Whether Section 30(2)(b)(ii) of IBC, 2016 entitles Dissenting Financial Creditor to be paid the minimum value of its security interest? | Contradiction in India Resurgence ARC Pvt. Ltd. and CoC of Essar Steel India Ltd. and Jaypee Kensington Boulevard judgments | Refers to Larger Bench – DBS Bank Ltd. Singapore Vs. Ruchi Soya Industries Ltd. and Another – Supreme Court
Hon’ble Supreme Court holds that:
(i) A secured creditor cannot claim preference over another secured creditor at the stage of distribution on the ground of a dissent or assent, otherwise the distribution would be arbitrary and discriminative. The purpose of the amendment was only to ensure that a dissenting financial creditor does not get anything less than the liquidation value, but not for getting the maximum of the secured assets.
(ii) There is a contradiction in the reasoning given in the judgment of this Court in India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd. & Anr. (2021) ibclaw.in 87 SC which is in discord with the ratio decidendi of the decisions of the three Judge Bench in CoC of Essar Steel India Limited v. Satish Kumar Gupta & Ors. (2019) ibclaw.in 07 SC and Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors. (2021) ibclaw.in 63 SC.
(iii) Section 53(1) is referred to in Section 30(2)(b)(ii) with the purpose and objective that the dissenting financial creditor is not denied the amount which is payable to it being equal to the amount of value of the security interest.
(iv) The dissenting financial creditor has to statutorily forgo and relinquish his security interest on the resolution plan being accepted, and his position is same and no different from that of a secured creditor who has voluntarily relinquished security and is to be paid under Section 53(1)(b)(ii) of the Code.
(v) It would be appropriate and proper if the question framed at the beginning of this judgment is referred to a larger Bench.
