Union Bank of India vs Mr. Rajender Kumar Jain & Ors.

PER: HARNAM SINGH THAKUR, MEMBER (JUDICIAL)

This application has been filed by the applicant-Union Bank of India, a financial creditor of the Kudos Chemie Ltd. (for short the ‘corporate debtor’) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘Code’) seeking the following directions:-

It is stated that the initially facilities had been granted to the corporate debtor by Corporation Bank which has now merged with Union Bank of India pursuant to an amalgamation which came into effect on 01.04.2020 and thus, pursuant to the said amalgamation, Union Bank of India is competent to initiate/pursue any and all legal proceedings on behalf of Corporation Bank for recovery of its dues from borrowers including the corporate debtor. It is further stated that Clause 4 (8) of the Scheme of Amalgamation specifically provides that any GPA executed by Corporation Bank shall be of full force and effect against or in favour of Union Bank of India, and may be enforced or acted upon as fully and effectively as if in the place of Corporation Bank and thus the GPA dated 13.12.2012 continue to be valid. The relevant extract of Clause 4(8) of Scheme of Amalgamation is reproduced below:

It is submitted that the Applicant Bank (Corporation Bank) had initially sanctioned Working Capital Limit of Rs.20.00 Crores and Term Loan facility of Rs.45.00 Crores to the corporate debtor to part finance its project costing around Rs.66.60 Crores. In terms of the Sanction Letter, the Bank has pari-passu first charge on the entire fixed assets of the corporate debtor with other term lenders. It is mentioned that at the time sanction of the term loan, share of the Applicant was 27.58% i.e. Rs.45.00 Crore Term Loan Limits out of total Term Loan exposure of Rs.163.16 Crores and the security available for Term Loan Limit was Rs.70.75 crore. The said Term Loan Limit and Cash Credit limits were renewed from time to time. It is further mentioned that the charge of the Lender-Bank was registered with the Registrar of Companies for the Term Loan facility of Rs. 45.00 crore on 20.06.2009.

It is further submitted that the credit limit sanctioned to corporate debtor was restructured by a consortium led by respondent No.2 i.e. Punjab National Bank under CDR Package on 29.12.2014 and the cut-off date for the said Restructuring with the credit limit was taken as on 28.02.2014. At the time of cut-off date, the total outstanding Term Loan Limit of the corporate debtor was Rs. 392.91 Crores and the Term Loan outstanding of the Applicant-Bank was Rs.29.15 Crores, which constituted 7.419% of the total Term Loan limits. Out of the total outstanding Term Loan of Rs. 392.91 crores as on the cut-off date, an amount of Rs. 351.03 crores was restructured and thus, the Applicant Bank had a Term Loan limit exposure of Rs. 28.12 crores. Further, under the Corporate Debt Restructuring (in short ‘CDR’) package, a major part of Working Capital Limit (in short ‘WCL’) of all the lenders were converted into Working Capital Term Loan (in short ‘WCTL’) and Funded Interest Term Loan (in short ‘FITL’) Limit and upon conversion of Working Capital Limit into WCTL and sanction of FITL limit under the CDR package, the exposure of the Applicant-Bank in Term Loan lenders was reduced from 7.42% to 2.22% as per the facility agreement executed on 29.12.2014. Hence, Applicant Bank’s security coverage was also reduced on fixed assets due to CDR restructuring. In this regard, it was submitted that under the CDR package, the Applicant had first pari-passu charge on the fixed assets of the Corporate Debtor with the other lenders, excluding the assets exclusively charged to the Lenders and second pari-passu charge on the entire current assets, present & future including entire stocks, book debts, loans & advances.

In view of the above restructuring of the loan, the lenders of the Corporate Debtor executed a Master Restructuring Agreement (in short ‘MRA’) on 29.12.2014 (Annexure A-3) in order to implement the restructuring proposal. One of the main conditions of the above MRA was that the promoters of the Corporate Debtor shall bring in a mandatory contribution of Rs. 63.00 Crores upfront. It was further agreed that they shall also provide personal guarantees of Mr. Jitendra Singh, Mrs. Gurmeet Sodhi, Mr. Kabir Sodhi & Mr. Kirat Sodhi to all the CDR lenders. However, despite various opportunities, the promoters failed to bring in the requisite contribution of funds under the CDR mechanism. As a result of the same, all the lender banks in their Joint Lenders Meeting (in short 'JLM’) dated 29.08.2016 (Annexure A-4), decided to exit from CDR mechanism of the Corporate Debtor on account of non-compliance of CDR conditions and thus, failure of CDR package was approved.

Thereafter, the CDR Cell vide its letter dated 30.09.2016 (Annexure A-5) also approved the exit of corporate debtor from CDR mechanism on account of non-compliance of CDR conditions and thus, approved failure of CDR package. Thus, CDR package of corporate Debtor was never implemented due to the non-compliance of the conditions enumerated under it and neither the corporate debtor nor the Banks could avail any of the benefits accruing thereunder and in other words, the rights & liabilities of all parties were restored as if to say that the CDR package was never in existence.

It is further mentioned that para 3.2.3 of MRA provides a clause for Continuation of Security Interest. The said clause clearly states that subsisting charge over the movable & immoveable assets of the borrower shall continue to be in full force & effect for respective facilities. Further, Clause 8.3 of the MRA provides for Consequences of Revocation. The said clause states that upon revocation of the restructuring of the existing loans, the rights & remedies of the Lenders would continue as if they had not been waived, amended, modified, superseded or replaced by the Restructuring Documents and the Lenders shall be entitled to enforce such rights and remedies. Clause 3.2.3 & 8.3 are reproduced below:

In view of the above stated clauses, it is stated that the Applicant Bank is entitled to receive the Resolution Plan amount as per the Security Interest prior to CDR package. It is further stated that the charge created by the other consortium lenders on the basis of CDR, cannot be considered and are invalid for the reason that the said charges were created on the basis of the CDR which had failed.

This Tribunal vide order dated 05.07.2019, admitted the petition against the corporate debtor and CIRP was initiated and accordingly, Respondent No.1 was appointed as the RP. The Applicant is a member of the Committee of Creditors and has been participating in the meetings of the Committee of Creditors being held from time to time.

In the 20th meeting of the Committee of Creditors, held on 16.01.2021, Agenda Item No.20.04 pertained to approval of the Resolution Plan submitted by the Resolution Applicant. During the course of discussions, the Applicant-Bank raised an objection regarding the manner of Distribution of Asset under Section 53 of the Code and suggested that distribution should be done as per the security interest "prior” to CDR implementation and not as per voting share of the claimed amount. However, the request of the Applicant Bank was not considered by the other members of the Committee of Creditors.

Thereafter in 21st CoC Meeting dated 21.01.2021, the members of the Committee of Creditors deliberated upon the distribution of Resolution Plan amount in Agenda Item No.21.04. On the request of the members of the Committee of Creditors, Respondent No.1 shared the consolidated sheet of distribution chart (Annexure A-8), wherein the Resolution Professional, made the calculations as per four different scenarios which are mentioned below:

Plan amount as per claims accepted by RP;

Plan amount as per security interest by assuming WCTL and FITL as part of Term Loan;

Plan amount if CDR package was assumed to have not been implemented; and

Plan amount if CDR package was assumed to have been implemented.

The Applicant Bank again raised its objection in relation to manner of distribution of the Resolution Plan amount to the Financial Creditors and thus, voted for Option No.3, i.e. plan amount, if CDR package was assumed to have not been implemented. However, the objection of the Applicant, being a minority CoC member — holding only 2.31% voting share — was cast aside by the other Financial Creditors, who voted for Option No.1 i.e. Plan amount as per claims accepted by Resolution Professional. Therefore, left no other option the Applicant voted against the Resolution Plan submitted by the Resolution Applicant-UPL. It is further submitted that the Resolution Plan has been approved by the other members of the Committee of Creditors holding 97% voting share.

According to the applicant, no party/financial creditor can be allowed to derive the benefit from a CDR which was actually never implemented. It is submitted that the provisions of Section 30(2)(1)(b) of the Code provide for the minimum payment to the dissenting Financial Creditors 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. Further Regulation 38(1)(b) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (for short the ‘Regulations’) provides that the financial creditors, who have a right to vote under Sections 21(2) 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.

It is contended by the applicant that the amount to be paid to it as a dissenting financial creditor under the approved Resolution Plan should be calculated and paid as per Option No.3 i.e. amount, if CDR package was not been implemented and also in terms of the above stated provisions. It is reiterated that admittedly, the CDR Package had never been implemented and thus no benefit can be derived thereunder by anyone.

According to the applicant, the credit limit sanctioned to the corporate debtor was restructured by the Applicant under the CDR Package on 29.12.2014, whereas the cut-off date for the restructuring the credit limit was taken as on 28.02.2014. Thus, the total Term Loan outstanding of the corporate debtor as on cut-off date was Rs.392.91 Crores and term loan outstanding of the Applicant Bank was Rs. 29.15 Crores (i.e. 7.41%). In the present case, the total Liquidation amount available is Rs.232.60 Crores and out of this the Applicant Bank is entitled to receive Rs. 17.26 Crores. The calculation in this regard is tabulated below:

Thus, the Applicant in entitled to receive Rs. 17.26 Crores in terms of Option No.3 and Section 53 of the Code.

The Applicant submits that by way of the present application, neither it is stalling the Resolution Process of the corporate debtor nor questioning the commercial wisdom of the members of the Committee of Creditors. The present application is for the limited purpose for distributing the Resolution Plan Amount to the Applicant as per Option No.3 and Section 53 of Code, since the CDR package was never implemented.

Notice of this application was issued to the respondents on 05.07.2021 and the applicant was directed to serve notice of this application to the respondents along with copy of entire paperbook through e-mail and speed post.

Respondent No.1/Resolution Professional filed its reply vide Diary No.00701/5 dated 27.07.2021, wherein it is stated that the contents of the application filed by the applicant are false and baseless. By way of the present application, the applicant has sought a relief i.e. direction to respondent No.1/Resolution Professional to distribute an amount of Rs.17.26 Crores under the resolution plan, which is not only misconceived but is also beyond the provisions of the Code.

It is stated by respondent No.1 that the Resolution Professional convened the 20th Meeting of Committee of Creditors on 16.01.2021, at which one of the agenda items was the approval of revised resolution plan submitted by M/s UPL Limited. The members of the Committee of Creditors deliberated on the distribution of the amount as proposed under the Resolution Plan in terms of provisions of Section 53 of the Code read with Section 30(4) of the Code, terms of Resolution Plan and eligibility of the Resolution Applicant in terms of provisions of Section 29A of the Code. Thereafter, in the 21st meeting of the Committee of Creditors, was held on 21.01.2021, wherein the respondent No.1-Resolution Professional presented the manner of distribution of amount offered under the resolution plan submitted by the resolution applicant under various scenarios, viz. (i) plan amount in proportion to claims accepted by the Resolution Professional; (ii) plan amount as per liquidation value of security interest by assuming WCTL and FITL as part of the term loan; (iii) plan amount, if CDR package was assumed to have not been implemented; and (iv) plan amount, if CDR package was assumed to have been implemented. Subsequent to discussions and deliberations, the Committee of Creditors decided that option (i) i.e. that the plan amount as per claims admitted, shall form the basis of the resolution plan and the members of the Committee of Creditors directed the Resolution Professional to put the resolution plan to vote by e-voting after 7-10 days and in the meantime, one more attempt to improve the resolution plan amount should be made. Thereafter, subsequent to e-voting by the Committee of Creditors, the resolution plan submitted by M/s UPL Limited was approved with 97.61% voting share of the Committee of Creditors.

According to the respondent No.1/Resolution Professional, the instant application has been filed by the applicant, a financial creditor of the corporate debtor, holding 2.31% of voting share in the Committee of Creditors and the Committee of Creditors in its commercial wisdom has already decided the distribution under the approved resolution plan as per Section 30(4) of the Code, which is in the purview and domain of the Committee of Creditors.

It is contended by respondent No.1/Resolution Professional that upon considering the legislative intent and the statutory scheme of the Code and the CIRP Regulations, as well as judicial pronouncements by the Hon’ble Supreme Court the approval of the resolution plan is solely within the commercial wisdom of the Committee of Creditors and upon receiving such approval, it is not for the adjudicating authority to replace its own wisdom with the commercial wisdom of the Committee of Creditors and thus, has prayed that the instant application ought not be entertained as it is not within the ambit of a majority financial creditor to frustrate the entire CIRP process seeking a resolution plan to be implemented in an alternative manner, when such resolution plan has been approved by 97.61% of the Committee of Creditors.

It is reiterated by the Resolution Professional that Committee of Creditors, which constitutes the consortium of lenders had taken part in the CDR process and have voted in favour of the resolution plan with an outstanding majority of 97.61% and the same does not merit interference by this Tribunal. Thus, Section 30(4) requires the Committee of Creditors whilst approving a resolution plan to 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. Accordingly, the plan distribution is based on new security interest registered with ROC post CDR, which the members of the Committee of Creditors have themselves agreed to. It is now open to the applicant-bank to dispute the security interest since it exists in the ROC.

Thus, it is submitted that in pursuance of the resolution plan having been approved by 97.61% of the Committee of Creditors, the instant application is misconceived and deserves to be dismissed.

A joint reply on behalf of Punjab National Bank, respondent No.2; UCO Bank, respondent No.3; and State Bank of India, respondent No.5, has been filed vide Diary No.00701/3 dated 23.07.2021, which while adopting the reply of respondent No.1/Resolution Professional has submitted that respondent nos.2, 3 and 5 being one of the most prominent public sector banks and being the members of the Committee of Creditors in the on-going process of the corporate debtor, had always acted within the ambit of the Code. Respondent nos.2, 3 and 5 had always showed constructive participation in the Committee of Creditors’ Meeting convened by the IRP/RP in the instant matter and had always strived to take all decisions based on best of their commercial wisdom after due deliberation and detailed discussion, being custodian of the public money.

It is further submitted that the decision taken by respondent Nos.2, 3 and 5 along with other Committee of Creditors members-banks to approve the resolution plan by 97.16% voting was a well-informed decision being taken after thorough analysis of financial contours, feasibility and viability of the resolution plan. Further, according to the provisions of the Code, there is no mention that an implementation or revocation of any CDR should be taken into consideration by the Committee of Creditors while exercising their commercial wisdom in taking business decision regarding the distribution of resolution plan. The very intent of legislature was only that there should be fairness of distribution amongst similarly situated creditors which has been achieved in the present matter as the applicant is being treated equally.

According to respondent Nos.2,3 and 5, the claim of the applicant-bank of Rs.85.29 Crores was admitted by the Resolution Professional, which gave the applicant bank 2.31 voting share in the Committee of Creditors and was never challenged by the applicant, the option no.1 being chosen for the distribution of the resolution amount gives equal treatment to the applicant-bank in relation to its 2.31% voting share with other creditors. Thus, it is a fair and equitable distribution and the applicant-bank cannot be allowed to go beyond its own voluntarily filed claim as on CIRP commencement date and to trace back to post CDR voting share to claim 7.419% share. It is thus, prayed that the present application may be dismissed with heavy costs on the applicant as if the application is allowed, it would open flood gate resulting more liquidations rather than insolvency resolutions and maximization of value of assets of the corporate debtor.

Central Bank of India, Respondent No.6 also filed its reply, wherein it has toed the line of reply filed by respondent No.1, 3 and 5 and stated that the application is wholly frivolous, misconceived, groundless, and not maintainable. The averments made in the application are having no legal veracity or foundation as per the Code and the same has been filed without any justified reason and cause against respondent No.6, hence, the same is liable to be dismissed.

It is further stated that respondent No.6 being one of the most prominent public sector banks and being member of the Committee of Creditors in the ongoing CIRP of the corporate debtor had always acted showed constructive participation in the meetings of the Committee of Creditors and within the ambit of the Code. Thus, it is prayed that the instant application filed by the applicant-bank may kindly be dismissed with heavy costs.

During the course of the arguments, it is contended by learned counsel for the applicant that it is a financial creditor and member of the Committee of Creditors of the corporate debtor. The applicant has initially sanctioned working capital limit of Rs.20 Crores and Term Loan facility of Rs.45.00 Crores to the corporate debtor to part finance its project. In terms of the sanction letter, the bank has pari-passu first charge on the entire fixed assets of the corporate debtor with other term lenders. Accordingly, the share of the applicant was 27.58% i.e. Rs.45.00 Crores Term Loan Limits out of total term loan exposure of Rs.163.16 Crores. It is alleged that as per the credit limit sanctioned to the corporate debtor, the exposure of the applicant bank was Rs.29.15 Crores, which constituted 7.419% of the total term loan limits. Out of the total outstanding Term Loan of Rs.392.91 Crores, an amount of Rs.351.03 Crores was restructured and thus, the applicant-bank had a term loan limit exposure was reduced from 7.42% to 2.15% as per the facility agreement executed on 29.12.2014. Under the restructuring of the loan, the lenders had executed a MRA on 29.12.2014 in order to implement the restructuring proposal.

It is further alleged that the promoters of the corporate debtor failed to fulfill the conditions of the MRA, as a result of the same, all the lender banks in their JLM dated 29.08.2016, decided to exit from CDR mechanism of the corporate debtor. Further, the CDR cell vide its letter dated 30.09.2016 also approved the exit of the corporate debtor from CDR mechanism on account of non-compliance of CDR conditions. It is averred by learned counsel for the applicant that in the 20th meeting of the Committee of Creditors held on 16.01.2021, in agenda item 20.04, the applicant-bank raised an objection regarding the manner of distribution of assets under Section 53 of the Code and suggested that distribution should be done as per the security interest “prior” to CDR implementation and not as per voting share of the claimed amount. However, the request of the applicant-bank was not considered by the other Committee of Creditors members.

It is argued by learned counsel for the applicant that the applicant-bank further raised its objection through e-mail dated 10.01.2021 in relation to the manner of distribution of the resolution plan amount and thus, voted for option 3. However, the objection of the applicant, being a minority member of the Committee of Creditors, holding only 2.31% voting share was cast aside by the other financial creditors, who voted for option 1. Therefore, applicant voted against the resolution plan. In the present case, the total liquidation amount available is Rs.232.60 Crores out of this the applicant-bank is entitled to receive Rs.17.26 Crores in terms of Option 3 and Section 53 of the Code.

In support of his arguments, the learned counsel for the applicant has placed reliance on a decision dated 05.01.2022 passed by the Hon’ble National Company Law Appellate Tribunal, in Company Appeal (AT) (Ins). No.503 of 2021; Bank of Maharashtra versus Videocon Industries Ltd. and Ors, wherein it is held as under:-

Hence, it is prayed by learned counsel for the applicant that respondent No.1 be directed to distribute an amount of Rs.17.26 Crores under the resolution plan to the applicant as per option 3, i.e. if CDR was never implemented and in accordance with the provisions of Section 53 of the Code.

It is argued by learned counsel for respondent No.1 that Resolution Professional is only required to examine the resolution plan with respect to compliance under Section 30(2) of the Code and upon such compliance, the Resolution Professional is only required to place the resolution plan for voting under Section 30(4) of the Code. In support of his contentions, learned counsel for the respondent No.1/Resolution Professional has placed reliance on judgment passed by the Hon’ble Supreme Court in the matter of Committee of Creditors of Essar Steel India versus Satish Kumar Gupta and Others; (2020) 8 SCC 531, wherein it is held that:-

Further, reliance has been placed upon a judgment dated 13.05.2021 passed by the Hon’ble Supreme Court in the matter of India Resurgence Arc. Pvt. Ltd. versus M/s Amit Metaliks Ltd. & Another; Civil Appeal No.1700 of 2021, wherein it is held as under:-

Thus, Section 30(4) requires the Committee of Creditors whilst approving a resolution plan to 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.

Learned counsel for the respondent No.1/Resolution Professional further contends that it is settled law that there is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act based on a thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before the adjudicating authority or before this Hon’ble Appellate Authority.

It is thus, prayed that in view of the aforementioned facts and circumstances, the present application filed by the Applicant be dismissed.

Mr. Arpit Chawla, learned counsel appearing for respondent Nos.2, 3, 5 and 6 submits that respondent No.2, 3, 5 & 6 based on their commercial wisdom and after examining all the salient features of the resolution plan decided to go with option no. 1 i.e. Distribution of resolution plan as per the claim submitted. It is mentioned that voting agenda item 21.04 placed in 21^st meeting of the Committee of Creditors regarding the approval of resolution plan submitted by M/s UPL Limited (having option 1 as basis i.e. distribution of plan amount as per claims admitted) was passed by a voting percentage of 97.61%. As the essential minimum voting threshold as per Section 30(4) of IBC, 2016 being –“the Committee of creditors may approve a resolution plan by vote of note less that sixty-six (66) percent, of voting share of financial creditors” was attained, thus, there was no illegality of any kind committed as being contended by the applicant.

In support of his submissions, learned counsel for respondent Nos.2, 3, 5 and 6, has also placed reliance on a judgment dated 13.05.2021 passed by the Hon’ble Supreme Court in the matter of India Resurgence Arc. Pvt. Ltd. versus M/s Amit Metaliks Ltd. & Another; Civil Appeal No.1700 of 2021, wherein it is held as under:-

Thus, it is prayed that the application filed by the applicant be dismissed.

On behalf of respondent No.6, it is argued by Mr. Arpit Chawla, learned counsel that the present application is wholly frivolous, misconceived, groundless and not maintainable and the averments made in the same are having no legal veracity or foundation as per the Code and the same has been filed without anu justified reason/cause against the respondent No.6, hence the same is liable to be dismissed. It is a settled proposition of law that a person, whose case is based entirely on misconstrued facts, has no right to approach the court or tribunal. It is contended on behalf of respondent No.6 that it being one of the most prominent public sector banks and being a member of the Committee of Creditors in the on-going CIRP of the corporate debtor has always acted within the ambit of the Code. Further, respondent No.6 had always showed constructive participation in the meetings of the Committee of Creditors convened by the IRP/RP and had always strived to take all decisions based on best of their commercial wisdom after due deliberation and detailed discussions, being custodian of the public money. Thus, prayer for dismissal of the application with heavy costs has been prayed for, as if the application is allowed it would open flood gate resulting into more liquidations rather than insolvency resolutions and maximizations of value of assets of the corporate debtor.

We have heard learned counsel for the parties and perused the paper book.

After hearing both the parties and after careful perusal of the law cited before us, we are of the considered view that the contentions raised by learned counsel for the applicant are not much convincing, thus, not tenable. At the outset, learned counsel for the applicant has raised twofold arguments. Firstly; that Resolution Professional/respondent No.1 be directed to distribute an amount of Rs.17.26 Crores under the resolution plan to the applicant as per option No.3 i.e. if CDR was never implemented instead of amount given in the resolution plan and secondly, the distribution should be done as per Section 30(2)(b) based upon security interest under Section 53 of the Code prior to CDR implementation and not as per voting share of the claimed amount.

Both these contentions of learned counsel for the applicant are not tenable because the distribution of the amount was made by the Committee of Creditors resting on total dues of voting share of individual creditors which is neither whimsical nor arbitrary in any manner. Although the applicant gave a dissenting vote for approval of the Plan, based on the reason that distribution of resolution fund was discriminatory against it and despite the plea that it was entitled to the equal share in regard to the distribution of the resolution fund on the value of the assets of the corporate debtor as security. However, the committee of creditors, deciding to go with option no.1 i.e. distribution of plan amount as per claims admitted, has approved the resolution plan by 97.61% votes.

In the circumstances, the issue which require adjudication before this Bench is as to whether the plan is in violation of Section 30(2)(b) of the Code for not providing the liquidation value to the dissenting financial creditors?

In support of his arguments, learned counsel for the applicant while placing reliance upon judgment in the matter of Bank of Maharashtra versus Videocon Industries Ltd. and Ors (supra) submitted that the resolution plan be sent back to the Committee of Creditors for reconsideration. However, the said authority relied upon by the learned counsel for the applicant is not applicable to the facts and circumstances of the case as well as in view of the judgment passed by the Hon’ble Supreme Court in the matter of Committee of Creditors of Essar Steel India versus Satish Kumar Gupta and Others (supra).

Moreover, we have also come across a decision dated 03.01.2022 passed by the Hon’ble National Company Law Appellate Tribunal, Principal Bench, New Delhi, on the same issue in the matter of Company Appeal (AT) (Insolvency) No.1117 of 2019; Canara Bank versus Mamta Binani, Resolution Professional of Aristo Texcon & Others, wherein it is held as under:-

Therefore, on the basis of doctrine of precedents, we follow the law laid down in Mamta Binani’s case (supra) instead of Videocon Industries case (supra) relied upon by the learned counsel for the applicant, as Mamta Binani’s case (supra) is a three Member Bench judgment passed by the Hon’ble NCLAT, as against Videocon Industries case (supra), which is two Member Bench judgment, passed by the Hon’ble NCLAT. Apart, it is held in Committee of Creditors of Essar Steel India versus Satish Kumar Gupta and Others (supra) that since it is the commercial wisdom of the Committee of Creditors that is to decide on whether or not to rehabilitate the corporate debtor by means of acceptance of a particular resolution plan, the provisions of the Code and the Regulations outline in detail the importance of setting up of such Committee, and leaving decisions to be made by the requisite majority of the members of the aforesaid Committee in its discretion.

If at all the commercial wisdom of the Committee of Creditors is challenged and if a secured creditor is allowed his share basing upon the value of security interest then it would lead to ‘unjust enrichment’ of such secured creditors, disadvantageous to the interest of other secured creditors i.e. the same class of creditors who require just and equal treatment.

In the circumstances if the present application is allowed then it would open flood gate resulting into more liquidations rather than insolvency resolutions and maximization of value of assets of the corporate debtor, which is not otherwise the objective of the Code. Thus, we do not find any illegality or violation of any law including the provisions of Section 30(2)(b) of the Code while approving the resolution plan by the Committee of Creditors with voting share of 97.61%. Consequently, for the reasons recorded hereinbefore, we do not find any merit in the application and the same stands dismissed.