Merina Commotrade Pvt. Ltd. Vs Anand Sonbhadra (NCLAT Delhi)
Conclusion: The intent of the legislature was not that a security interest available to a dissenting financial creditor over the assets of the corporate debtor gave him some right over and above other financial creditors so as to enforce the entire of the security interest and thereby bring about an inequitable scenario, by receiving excess amount, beyond the receivable liquidation value proposed for the same class of creditors as per Section 30(2)(b) of the Code.
Held: Appellant had submitted that it was a secured financial creditor of the Corporate Debtor. Appellant’s financial debt was secured by charge on certain units and / or charge on total FSI (totaling to about 34,200 sq. ft.) in the project that was being developed by the CD. Appellant submitted its claim for secured financial debt of Rs. 10,21,25,000/- which was admitted fully and he was included in the CoC with 1.67% voting share. It was further submitted that during the CIRP, the RP appointed registered valuers who reported the liquidation value of the assets of the CD at about Rs. 166.54 Cr. but thereafter, the RP instructed the registered valuers, for land and building, to revisit their respective valuations by adjusting certain dues payable to New Okhla Industrial Development Authority (Noida) and Greater Noida Industrial Development Authority (GNIDA). The said registered valuers submitted their addendums on 09.10.2019 and reduced the liquidation value of the CD from Rs. 166.54 Cr. to a Rs.82.66 Cr. The valuation reports were shared by RP after voting on the resolution plan commenced and after taking into consideration the valuations assigned by the registered valuers vis a vis the resolution plan value offered to assessee, assessee voted against the resolution plan. However, the resolution plan was approved by the CoC with 87.60% votes in its favour. In the plan, the RP allocated a sum of Rs. 79,55,513/- to the Appellant as the liquidation value that a dissenting financial creditor would be entitled to in accordance with Section 30(2) r/w Section 53 of the Code but the appellant filed the objection to the approval of the resolution plan filed by the RP i.e. CA No. 485 of 2019 but the said objection had been rejected and plan has been approved. It was submitted that the Adjudicating Authority had erred in holding that as per Section 30(2)(b) of the Code, the liquidation value required to be paid to a financial creditor was only qua the secured interest of the financial creditor and not qua the total liquidation value of the CD. It was held that Respondent argued that the secured financial creditor could not insist on payment of the entire dues of the security as per its security interest in the event of approval of resolution plan. Reliance was placed upon Paridhi Finvest Pvt. Ltd. vs. Value Infratech Buyers Association & Anr., which held that the security holder could not insist upon payment of amount as per security interest when the Corporate Debtor was resolved through a resolution plan. As per Section 30(2)(b) of the Code, the financial creditor who did not vote in favour of the resolution plan was entitled to payment of debt, which should not be less than the amount to be paid to such creditor in terms of Section 53(1) of the Code. The Adjudicating Authority was not empowered to look into the question of valuation of the assets of the Corporate Debtor. Reliance was placed upon Ramkrishna Forgins Limited vs. Ravindra Loonkar, RP of Acil Limited & Anr., where it had been observed that there was no scope for interference with the commercial aspects of the decision of the CoC, and therefore, there was no scope for substituting any commercial term of the resolution plan approved by the CoC. Tribunal viewed that the dissenting creditor had submitted that in respect of Section 30(4) of the Code, the CoC could not have approved the resolution plan which failed to consider the priority and value of security interest of the creditors while deciding the manner of distribution to each creditor. The Supreme Court dismissed the appeal and emphasized that the commercial wisdom of the CoC should not be interfered with unless creditors within a class were denied equitable treatment. The question whether section 30(2)(b)(ii) entitled the dissenting financial creditor to be paid the minimum value of its security interest, had been referred to a larger bench of the Supreme Court in DBS Bank Ltd. Vs. Ruchi Soya Industries Ltd. & Anr., (2024) and dismissed the appeal.
