2020 (5) TMI 207 - SCH - Insolvency and Bankruptcy

Approval of Resolution Plan which is lesser than liquidation value - matter remitted to the NCLT after a finding that under Section 30(2) of the Insolvency and Bankruptcy Code together with the principle of maximization of assets of the corporate debtor, a resolution plan which is lesser than liquidation value cannot be accepted. HELD THAT - This judgment has to be set aside in view of decision in the case of Maharashtra Seamless Limited vs. Padmanabhan Venkatesh Ors. 2020 (1) TMI 903 - SUPREME COURT in which this Court has categorically held that No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The judgment of the NCLAT is set aside - appeal allowed.

Summary

Issues:
1. Application for impleadment dismissal
2. Interpretation of Section 30(2) of the Insolvency and Bankruptcy Code
3. Principle of maximization of assets of the corporate debtor
4. Comparison with previous judgment in Civil Appeal No. 4242 of 2019
5. Setting aside the judgment of the NCLAT

Issue 1: Application for impleadment dismissal
The Supreme Court dismissed the application for impleadment as withdrawn without delving into the merits of the application.

Issue 2: Interpretation of Section 30(2) of the Insolvency and Bankruptcy Code
The impugned judgment remitted the matter to the NCLT, emphasizing that a resolution plan lower than the liquidation value cannot be accepted under Section 30(2) of the Insolvency and Bankruptcy Code.

Issue 3: Principle of maximization of assets of the corporate debtor
The judgment highlighted the principle of maximizing the assets of the corporate debtor as a crucial factor in evaluating resolution plans, indicating that plans falling below the liquidation value are not conducive to this principle.

Issue 4: Comparison with previous judgment in Civil Appeal No. 4242 of 2019
The Supreme Court referred to a recent judgment in Civil Appeal No. 4242 of 2019, where it was clarified that there is no requirement for a resolution applicant to match the liquidation value determined as per the regulations, citing the case of Essar Steel as precedent.

Issue 5: Setting aside the judgment of the NCLAT
Based on the interpretation of the law and the comparison with the previous judgment, the Supreme Court allowed the appeal and set aside the judgment of the NCLAT, indicating that the NCLAT's decision was not in line with the legal principles established by the Supreme Court.