb Khan, Ms. Jayasree
Saha, Mr. Shankar Mali, Advocates for R-2/CoC

Mr. Rishav Banerjee, Mr. Rajarshi Banerjee, Mr.

Shambo Nandy, Advocates for R-1/RP

Company Appeal (AT) (Insolvency) No.405 of 2023 1

 JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by ICICI Bank Ltd., a Financial Creditor of the Corporate

Debtor – BKM Industries Limited has been filed challenging the order dated

01.03.2023 in IA (IB) No.471/KB/2022. In the said IA, the Applicant has

sought direction to the Resolution Professional (“RP”) to take into account

the priority of distribution of the Plan realizations and taking into account

the priority assigned to the dissenting Financial Creditor, who are also

secured creditors. The Adjudicating Authority rejected the IA by the

impugned order. Aggrieved by the order of rejection, this Appeal has been

filed.

2. Brief facts of the case necessary for deciding this Appeal are:

(i) The Corporate Insolvency Resolution Process (“CIRP”) against

the Corporate Debtor was initiated by order dated 30.12.2020

in Application under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) filed

by M/s Trimurti Associates Private Limited.

(ii) The Appellant submitted its claim in Form-C for an amount of

Rs.15,52,73,428/- (comprising of Rs.13.04 crores under the

rupee term loan and Rs.2.48 crores under the working capital

loan). The amount claimed by the Appellant in Form-C was

Company Appeal (AT) (Insolvency) No.405 of 2023 2

 admitted by the RP. The Appellant was also given a seat in the

Committee of Creditors (“CoC”).

(iii) A Resolution Plan was submitted by the Resolution Applicant.

In the Resolution Plan submitted by Uniglobal Papers Private

Limited, the Resolution Applicant had proposed that amount

proposed for payment towards secured creditors shall be

distributed amongst them based on proportion of their

admitted claim.

(iv) In the 14th CoC Meeting held on 02.05.2022, Members of the

CoC had discussion on distribution of proceeds under the

received Resolution Plan, wherein the Appellant mentioned

that any distribution to be made to secured creditors must be

done keeping in mind the security interest. The Members of

the CoC requested the RP to assist the CoC with a proposed

distribution amount as per security interest and provide the

information with disclaimer that such calculation would be

suggestive only. The RP on 06.05.2022 addressed an email to

all the Financial Creditors of the Corporate Debtor, providing

the calculation methodology and the lender-wise proportional

share in the liquidation value of the Corporate Debtor for the

purposes of distribution as well as proportionate share as per

security interest. The Appellant raised objection to the

distribution methodology circulated by RP and claimed

Company Appeal (AT) (Insolvency) No.405 of 2023 3

 distribution as per security interest. The Appellant had

security interest in immovable and movable property of the

Corporate Debtor situated at two places.

(v) On 10.05.2022, the 15th CoC Meeting was held where RP

proposed the Agenda for distribution of the amount offered to

secured creditors either on the basis of outstanding debt or on

the basis of security interest available with the respective

secured lenders. The Appellant objected to the methodology of

the calculation. The Agenda Item was put to vote. The CoC

with 78.79% vote share voted in favour of distribution as per

outstanding debt/ voting share. The Appellant vide email

dated 10.05.2022 again objected to it.

(vi) On 17.05.2022, in the 16th CoC Meeting, the CoC approved the

Resolution Plan of Uniglobal Papers Private Limited, which was

approved with vote share of 78.79%. The Resolution

Professional filed an Application for approval of the Resolution

Plan.

(vii) The Appellant filed an IA No.471 of 2022 before the

Adjudicating Authority on 21.05.2022 wherein the Applicant

prayed for following reliefs:

“(a) this Learned Adjudicating Authority be pleased to pass

an order directing the Resolution Professional to take into
account the priority on security interest of the financial

Company Appeal (AT) (Insolvency) No.405 of 2023 4

 creditors while determining the calculation methodology
of the Creditors’ proportional share in the liquidation
value of the Corporate Debtor for the purpose of
distribution under Section 53(1) of the Code;

b) stay of a further proceedings in the instant corporate

insolvency resolution process, pending disposal of the
instant application;

c) Ad-interim orders in terms of prayer (b) hereinabove;

d) Any further order or orders and/ or direction or directions

as may deem fit and proper”

(viii) The Application filed by the Appellant was opposed by the RP

as well as Successful Resolution Applicant. The Adjudicating

Authority after hearing the parties, by the impugned order has

rejected the Application. The Adjudicating Authority placed

reliance on the judgment of the Hon’ble Supreme Court in

India Resurgence ARC Private v. Amit Metaliks Limited

and Anr. (2021) SCC OnLine SC 409. Aggrieved by the said

order, this Appeal has been filed.

3. We have heard Shri Krishnendu Datta, learned Senior Counsel

appearing for the Appellant. Shri Rishav Banerjee, learned Counsel

appearing for Respondent No.1/RP and Shri Avrojyoti Chatterjee, learned

Counsel appearing for CoC.

4. Shri Krishnendu Datta, learned Senior Counsel for the Appellant

submits that Appellant has first charge on the assets of the Corporate

Company Appeal (AT) (Insolvency) No.405 of 2023 5

Debtor and as per liquidation value of the assets, on which the Appellant

has first charge, the Appellant was entitled to receive the liquidation value

as per security interest. It is submitted that the Appellant being dissenting

Financial Creditor is entitled to receive liquidation value by virtue of Section

30, sub-section (2) (b) of the IBC. The Appellant’s entire claim of Rs.15.52

crores having been admitted, the proposal of RP to make payment of

Rs.4.54 crores to the Appellant is not as per liquidation value attributable

to the Appellant. The Appellant having first charge holder in respect of the

secured assets, and the liquidation value of such assets being Rs.24.5

crores, the Appellant is entitled to receive an amount of Rs.13.52 crores.

The RP has failed to correctly and appropriately calculate the Appellant’s

proportionate share of the Corporate Debtor’s liquidation value. The

Adjudicating Authority did not take into consideration the Appellant’s

priority of charge in the security interest or the value of such security

interest. The Appellant’s entitlement as a dissenting Financial Creditor

cannot be curtailed by exercise of commercial wisdom by the CoC.

5. The learned Counsel for the RP, Shri Rishav Banerjee refuting the

submissions of learned Counsel for the Appellant submits that distribution

methodology has been approved by the CoC in its 15th Meeting held on

10.05.2022. The distribution methodology having been approved, which is

as per Resolution Plan submitted by Uniglobal Papers Private Limited,

Appellant has no right to challenge the decision of the CoC approving the

distribution methodology. The statutory entitlement of the dissenting

Financial Creditor is regulated by Section 30, sub-section (2)(b) and the

Company Appeal (AT) (Insolvency) No.405 of 2023 6

Appellant is only entitled for an amount which it could have received in

event the Corporate Debtor was liquidated. The learned Counsel submits

that judgment of the Hon’ble Supreme Court of India in India Resurgence

ARC Pvt. Ltd., fully covers the issue. The Appellant being dissenting

Financial Creditor cannot suggest that a higher amount to be paid to it

with reference to the value of the security interest. The learned Counsel

has also relied on the judgment of this Tribunal in Small Industries

Development Bank of India (SIDBI) vs. Vivek Raheja – Company Appeal

(AT) (Insolvency) No.570 of 2022 and stated that accepting the

submission advanced by the Appellant will ignite perverse incentives for

secured creditors to vote for liquidation and shall be impeding the

resolution of a Corporate Debtor, which is against the primary objective of

the IBC.

6. The learned Counsel for the CoC has supported the submissions

advanced on behalf of the RP. It is submitted that the Resolution Plan

having been approved with 78.79% vote of CoC and the distribution to the

Appellant is as per the Resolution Plan, the Appellant cannot be allowed to

raise any grievance to the distribution, which has approval of the CoC. The

Appellant being dissenting Financial Creditor, is entitled to only amount

which it could have received in event the Corporate Debtor was liquidated.

The Resolution Plan having already been approved by the Adjudicating

Authority vide order dated 19.09.2023, no further grievance of the

Appellant can be entertained. The Resolution Plan itself contemplate that

amount proposed for payments towards Financial Creditors, shall be

Company Appeal (AT) (Insolvency) No.405 of 2023 7

distributed among them based on the proportion of their admitted claims.

It is submitted that commercial wisdom of the CoC in approving the

distribution methodology as well as Resolution Plan cannot be allowed to

be challenged at the instance of dissenting Financial Creditor. The dispute

raised in the Appeal is fully covered by the judgment of the Hon’ble

Supreme Court in India Resurgence ARC Pvt. Ltd.

7. We have considered the submissions of learned Counsel for the

parties and have perused the record.

8. Before we enter into respective submission of learned Counsel for the

parties, it is relevant to notice the Minutes of the CoC Meeting dated

02.05.2022 and 10.05.2022, i.e., 14th and 15th CoC Meeting respectively.

In 14th CoC Meeting, discussion was made on the Resolution Plan received

by Uniglobal Papers Private Limited. One of the matters, which was

discussed was regarding the distribution as per the Resolution Plan. In

Agenda Item No.3, following was noted:

“3. Any other matter that CoC members like to

discuss.
• The members of CoC requested the RP to prepare and
share with the distribution ratio if the amount offered
for secured creditors under the Resolution Plan be
distributed as per the security interest available with
the lenders. The RP mentioned that while he can
share the proposed distribution keeping in view the
amount of claims admitted by him, the lenders must
among themselves arrive at the proposed distribution

Company Appeal (AT) (Insolvency) No.405 of 2023 8

 on the basis of security interest. The members of CoC
requested the RP that in view of limited time at
disposal and as the RP already have information of
all the secured lenders based on the submitted
documents along with the claim of the respective
lenders, he could assist them with a proposed
distribution amount as per security interest and he
could provide the same with disclaimer that the same
would be suggestive one only and the secured creditor
would have discretion to modify and accept the same
based on the actual position and understanding
among themselves. RP agreed to the same but
requested to arrive at a decision on distribution at the
earliest.
• It was discussed in the meeting that another CoC
meeting might be called around on 5th or 7th May 2022
so that revised Resolution Plans could be put for
voting on or before 8th May 2022.”

9. After the decision of the CoC taken in the 14th CoC Meeting, the RP

circulated email dated 06.05.2022 to all Financial Creditors incorporating

the proposed distribution as per lender wise. Along with email dated

06.05.2022 the RP has annexed a Chart, annexing the distribution matrix

among secured creditors in the Resolution Plan. It is useful to extract the

distribution matrix as circulated by RP is to the following effect:

"Distribution matrix secured creditors in Resolution Plan for BKM Industries

Ltd

Amount offered to SFC in the resolution plan in Cr. 32

Assumption Assumption
1 2

Company Appeal (AT) (Insolvency) No.405 of 2023 9

 Lender wise
Ratio of As per
distribution
SFC security
Voting Admitted Amounts per of
Bank admitted interest - see
Shares claim outstanding liquidation
claim working
value as per
only below
Sec 53(1)
SBI 30.11% 46.29 33.88% 10.84 8.76 11.76
Indian Bank 18.77% 28.86 21.12% 6.76 5.46 7.33
ACRE 15.79% 24.27 17.76% 5.68 0.15 6.17
ICICI Term
loan 13.04 9.55%
ICICI WCDL 10.10% 2.48 1.82% 3.64 13.51 3.95
IDBI 9.21% 14.15 10.36% 3.31 2.68 3.60
BOB 4.91% 7.55 5.52% 1.77 1.43 1.92
JP Fin 4.93% 7.58
Trimurty 4.91% 7.55
Manaksia
Steel 0.12% 0.19
Manaksia Ltd. 0.65% 1.00
Vajra 0.48% 0.74
Total 99.99% 153.71 100.00% 32.00 32.00 34.72"

10. The Appellant immediately objected to the distribution matrix vide

email dated 10.05.2022. However, the distribution mechanism as

circulated by RP came for consideration in the 15th CoC Meeting held on

10.05.2022. The discussion and voting as captured in the Minutes are as

follows:

“2. Discussion and voting on the distribution of

the amount offered in the resolution plan to
the secured creditors of BKM Industries Ltd.

• Representatives of ICICI Bank, together with their

legal representative raised their objection on the
calculation of distribution of liquidation value
terms of section 53(1) of the IBC 2016 done by RP.
Representatives of ICICI Bank highlighted that
interpretation of the explanation to Sec 53 of the
IBC 2016 by the RP is inaccurate and a complete

Company Appeal (AT) (Insolvency) No.405 of 2023 10

 reading of the statutory provision indicates that
payment in equal proportion can only be made in
respect of a class of recipients ranking equally.
Similarly, the ambit of sub-section (2) of Section 53
is limited to recipients who enjoy equal ranking
whereas ICICI Bank enjoys a priority/ first charge
over the assets located at Medak and Silvassa. In
the event of failure by the RP to re-calculate the
liquidation value due to secured financial creditor,
ICICI Bank shall be constrained to initiate legal
proceedings to safeguard their rights. To this RP
replied that the calculation was as per his
understanding of the particular section and further
the distribution under sec 53(1) of IBC, 2016 does
not have any relevance unless the resolution plan
is voted upon by the CoC members. To which other
CoC members mainly representatives of SBI and
Indian Bank replied that since the legal counsel/
team of other CoC members and that of RP are not
and, this legal interpretations should not be
discussed in today’s CoC meeting. They requested
RP to stick to the agenda as circulated by the RP
in the notice and the voting item. RP took note of
the same.
• Keeping the paucity of time involved, the RP
suggested for a voting on the agenda during the
meeting itself. Some CoC members mainly Mr.
Saurav Sharma from SBI and Mr. AK Jha from
Indian bank informed the RP that they are ready
to vote in the meeting itself. However, Mr. Rahul
Saraff of ICICI Bank raised his concern that they
would be requiring the approval from their higher

Company Appeal (AT) (Insolvency) No.405 of 2023 11

 authority for voting in this matter. After
considering the CoC members requests RP
announced in the meeting that he would initiate an
e-voting for voting by the CoC members on the
voting agenda and requested all the members to
case their votes as soon as possible.
• RP informed the CoC members that the e-voting
platform would be opened from today late
afternoon for the minimum hours as prescribed in
IBC, 2016, in the context of time constrained.

3) Discussion on the voting of the final

resolution plans submitted by the two
prospective resolution applicants

• RP informed the CoC members that once the voting

on the distribution mechanism of amount offered
for secured creditors in the resolution plan had
been voted & decided by a majority of 66% of the
CoC members, then both the resolution applicants
would be requested to incorporate the same in
their resolution plans and the same would be put
for final voting by the CoC members subsequently
even if the is no separate CoC meeting for the
voting on the resolution plan. That voting would be
considered as final voting for approval of
resolution plan by the CoC members with at least
66% voting in favour of a particular plan.
• CoC members informed the RP that both the plans
submitted by both the resolution applicants were
feasible and viable in term of their implementation

4) Voting agenda

Company Appeal (AT) (Insolvency) No.405 of 2023 12

 Following voting agenda would be put for voting by the
CoC members
Sl. No. Voting Items Yes No Abstain
1. CoC approves the
distribution of the
amount offered for the
secured financial
creditors by the
successful resolution
applicant (to be
decided in a separate
voting) based on the
proportion of admitted
claim of the respective
secured lenders

2. CoC approves the

distribution of the
amount offered for the
secured financial
creditors by the
successful resolution
applicant (to be
decided in a separate
voting) based on the
security inte4rest
over assets of the
corporate debtor
available with the
respective secured
lenders”

11. The voting as per Agenda Item was conducted on 11.05.2022 by e-

voting, Item No.1 of the Voting Agenda was approved by 78.79% voting

share and the Item No.2 of the Agenda Item was rejected by 88.63% vote

share. Meaning thereby that CoC approved the Agenda for distribution of

the amount offered for the secured Financial Creditors by the admitted

claim of the respective secured creditors. Subsequent to the aforesaid, in

16th CoC Meeting the Plan came for consideration, which was approved in

Company Appeal (AT) (Insolvency) No.405 of 2023 13

the Meeting dated 17.05.2022 with vote share of 78.79%. After the said

approval of the Plan, IA No.471 of 2022 was filed by the Appellant.

12. From the Minutes of the 14th and 15th CoC, it is clear that specific

Agenda Item was placed before the CoC for consideration as to whether

distribution has to be made as per the admitted claim of the secured

lenders or on the basis of security interest over assets of the Corporate

Debtor. When the CoC approved the voting at Agenda Item No.1, i.e.,

distribution based on the proportion of admitted claim of the respective

secured lenders, which was also in accordance with the Resolution Plan

submitted by the Resolution Applicant, no challenge by the Appellant can

be entertained. It is useful to notice paragraph 2.1 (d) of the Resolution

Plan, which dealt with debt owed to the Financial Creditors. Paragraph

2.1.3 (d) is as follows:

“2.1.3 (d) The amount proposed for payment towards

Secured Financial Creditors shall be distributed
amongst them based on the proportion of their
admitted claim.”

13. The Resolution Plan was approved in the 16th CoC Meeting. Thus,

distribution to the Appellant is as per the decision of the CoC. Now the

submission of the Appellant that distribution is not in accordance with

Section 30, sub-section (2) (b) and the Appellant has not been paid the

liquidation value needs to be considered. Section 30, sub-section (2) (b)

provides as follows:

Company Appeal (AT) (Insolvency) No.405 of 2023 14

 “30(2)(b) provides for the payment of debts of operational
creditors in such manner as may be specified by the
Board which shall not be less than-
(i) the amount to be paid to such creditors in the
event of a liquidation of the corporate debtor under
section 53; or
(ii) the amount that would have been paid to such
creditors, if the amount to be distributed under the
resolution plan had been distributed in accordance with
the order of priority in sub-section (1) of section 53,

whichever is higher, and provides for the payment of

debts of financial creditors, who do not vote in favour of
the resolution plan, in such manner as may be specified
by the Board, which shall not be less than the amount to
be paid to such creditors in accordance with sub-section
(1) of section 53 in the event of a liquidation of the
corporate debtor.
Explanation 1. — For removal of doubts, it is hereby
clarified that a distribution in accordance with the
provisions of this clause shall be fair and equitable to
such creditors.
Explanation 2. — For the purpose of this clause, it is
hereby declared that on and from the date of
commencement of the Insolvency and Bankruptcy Code
(Amendment) Act, 2019, the provisions of this clause
shall also apply to the corporate insolvency resolution
process of a corporate debtor-
(i) where a resolution plan has not been approved
or rejected by the Adjudicating Authority;
(ii) where an appeal has been preferred under
section 61 or section 62 or such an appeal is not time

Company Appeal (AT) (Insolvency) No.405 of 2023 15

 barred under any provision of law for the time being in
force; or
(iii) where a legal proceeding has been initiated in
any court against the decision of the Adjudicating
Authority in respect of a resolution plan;”

14. As per Section 30, sub-section (2)(b), the Financial Creditor, who do

not vote in favour of the Resolution Plan are entitled for payment of debt,

which shall not be less than the amount to be paid to such creditors in

accordance with sub-section (1) of Section 53, which provides as follows:

“53. Distribution of assets.- (1) Notwithstanding

anything to the contrary contained in any law enacted by
the Parliament or any State Legislature for the time being
in force, the proceeds from the sale of the liquidation
assets shall be distributed in the following order of
priority and within such period as may be specified,
namely: -
(a) the insolvency resolution process costs and the
liquidation costs paid in full;
(b) the following debts which shall rank equally
between and among the following:
(i) workmen’s dues for the period of twenty-
four months preceding the liquidation
commencement date; and
(ii) debts owed to a secured creditor in the
event such secured creditor has relinquished
security in the manner set out in section 52;
(c) wages and any unpaid dues owed to employees
other than workmen for the period of twelve months
preceding the liquidation commencement date;
(d) financial debts owed to unsecured creditors;

Company Appeal (AT) (Insolvency) No.405 of 2023 16

 (e) the following dues shall rank equally between
and among the following: -
(i) any amount due to the Central
Government and the State Government including
the amount to be received on account of the
Consolidated Fund of India and the Consolidated
Fund of a State, if any, in respect of the whole or
any part of the period of two years preceding the
liquidation commencement date;
(ii) debts owed to a secured creditor for any
amount unpaid following the enforcement of
security interest;
(f) any remaining debts and dues;
(g) preference shareholders, if any; and
(h) equity shareholders or partners, as the case
may be.”

15. When we look into Section 53, sub-section (1) (b), debt owed to a

secured creditor has to be distributed equally between and amongst

workmen’s dues and debts owed to a secured creditors. The debt owed to

the secured creditor is a debt as admitted in the CIRP. Admittedly, the

claim as submitted by the Appellant was admitted in the CIRP and debt

owed to Appellant is as per admitted claim. The distribution of the debt

has to be as per the debt of the Financial Creditors. The ‘debt’ is defined

in Section 3(11) of the IBC, which is as follows:

“3(11) “debt” means a liability or obligation in respect of

a claim which is due from any person and includes a
financial debt and operational debt;”

Company Appeal (AT) (Insolvency) No.405 of 2023 17

16. Section 3, sub-section (6) defines the ‘claim’, which claim is to be

filed by a Financial Creditor as per Regulation 8, sub-section (1) of the CIRP

Regulations, 2016. Thus, the scheme of Section 53, sub-section (1), clearly

indicates distribution as per the debt and in the legislative scheme there is

no scope of distribution of assets among the Financial Creditors as per

security interest. The issue which has been raised by the Appellant, came

for consideration before this Tribunal in Small Industries Development

Bank of India vs. Vivek Raheja and Ors. where also the Appellant had

claimed distribution of assets as per security interest. An IA was filed by

the Appellant (SIDBI), seeking a direction to distribute as per security

interest. In paragraph 2, following case of the SIDBI has been noticed:

“2. Brief facts of the case giving rise to this Appeal are:-
• Oriental Bank of Commerce had filed a Section 7
Application under the Insolvency and Bankruptcy
Code, 2016 (IBC in short) against the Corporate
Debtor – M/s. Gupta Exim (India) Pvt. Ltd. which
was admitted by the Adjudicating Authority vide
Order dated 29th October, 2019. In the ‘Corporate
Insolvency Resolution Process’ in 16th Meeting of
‘Committee of Creditors’, Resolution Plans were
discussed. Revised Resolution Plans were
submitted by the prospective Resolution
Applicants. Resolution Plan was put to e-Vote
between 07th August, 2021 and 16th August,
2021 and by majority of 97.97%, the Resolution
Plan of ‘Lotus Textiles’ and Mr. Vijayant Mittal was
approved. Appellant sent an Objection dated 16th

Company Appeal (AT) (Insolvency) No.405 of 2023 18

 August, 2021 to the distribution to the Appellant
under the Resolution Plan.
• An I.A. No. 581 of 2021 was filed by the Appellant
for direction to the Resolution Professional to
distribute the proceeds of the Resolution Plan
where following prayers were made:
1. The present application may kindly be allowed
and the directions be issued to the Respondent
No. 1 modify/clarify the distribution to
dissenting members as per the Resolution Plan
and distribute the proceeds of the resolution
plan to Applicant SIDBI for an amount of Rs.
5,64,97,893/- in priority in accordance with
provisions of IBC 2016 in the interest of justice
and equity.
2. Interim stay be granted on distribution of the
resolution plan amount by the Resolution
Professional to the CoC members till the present
application is decided.”
• The case of the Appellant in the Application was
that as per security interest of the Appellant, the
Appellant is entitled to 6.93 % i.e. the amount of
Rs. 5,64,97,893/- and as per voting share as
approved by the CoC, the Appellant is entitled to
2.03% i.e. Rs. 1,65,47,078/-. The case of the
Appellant set up in the Application is that he is
entitled for his distribution of plan amount as per
value of the security interest of the Appellant. The
Application was objected by the Resolution
Professional. The Adjudicating Authority by the
Impugned Order dated 17th March, 2022 rejected
the I.A. No. 581 of 2021 upholding the decision of

Company Appeal (AT) (Insolvency) No.405 of 2023 19

 the CoC for distribution of proceeds of the
Resolution Plan as per the voting share. Appellant
aggrieved by the said Order, has come up in this
Appeal.”

17. This Tribunal after taking into consideration the judgment in India

Resurgence Arc Private Limited Vs. M/s. Amit Metaliks Limited &

Anr., upheld the judgment of the Adjudicating Authority, who rejected the

IA, which was filed by SIDBI for distribution as per security interest. In

paragraphs 20 and 25 of the judgment, following was held:

“20. When we look into above statement of objects and

reasons, it is made clear that financial creditors who do
not vote in favour of the resolution plan shall receive an
amount that is not less than the liquidation value of their
debt. The above statement of objects and reasons also
makes it clear that the entitlement of dissenting financial
creditor is to receive liquidation value of their debt and
not the distribution as per their security value as is
sought to be contended by the Learned Counsel for the
Appellant before us. The statement of objects and
reasons by which amendments in Section 30(2)(b) has
been made, makes it clear that entitlement of dissenting
financial creditor is the liquidation value of their debt
which also clearly negate the submissions raised by the
Learned Counsel for the Appellant before us.

25. In view of the foregoing discussion, we do not find

any error in the Order dated 17.03.2022 of the
Adjudicating Authority rejecting I.A. No. 581 of 2021 filed
by the Appellant. The decision of the Committee of

Company Appeal (AT) (Insolvency) No.405 of 2023 20

 Creditors and the Adjudicating Authority deciding to
distribute the proceeds of the plan value as per voting
share of the secured creditor in no manner contravenes
the provisions of Section 30(2)(b) of the Code. None of the
submissions raised by the Learned Counsel for the
Appellant has any substance. In result, the Appeal is
dismissed.”

18. Now we come to the judgment of the Hon’ble Supreme Court in India

Resurgence Arc. Pvt. Ltd. Vs. M/s. Amit Metaliks Ltd. & Anr. In

paragraph 3 of the judgment, facts were noticed, which is to the following

effect:

“3. 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. The dissention on the part
of the appellant and response thereto by the resolution
professional as also by other members of CoC was noted
in the 14th meeting of CoC dated 31.07.2020 in the
following words : -
“Representative from Religare Finvest/India
Resurgence ARC, Mr. Shakti inquired about the
lower share they are getting as per Resolution Plan
whereas the security interest held by them is far
more. He also raised question about the fair
market value and liquidation value of the CD. On
this the RP informed him that the valuation
exercise has been done by registered valuers of

Company Appeal (AT) (Insolvency) No.405 of 2023 21

 IBBI who were appointed by the erstwhile IRP and
he do not find any inconsistency in the same.
Other members also agreed on the same. Mr.
Shakti then raised the point that in the present
scenario it will be better for them if the company
goes into Liquidation and they will realize their
security interest by exercising option u/s 52(1)(b).
The RP then replied that Liquidation option may be
beneficial to one creditor but is definitely
detrimental to other secured lenders who are
having majority stake of around 96%. Further the
RP also said that the objective of IBC is resolution
and revival of a distressed company and is not a
recovery procedure.””

19. The Hon’ble Supreme Court after hearing the parties and referring to

the provisions of Section 30 of the IBC, laid down following in paragraph

13, 14, 16 and 17:

“13. It needs hardly any elaboration that 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.15

14. The provisions of amended sub-section (4) of Section 30

of the Code, on which excessive reliance is placed on behalf

Company Appeal (AT) (Insolvency) No.405 of 2023 22

 of the appellant, in our view, do not make out any case for
interference with the resolution plan at the instance of the
appellant. The purport and effect of the amendment to sub-
section (4) of Section 30 of the Code, by way of sub-clause (b)
of Section 6 of the Amending Act of 2019, was also explained
by this Court in Essar Steel (supra), as duly taken note of
by the Appellate Authority (vide the extraction
hereinbefore).The NCLAT was, therefore, 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.

16. 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 and the same has been
explained by this Court in Essar Steel as under:—

“128. When it comes to the validity of the substitution

of Section 30(2)(b) by Section 6 of the Amending Act of
2019, it is clear that the substituted Section 30(2)(b)
gives operational creditors something more than was
given earlier as it is the higher of the figures mentioned
in sub-clauses (i) and (ii) of sub-clause (b) that is now
to be paid as a minimum amount to operational
creditors. The same goes for the latter part of sub-

Company Appeal (AT) (Insolvency) No.405 of 2023 23

 clause (b) which refers to dissentient financial
creditors. Ms. Madhavi Divan is correct in her
argument that Section 30(2)(b) is in fact a beneficial
provision in favour of operational creditors and
dissentient financial creditors as they are now to be
paid a certain minimum amount, the minimum in the
case of operational creditors being the higher of the
two figures calculated under sub-clauses (i) and (ii) of
clause (b), and the minimum in the case of dissentient
financial creditor being a minimum amount that was
not earlier payable. As a matter of fact, pre-
amendment, secured financial creditors may
cramdown unsecured financial creditors who are
dissentient, the majority vote of 66% voting to give
them nothing or next to nothing for their dues. In the
earlier regime it may have been possible to have done
this but after the amendment such financial creditors
are now to be paid the minimum amount mentioned in
sub-section (2). Ms. Madhavi Divan is also correct in
stating that the order of priority of payment of creditors
mentioned in Section 53 is not engrafted in sub-section
(2)(b) as amended. Section 53 is only referred to in
order that a certain minimum figure be paid to different
classes of operational and financial creditors. It is only
for this purpose that Section 53(1) is to be looked at as
it is clear that it is the commercial wisdom of the
Committee of Creditors that is free to determine what
amounts be paid to different classes and subclasses
of creditors in accordance with the provisions of the
Code and the Regulations made thereunder.”
(underlining supplied for emphasis)

Company Appeal (AT) (Insolvency) No.405 of 2023 24

 17. Thus, what amount is to be paid to different classes or
subclasses of creditors in accordance with provisions of the
Code and the related Regulations, is essentially 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.”

20. The issue raised in the Appeal, is fully covered by the judgment of

the Hon’ble Supreme Court. The Hon’ble Supreme Court in India

Resurgence ARC Private Ltd. (supra) also referred to its earlier judgment

in Jaypee Kensington Boulevard Apartments Welfare Association v.

NBCC (India) Ltd. while coming to the conclusion.

21. The learned Counsel for the Appellant during his submissions has

relied on the judgment of the Hon’ble Supreme Court in Vistra ITCL (India)

Ltd. and Ors. vs. Dinkar Venkatasubramanian and Anr. – (2023) 7

SCC 324. There are several distinguishable facts in the judgment of Vistra

ITCL (India) Ltd. and in the present case. In the case of Vistra, the claim

of Financial Creditor was not admitted. Whereas in the present case the

debt of the Appellant was admitted. In Vistra, the claim of Vistara to be

secured creditor was rejected as has been noticed in paragraphs 2 to 10 of

the judgment itself. Whereas, the Appellant in the present case has been

recognized as a dissenting Financial Creditor and was part of the CoC and

in the present case, the CoC by its decision has approved both the

distribution mechanism as well as the Resolution Plan, which proposed

distribution based on proportion of admitted claim. Vistra was never

Company Appeal (AT) (Insolvency) No.405 of 2023 25

treated as secured creditor or given its minimum entitlement as secured

creditor as per Section 53(1). The judgment of Vistra is a judgment of the

Hon’ble Supreme Court, which is referable to Article 142 of the

Constitution, which jurisdiction was exercised and ultimately the Hon’ble

Supreme Court has held Vistra to be a secured creditor. The present is a

case where ICICI Bank was accepted and recognized as Financial Creditor

and its full claim was accepted and distribution to the Appellant was as per

Section 30, sub-section (2)(b) of the IBC.

22. In view of the forgoing discussions, we are of the view that no error

has been committed by the Adjudicating Authority in rejecting IA No.471

of 2022. There is no merit in the Appeal. The Appeal is dismissed. No

order as to costs.

[Justice Ashok Bhushan]

Chairperson

[Barun Mitra]
Member (Technical)

[Mr. Arun Baroka]

Member (Technical)

NEW DELHI

6th November, 2023

Ashwani

Company Appeal (AT) (Insolvency) No.405 of 2023 26