Case Note & Summary
The appeals were filed against a common order dated 25.03.2026 by the National Company Law Tribunal (NCLT), which dismissed two applications challenging a resolution plan and its distribution method. The appellant, IFCI Limited, claimed to be a secured financial creditor with a voting share of 8.34% and an admitted claim of over Rs. 288 crores. The appellant argued that it should receive payment in proportion to its security interest, which was valued at Rs. 43 crores. The NCLT found that the appellant, being a dissenting creditor, had no locus to object to the resolution plan since it was receiving more than the liquidation value. The Committee of Creditors (CoC) had approved the distribution of the resolution plan based on the claim ratio, which was supported by a significant majority of votes. The court analyzed the legal framework under the Insolvency and Bankruptcy Code, particularly Section 30, which allows the CoC to determine the distribution method. The court referenced precedents, including the Supreme Court's ruling in 'India Resurgence ARC Pvt. Ltd. Vs M/s Amit Metaliks Ltd', which clarified the rights of dissenting creditors. Ultimately, the court upheld the CoC's decision, stating that the distribution method was within their commercial wisdom and dismissed the appeals.
Headnote
A) Insolvency Law - Distribution of Resolution Plan - Approval of Distribution Method - Insolvency and Bankruptcy Code, 2016, Section 30 - The Committee of Creditors approved the distribution of resolution plan to secured financial creditors based on claim ratio rather than security interest, which was challenged by dissenting creditors. The court upheld the decision, emphasizing the commercial wisdom of the Committee of Creditors in determining distribution methods (Paras 5-9).
Issue of Consideration
Whether the Committee of Creditors was right in approving the manner of distribution to the secured financial creditor in proportion to the claim ratio as admitted by the resolution professional during CIRP irrespective of the security interest.
Final Decision
The appeals were dismissed, upholding the decision of the Committee of Creditors to distribute the resolution plan based on claim ratio rather than security interest.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Section 30
- Section 53
- commercial wisdom of Committee of Creditors
- dissenting financial creditors
- distribution of resolution plan
