Case Note & Summary
The dispute arose from the Corporate Insolvency Resolution Process (CIRP) initiated against Rave Scans Private Limited under Section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC). The appellant, Rahul Jain, was the resolution applicant whose revised resolution plan was approved by the National Company Law Tribunal (NCLT) on 17th October 2018. However, the second respondent, Hero Fincorp Ltd., appealed against this order, claiming discrimination as it received a lower percentage of its admitted claim compared to other financial creditors. The NCLAT modified the NCLT's order, requiring the appellant to increase the liquidation value offered to Hero, citing discrimination under the amended Regulation 38. The appellant contended that the NCLAT's decision was unjustified, as the resolution plan had been approved before the amendment and the liquidation value offered was higher than the ascertained value. The court analyzed the provisions of the IBC and the relevant regulations, concluding that the NCLAT's modification was not warranted. The Supreme Court held that the NCLAT's directions were unjustified and restored the NCLT's order, allowing the appeal without costs.
Headnote
A) Insolvency Law - Discrimination Among Creditors - NCLAT's Modification of Resolution Plan - Insolvency and Bankruptcy Code, 2016, Section 30 - The NCLAT modified the resolution plan on grounds of discrimination against a dissenting financial creditor, which was found unjustified as the resolution plan had been approved prior to the amendment of Regulation 38. Held that the NCLAT's directions were not justified and restored the NCLT's order (Paras 13-14).
Issue of Consideration
Whether the NCLAT's finding of discrimination against the financial creditor, leading to modification of the resolution plan, was justified.
Final Decision
The Supreme Court allowed the appeal, set aside the NCLAT's directions, and restored the NCLT's order approving the resolution plan.
Law Points
- Insolvency Resolution Process
- discrimination among creditors
- liquidation value
- fair treatment of creditors
- amended Regulation 38
