Indian Bank & Ors. & Ors vs State Bank Of India & Ors. & Ors

(Arising out of Judgement and order dated 05.02.2024 passed by the Ld. Adjudicating Authority (National Company Law Tribunal, Cuttack Bench) in I.A. No. 149/CB/2023, I.A. No. 150/2023 and I.A. No. 285/2023 in CP(IB) No. 111/CTB/2020)

IN THE MATTER OF:

1. Indian Bank ...Appellant No.1

2. UCO Bank ...Appellant No.2 3. Bank of Baroda ...Appellant No.3 4. ICICI Bank Limited ...Appellant No.4 5. Union Bank of India ...Appellant No.5

Versus

1. State Bank of India (Dissenting Financial ...Respondent No.1 Creditor)

2. M/s Indrani Patnaik (Successful Resolution ...Respondent No.2 Applicant)

3. ASIA Opportunities (III) Mauritius Limited ...Respondent No.3 (Performa Respondent)

4. Punjab National Bank (Performa Respondent). ...Respondent No.4

Present:

For Appellant: Mr. Rajesh Kumar Gautam, Mr. Deepanjal Choudhary, Mr. Likivi K. Jakhalu and Mr. Aman Gahlot, Advocates.

Cont'd..../ -2-

For Respondents: Mr. Krishnendu Datta, Sr. Advocate with Mr. Aseem Chaturvedi, Mr. Vishnu Sriram, Mr. Arpit Kumar Singh and Ms. Niharika Sharma, Advocates for R1.

JUDGMENT

(8th April, 2026)

INDEVAR PANDEY, MEMBER (T)

The present Appeal has been preferred by Indian Bank, UCO Bank,

Bank of Baroda, ICICI Bank Limited and Union Bank of India (collectively,

the Appellant Banks), under Section 61 of the Insolvency and Bankruptcy

Code, 2016 (hereinafter referred to as Code), assailing the common

Judgment and Order dated 05.02.2024 passed by the Ld. Adjudicating

Authority (National Company Law Tribunal, Cuttack Bench) in I.A. No.

149/CB/2023, I.A. No. 150/2023 and I.A. No. 285/2023 in CP(IB) No.

111/CTB/2020.

2. The I.A. No. 149/CB/2023 was filed by State Bank of India, the

dissenting Financial Creditor and Respondent No.1 herein seeking

appropriate orders of Adjudicating Authority for setting aside distributions

of payments to dissenting Financial Creditors decided in the 4th meeting of

Monitoring Committee held on 04.05.2023 being void and contrary to the

provisions of Section 30 (2) (b) r/w Section 53 (1) of the Code and to direct

to make payment of the amount of Rs. 64.47 crores to the applicant. The

I.A. No. 150/2023 was filed by Indrani Patnaik, the Successful Resolution

Applicant (SRA) and Respondent No.2 in this appeal, for a declaration that

the SRA has complied with the resolution plan dated 27.05.2022 as

Company Appeal (AT) (Ins.) No. 629 of 2024 -3-

modified by the addendum dated 29.02.2022 and that the resolution plan

stands implemented. The I.A. No. 285/2023 was filed by State Bank of India

seeking leave of Adjudicating Authority to amend I.A. No. 149 to bring on

record a copy of the resolution plan as approved by the Adjudicating

Authority vide order dated 20.03.2023 and also relevant minutes of

Monitoring Committee meetings.

3. By the aforesaid impugned order, the Ld. Adjudicating Authority

issued directions affecting the distribution of Resolution Plan proceeds to

State Bank of India, which was a dissenting secured financial creditor in

the Committee of Creditors of the Corporate Debtor, OCL Iron and Steel Ltd.

The impugned directions also concern the implementation of the Resolution

Plan submitted by M/s Indrani Patnaik, the Successful Resolution

Applicant (Respondent No. 2), and impact other stakeholders including Asia

Opportunities (III) Mauritius Limited (Respondent No. 3) and Punjab

National Bank (Respondent No. 4 - Performa Respondent). The Appellant

Banks herein are assenting financial creditors, who had voted in favour of

the Resolution Plan and the approved distribution mechanism, and have

now challenged the order of the Adjudicating Authority on the grounds that

it interferes with the commercial wisdom of the Committee of Creditors.

Brief facts of the case

4. The brief facts of the case are as given below:

i. Indian Bank, being one of the financial creditors, initiated

proceedings under Section 7 of the Insolvency and Bankruptcy Code,

Company Appeal (AT) (Ins.) No. 629 of 2024 -4-

2016 against the Corporate Debtor (OCL Iron and Steel Ltd.) and

pursuant to an order dated 20.09.2021, the Corporate Debtor was

admitted into Corporate Insolvency Resolution Process (CIRP). Mr.

Vijay Kumar Iyer was appointed as Resolution Professional (RP) by

the Adjudicating Authority vide order dated 25.11.2021.

ii. Upon collation of claims, the Committee of Creditors was constituted

comprising of nine financial creditors with the following voting shares:

Asia Opportunities (III) Mauritius Limited (36.22%), ICICI Bank

(12.68%), State Bank of India (10.39%), Indian Bank (10.32%), UCO

Bank (9.82%), Bank of Baroda (7.87%), Union Bank of India (7.11%),

Punjab National Bank (0.63%) and Ganesh Ores Pvt. Ltd. (4.98%).

iii. During the 18th CoC meeting held on 23.09.2022, deliberations were

undertaken regarding the distribution mechanism and formula for

payment to creditors under the proposed Resolution Plan, and it was

resolved that the agenda for approval of the distribution mechanism

would be placed for e-voting along with the Resolution Plan.

iv. In the 19th CoC meeting held on 30.09.2022, the CoC unanimously

resolved to appoint M/s K.G. Somani & Co. LLP to calculate and

determine the amount payable to each creditor on the basis of the

approved distribution mechanism, and it was further clarified that in

the event of liquidation, proceeds attributable to secured financial

creditors would be distributed as per their share in security interest,

whereas in case of approval of a Resolution Plan, distribution would

be in accordance with the mechanism approved in the 18th meeting.

Company Appeal (AT) (Ins.) No. 629 of 2024 -5-

v. An Evaluation Report estimating the attributable liquidation value

was submitted by M/s K.G. Somani & Co. LLP on 07.10.2022, and in

the 20th CoC meeting held on the same date, further deliberations

were undertaken with respect to the distribution mechanism in the

event of approval of the Resolution Plan.

vi. The Resolution Plan submitted by M/s Indrani Patnaik (SRA) was

approved by the CoC through e-voting conducted between 25.09.2022

and 12.10.2022, receiving 88.98% majority vote. The Adjudicating

Authority thereafter approved the Resolution Plan by order dated

20.03.2023, and a Monitoring Committee was constituted to oversee

implementation of resolution plan.

vii. The 1st Monitoring Committee meeting held on 27.03.2023 and the

2nd meeting held on 02.05.2023, wherein discussions took place

regarding the distribution of Resolution Plan proceeds, particularly in

relation to dissenting financial creditors; however, no consensus was

reached and the issue was deferred.

viii. In the 3rd and 4th Monitoring Committee meetings held on

03.05.2023 and 04.05.2023 respectively, the lack of consensus

regarding distribution to dissenting financial creditors was recorded,

and calculations regarding distribution of Resolution Plan proceeds

were placed before the members.

ix. M/s Indrani Patnaik, being the Successful Resolution Applicant,

transferred an amount of Rs. 35.20 crores on 15.05.2023 to State

Bank of India as a dissenting financial creditor.

Company Appeal (AT) (Ins.) No. 629 of 2024 -6-

x. Aggrieved by the same State Bank of India (Respondent No.1)

thereafter filed I.A. No. 149/2023 on 18.05.2023 before the

Adjudicating Authority seeking to set aside the distribution decided

in the 4th Monitoring Committee meeting. The Successful Resolution

Applicant filed I.A. No. 150/2023 on 19.05.2023 seeking a declaration

regarding compliance with the Resolution Plan.

xi. Ld. Adjudicating Authority by the impugned common order dated

05.02.2024, disposed of I.A. Nos. 149, 150 and 285 of 2023 and

directed that distribution to State Bank of India, being the dissenting

financial creditor, be made in accordance with Section 30(2)(b) of the

Code as computed by the Evaluation Advisor, and further directed

that the computation of liquidation value be re-checked and payment

be made accordingly.

xii. Aggrieved by the impugned order mandating distribution to the

dissenting secured financial creditor out of the upfront payment in a

manner allegedly contrary to the CoC-approved mechanism and

settled law, the present Appeal has been preferred by the Appellant

Banks under Section 61 of the Insolvency and Bankruptcy Code,

2016.

Submissions of the Appellants

5. At the outset, Ld. Counsel for the Appellants submits that the present

Appeal has been preferred against the impugned order dated 05.02.2024

passed by the Ld. Adjudicating Authority, wherein it has been directed that

Company Appeal (AT) (Ins.) No. 629 of 2024 -7-

Respondent No. 1, being a dissenting secured financial creditor, be paid in

proportion to its security interest in one of the Units of the Corporate Debtor,

namely the Steel Unit. It is submitted that the said direction travels beyond

the express terms of the Resolution Plan approved by the Committee of

Creditors and is contrary to the commercial decision taken by the CoC.

6. Ld. Counsel further submits that the Committee of Creditors, in

exercise of its commercial wisdom and as specifically clarified in the 20th

CoC Meeting dated 07.10.2022, categorically resolved that dissenting

secured financial creditors shall be paid strictly in terms of the distribution

mechanism proposed under the approved Resolution Plan. It was never

resolved that distribution would be linked to or proportionate to the

individual security interest of a dissenting secured financial creditor. The

Resolution Plan, as approved by the CoC, does not contemplate any

distribution based on the extent or nature of the security interest held by

any dissenting financial creditor.

7. It is submitted that the Ld. Adjudicating Authority, in the impugned

order, has erroneously relied upon the decision recorded in the 19th CoC

Meeting, wherein it had been discussed that liquidation proceeds

attributable to secured financial creditors shall be distributed in proportion

to their respective share in the security interest. He submits that the said

reliance is misplaced and legally unsustainable in light of subsequent

developments.

8. Learned Counsel submits that the Ld. Adjudicating Authority failed

to take into consideration the subsequent and binding decision taken in the

Company Appeal (AT) (Ins.) No. 629 of 2024 -8-

20th CoC Meeting, wherein the CoC consciously and expressly resolved that

in the event of approval of the Resolution Plan, dissenting secured financial

creditors would be paid strictly in accordance with the distribution

mechanism contained in the Resolution Plan. The decision taken in the 20th

meeting was a later, deliberate, and conclusive determination of the CoC

and necessarily supersedes all earlier deliberations or proposals recorded in

prior meetings, including the 19th CoC Meeting.

9. Ld. Counsel further submits that Clause 4.1.5.2 of the Resolution

Plan, which was duly approved by the CoC, expressly provides that a

dissenting secured financial creditor shall be paid in terms of Section

30(2)(b) read with Section 53 of the Insolvency and Bankruptcy Code, 2016,

subject to the maximum consideration agreed to be paid by the Resolution

Applicant. The clause clearly limits the entitlement of a dissenting secured

financial creditor to the statutory minimum as contemplated under the

Code and does not confer any right to claim payment based on the entire

realizable value of its security.

10. Further, Clause 4.1.5.3 of the Resolution Plan specifically provides

that in respect of the Auto Division of the Corporate Debtor, which was

proposed to be sold after implementation of the Plan, the entire sale

proceeds shall be distributed exclusively among the Assenting Financial

Creditors. This clause unequivocally excludes dissenting secured financial

creditors from any entitlement to such proceeds.

11. Ld. Counsel submits that upon a conjoint reading of the decision of

the CoC in its 20th meeting and Clauses 4.1.5.2 and 4.1.5.3 of the approved

Company Appeal (AT) (Ins.) No. 629 of 2024 -9-

Resolution Plan, it is manifest that there exists no provision mandating

payment to a dissenting financial creditor in proportion to its individual

security interest. The impugned direction, therefore, effectively rewrites the

Resolution Plan and overrides the commercial wisdom of the CoC, which is

impermissible in law.

12. Ld. Counsel reiterates that the CoC, in its 20th meeting, expressly

resolved that upon approval of the Resolution Plan, dissenting secured

financial creditors would be paid strictly as proposed under the respective

Resolution Plan and not on the basis of any independent computation linked

to their security interest.

13. He further submitted that Clause 4.1.5.3 of the Resolution Plan

clearly stipulates that the Auto Unit of the Corporate Debtor was proposed

to be sold after implementation of the Plan and that the entire sale proceeds

arising therefrom shall be distributed only among the Assenting Financial

Creditors. The language of the clause is explicit and leaves no scope for any

alternative interpretation.

14. However, the Ld. Adjudicating Authority, while passing the impugned

order, has granted Respondent No. 1 the value of its security interest

computed with reference to the liquidation value of both the Steel Unit and

the Auto Unit of the Corporate Debtor. By adopting such an approach, the

Ld. Adjudicating Authority has effectively permitted Respondent No. 1 to

derive benefit not only from the liquidation value of the Steel Unit, but also

from the liquidation value attributable to the Auto Unit.

Company Appeal (AT) (Ins.) No. 629 of 2024 -10-

15. Ld. Counsel submits that this direction is directly contrary to Clause

4.1.5.3 of the Resolution Plan, which specifically provides that the sale

proceeds of the Auto Unit shall accrue exclusively to the Assenting Financial

Creditors. The Resolution Plan does not contemplate any entitlement

whatsoever of a dissenting secured financial creditor to the value or

proceeds of the Auto Unit. By granting such benefit, the Ld. Adjudicating

Authority has altered the distribution mechanism approved by the CoC and

disturbed the inter se rights of assenting financial creditors.

16. Ld. Counsel submits that the issue relating to the entitlement of a

dissenting financial creditor has been conclusively settled by the Hon'ble

Supreme Court in 'India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd.'

[(2021) 19 SCC 672], wherein, while relying upon the earlier judgment in

Jaypee Kensington Boulevard Apartments Welfare Association vs. NBCC

(India) Ltd., it has been held that the limitation on the extent of the amount

receivable by a dissenting financial creditor is inherent in Section 30(2)(b)

of the Code. The Hon'ble Supreme Court has clarified that it was never the

legislative intent that a security interest held by a dissenting financial

creditor over the assets of the Corporate Debtor should enable such creditor

to enforce the entire value of its security independent of the resolution

framework and thereby receive an amount exceeding the liquidation value

receivable within its class. Such a situation would result in inequity and

imbalance among similarly placed creditors.

17. Ld. Counsel further submits that in the present case, there has been

no statutory violation whatsoever. The distribution mechanism provided

under the Resolution Plan is fully compliant with Section 30(2)(b) read with

Company Appeal (AT) (Ins.) No. 629 of 2024 -11-

Section 53 of the Insolvency and Bankruptcy Code, 2016. The Plan ensures

that dissenting secured financial creditors receive at least the amount

payable to them in the event of liquidation, as mandated by law. The

mechanism adopted is fair, equitable, and in consonance with the binding

principles laid down by the Hon'ble Supreme Court in India Resurgence ARC

(Pvt. Ltd.) vs. Amit Metaliks Ltd.

18. In view of the foregoing submissions, Ld. Counsel submits that the

impugned order dated 05.02.2024 is liable to be set aside to the extent it

directs payment to Respondent No. 1 in proportion to its security interest,

as the same is contrary to the express terms of the approved Resolution

Plan, the commercial wisdom of the CoC, and the settled position of law

under the Insolvency and Bankruptcy Code, 2016.

Submissions of Respondent No.1/SBI

19. Shri Krishnendu Datta, Ld. Sr. Counsel appearing for Respondent

No.1 / State Bank of India submits that the present Appeal filed by the

assenting financial creditors is wholly misconceived and deserves to be

dismissed. It is submitted that the Impugned Order dated 05.02.2024

passed by the Ld. AA correctly recognizes the legal position that the

Monitoring Committee cannot alter the distribution mechanism which had

already been deliberated upon and approved by the Committee of Creditors

("CoC") in exercise of its commercial wisdom during the Corporate

Insolvency Resolution Process ("CIRP") of OCL Iron and Steel Ltd.

("Corporate Debtor").

Company Appeal (AT) (Ins.) No. 629 of 2024 -12-

20. Learned Sr. Counsel submits that the present Appeal has been filed

by the assenting financial creditors namely Indian Bank (A1), UCO Bank

(A2), Bank of Baroda (A3), ICICI Bank (A4), and Union Bank of India (A5)

who were members of the CoC in the CIRP of the Corporate Debtor. The

Appeal challenges the Adjudicating Authority's order dated 05.02.2024

whereby the Adjudicating Authority held that the decision of the Monitoring

Committee to pay an amount of Rs. 35.2 crores to Respondent No.1, who is

a dissenting financial creditor, was contrary to the distribution mechanism

earlier decided by the CoC in the 18th and 19th CoC meetings, and therefore

violated Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016

("IBC"). The NCLT accordingly directed that the amount payable to

Respondent No.1 as determined by the evaluation advisor, namely Rs. 64.56

crores, be paid to Respondent No.1.

21. Learned Sr. Counsel further submits that the Appellants have

challenged the Impugned Order on three principal grounds, namely: (i) that

the Impugned Order is allegedly contrary to the judgment of the Hon'ble

Supreme Court in 'India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd.'

[(2021) 19 SCC 672]; (ii) that the distribution directed to be made to

Respondent No.1 allegedly grants a premium to a dissenting financial

creditor since the total resolution amount under the plan is lower than the

liquidation value; and (iii) that Respondent No.1 allegedly has security

interest only in the steel unit and not the auto unit of the Corporate Debtor.

Company Appeal (AT) (Ins.) No. 629 of 2024 -13-

22. Learned Sr. Counsel submits that each of the aforesaid grounds

raised by the Appellants is completely misplaced, factually incorrect and

legally unsustainable.

23. Learned Sr. Counsel submits that the distribution mechanism which

forms the basis of the present dispute was not devised subsequently, but

was specifically deliberated upon and approved by the Committee of

Creditors during the CIRP process itself. The said distribution mechanism

was discussed and finalized during the 18th and 19th CoC meetings, and

therefore the same is binding upon all stakeholders including the

Monitoring Committee, which was constituted subsequently for

implementation of the resolution plan.

24. He submits that during the 18th CoC meeting held on 23.09.2022,

the members of the CoC deliberated extensively upon the proposed

distribution formula and distribution mechanism in respect of the

resolution plan received during the CIRP. After detailed discussions, the

CoC approved by e-voting concluded on 28.09.2022 that in the event the

amount available under the resolution plan was lower than the liquidation

value of the Corporate Debtor, the distribution of the proceeds would be

carried out as per the share of liquidation value attributable to each secured

financial creditor.

25. Learned Sr. Counsel further submits that during the 19th CoC

meeting held on 30.09.2022, the said distribution mechanism was again

taken up for discussion. During the said meeting, the CoC reaffirmed the

distribution mechanism already approved in the 18th CoC meeting and

Company Appeal (AT) (Ins.) No. 629 of 2024 -14-

further clarified that the distribution among secured financial creditors

would be carried out on the basis of the share of liquidation value

attributable to each creditor based on the security interest held by such

creditor.

26. Learned Sr. Counsel submits that in the said 19th CoC meeting, all

members of the CoC including the present Appellants unanimously agreed

to appoint M/s KG Somani and Co. LLP as the evaluation advisor for the

purpose of calculating and determining the amount payable to each creditor

in accordance with the distribution formula approved by the CoC.

27. Pursuant to the aforesaid decision, the evaluation advisor submitted

its report dated 07.10.2022 wherein the liquidation value attributable to

Respondent No.1 was determined at Rs. 64.56 crores. The said computation

was carried out strictly in accordance with the distribution mechanism

approved by the CoC.

28. He further submits that during the 20th CoC meeting held on

07.10.2022, the members of the CoC specifically considered the issue of

payment to dissenting financial creditors and unanimously agreed that

dissenting financial creditors would be paid at least the minimum

liquidation value payable to them in terms of Section 30(2)(b) read with

Section 53 of the IBC.

29. Learned Sr. Counsel submits that thereafter the resolution plan

submitted by M/s Indrani Patnaik came to be approved by the Hon'ble NCLT

Company Appeal (AT) (Ins.) No. 629 of 2024 -15-

by order dated 20.03.2023. Respondent No.1 did not vote in favour of the

resolution plan and therefore remained a dissenting financial creditor.

30. He submits that the approved resolution plan itself incorporates the

aforesaid distribution mechanism. In particular, Clause 4.1.5.5 of the

resolution plan provides that dissenting financial creditors shall be paid in

priority to assenting financial creditors as per the distribution decided by

the CoC, and Clause 4.1.5.6 provides that dissenting financial creditors are

to be paid in accordance with Section 30(2)(b) read with Section 53 of the

IBC.

31. Learned Sr. Counsel further submits that in terms of the distribution

mechanism approved by the CoC as well as the provisions of the resolution

plan, Respondent No.1 was entitled to receive the liquidation value

determined by the evaluation advisor, i.e., Rs. 64.56 crores. Respondent

No.1 accordingly submitted before the Monitoring Committee that

approximately Rs. 64.74 crores was payable to it as a dissenting financial

creditor.

32. Learned Sr. Counsel however submits that despite the above binding

decisions of the CoC, the Monitoring Committee in its 4th meeting held on

04.05.2023 arbitrarily decided that only Rs. 35.2 crores would be paid to

Respondent No.1. This decision of Monitoring Committee was incomplete

departure from the distribution mechanism approved by the CoC, and

amounted to an impermissible attempt by the Monitoring Committee to alter

the decision of the CoC.

Company Appeal (AT) (Ins.) No. 629 of 2024 -16-

33. Learned Sr. Counsel further submits that even the Chairperson of the

Monitoring Committee (the Resolution Professional) and the Monitoring

Committee's legal counsel recorded in the minutes of the Monitoring

Committee meetings that any attempt to modify the distribution mechanism

approved by the CoC would be contrary to law. Despite these observations,

the Monitoring Committee proceeded to reduce the amount payable to

Respondent No.1.

34. Learned Sr. Counsel states that the question as to whether the

distribution of proceeds under the resolution plan as approved by the CoC.

can subsequently be modified or changed by other members of the CoC after

approval of a Resolution plan by the NCLT came up for consideration before

this Appellate Tribunal in the matter of 'Bank of Baroda v. IDBI Bank

Limited' [2025 SCC OnLine NCLAT 2115]. In the said case one of the

assenting financial creditors sought to alter the distribution mechanism

approved by the CoC, after approval of Resolution plan by the NCLT and at

the stage of its implementation. This Appellate Tribunal categorically held

that the same is not permissible and one or more members of the CoC

cannot change the distribution already approved by the majority of CoC,

prior to the approval of the Resolution plan by the Hon'ble NCLT. In this

regard they have highlighted para 23 and 28 of the said judgment.

35. Ld. Sr. Counsel submits that the Monitoring Committee had no

authority to alter the distribution mechanism approved by the CoC, and the

Impugned Order merely enforces the decision already taken by the CoC.

Company Appeal (AT) (Ins.) No. 629 of 2024 -17-

36. Regarding the reliance placed by the Appellants on the judgment of

the Hon'ble Supreme Court in India Resurgence ARC Pvt. Ltd. v. Amit

Metaliks Ltd. (2021) 19 SCC 672, the Ld. Sr. Counsel states that the

reliance on the said judgement is entirely misplaced, as Hon'ble Supreme

Court in Amit Metaliks held that a dissenting financial creditor cannot claim

the entire value of its security interest and is entitled only to receive its

proportionate share of the liquidation value.

37. It is the submission of Learned Sr. Counsel that in the present case,

Respondent No.1 has never sought payment beyond the liquidation value

attributable to its security interest. The Respondent 1 is not seeking any

share from the proceeds of Auto unit in accordance with the resolution plan.

Respondent No.1 has merely sought payment of the liquidation value

determined by the evaluation advisor appointed by the CoC itself, which

amounts to Rs. 64.56 crores.

38. He submits that the dispute in the present case does not concern the

entitlement of a dissenting creditor to the value of its security. Rather, the

dispute arises because the Monitoring Committee attempted to modify the

distribution mechanism approved by the CoC, which is impermissible under

the IBC.

39. Learned Sr. Counsel further submits that it is a settled principle of

law that the ratio of a judgment must be applied only in the factual context

in which it was delivered, and in this regard he placed reliance on the

judgment of the Hon'ble Supreme Court in Union of India v. Dhanwanti Devi

Company Appeal (AT) (Ins.) No. 629 of 2024 -18-

(1996) 6 SCC 44. Accordingly, learned Sr. Counsel submits that the reliance

placed by the Appellants on Amit Metaliks is completely misconceived.

40. Regarding the third issue Learned Sr. Counsel submits that the

payment directed to Respondent No.1 is fully consistent with Section

30(2)(b) of the IBC as well as the distribution mechanism approved by the

CoC under Section 30(4). The amount payable to Respondent No.1 has been

determined by the evaluation advisor appointed by the CoC itself.

41. Learned Sr. Counsel submits that the evaluation advisor calculated

the liquidation value attributable to each secured creditor by examining the

security interest held by such creditors in the assets of the Corporate

Debtor. Based on this analysis, the liquidation value attributable to

Respondent No.1, which holds security interest in the steel unit of the

Corporate Debtor was determined to be Rs. 64.56 crores.

42. Learned Counsel further submits that the argument raised by the

Appellants during oral submissions that Respondent No.1 has also received

payment attributable to the auto division of the Corporate Debtor is

completely baseless and factually incorrect. The evaluation advisor's report

clearly demonstrates that the amount payable to Respondent No.1 was

computed solely on the basis of the security interest held by Respondent

No.1 in the steel unit.

43. Accordingly, learned Sr. Counsel submits that the payment directed

by the NCLT does not grant any undue advantage or premium to

Company Appeal (AT) (Ins.) No. 629 of 2024 -19-

Respondent No.1 and merely ensures compliance with Section 30(2)(b) of

the IBC and the distribution mechanism approved by the CoC.

Analysis and findings

44. We have heard the Ld. Counsels from both sides in great detail and

have gone through the voluminous records of the case including the written

submissions of Appellants and Respondent No. 1. The other respondents

are performa respondents.

45. At the outset, it is necessary to briefly note the rival submissions

advanced by the parties before proceeding to examine the issue on merits.

The Appellants, who are assenting financial creditors, have contended that

the Adjudicating Authority has erred in directing payment of a higher

amount to Respondent No.1. It is their case that the CoC, in its 20th

meeting, had clarified that dissenting secured financial creditors would be

paid strictly in terms of the Resolution Plan and not on the basis of security

interest. According to them, the Resolution Plan does not contemplate

distribution based on security interest, and therefore the reliance placed by

the Adjudicating Authority on the 18th and 19th CoC meetings is misplaced.

It is further argued that the amount directed to be paid is excessive and

contrary to the law laid down by the Hon'ble Supreme Court in India

Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd., as it allegedly grants a

premium to the dissenting financial creditor.

Company Appeal (AT) (Ins.) No. 629 of 2024 -20-

46. Per contra, Respondent No.1 has submitted that the CoC, in its

commercial wisdom, had conclusively approved the distribution mechanism

in its 18th and 19th meetings, wherein it was clearly resolved that the

distribution of resolution proceeds would be based on the liquidation value

attributable to each secured financial creditor. It is further submitted that

pursuant to such decision, an independent evaluation advisor was

appointed, who determined the liquidation value payable to Respondent

No.1 at Rs. 64.56 crores. It is contended that this determination formed the

basis of the Resolution Plan, which was subsequently approved by the

Adjudicating Authority and has attained finality. According to Respondent

No.1, the Monitoring Committee had no authority to alter the distribution

mechanism at the stage of implementation and its decision to reduce the

amount to Rs. 35.2 crores is totally arbitrary and contrary to both the

Resolution Plan and the statutory mandate under Section 30(2)(b) of the

Code. It is also submitted that the reliance on Amit Metaliks is misplaced,

as Respondent No.1 is only claiming its liquidation value and nothing

beyond.

47. The first and foremost question which arises is whether the

distribution of the resolution amount, including to dissenting financial

creditors, as decided and approved by the CoC in its commercial wisdom

during the 18th and 19th CoC meetings, is valid in law and binding upon

the Monitoring Committee.

48. In this regard we take note of the relevant portions of the Resolution

Plan, which are extracted below:

Company Appeal (AT) (Ins.) No. 629 of 2024 -21-

"4.1.5.2 Resolution Applicant proposes to pay Rs. 150.00 Cr.

as upfront cash payment to the Secured Financial Creditors within 45 days from the effective date, in accordance with per Section 30(2)(b) read with Section 53 of the Code. Post the payment of CIRP Costs in the manner set out above in this Resolution Plan and the Liquidation Value or the amount proposed under the Resolution Plan whichever is higher, due to Operational Creditors, Workmen and Employee and Dissenting Financial Creditors as per Section 30(2)(b) read with Section 53 of the Code, the admitted Debt of Financial Creditors shall be paid and the same shall be distributed in the proportion agreeable to the CoC, subject to the maximum consideration agreed to be paid by the Resolution Applicant.

4.1.5.3 Additionally, the RA proposes to sell the auto division of the Corporate Debtor after implementation of the Plan. The entire sale proceeds shall be distributed between the assenting financial creditors.

4.1.5.5 As per Regulation 38(1)(b) of the (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the financial creditors, who have a right to vote under sub-section]; (2) of section 21 and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan.

4.1.5.6. In the event, some of the Financial Creditors out of CoC are dissenting to the proposed Resolution Plan, such Financial Creditors shall be paid in accordance Section 30(2)(b) read with Sub-section (1) of section 53 of the Code."

(Emphasis supplied)

49. The following points emerge from the aforesaid clauses of the

Resolution plan:

Company Appeal (AT) (Ins.) No. 629 of 2024 -22-

i. Out of the amount of Rs. 150 crores paid by the SRA, Payment to be

made to the dissenting Financial Creditors in accordance with Section

30(2)(b) of the code read with section 53 of the code;

ii. Dissenting Financial Creditors are to be paid amount provided in the

plan or Liqudation value whichever is higher;

iii. Under Regulation 38(1)(b) of the CIRP Regulations 2016, dissenting

Financial Creditors to be paid in priority over Financial Creditors who

voted in favour of the plan; and

iv. Dissenting Financial Creditors to be paid in accordance with Section

30(2)(b) of the Code read with Section 53(1) of the Code.

v. After implementation of the Resolution Plan the Auto division of the

Corporate Debtor would be sold by RA and its proceeds distributed

amongst the accenting Financial Creditors only.

50. It is clear from the above that the dissenting financial creditors have

to be paid the higher value among the amount provided in Resolution Plan

and the liquidation value.

51. We now take a look at the decision taken in the 18th and 19th CoC

meetings. The 18th CoC meeting was held on 23.09.2022 and the e-voting

for the same was completed on 28.09.2022. The following resolution was

passed in the said meeting regarding distribution mechanism/ principles or

formulae for payment to creditors proposed in the resolution plan:

Company Appeal (AT) (Ins.) No. 629 of 2024 -23-

52. A perusal of the same clearly establishes that in the 18th CoC meeting

held on 23.09.2022, the CoC deliberated upon the manner of distribution

of the resolution proceeds in a situation, where the resolution value is lower

than the liquidation value. After due deliberation, the CoC approved a

specific and structured mechanism, namely, that the distribution shall be

Company Appeal (AT) (Ins.) No. 629 of 2024 -24-

made on the basis of the liquidation value attributable to each secured

financial creditor. This was a conscious commercial decision taken after

evaluating the financial implications and rights of all stakeholders.

53. The relevant extracts of the 19th CoC meeting held on 30.09.2022 are

reproduced below:

Company Appeal (AT) (Ins.) No. 629 of 2024 -25-

54. We note that in the 19th CoC meeting held on 30.09.2022, the CoC

clarified that the distribution among secured financial creditors would be

based on their respective share in the security interest and the

corresponding liquidation value attributable thereto. Significantly, the CoC

also decided to appoint an independent evaluation advisor, M/s K.G.

Somani & Co. LLP, to compute the liquidation value attributable to each

creditor in accordance with the approved mechanism. The CoC also

reconfirmed the distribution mechanism as approved in the 18th CoC

Company Appeal (AT) (Ins.) No. 629 of 2024 -26-

meeting. This demonstrates that the CoC not only approved the principle of

distribution, but also ensured its precise implementation through an expert

determination.

55. Pursuant to this decision, the evaluation advisor submitted its report

determining the liquidation value payable to Respondent No.1 at Rs. 64.56

crores. This quantification was not challenged at the relevant stage and

formed an integral part of the framework within which the Resolution Plan

was considered and approved.

56. We further note that, in the 20th CoC meeting, the CoC reiterated that

dissenting financial creditors would be paid at least the minimum

liquidation value in terms of Section 30(2)(b) of the Code, thereby reinforcing

rather than diluting the earlier decisions. The relevant portions of the

discussion in 20th CoC meeting are extracted below:

"Post detailed discussion, it was concluded that the suggestion

by ICICI Bank vide email dated 4th October 2022, as regards

the proposed distribution mechanism for dissenting financial

creditors, the same may be clarified in the following manner:

.........in the event of approval of resolution

plan, dissenting secured financial creditors

will be paid as proposed under the respective

resolution plan."

Company Appeal (AT) (Ins.) No. 629 of 2024 -27-

57. The evaluation advisor appointed by the CoC had given the estimates

of share of each secured financial creditor based on their security interest.

The same is extracted below:

Company Appeal (AT) (Ins.) No. 629 of 2024 -28-

58. We note from the same that the share proposed for SBI/ Respondent

No.1 is Rs.64.56 crores and the same is based on the liquidation value of

the steel unit. Contrary to the submission of the Appellants, the liquidation

value used for determining SBI's share only relates to the steel unit. The

share of Auto unit has not been considered in the computation of the SBI's

share of liquidation value.

59. The Resolution Plan, which was subsequently approved by the

Adjudicating Authority on 20.03.2023, incorporates this framework and

provides that dissenting financial creditors shall be paid in accordance with

Section 30(2)(b). Once such a plan is approved under Section 31 of the Code,

it becomes binding on all stakeholders, including the CoC itself as well as

any committee constituted for its implementation.

60. Another important aspect for consideration is whether the payment

directed to Respondent No.1 is in accordance with Section 30(2)(b) of the

Code and the distribution decided by the CoC under Section 30(4), and

whether such payment is inequitable in any manner. At this stage we take

note of relevant portions of Section 30 of the Code, which are extracted

below:

"Section 30: Submission of resolution plan.

*30. (1) ------

(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan--

(a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor;

Company Appeal (AT) (Ins.) No. 629 of 2024 -29-

[(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.

(3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2).

(4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent. of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub- section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board"

[Emphasis supplied]

61. Section 30(2)(b) provides a statutory safeguard to dissenting financial

creditors by ensuring that they receive not less than the amount they would

have received in liquidation. In the present case, the liquidation value

attributable to Respondent No.1 has been determined through an

independent and expert evaluation process at Rs. 64.56 crores. Therefore,

payment of this amount is not discretionary but mandatory.

62. Further, Section 30(4) vests the CoC with the power to approve the

Resolution Plan and determine the manner of distribution in its commercial

wisdom. As already discussed, the CoC has exercised this power by

Company Appeal (AT) (Ins.) No. 629 of 2024 -30-

approving a distribution mechanism based on liquidation value attributable

to security interest. This decision has been taken after due deliberation and

has been consistently applied.

63. The contention of the Appellants that such payment is inequitable or

results in granting a premium to the dissenting creditor is untenable. The

amount payable to Respondent No.1 is its statutory entitlement and not a

premium. The fact that the resolution value is lower than the liquidation

value does not permit deviation from the mandate of Section 30(2)(b). The

CoC itself, being fully aware of this position, adopted a distribution

mechanism that ensures compliance with the statutory requirement.

64. Another provision to be considered in this regard is Regulation 38 of

CIRP Regulations. Relevant clauses 38(1) and 38(4) of the same are

extracted below:

"Regulation 38: Mandatory contents of the resolution plan.

38. (1) The amount payable under a resolution plan -

(a) to the operational creditors shall be paid in priority over financial creditors; and

(b) to the financial creditors, who have a right to vote under sub-

section (2) of section 21 and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan:

Provided that where a resolution plan provides for payment in stages, the financial creditors who did not vote in favour of the resolution plan shall be paid at least pro rata and in priority over financial creditors who voted in favour of the plan, in each stage. *****

38. (4) (a) The committee shall consider setting up a monitoring committee for monitoring and supervising the implementation of the resolution plan.

Company Appeal (AT) (Ins.) No. 629 of 2024 -31-

(b) The monitoring committee may consist of the resolution professional or any other insolvency professional, or any other person, including representatives of the committee and representatives of resolution applicant(s), as its members:

Provided that where the resolution professional is proposed to be part of the monitoring committee, the monthly fee payable to him shall not exceed the monthly fee received by him during the corporate insolvency resolution process.

(c) The monitoring committee shall submit quarterly reports to the Adjudicating Authority regarding the status of implementation of resolution plan."

65. This Regulation 38(1)(b) stipulates that the dissenting financial

creditors will be paid in priority over the financial creditors who voted in

favour of the resolution plan in the CoC meeting. Further, Regulation 38(4)

provides for setting up of Monitoring Committee for monitoring and

supervising the implementation of Resolution Plan. It is to be noted that

such a committee is to be setup based on the requirements of the specific

resolution plans and is not mandatory to setup a monitoring committee in

each and every case. The Monitoring Committee itself is to be setup by the

CoC and it has a very limited mandate relating to monitoring and

implementation of the resolution plan for which it submits quarterly reports

to the Adjudicating Authority.

66. At this juncture, it is also necessary to emphasize that once the CoC,

in exercise of its commercial wisdom under Section 30(4), approves a

Resolution Plan and the same is thereafter approved by the Adjudicating

Authority under Section 31, the plan attains finality and binding force in

law. Such approval creates a complete and enforceable framework governing

the rights and obligations of all stakeholders. The Monitoring Committee,

Company Appeal (AT) (Ins.) No. 629 of 2024 -32-

which is constituted by the CoC, only for a limited purpose of supervising

and facilitating the implementation of the approved plan, cannot assume

the role of the CoC or the Adjudicating Authority to revisit or modify the

terms of the plan. Any attempt to alter the distribution mechanism at this

stage would amount to rewriting the Resolution Plan itself, which is

impermissible and contrary to the scheme of the Code. The sanctity and

finality attached to an approved Resolution Plan cannot be diluted by

subsequent decisions of the Monitoring Committee.

67. We note that the Chairperson of Monitoring Committee (being the RP)

and the Monitoring Committee's own legal counsel, were of the view that

any attempt to change the distribution approved by the CoC is contrary to

the provisions of the Code as borne by the minutes of the 2nd MC meeting

held on 02.05.2023 and 3rd MC meeting held on 03.05.2023. In this

background, the decision of the Monitoring Committee in its 4th meeting

dated 04.05.2023, wherein it reduced the amount payable to Respondent

No.1 from Rs. 64.56 crores to Rs. 35.2 crores, is clearly beyond its

jurisdiction. The Monitoring Committee is not vested with any power to

revisit or alter the commercial decisions of the CoC. Its role is limited to

monitoring and implementing the approved Resolution Plan. Any deviation

from the distribution mechanism would amount to modifying the Resolution

Plan itself, which is impermissible in law.

68. In 'Bank of Baroda v. IDBI Bank Limited' [2025 SCC OnLine NCLAT

2115], decided by this Appellate Tribunal, one of the assenting financial

creditors sought to alter the distribution mechanism approved by the CoC,

Company Appeal (AT) (Ins.) No. 629 of 2024 -33-

after approval of Resolution plan by the NCLT and at the stage of its

implementation. It was categorically held that the commercial wisdom of

CoC regarding manner of distribution, once exercised, cannot be changed

subsequently even by the CoC. In this case, such a change has been

attempted by the Monitoring Committee, which is a creature of CoC itself.

The relevant paras of the judgment are extracted below:

"23. The further statutory scheme contemplated by the l& B Code is that after approval of the Resolution Plan, the CoC itself is also bound by its finality and cannot be allowed to tinker with or modify the resolution plan including the mechanism of distribution. Thus, the decision of the CoC taken on 27.10.2023 could not be said to be in accordance with the I&B Code and is clearly contrary to the scheme and object of the I&B Code.

Furthermore, the resolution plan as was submitted by the Respondent No. 3. without any modification, was approved by the Adjudicating Authority on 19.12.2023. The Adjudicating Authority while approving the plan has also noticed the Clauses of resolution plan where Reliance Bhutan Loan was to be assigned to the Approving Financial Creditors. When in final approval of resolution plan assignment of the Reliance Bhutan Loan was to the Approving Financial Creditor, we fail to see any justification/validity in action of the CoC in reassigning the Reliance Bhutan Loan to the Dissenting Financial Creditors.

28. It is true that the CoC with commercial wisdom can take a decision regarding different aspects of the plan including manner of distribution, which is also statutory scheme under section 30(4) but once the commercial wisdom has been exercised by approving the resolution plan in meeting dated 05.08.2021, the modification of the said distribution mechanism, which is impermissible, cannot be saved in the name of commercial wisdom of the CoC."

Company Appeal (AT) (Ins.) No. 629 of 2024 -34-

69. The next contention of the Appellants is that the Impugned Order is

contrary to the judgment of the Hon'ble Supreme Court in India Resurgence

ARC Pvt. Ltd. v. Amit Metaliks Ltd..2021 (19) SCC 672. The facts in Amit

Metaliks (supra) related to non-consideration of value of the security interest

of the appellant by the Committee of Creditors, which has decided to

distribute the plan proceeds based on the admitted claims of the secured

creditors. The appellant in that case had challenged the commercial wisdom

of the CoC. It should be mentioned that the appellant did not raise this issue

during the plan approval process at the level of AA. The challenge by the

appellant was against the commercial wisdom of the CoC.

70. The ratio of Amit Metaliks does not apply to the present case as the

Respondent No.1 is not claiming any amount beyond its liquidation value

which has been duly approved by the CoC and AA. The appellant, on the

contrary, is seeking a review of the decision of CoC and AA via a decision

taken in the Monitoring Committee. Respondent No.1 is seeking

enforcement of the liquidation value as determined by the evaluation advisor

and accepted within the CoC framework. The amount of Rs. 64.56 crores

represent the liquidation value attributable to Respondent No.1 and is

therefore fully consistent with Section 30(2)(b).

71. We further note that the Impugned Order does not interfere with or

alter the commercial wisdom of the CoC. It merely enforces the very

distribution mechanism which was approved by the CoC and incorporated

in the Resolution Plan. Hence, it cannot be said that the Impugned Order is

contrary to the law laid down by the Hon'ble Supreme Court.

Company Appeal (AT) (Ins.) No. 629 of 2024 -35-

72. It was also contended during the course of oral submissions that

Respondent No.1 holds security interest only in the steel unit of the

Corporate Debtor and, therefore, ought not to receive any amount relatable

to the auto unit. As we have seen earlier in para 57, that the distribution

proposed by the evaluation advisor, had only considered the liquidation

value of steel unit. The resolution plan clearly states that the proceeds of

the Auto Unit would be distributed amongst the assenting Financial

Creditors only. The Respondent No.1 has clearly stated that they have no

claim in the Auto Unit of the CD. Once liquidation value for secured creditor

has been computed on the basis of resolution plan and approved within the

CoC framework by the AA, the entitlement of a creditor cannot be re-opened

even by the CoC, not to say the Monitoring Committee. The Impugned Order

does not confer any undue or additional benefit upon Respondent No.1, but

merely enforces the liquidation value already determined and approved.

Therefore, this contention is misconceived, contrary to the approved

distribution framework, and liable to be rejected.

73. We, therefore, hold that the distribution mechanism approved by the

CoC in its commercial wisdom and subsequently by the AA is valid, lawful,

and binding, and the Monitoring Committee could not have altered the

same. We are of the view that the payment directed to Respondent No.1 is

strictly in accordance with Section 30(2)(b), read with Section 53(1) of the

Code which has been duly approved by the CoC and thereafter, by the AA,

under Section 30(4), does not suffer from any inequity or illegality.

Company Appeal (AT) (Ins.) No. 629 of 2024 -36-

74. In view of the findings above, we hold that the Impugned Order dated

05.02.2024, does not warrant any interference. The Appeal is devoid of merit

and is accordingly dismissed. No order as to costs.

[Justice Ashok Bhushan) Chairperson

[Mr. Indevar Pandey] Member (Technical)

SA/Pragya (LRA)

Company Appeal (AT) (Ins.) No. 629 of 2024