DBS BANK LIMITED SINGAPORE versus RUCHI SOYA INDUSTRIES LIMITED AND ANOTHER
[2024] 1 S.C.R. 114, Supreme Court of India, 2024
Outcome: Matter referred to larger bench
Segment: Issues
* Author
[2024] 1 S.C.R. 114 : 2024 INSC 14
Case Details
DBS Bank Limited Singapore
v.
Ruchi Soya Industries Limited and Another
(Civil Appeal No. 9133 of 2019)
03 January 2024
[Sanjiv Khanna* and S.V.N. Bhatti, JJ.]
Issue for Consideration
Whether s.30(2)(b)(ii) of the Insolvency and Bankruptcy Code, 
2016, as amended in 2019, entitles the dissenting financial creditor 
to be paid the minimum value of its security interest; whether the 
amendments made in the substantive portion of s.30(2), in terms 
of Explanation 2 will be applicable when the first appeal was heard 
by NCLAT.
Headnotes
Insolvency and Bankruptcy Code, 2016 – s.30(2)(b)(ii) – 
Interpretation:
Held: s.30(2)(b)(ii) forfends the dissenting financial creditor from 
settling for a lower amount payable under the resolution plan – A 
financial creditor can dissent if the resolution plan is discriminatory 
or against a provision of law– However, a dissenting financial 
creditor cannot take advantage of s.30(2)(b)(ii) – 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 – 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 – There is a 
contradiction in the reasoning given in the judgment of this Court 
in India Resurgence
ARC Private Limited v. Amit Metaliks Limited 
& Another [2021] 6 SCR 611, which is in discord with the ratio 
decidendi of the decisions of the three Judge Bench in Committee 
of Creditors of Essar Steel India Limited v. Satish Kumar Gupta 
& Ors [2019] 16 SCR 275 and Jaypee Kensington Boulevard 
Apartments Welfare Association & Others. v. NBCC (India) Limited 
& Others [2021] 12 SCR 603 – Provisions of s.30(2)(b)(ii) by
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DBS BANK LIMITED SINGAPORE v. RUCHI SOYA INDUSTRIES 
LIMITED AND ANOTHER
law provides assurance to the dissenting creditors that they will 
receive as money the amount they would have received in the 
liquidation proceedings – This rule also applies to the operational 
creditors – This ensures that dissenting creditors receive the 
payment of the value of their security interest – Paragraph 17 
in India Resurgence is correct in its observations when it refers 
to the provisions of s.30(4) and that the voting is essentially a 
matter which relates to commercial wisdom of the CoC – The 
observation that a dissenting secured creditor cannot suggest 
that a higher amount be paid to it is also correct – However, this 
does not affect the right of a dissenting secured creditor to get 
payment equal to the value of the security interest in terms of 
s.30(2)(b)(ii) – Further, Paragraph 21 is partially correct – It is 
incorrect to state that the dissenting financial creditor would not 
be entitled to receive the liquidation value, the amount payable to 
him in terms of s.53(1) – Reasoning given in the earlier portion of 
paragraph 22 in conflict with the ratio in Committee of Creditors 
of Essar Steel India Limited as it does not take into account 
the legal effect of s.30(2)(b)(ii) – Present view taken different 
from India Resurgence ARC Private Limited on interpretation of 
s.30(2)(b)(ii) – Matter referred to larger Bench. [Paras 26, 27, 
31, 33, 36 and 49]
Insolvency and Bankruptcy Code, 2016 – s.30(2), Explanation 2 
– IBC (Amendment) Act, 2019 – Appellant had preferred the first 
appeal before the NCLAT on 31.07.2019 – The Amendment Act 
was notified and came into effect on 16.08.2019 – Applicability 
of the Amendment Act:
Held: Explanation 2(ii) clearly states that an appeal preferred 
u/s.61 or 62, when it is not barred by time under any provision of 
law, shall be heard and decided after considering the amended 
s.30(2)(b) under the Amendment Act – Clauses (i), (ii) and (iii) of 
Explanation 2 reflect the wide expanse and width of the legislative 
intent viz. the application of the Amendment Act, whether 
proceedings are pending before the adjudicating authority, the 
appellate authority, or before any court in a proceeding against 
an order of the adjudicating authority in respect of a resolution 
plan – Only when the resolution plan, as approved, has attained 
finality as no proceedings are pending, that the amendments will 
not apply to re-write the settled matter. [Para 22]
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List of Citations and Other References
Committee of Creditors of Essar Steel India Limited v. 
Satish Kumar Gupta & Ors [2019] 16 SCR 275: (2020) 
8 SCC 531; Jaypee Kensington Boulevard Apartments 
Welfare Association & Others. v. NBCC (India) Limited 
& Others [2021] 12 SCR 603:(2022) 1 SCC 401 – 
relied on.
Swiss Ribbons Private Limited and Another v. Union 
of India and Others [2019] 3 SCR 535: (2019) 4 SCC 
17; Vallal RCK v. Siva Industries and Holdings Limited 
and Other (2022) 9 SCC 803; India Resurgence ARC 
Private Limited v. Amit Metaliks Limited & Another [2021] 
6 SCR 611:2021 SCC Online SC 409; Vistra ITCL 
(India) Limited & Ors. v. Dinkar Venkatasubramanian 
& Anr. (2023) 7 SCC 324 – referred to.
List of Acts
Insolvency and Bankruptcy Code, 2016; IBC (Amendment) Act, 
2019.
List of Keywords
Dissenting financial creditor; Minimum value of security interest.
Other Case Details Including Impugned Order and 
Appearances
CIVIL APPELLATE JURISDICTION : Civil Appeal No.9133 of 2019.
From the Judgment and Order dated 18.11.2019 of the National 
Company Law Appellate Tribunal, New Delhi in Comp. App. (AT) 
(Ins.) No.788 of 2019.
With
Civil Appeal No.787 Of 2020.
Appearances:
Krishnendu Datta, Sr. Adv., Ms. Anindita Roychowdhury, Raghav 
Chadda, Bharat Makkar, Ms. Anannya Ghosh, Brian Henry Moses, 
Advs. for the Appellant.
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DBS BANK LIMITED SINGAPORE v. RUCHI SOYA INDUSTRIES 
LIMITED AND ANOTHER
Krishnan Venugopal, Sr. Adv., Nakul Sachdeva, Aakarshan Sahay, 
Sagar Arora, Abhinandan Sharma, Krishnan Agarwal, Faisal 
Sherwani, M/s. Cyril Amarchand Mangaldas, N.P.S. Chawla, Sujoy 
Datta, Surekh Kant Baxy, Ms. Kinjal Goyal, Gaurav Varma, Advs. 
for the Respondents.
Judgment / Order of The Supreme Court
Judgment
Sanjiv Khanna, J.
The issue that arises for consideration in the present appeals is:
Whether Section 30(2)(b)(ii) of the Insolvency and Bankruptcy Code, 
20161, as amended in 2019, entitles the dissenting financial creditor 
to be paid the minimum value of its security interest?
2.	
Appellant - DBS Bank Limited Singapore had extended financial 
debt of around USD 50,000,000 (fifty million dollars only) or Rs. 
243,00,00,000 (rupees two hundred forty three crore only) to M/s. 
Ruchi Soya Industries Limited2, the corporate debtor. 
3.	
The financial debt was secured by: (i) a sole and exclusive first 
charge over certain immovable and fixed assets of the Corporate 
Debtor in Kandla, Gujarat; and (ii) sole and exclusive first charge 
over assets of the Corporate Debtor in Baran, Rajasthan; Guna, 
Madhya Pradesh; Dalauda, Madhya Pradesh; Gadarwara, Madhya 
Pradesh; and a commercial office space at Nariman Point, Mumbai. 
4.	
On 15.12.2017, Corporate Insolvency Resolution Process3 was 
initiated against the Corporate Debtor under the provisions of the 
Code. The company
petition seeking to initiate CIRP was admitted 
and a Resolution Professional4 was appointed. 
5.	
The appellant had submitted its claim, which was admitted by the 
RP at Rs. 242,96,00,000 (rupees two hundred forty two crore ninety 
six lakh only).
1	
For short, “IBC” or “the Code”, as the case may be.
2	
For short, “Corporate Debtor”.
3	
For short, “CIRP”.
4	
For short, “RP”.
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6.	
On 20.03.2019, Patanjali Ayurvedic Limited submitted a resolution 
plan for Rs. 4134,00,00,000 (rupees four thousand one hundred 
thirty four crore only) against the aggregate claims of around Rs. 
8398,00,00,000 (rupees eight thousand three hundred ninety eight 
crore only), representing approximately 49.22% of the total admitted 
claims of the financial creditors.
7.	
On 12.04.2019, by a communication, the appellant informed the 
Committee of Creditors5 that the sole and exclusive nature of 
security held by the appellant by way of mortgage/hypothecation over 
immovable and fixed assets of the Corporate Debtor was of greater 
value compared to collaterals held by other creditors. Emphasising 
the specific treatment of the exclusive and superior security, the 
appellant requested the CoC to take into account the liquidation value 
of such security while considering the distribution of proceeds and 
to make such distribution in a “fair and equitable” manner. 
8.	
In the 21st and 22nd CoC meetings held on 15.04.2019 and 23.04.2019 
respectively, the appellant’s concern regarding treatment/proposed 
pay-out was noted. However, in the meeting held on 23.04.2019, the 
CoC approved pari passu distribution of the resolution plan proceeds. 
9.	
On 30.04.2019, the resolution plan was approved by 96.95% of the 
CoC. The appellant had voted against the resolution plan, thereby 
becoming a dissenting financial creditor.
10.	 The
resolution plan was filed for approval before the National Company 
Law Tribunal6, Mumbai. Separately, the appellant challenged the 
distribution mechanism of the resolution plan proceeds by way of 
an application before the NCLT, Mumbai.
11.	 On 24.07.2019, the NCLT granted provisional/conditional approval to 
the resolution plan. By the same order dated 24.07.2019, the NCLT 
dismissed the appellant’s application challenging the distribution 
mechanism of the resolution plan proceeds.
12.	 On 31.07.2019, the appellant challenged the dismissal of its 
application before the National Company Law Appellate Tribunal7. 
5	
For short, “CoC”.
6	
For short, “NCLT”.
7	
For short, “NCLAT”.
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DBS BANK LIMITED SINGAPORE v. RUCHI SOYA INDUSTRIES 
LIMITED AND ANOTHER
13.	 During pendency of the appeal, Section 6 of the Insolvency and 
Bankruptcy Code (Amendment) Act, 20198, was notified by way of 
a gazette notification dated 16.08.2019. It amended Section 30(2)(b) 
of the Code. Amended Section 30(2)(b)(ii) of the Code provides that 
operational and dissenting financial creditors shall not be paid an 
amount lesser than the amount to be paid to creditors in the event of 
liquidation of the Corporate Debtor under Section 53(1) of the Code. 
Explanation 2 added thereby makes the amended Section 30(2)(b) 
applicable to pending proceedings. Section 30(4) was also amended 
to state the CoC shall take into account “the order of priority” amongst 
creditors as laid down in Section 53(1) of the Code.
14.	 On 30.08.2019, at the 26th CoC meeting, the appellant requested the 
CoC to reconsider the distribution of the resolution proceeds in light 
of the amendments to the Code. The appellant had submitted that 
if the amendments were considered, it would be entitled to receive 
Rs. 217,86,00,000 (rupees two hundred seventeen crore eighty six 
lakh only) which is the liquidation value of the security interest. The 
CoC, however, did not accept the prayer, observing inter alia that 
the appellant had already filed an appeal before the NCLAT, which 
was pending. The CoC was of the view that there was a fair amount 
of ambiguity in the amendments, and no view
should be expressed 
by them. 
15.	 The NCLT vide order dated 04.09.2019 finally approved the resolution 
plan, which was already provisionally approved vide order dated 
24.07.2019.
16.	 On 11.10.2019, the appellant challenged the final approval order dated 
04.09.2019 by way of an appeal before the NCLAT. The first NCLAT 
appeal preferred by the appellant on 31.07.2019 was still pending.
17.	 The two appeals preferred by the appellant against the orders/
judgments of the NCLT dated 24.07.2019 and dated 04.09.2019 
were taken up for hearing by the NCLAT. By order dated 18.11.2019, 
the first appeal preferred by the appellant was dismissed. By the 
subsequent order dated 09.12.2019, the NCLAT dismissed the second 
appeal filed by the appellant.
8	
For short, “Amendment Act”.
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18.	 The orders dated 18.11.2019 and 09.12.2019 passed by the NCLAT 
are in challenge before us. This Court, vide order dated 06.12.2019, 
was pleased to issue notice in the appeal preferred against the 
order dated 18.11.2019 and by way of an interim order, has directed 
that Rs. 99,74,00,000 (rupees ninety nine crore seventy four lakh 
only), being the difference between the amount which the appellant 
would have received in terms of the amendments noticed above 
and the amount received by the appellant on pro rata distribution of 
proceeds, should be deposited in an escrow account. Accordingly, 
Rs. 99,74,00,000 (rupees ninety nine crore seventy four lakh only) 
had been set aside and kept in an escrow account. 
19.	 The appellant, it should be stated, has made no claims against 
Patanjali Ayurvedic Limited.
20.	 As per the appellant, the pro rata distribution of proceeds does not 
give regard to the sole, exclusive and higher value of their security 
interest. The appellant will receive approximately Rs. 119,00,00,000 
(rupees one hundred nineteen crore only) as against the liquidation 
value of the security interest of Rs. 217,86,00,000 (rupees two 
hundred seventeen crore eighty six lakh only). The admitted claim 
of the appellant is Rs. 242,96,00,000 (rupees two hundred forty two 
crore ninety six lakh only). Thus, the appellant, notwithstanding the 
amendments to Section 30 of the Code, has been deprived of its 
due
share given its superior security assets. Equating the appellant 
with financial creditors having inferior security interest has resulted 
in unjust enrichment and windfall benefits to the dissimilarly placed 
creditors to the detriment of the appellant. 
21.	 To appreciate the legal question, which requires an answer, we would 
like to reproduce Section 30(2) and Section 30(4) of the Code, with 
the amendments made vide the IBC (Amendment) Act, 2019, which 
for clarity have been highlighted in italics and bold. Relevant portions 
of the two sections read:
“30. Submission of resolution plan.—
xx
xx
xx
(2) The resolution professional shall examine each 
resolution plan received by him to confirm that each 
resolution plan—
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DBS BANK LIMITED SINGAPORE v. RUCHI SOYA INDUSTRIES 
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(a)	 provides for the payment of insolvency resolution 
process costs in a manner specified by the Board in 
priority to the payment of other debts of the corporate 
debtor;
(b)	 provides for the payment of debts of operational 
creditors in such manner as may be specified by 
the Board which shall not be less than—
(i)	
the amount to be paid to such creditors in the 
event of a liquidation of the corporate debtor 
under Section 53; or
(ii)	 the amount that would have been paid to such 
creditors, if the amount to be distributed under 
the resolution plan had been distributed in 
accordance with the order of priority in sub-
section (1) of Section 53,
whichever is higher, and provides for the payment of 
debts of financial creditors, who do not vote in favour 
of the resolution plan, in such manner as may be 
specified by the Board, 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.
Explanation 1.—For the removal of doubts, it is hereby 
clarified that a distribution in accordance with the 
provisions of this clause shall be fair and equitable 
to such creditors.
Explanation 2.—For the purposes of this clause, 
it is hereby declared that on and from the date of 
commencement of the Insolvency and Bankruptcy 
Code (Amendment) Act, 2019, the provisions of this
clause shall also apply to the corporate insolvency 
resolution process of a corporate debtor—
(i)	
where a resolution plan has not been approved 
or rejected by the Adjudicating Authority;
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(ii)	 where an appeal has been preferred under Section 
61 or Section 62 or such an appeal is not time 
barred under any provision of law for the time 
being in force; or
(iii)	 where a legal proceeding has been initiated in 
any court against the decision of the Adjudicating 
Authority in respect of a resolution plan;
(c)	
provides for the management of the affairs of the 
corporate debtor after approval of the resolution plan;
(d)	 the implementation and supervision of the resolution 
plan;
(e)	 does not contravene any of the provisions of the law 
for the time being in force;
(f)	
conforms to such other requirements as may be 
specified by the Board.
Explanation.—For the purposes of clause (e), if any 
approval of shareholders is required under the Companies 
Act, 2013 (18 of 2013) or any other law for the time being in 
force for the implementation of actions under the resolution 
plan, such approval shall be deemed to have been given 
and it shall not be a contravention of that Act or law.
xx
xx
xx
(4) The committee of creditors may approve a resolution 
plan by a vote of not less than sixty-six per cent of 
voting share of the financial creditors, after considering 
its feasibility and viability the manner of distribution 
proposed, which may 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, and such 
other requirements as may be specified by the Board:
xx
xx
xx
22.	 The first issue that arises for consideration in these appeals is 
whether the amendments made in the substantive portion of Section
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LIMITED AND ANOTHER
30(2), in terms of Explanation 2 will be applicable when the first 
appeal was heard by the NCLAT. The Amendment Act was notified 
and came into effect on 16.08.2019. The appellant had preferred 
the first appeal before the NCLAT on 31.07.2019, which appeal was 
directed against the provisional approval order passed by the NCLT 
on 24.07.2019. In our opinion, Explanation 2(ii) clearly states that 
an appeal preferred under Section 61 or 62, when it is not barred 
by time under any provision of law, shall be heard and decided after 
considering the amended Section 30(2)(b) under the Amendment 
Act. In fact, Explanation 2(i) states that the amended clause shall 
“also” apply to the CIRP of the corporate debtor where a resolution 
plan has not been approved or rejected by the adjudicating authority. 
Explanation 2(iii) states that the amended Section 30(2)(b) shall 
“also” apply where legal proceedings have been initiated in any 
court against the decision of the adjudicating authority. Clauses 
(i), (ii) and (iii) of Explanation 2 reflect the wide expanse and width 
of the legislative intent viz. the application of the Amendment Act, 
whether proceedings are pending before the adjudicating authority, 
the appellate authority, or before any court in a proceeding against 
an order of the adjudicating authority in respect of a resolution plan. 
Only when the resolution plan, as
approved, has attained finality as 
no proceedings are pending, that the amendments will not apply to 
re-write the settled matter.
23.	 A three Judge Bench of this Court in Committee of Creditors 
of Essar Steel India Limited v. Satish Kumar Gupta & Ors.9, 
in paragraph 130, has observed that Explanation 2 applies to the 
substituted Section 30(2)(b) to pending proceedings either at the 
level of the adjudicating authority, appellate authority or in a writ 
or civil court. Referring to several decisions, it is observed that 
no vested right inheres in any resolution applicant who has plans 
approved under the Code. Further, an appellate proceeding is a 
continuation of the original proceeding. A change in law can always 
be applied to original or appellate proceedings. Thus, Explanation 2 
is constitutionally valid and despite having retrospective operation, 
it does not impair vested rights.
9	
(2020) 8 SCC 531.
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24.	 We must also take note of the second submission of the appellant in 
this regard relying upon Explanation 2(i), inter alia, on the ground that 
the final approval to the resolution plan by the NCLT was vide order 
dated 04.09.2019, which is after the notification of the Amendment Act 
on 16.08.2019. The first order provisionally/ conditionally approving 
the resolution plan was dated 24.07.2019 and hence, the effect of 
the Amendment Act could not have been considered and applied 
by the NCLT. There is merit in the contention of the appellant, but 
we need not firmly decide this issue, for we are of the opinion that 
the Amendment Act was certainly applicable when the appeals were 
heard and decided by the NCLAT on 18.11.2019 and 09.12.2019, 
which was post the enforcement of the Amendment Act.
25.	 The second question relates to the interpretation of Section 30(2)
(b)(ii) of the Code. As we read Section 30(2)(b)(ii), the dissenting 
financial creditor is entitled to payment, which should not be less 
than the amount payable under Section 53(1), in the event of the 
liquidation of the corporate debtor. The provision recognises that all 
financial creditors need not be similarly situated. Secured financial 
creditors may have distinct sets of securities. There are a number 
of decisions of this Court, viz. Committee of Creditors of Essar 
Steel India Limited (supra), Swiss Ribbons Private Limited and 
Another v. Union of
India and Others10, and Vallal RCK v. Siva 
Industries and Holdings Limited and Others11, which have held that 
the commercial wisdom of the CoC must be respected. Therefore, 
the resolution plan accepted by the requisite creditors/members of 
the CoC upon voting, is enforceable and binding on all creditors. The 
CoC can decide the manner of distribution of resolution proceeds 
amongst creditors and others, but Section 30(2)(b) protects the 
dissenting financial creditor and operational creditors by ensuring 
that they are paid a minimum amount that is not lesser than their 
entitlement upon the liquidation of the corporate debtor.
26.	 The Code had been enacted to balance the interests of various 
stakeholders, inter alia, by facilitating the resolution of insolvency, 
promoting investment, maximising the value of assets, and increasing 
the availability of credit. Secured credit is important for commerce 
10	
 (2019) 4 SCC 17.
11	
 (2022) 9 SCC 803.
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as it reduces credit risk and carries lower interest due to lower loss 
value in the event of failure. On the resolution plan being approved, 
an unwilling secured creditor does and must forgo the security, albeit 
such an unwilling secured creditor is entitled to the value of the 
security as payable on the liquidation of the corporate debtor. The 
provision is enacted to protect the minority autonomy of creditors. It 
should not be read down to nullify the minimum entitlement. Section 
30(2)(b)(ii) forfends the dissenting financial creditor from settling for 
a lower amount payable under the resolution plan. 
27.	 The order passed by the NCLAT dated 18.11.2019 noticing 
the amendments states that Section 30(4) had not been given 
retrospective effect but is prospective in nature. While it was 
open to the CoC to follow the amended Section 30(4), it was not 
mandatory to follow the same. A financial creditor can dissent if 
the resolution plan is discriminatory or against a provision of law. 
However, a dissenting financial creditor cannot take advantage of 
Section 30(2)(b)(ii). 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. 
28.	 In India Resurgence ARC Private Limited v. Amit Metaliks Limited 
& Another.12, a two Judge Bench of this Court has referred to a 
judgment by a three Judge Bench of this Court in Jaypee Kensington 
Boulevard Apartments Welfare Association & Others. v. NBCC 
(India) Limited & Others.13, to observe and hold:
“18. In the case of Jaypee Kensington (supra), the proposal 
in the resolution plan was to the effect that if the dissenting 
financial creditors would be entitled to some amount in the 
nature of liquidation value in terms of Sections 30 and 53 
of IBC read with Regulation 38 of the CIRP Regulations, 
they would be provided such liquidation value in the form 
of proportionate share in the equity of a special purpose 
12	
2021 SCC Online SC 409.
13	
(2022) 1 SCC 401.
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vehicle proposed to be set up and with transfer of certain 
land parcels belonging to corporate debtor. Such method 
of meeting with the liability towards dissenting financial 
creditors in the resolution plan was disapproved by the 
Adjudicating Authority; and this part of the order of the 
Adjudicating Authority was upheld by this Court with the 
finding that the proposal in the resolution plan was not in 
accord with the requirement of ‘payment’ as envisaged by 
clause (b) of Section 30(2) of the Code. In that context, 
this Court held that such action of ‘payment’ could only 
be by handing over the quantum of money or allowing 
the recovery of such money by enforcement of security 
interest, as per the entitlement of a dissenting financial 
creditor. This Court further made it clear that in case a valid 
security interest is held by a dissenting financial creditor, the 
entitlement of such dissenting financial creditor to receive 
the amount could be satisfied by allowing him to enforce 
the security interest, to the extent of the value receivable 
by him and in the order of priority available to him. This 
Court clarified that by enforcing such a security interest, 
a dissenting financial creditor would receive payment to 
the extent of his entitlement and that would satisfy the 
requirement of Section 30(2)(b) of the Code. This Court, 
inter alia, observed and held as under:
“121.1. Therefore, when, for the purpose of
discharge 
of obligation mentioned in the second part of clause 
(b) of Section 30(2) of the Code, the dissenting 
financial creditors are to be “paid” an “amount” 
quantified in terms of the “proceeds” of assets 
receivable under Section 53 of the Code; and the 
“amount payable” is to be “paid” in priority over 
their assenting counterparts, the statute is referring 
only to the sum of money and not anything else. 
In the frame and purport of the provision and also 
the scheme of the Code, the expression “payment” 
is clearly descriptive of the action of discharge of 
obligation and at the same time, is also prescriptive 
of the mode of undertaking such an action. And, that 
action could only be of handing over the quantum of
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money, or allowing the recovery of such money by 
enforcement of security interest, as per the entitlement 
of the dissenting financial creditor.
121.2. We would hasten to observe that in case a 
dissenting financial creditor is a secured creditor 
and a valid security interest is created in his favour 
and is existing, the entitlement of such a dissenting 
financial creditor to receive the “amount payable” 
could also be satisfied by allowing him to enforce the 
security interest, to the extent of the value receivable 
by him and in the order of priority available to him. 
Obviously, by enforcing such a security interest, a 
dissenting financial creditor would receive “payment” 
to the extent of his entitlement and that would satisfy 
the requirement of Section 30(2)(b) of the Code….”
29.	 Thereafter, this Court in India Resurgence ARC Private Limited 
(supra) has observed:
“19. In Jaypee Kensington (supra), this Court repeatedly 
made it clear that a dissenting financial creditor would be 
receiving the payment of the amount as per his entitlement; 
and that entitlement could also be satisfied by allowing 
him to enforce the security interest, to the extent of the 
value receivable by him. It has never been laid down 
that if a dissenting financial creditor is having a security 
available with him, he would be entitled to enforce the 
entire of security interest or to receive the
entire value of 
the security available with him. It is but obvious that his 
dealing with the security interest, if occasion so arise, would 
be conditioned by the extent of value receivable by him.
20. The extent of value receivable by the appellant is 
distinctly given out in the resolution plan i.e., a sum of 
INR 2.026 crores which is in the same proportion and 
percentage as provided to the other secured financial 
creditors with reference to their respective admitted claims. 
Repeated reference on behalf of the appellant to the value 
of security at about INR 12 crores is wholly inapt and is 
rather ill-conceived.
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21. The limitation on the extent of the amount receivable by 
a dissenting financial creditor is innate in Section 30(2)(b) 
of the Code and has been further exposited in the decisions 
aforesaid. It has not been the intent of the legislature 
that a security interest available to a dissenting financial 
creditor over the assets of the corporate debtor gives 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.”
30.	 Our attention is also drawn to paragraph 17 and 22 of India 
Resurgence ARC Private Limited (supra), wherein after elucidating 
on the ratio in Jaypee Kensington (supra), the Bench has observed:
“17. Thus, what amount is to be paid to different classes 
or subclasses of creditors in accordance with provisions 
of the Code and the related Regulations, is essentially the 
commercial wisdom of the Committee of Creditors; and 
a dissenting secured creditor like the appellant cannot 
suggest a higher amount to be paid to it with reference 
to the value of the security interest.
xx
xx
xx
22. It needs hardly any emphasis that if the propositions 
suggested on behalf of the appellant were to be accepted, 
the result would be that rather than insolvency resolution 
and maximisation of the value of assets
of the corporate 
debtor, the processes would lead to more liquidations, 
with every secured financial creditor opting to stand on 
dissent. Such a result would be defeating the very purpose 
envisaged by the Code; and cannot be countenanced. We 
may profitably refer to the relevant observations in this 
regard by this Court in Essar Steel as follows:
“85. Indeed, if an “equality for all” approach recognising 
the rights of different classes of creditors as part of 
an insolvency resolution process is adopted, secured 
financial creditors will, in many cases, be incentivised 
to vote for liquidation rather than resolution, as they
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would have better rights if the corporate debtor was 
to be liquidated rather than a resolution plan being 
approved. This would defeat the entire objective of 
the Code which is to first ensure that resolution of 
distressed assets takes place and only if the same 
is not possible should liquidation follow.””
31.	 We believe that there is a contradiction in the reasoning given in the 
judgment of this Court in India Resurgence ARC Private Limited 
(supra), which is in discord with the ratio decidendi of the decisions 
of the three Judge Bench in Committee of Creditors of Essar Steel 
India Limited (supra) and Jaypee Kensington (supra).
32.	 In Committee of Creditors of Essar Steel India Limited (supra), 
this Court had referred to the UNCITRAL Legislative Guide on the 
treatment of dissenting creditors to observe that it is essential to 
provide a way of imposing a plan agreed upon by a majority of a 
class upon the dissenting minority to increase the chances of success 
of the reorganisation. However, it is also necessary depending upon 
the mechanism that is chosen for voting on the plan and whether the 
creditors vote in class, to consider whether the plan can be made 
binding upon dissenting classes of creditors and other affected parties. 
To the extent that the plan can be approved and enforced upon the 
dissenting parties, there is a need to ensure that the plan provides
appropriate protection for the dissenting parties and, in particular, 
the rights may not be unfairly affected. Thereupon, the UNCITRAL 
Legislative Guide states:
“…The law might provide, for example, that dissenting 
creditors cannot be bound unless assured of certain 
treatment. As a general principle, that treatment might 
be that the creditors will receive at least as much under 
the plan as they would have received in liquidation 
proceedings. If the creditors are secured, the treatment 
required may be that the creditor receives payment of the 
value of its security interest, while in the case of unsecured 
creditors it may be that any junior interests, including equity 
holders, receive nothing…”
33.	 In our opinion, the provisions of Section 30(2)(b)(ii) by law provides 
assurance to the dissenting creditors that they will receive as money 
the amount they would have received in the liquidation proceedings.
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This rule also applies to the operational creditors. This ensures 
that dissenting creditors receive the payment of the value of their 
security interest. 
34.	 In paragraph 128 in the case of Committee of Creditors of Essar 
Steel India Limited (supra), it has been clearly held:
“128. When it comes to the validity of the substitution 
of Section 30(2)(b) by Section 6 of the Amending Act 
of 2019, it is clear that the substituted Section 30(2)(b) 
gives operational creditors something more than was 
given earlier as it is the higher of the figures mentioned 
in sub-clauses (i) and (ii) of sub-clause (b) that is now to 
be paid as a minimum amount to operational creditors. 
The same goes for the latter part of sub-clause (b) which 
refers to dissentient financial creditors. Ms Madhavi Divan 
is correct in her argument that Section 30(2)(b) is in fact a 
beneficial provision in favour of operational creditors and 
dissentient financial creditors as they are now to be paid 
a certain minimum amount, the minimum in the case of 
operational creditors being the higher of the two figures 
calculated under sub-clauses (i) and (ii) of clause (b), and 
the minimum in the case of dissentient financial creditor 
being a minimum amount that was not earlier payable. As a 
matter of fact, pre-amendment, secured financial creditors 
may cram down unsecured financial creditors who are 
dissentient, the majority vote of 66% voting to give
them 
nothing or next to nothing for their dues. In the earlier 
regime it may have been possible to have done this but 
after the amendment such financial creditors are now to 
be paid the minimum amount mentioned in sub-section (2). 
Ms Madhavi Divan is also correct in stating that the order 
of priority of payment of creditors mentioned in Section 53 
is not engrafted in sub-section (2)(b) as amended. Section 
53 is only referred to in order that a certain minimum figure 
be paid to different classes of operational and financial 
creditors. It is only for this purpose that Section 53(1) is to 
be looked at as it is clear that it is the commercial wisdom 
of the Committee of Creditors that is free to determine what 
amounts be paid to different classes and sub-classes of 
creditors in accordance with the provisions of the Code 
and the Regulations made thereunder.”
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35.	 The reasoning and the ratio in Jaypee Kensington (supra) is also 
the same:
“164.2. We would hasten to observe that in case a 
dissenting financial creditor is a secured creditor and a valid 
security interest is created in his favour and is existing, 
the entitlement of such a dissenting financial creditor to 
receive the “amount payable” could also be satisfied by 
allowing him to enforce the security interest, to the extent 
of the value receivable by him and in the order of priority 
available to him. Obviously, by enforcing such a security 
interest, a dissenting financial creditor would receive 
“payment” to the extent of his entitlement and that would 
satisfy the requirement of Section 30(2)(b) of the Code.”
36.	 We have reservation on portions of the view expressed in paragraphs 
17, 21 and 22 in the judgment of India Resurgence ARC Private 
Limited (supra). Paragraph 17 is respectfully correct in its observations 
when it refers to the provisions of Section 30(4) and that the voting is 
essentially a matter which relates to commercial wisdom of the CoC. 
The observation that a dissenting secured creditor cannot suggest 
that a higher amount be paid to it is also correct. However, this does 
not affect the right of a dissenting secured creditor to get payment 
equal to the value of the security interest in terms of Section 30(2)
(b)(ii) of the Code. Paragraph 21 in
India Resurgence ARC Private 
Limited (supra) again in our respectful view is partially correct. It 
is correct to the extent that the legislature has not stipulated that 
the dissenting financial creditor shall be entitled to enforce the 
security interest. However, it is incorrect to state that the dissenting 
financial creditor would not be entitled to receive the liquidation 
value, the amount payable to him in terms of Section 53(1) of the 
Code. Paragraph 22 refers to the Committee of Creditors of Essar 
Steel (supra), which we have already quoted and is apposite to the 
view expressed by us. The reasoning given in the earlier portion of 
paragraph 22 in our respectful opinion is in conflict with the ratio 
in Committee of Creditors of Essar Steel India Limited (supra) 
as it does not take into account the legal effect of Section 30(2)(b)
(ii) of the Code. While it is important to maximise the value of the 
assets of the corporate debtor and prevent liquidation, the rights of 
operational creditors or dissenting financial creditors also have to 
be protected as stipulated in law.
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37.	 In Jaypee Kensington (supra), it has been held that the dissenting 
financial creditor, if the occasion arises, is entitled to receive the 
extent of value in money equal to the security interest held by him. 
It would not be proper to read Jaypee Kensington (supra), as laying 
down that the dissenting financial creditor would be entitled to the 
extent of amounts receivable by him in the resolution plan. This 
would undo the very object and purpose of the amendment. It would 
make the portion of Section 30(2)(b)(ii) specifying the amount to be 
paid to such creditor in accordance with Section 53(1), redundant 
and meaningless.
38.	 Our reasoning finds resonance in the reasoning given in Jaypee 
Kensington (supra), which states that for the purpose of discharge 
of obligation mentioned in the second part of Section 30(2)(b) of the 
Code, the dissenting financial creditors are to be paid an amount 
quantified in terms of the proceeds of assets receivable under Section 
53 of the Code. This amount payable is to be paid on priority over 
the dissenting counterparts. However, Section 30(2) refers only to 
the sum of money and nothing else, that is, it does not permit the 
dissenting financial creditor to enforce the security and sell the same. 
This would be counterproductive and may nullify the resolution plan. 
What the dissenting financial creditor is entitled to is the payment, 
which should not be less than the
amount/value of the security interest 
held by them. The security interest gets converted from the asset 
to the value of the asset, which is to be paid in the form of money. 
This is clear from the relevant portions of paragraphs 164.1, 164.2, 
166.4, and 167 in Jaypee Kensington (supra), which read as under:
“164.1. Therefore, when, for the purpose of discharge of 
obligation mentioned in the second part of clause (b) of 
Section 30(2) of the Code, the dissenting financial creditors 
are to be “paid” an “amount” quantified in terms of the 
“proceeds” of assets receivable under Section 53 of the 
Code; and the “amount payable” is to be “paid” in priority 
over their assenting counterparts, the statute is referring 
only to the sum of money and not anything else. In the 
frame and purport of the provision and also the scheme of 
the Code, the expression “payment” is clearly descriptive 
of the action of discharge of obligation and at the same 
time, is also prescriptive of the mode of undertaking such
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an action. And, that action could only be of handing over 
the quantum of money, or allowing the recovery of such 
money by enforcement of security interest, as per the 
entitlement of the dissenting financial creditor.
164.2. We would hasten to observe that in case a 
dissenting financial creditor is a secured creditor and a valid 
security interest is created in his favour and is existing, 
the entitlement of such a dissenting financial creditor to 
receive the “amount payable” could also be satisfied by 
allowing him to enforce the security interest, to the extent 
of the value receivable by him and in the order of priority 
available to him. Obviously, by enforcing such a security 
interest, a dissenting financial creditor would receive 
“payment” to the extent of his entitlement and that would 
satisfy the requirement of Section 30(2)(b) of the Code [ 
Though it is obvious, but is clarified to avoid any ambiguity, 
that the “security interest” referred herein for the purpose 
of money recovery by dissenting financial creditor would 
only be such security interest which is relatable to the 
“financial debt” and not to any other debt or claim.] . In 
any case, that is, whether by direct payment in cash or by 
allowing recovery of amount via the mode of enforcement of 
security interest, the dissenting financial creditor is entitled 
to receive the “amount payable” in monetary
terms and 
not in any other term.
xx
xx
xx
166.4. The suggestion about prejudice being caused to 
the assenting financial creditors by making payment to the 
dissenting one has several shortcomings. As noticeable, in 
the scheme of IBC, a resolution plan is taken as approved, 
only when voted in favour by a majority of not less than 
66% of the voting share of CoC. Obviously, the dissenting 
sect stands at 34% or less of the voting share of CoC. 
Even when the financial creditors having a say of not less 
than 2/3rd in the Committee of Creditors choose to sail 
with the resolution plan, the law provides a right to the 
remainder (who would be having not more than 34% of
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voting share) not to take this voyage but to disembark, 
while seeking payment of their outstanding dues. Even 
this disembarkment does not guarantee them the time 
value for money of the entire investment in the corporate 
debtor; what they get is only the liquidation value in terms 
of Section 53 of the Code. Of course, in the scheme of 
CIRP under the Code, the dissenting financial creditors 
get, whatever is available to them, in priority over their 
assenting counterparts. In the given scheme of the statutory 
provisions, there is no scope for comparing the treatment 
to be assigned to these two divergent sects of financial 
creditors. The submissions made on behalf of assenting 
financial creditors cannot be accepted.
xx
xx
xx
167. To sum up, in our view, for a proper and meaningful 
implementation of the approved resolution plan, the 
payment as envisaged by the second part of clause (b) 
of sub-section (2) of Section 30 could only be payment in 
terms of money and the financial creditor who chooses to 
quit the corporate debtor by not putting his voting share in 
favour of the approval of the proposed plan of resolution (i.e. 
by dissenting), cannot be forced to yet remain attached to 
the corporate debtor by way of provisions in the nature of 
equities or securities. In the true operation of the provision 
contained in the second part of sub-clause (ii) of clause 
(b) of sub-section (2) of Section 30 (read with
Section 
53), in our view, the expression “payment” only refers to 
the payment of money and not anything of its equivalent 
in the nature of barter; and a provision in that regard is 
required to be made in the resolution plan whether in 
terms of direct money or in terms of money recovery with 
enforcement of security interest, of course, in accordance 
with the other provisions concerning the order of priority as 
also fair and equitable distribution. We are not commenting 
on the scenario if the dissenting financial creditor himself 
chooses to accept any other method of discharge of its 
payment obligation but as per the requirements of law, the 
resolution plan ought to carry the provision as aforesaid.”
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39.	 Similar view has been taken by a two Judge Bench of this Court in 
Vistra ITCL (India) Limited & Ors. v. Dinkar Venkatasubramanian 
& Anr.14, wherein it was observed in paragraphs 34, 41.2 and 42 
as under:
“34. The amendment introduced by Act 26 of 2019 ensures 
that the operational creditors under the resolution plan 
should be paid the amount equivalent to the amount which 
they would have been entitled to, in the event of liquidation 
of the corporate debtor under Section 53 of the Code. In 
other words, the amount payable under the resolution plan 
to the operational creditors should not be less than the 
amount payable to them under Section 53 of the Code, 
in the event of liquidation of the corporate debtor. The 
amended provision also provides that the financial creditors 
who have not voted in favour of the resolution plan shall 
be paid not less than the amount which would be paid 
to them in accordance with sub-section (1) to Section 53 
of the Code, in the event of liquidation of the corporate 
debtor. Explanation (1) to clause (b) of Section 30(2) of 
the Code, for the removal of doubts, states and clarifies 
that the distribution in accordance with this clause shall 
be fair and equitable to such creditors.
xx
xx
xx
41.2. The second option is to treat Appellant 1-Vistra as a 
secured creditor in terms of Section 52 read with Section 
53 of the Code. In other
words, we give the option to the 
successful resolution applicant — DVI (Deccan Value 
Investors) to treat Appellant 1-Vistra as a secured creditor, 
who will be entitled to retain the security interest in the 
pledged shares, and in terms thereof, would be entitled 
to retain the security proceeds on the sale of the said 
pledged shares under Section 52 of the Code read with 
Rule 21-A of the Liquidation Process Regulations. The 
second recourse available, would be almost equivalent 
in monetary terms for Appellant 1-Vistra, who is treated 
14	
 (2023) 7 SCC 324.
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as a secured creditor and is held entitled to all rights 
and obligations as applicable to a secured creditor under 
Sections 52 and 53 of the Code. This to our mind would 
be a fair and just solution to the legal conundrum and 
issue highlighted before us.
42. We wish to clarify that the directions given by us would 
not be a ground for the successful resolution applicant — 
DVI to withdraw the resolution plan which has already been 
approved by Nclat and by us. The reason is simple. Any 
resolution plan must meet with the requirements/provisions 
of the Code and any provisions of law for the time being 
in force. What we have directed and the option given by 
us ensures that the resolution plan meets the mandate 
of the Code and does not violate the rights given to the 
secured creditor, who cannot be treated as worse off/
inferior in its claim and rights viz an operational creditor 
or a dissenting financial creditor.”
40.	 One of the contentions raised by the respondent no. 2 - the CoC is 
that Section 30(2)(b)(ii) refers only to Section 53 of the Code and 
not to Section 52. We find it difficult to accept the said submission 
to read down Section 30(2)(b)(ii) of the Code. Reference to Section 
53 of the Code in Section 30(2)(b)(ii) is made with a specific purpose 
and objective and accordingly, we have to understand and give a 
cogent and effective meaning to the words to effectuate the intent. 
Section 53 of the Code
refers to Section 52 thereof. We would not 
isolate Section 53, when we refer to Section 30(2)(b)(ii) and make 
it meaningless and undo the legislative intent behind the amended 
provision, which is clear and apparent. Whenever required, in a 
reference made to Section 53 of the Code, we would have to refer 
to Section 52 to give meaning to Section 30(2)(b)(ii) of the Code. A 
dissenting financial creditor is entitled to not partake the proceeds 
in the resolution plan, unless a higher amount in congruence with its 
security interest is approved in the resolution plan. The “amount” to 
be paid to the dissenting financial creditor should be in accordance 
with Section 53(1) in the event of liquidation of the corporate debtor. 
In other words, in our opinion, the dissenting financial creditor is 
entitled to a minimum value in monetary terms equivalent to the 
value of the security interest.
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41.	 The submission that the secured creditor’s entitlement to distribution 
under Section 53(1)(b)(ii) is applicable where the secured creditor 
relinquishes its security interest under Section 52 of the Code, and, 
therefore, is not applicable to dissenting financial creditors like the 
appellant is erroneous and unacceptable.
42.	 Apart from the reasons stated above, a dissenting financial creditor, 
as held in Jaypee Kensington (supra) is only entitled to the monetary 
value of the assets. The dissenting financial creditor loses the security 
interest, that is, it relinquishes the security interest. Dissenting financial 
creditor, therefore, cannot enforce the security interest. It is necessary 
to clearly state this position, as in case a dissenting financial creditor 
enforces the security interest, the resolution plan itself may fail and 
become unworkable. 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. 
43.	 The reasoning also takes care of the argument that the Explanation 
to Section 53 incorporates the principle of pari passu distribution 
into Section 53(1) with each class of creditors mentioned therein. 
We
wish to clarify that 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. The entire Section 
53 is not made applicable.
44.	 We would, for the above reasons, reject the submission on behalf 
of the respondents that Section 30(2)(b)(ii) is unworkable because it 
involves deeming fiction relating to liquidation, which is inapplicable 
during the CIRP period. This would be contrary to the legislative 
intent and is unacceptable.
45.	 Respondent no. 2 – CoC has submitted that the appellant has 
dissented because it did not approve the manner of distribution of the 
proceeds under the resolution plan. The appellant did not dispute the 
resolution plan itself. Accordingly, Section 30(2)(b)(ii) is not applicable. 
The argument is fallacious and must be rejected. Section 30(2)(b)(ii) 
relates to the proportion of the proceeds mentioned in the resolution 
plan or the amount which the dissenting financial creditor would be 
entitled to in terms of the waterfall mechanism provided in Section
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53(1), if the corporate debtor goes into liquidation. The dissenting 
financial creditor does not have any say when the resolution plan is 
approved by a two-third majority of the CoC. The resolution plan will 
be accepted when approved by the specified majority in the CoC. 
The dissenting financial creditor cannot object to the resolution plan, 
but can object to the distribution of the proceeds under the resolution 
plan, when the proceeds are less than what the dissenting financial 
creditor would be entitled to in terms of Section 53(1) if the corporate 
debtor had gone into liquidation. This is the statutory option or choice 
given by law to the dissenting financial creditor. The option/choice 
should be respected.
46.	 Respondent no. 2 – CoC had referred to the objections referred to in 
the CoC meetings dated 15.04.2019 and 23.04.2019. We are of the 
view that the objections raised by the appellant relate to the distribution 
of the proceeds in terms of the liquidation plan. According to them, 
they were entitled to money of value not less than the amount that 
they would have received under Section 53(1) of the Code.
47.	 It is also argued that the NCLAT had rejected the first appeal on the 
ground that the appellant had only challenged the distribution of the 
pay-out under the plan inter se the financial creditors of the corporate 
debtor and not the resolution plan. Accordingly, the amendment to 
Section 30(2)(b)
vide the Amendment Act of 2019 was not applicable. 
We have already rejected this argument, for the reasons set out 
above. In our opinion, the contention that the appellant is not the 
dissenting financial creditor is to be rejected.
48.	 The contention on behalf of the respondent that there is conflict 
between sub-section (4), as amended in 2019, and the amended 
clause (b) to sub-section (2) to Section 30 of the Code does not 
merit a different ratio and conclusion. Section 30(4) states that the 
CoC may approve the resolution plan by a vote not less than 66% 
of the voting share of the financial creditor. It states that the CoC 
shall consider the feasibility and viability, the manner of distribution 
proposed, which may take into account the order of priority amongst 
creditors under sub-section (1) to Section 53, including the priority 
and value of the security interest of the secured creditors, and other 
requirements as may be specified by the Board. These are the 
aspects that the CoC has to consider. It is not necessary for the CoC 
to provide each assenting party with liquidation value. However, a
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secured creditor not satisfied with the proposed pay-out can vote 
against the resolution plan or the distribution of proceeds, in which 
case it is entitled to full liquidation value of the security payable in 
terms of Section 53(1) on liquidation of the corporate debtor. The 
conflict with sub-clause (ii) to clause (b) to sub-section (2) to Section 
30 does not arise as it relates to the minimum payment which is to 
be made to an operational creditor or a dissenting financial creditor. 
A dissenting financial creditor does not vote in favour of the scheme. 
Operational creditors do not have the right to vote.
49.	 In view of the aforesaid discussion, and as we are taking a different 
view and ratio from India Resurgence ARC Private Limited (supra) 
on interpretation of Section 30(2)(b)(ii) of the IBC, we feel that it would 
be appropriate and proper if the question framed at the beginning of 
this judgment is referred to a larger Bench. The matter be, accordingly 
placed before the Hon’ble the Chief Justice for appropriate orders.
Headnotes prepared by: Divya Pandey
Result of the case: Matter referred 
to larger Bench.