Central Bank Of India vs Cure Life Care Private Limited

CORAM : JUSTICE N. SESHASAYEE, MEMBER (JUDICIAL) Mr. BARUN MITRA, MEMBER (TECHNICAL) IN THE MATTER OF: Central Bank of India ...Appellant Versus Cure Life Care Pvt. Ltd. Through Its Liquidator Vcan Resolve IPE LLP ...Respondent

Present: For Appellant : Mr. Tushar Singh, Ms. Aastha Kaushik, Advocates.

For Respondent : Ms. Vishwas V. Shah, Advocates.

ORDER

(Hybrid Mode)

Per: Justice N. Seshasayee, Member (Judicial)

The appellant herein challenges the order of the Adjudicating Authority in I.

A. No. 37 of 2024, dated 21.11.2024, which application RP had moved for

obtaining the approval of the Adjudicating Authority to the Resolution Plan

approved by the CoC.

2. The brief facts are:

a) the appellant had extended certain loan facility to the CD amounting

to Rs. 23,08,33,945/- (Rupees Twenty Three Crores Eight Lakhs

Thirty Three Thousand Nine Hundred Five Only). This debt was

secured through the fixed assets of the CD. Be that asset may, the

appellant had sold the secured assets under the provision of the

SARFAESI Act and realised the part of the loan dues from the CD.

This sale later came to be confirmed on 23.05.2019. Comp. App. (AT) (Ins) No. 150 of 2025 1|5

b) In the meantime the appellant had also moved the Adjudicating

Authority under section 7 of the IBC, which was essentially confined

to the default in paying balance amount of Rs. 06,89,38,756/-

(arrived after adjusting the sale proceeds of the secured assets of the

CD). This application under section 7 IBC came to be admitted and

the resolution process commenced.

c) The resolution was successful, and the CoC approved the resolution

plan of the SRA. As indicated earlier the RP moved I.A. 37 of 2024

seeking the approval of the Adjudicating Authority under section 31

of the IBC.

3. This came to be rejected on the ground that the CoC had not obtained

the consent of operational creditors and the unsecured creditors of the CD and

directed liquidation of the CD. This order is now under challenge.

3.1 The learned counsel for the appellant submitted that he Adjudicating

Authority in effect has insisted that consent of operational creditors and

unsecured creditors is necessary vis-a-vis what the plan proposed to pay, and

this is not warranted in law as it is beyond the jurisdiction of the Adjudicating

Authority.

3.2 Developing his argument further, the learned counsel submitted that

the fair value and the liquidation value of the CD was determined at Rs. 1.15

lakhs and 1.14 lakhs respectively. It is on this basis resolution plans were

invited. In the resolution plan it is inter alia proposed:

a) Particulars Amount in Rs.

Upfront Cash Amount INR 1,04,00,000/-

to the secured Financial inclusive of CIRP cost at actuals (upfront payment i.e 60 Comp. App. (AT) (Ins) No. 150 of 2025 2|5 days from NCLT Approval date) Upfront Cash Amount INR 20,000/- to the unsecured financial creditors being related parties (upfront payment i.e 60 days from NCLT Approval date) Upfront Cash amount INR 20,000/- to Operational Creditors (including Statutory Claims) upfront payment i.e 60 days from NCLT Approval Date) Total Payment to all INR 1,04,00,000/- stakeholders Working Capital/capex As per business for business (within 1 Requirement to 5 years) Means of Finance Internal Accrual of CD At Actual From Net worth of RA / Balance Required to its related concerns, meet cash payment nominees, obligations as per this Affiliates/spv resolution plan. Resolution applicant has ample liquidity and net worth to discharge payment obligations of this resolution plan. Further RA clarifies that the entire revival of the Company including its working capital requirements would be financed from the available cash reserves with Resolution Applicant. Resolution Applicant do not envisage any borrowing from any external source for the same Total INR 1,04,00,000/-

Comp. App. (AT) (Ins) No. 150 of 2025 3|5 3.3 In paragraph 6.2 of the plan it was made evident that payment of the

amount proposed would be based on the waterfall mechanism provided

under section 53 of the IBC. Subsequently in paragraph 6.3.3.2 and 6.3.4

the resolution applicant had come out with an additional offer over and

above Rs. 20,000/- which was proposed for unsecured creditors and the

operational creditors and this clause in reads:

"they will be allotted partly paid unsecured debentures having face value Rs 10/- each with a paid-up value of INR 5/- each. The CD shall have right, in his sole discretion, to call for the balance amount of INR 5/- each per debenture(unsecured) at any time. In the event of failure of such debentures holders (unsecured) to pay the called-up amount within such time period as mentioned by the CD, such debentures shall be liable to be forfeited and shall be dealt with in the manner provided under the Companies Act, 2013 including re-Issuance of the same to any other person at such other price as the CD may deems fit or transfer the forfeited amount to capital Reserve."

3.4 The Learned counsel argued that the Adjudicating Authority initially

thought that this clause is perhaps a substitution of Rs. 20,000/- each

which the appellant had offered for the operational creditor, and the

unsecured creditor but the same was clarified by the RP vide his affidavit

dated 15.10.2024. In this affidavit it is clarified that issue of debentures as

stated above is in addition to the payment and not in substitution or

alteration of Rs. 20,000/-. However, in the impugned order the Adjudicating

Authority had held that the consent of the operational creditor and the

unsecured creditor is necessary. The learned counsel emphasised that

resolution plan in terms of statute requires only approval by a minimum of

66% voting share of the CoC. And there is hardly any necessity to obtain the

consent of operational creditors. So far as unsecured creditors are

concerned they are all related parties and hence they do not have any voting

rights.

Comp. App. (AT) (Ins) No. 150 of 2025 4|5

4. The Learned counsel for the liquidator merely emphasised that the

liquidation charges of Rs. 1,00,656/- might be paid. The counsel for the

appellant on instruction submitted that it would be paid in terms of the

resolution of the stake holders dated 28.01.2025.

5. This Tribunal carefully perused the resolution plan and also the

impugned order and finds that there is considerable force and merit in the

submissions of the counsel for the appellant. The Adjudicating Authority

has erred in requiring or insisting that the consent of the operational

creditors and unsecured creditors of the CD must be obtained by the CoC,

whereas under the scheme of IBC it is not required. The area of investigation

for granting approval to the resolution plan by the Adjudicating Authority is

very narrow, and very evidently, the Adjudicating Authority is seen to have

over reached its jurisdiction. Other than this the impugned order does not

indicate any other violation of law or provisions of the IBC.

6. In conclusion this appeal deserves to be allowed and the order of the

Adjudicating Authority in I.A. 37 of 2024 dated 21.11.2024 is set aside and

resolution plan is approved by the CoC now stand approved.

[Justice N. Seshasayee] Member (Judicial)

[Barun Mitra] Member (Technical)

tushar/nn

Comp. App. (AT) (Ins) No. 150 of 2025 5|5