MISHRA AND S. RAVINDRA BHAT, JJ.] versus RAVE SCANS PVT. LTD. & ORS.

Citation: [2019] 13 S.C.R. 1127 · Decided: 08-11-2019 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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1127
RAHUL JAIN
v.
RAVE SCANS PVT. LTD. & ORS.
(Civil Appeal No. 7940 of 2019)
NOVEMBER 08, 2019
[ARUN MISHRA AND S. RAVINDRA BHAT, JJ.]
Insolvency and Bankruptcy Code, 2016 – ss.10 and 30 –
Insolvency and Bankruptcy Board of India (Insolvency Resolution
Process for Corporate Persons) Regulations, 2016 – regn.38 –
Corporate Insolvency Resolution Process (CIRP) was initiated
against the corporate debtor u/s.10 of the IBC – The appellant was
the resolution applicant of the corporate debtor, whose liquidation
value was ascertained as 36 crores and against the said amount
appellant offered 54 crores to revive the corporate debtor in terms
of the resolution plan – The resolution plan was revised by the
appellant, which was approved by the adjudicating authority i.e.
NCLT – Second respondent (dissenting creditor) challenged the
resolution plan alleging that it was provided with only 32.34% of
its admitted claim, whereas other financial creditors were provided
with 45% of their admitted claims and hence it was discriminatory
– NCLAT directed the appellant to increase the liquidation value of
the offer to second respondent – On appeal, held: In the instant
case, second respondent was provided with 32.34% of its admitted
claim as it had dissented with the plan – On the other hand, other
financial creditors were provided with 45% of the admitted claim –
Given that the resolution process began well before the amended
regulation 38 came into force (in fact, January, 2017) and the
resolution plan was prepared and approved before that event, the
wide observations of the NCLAT, requiring the appellant to match
the pay-out (offered to other financial creditors) to second
respondent, was not justified – The court noticed that the liquidation
value of the corporate debtor was ascertained at 36 crores – Against
the said amount, the appellant offered 54 crores – The plan was
approved and, except the objections of the dissenting creditor
(second respondent), the plan had attained finality – Having regard
to these factors and circumstances, the NCLAT’s order and directions
were not justified, consequently set aside – The order of the NCLT
restored.
 [2019] 13 S.C.R. 1127
1127
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1128
SUPREME COURT REPORTS
[2019] 13 S.C.R.
Allowing the appeal, the Court,
HELD: 1. Section 30 of the Insolvency and Bankruptcy
Code, 2016 lays out the duties of the resolution professional and
the various steps that she or he has to take, as well as the
considerations that are to weigh, in examining a resolution plan.
The principle of fairness engrafted in the provision is that the
plan should make a provision for repayment of debts of operational
creditors having regard to the value, which shall not be less than
what is prescribed by the Board (i.e. the Insolvency Board),
repayable in the event of liquidation, spelt out in Section 53.
Section 30(3) requires the resolution professional to present the
resolution plan to the committee of creditors and Section 30(4)
stipulates that approval shall be by a vote not less than 75% of
the voting share of the financial creditors. [Para 11][1134-A-C]
2. In the present case, it is noticeable that no doubt, the
second respondent was provided with 32.34% of its admitted
claim as it has dissented with the plan. On the other hand, Tata
Capital Financial Services Ltd. was provided with 75.63% of its
admitted claim; other financial creditors (Indian Overseas Bank,
Bank of Baroda and Punjab National Bank) were provided with
45% of their admitted claims. Given that the resolution process
began well before the amended regulation came into force (in
fact, January, 2017) and the resolution plan was prepared and
approved before that event, the wide observations of the NCLAT,
requiring the appellant to match the pay-out (offered to other
financial creditors) to second respondent, was not justified. The
court notices that the liquidation value of the corporate debtor
was ascertained at 36 crores. Against the said amount, the
appellant offered 54 crores. The plan was approved and, except
the objections of the dissenting creditor (i.e second respondent),
the plan has attained finality. Having regard to these factors and
circumstances, it is held that the NCLAT’s order and directions
were not justified. They are hereby set aside; the order of the
NCLT is hereby restored. [Para 13][1135-A-D]
Central Bank of India v. Resolution Professional of the
Sirpur Paper Mills Ltd. & Ors., Company Appeal (AT)
(Insolvency) N

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