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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL  APPEAL NO.10673 OF 2018
K. Sashidhar      …..Appellant(s)
 
:Versus:
Indian Overseas Bank & Ors.        ....Respondent(s)
WITH
C.A. N    o.10719 of 2018, C.A. No.10971 of 2018 and SLP (C) No.29181
of 2018
J U D G M E N T
A.M.     Khanwilkar, J .
1. Leave granted in SLP (C) No.29181 of 2018.
2. All appeals were taken up for hearing at the notice stage
with the consent of the contesting respondents. 
3. These   appeals   have   arisen   from   the   common   judgment
and order of the National Company Law Appellate Tribunal (for
short   “ NCLAT ”),   New   Delhi,   dated   6 th
  September,   2018,
rendered   in   appeals   filed   in   relation   to   the   insolvency
resolution process under the provisions of the Insolvency and

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Bankruptcy   Code,   2016   (for   short   “ I&B   Code ”)   concerning
Kamineni Steel & Power India Pvt. Ltd. (for short “ KS&PIPL ”),
having   its   registered   office   at   Hyderabad,   Telangana   and
Innoventive   Industries   Ltd.   (for   short   “ IIL ”)   having   its
registered office at Pune, Maharashtra.
 
4. The   NCLAT   affirmed   the   order   passed   by   the   National
Company   Law   Tribunal,   Mumbai   Bench   (for   short   “ NCLT
Mumbai ”) recording rejection of the resolution plan concerning
IIL   and   directing   initiation   of   liquidation   process   under
Chapter III of Part II of the I&B Code. As regards KS&PIPL, the
NCLAT   reversed   the   decision   of   the   National   Company   Law
Tribunal, Hyderabad (for short “ NCLT Hyderabad ”) which had
approved   its   resolution   plan   and   instead   remanded   the
proceedings   to   NCLT   Hyderabad   for   initiation   of   liquidation
process  in terms of Section 33 and 34 of the I&B Code.
5.   The   NCLAT   held   that   as,   in   both   the   cases,   the
resolution plan did not garner support of not less than 75% of
voting   share   of   the   financial   creditors   constituting   the
Committee   of   Creditors   (for   short   “ CoC ”)   the   same   stood

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rejected   and   thereby   warranted   initiation   of   liquidation
process   of   the   concerned   corporate   debtor,   namely,   KS&PIPL
and IIL. 
6. For considering the grounds of challenge in the respective
appeals, we deem it appropriate to advert to the relevant facts
concerning the respective corporate debtor.
 
7. KS&PIPL  was   incorporated  as  a   private   limited  company
on 20 th
  October, 2008. Its steel division commenced operation
on   30 th
  March,   2013.   The   company   was   functional   till   the
Financial   Year   2014­15.   However,   it   could   not   continue
beyond   this   period   due   to   deficient   working   capital   and
various   other   factors   including   financial   crisis,   leading   to
heavy  operational losses and consequent erosion of the entire
net   worth.   Attempts   were   made   to   revive   the   company   by
forming a joint lenders forum by the consortium of banks. As
that attempt did not fructify, the company filed an application
with   BIFR   under   Section   15(1)   of   Sick   Industrial   Companies
(Special   Provisions)   Act,   1985   on   15 th
  November,   2016.   The
said   proceedings   abated   due   to   a   notification   dated   25 th

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November,   2016,   as   to   the   repeal   of   the   Act.   Eventually,   the
company   filed   a   petition   under   Section   10   of   the   I&B   Code
read   with   Rule   7   of   the   Insolvency   and   Bankruptcy
(Application to Adjudicating Authority) Rules, 2016, seeking to
initiate   Corporate   Insolvency   Resolution   Process   (CIRP)
concerning   the   said   company.   That   petition   was   admitted   on
10 th
  February,   2017,   by   the   NCLT   Hyderabad   and   an   Interim
Resolution Professional (for short “ IRP ”) came to be appointed
with  directions   to   constitute   a  CoC.  The   CoC  was   constituted
and the first meeting was held on 8 th
  March, 2017 to confirm
the   appointment   of   IRP   and   authorise   the   lead   bank,   namely
the   Indian   Bank   to   inform   the   approved   valuers   that   they
should   proceed   with   their   valuation.   The   second   meeting   of
CoC   was   held   on   6 th
  April,   2017,   for   taking   on   record   the
predicated   expenses   and   essential   costs   and   factory
maintenance   costs   and   to   confirm   about   the   operation   of   the
bank   account   with   lead   Bankers,   Indian   Bank   by   IRP   and
Chief Financial Officer. In the third meeting of CoC, convened
on   12 th
  May,  2017,  the   corporate   debtor   made   a   presentation

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for   a   resolution   plan,   giving   three   options.   In   that   meeting,   it
was   resolved   to   appoint   SBI   Capital   Markets   Limited   to
determine   the   sustainable   debt   of   the   corporate   debtor   to
enable   the   creditors   to   assess   the   viability   of   the   resolution
plan.   In   the   fourth   meeting   of   CoC,   held   on   27 th
  June,   2017,
the   resolution   plan   submitted   by   the   corporate   debtor   was
reviewed and a draft Techno Economic Viability report by SBI
Capital   Markets   Limited   was   also   considered.   It   is   not
necessary to dilate on other aspects discussed and resolved in
this   meeting.   As   the   statutory   period   of   180   days   for
completion   of   CIRP   was   to   expire,   an   application   was   filed
before the NCLT Hyderabad for extending the time by a further
90   days.   Thus,   the   NCLT   Hyderabad,   on   27 th
  July,   2017,
extended   further   time   by   90   days   starting   from   9 th
  August,
2017. The sixth meeting  of the  CoC  was held on  24 th
  August,
2017,   when   the   corporate   debtor   submitted   an   expression   of
interest  from AREA Group of Companies, Chandigarh to infuse
Rs.   150   Crore   in   the   form   of   debentures,   subject   to   getting   a
firm   approval   from   the   lenders.   The   said   proposal   was

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circulated   during   the   meeting   which   concluded   with   the
resolution that the same be placed along with the final report
of  SBI   Capital   Markets  Limited,  which  was  still  awaited.    The
seventh meeting of the CoC was held on 26 th
 September, 2017
in   which   various   options   were   deliberated   but   the   discussion
remained inconclusive. In the eighth CoC meeting, held on 16 th
October,   2017,   it   was   agreed   that   the   resolution   plan
submitted   by   the   corporate   debtor   should   provide   for
monitoring   and   supervision   by   the   resolution   professional,   in
case   the   plan   was   approved   by   the   CoC.   The   Indian   Bank,
which had 22.33% of voting power, conveyed its disapproval to
the   proposed   resolution   plan.   JMFARC   Limited,   having
12.39%   of   voting   power,   had   already   rejected   the   resolution
plan   in   the   previous   meeting   held   on   26 th
  September,   2017.
Both   these   banks,   however,   agreed   to   reconsider   the
resolution   plan   if   a   portion   of   the   sustainable   debt   was   to   be
increased.   The   corporate   debtor   was   asked   to   submit   a   fresh
One   Time   Settlement   (OTS)   proposal   through   email   to   all   the
bankers   for   consideration.   Accordingly,   the   corporate   debtor

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sent   an   email   on   18 th
  October,   2017,   with   another   OTS
scheme   proposal   as   an   alternative   to   the   resolution   plan
already   submitted.   The   corporate   debtor   offered   an   OTS
scheme proposal of Rs.525 Crore with a structured repayment
period   indicated   therein.   In   response,   the   Indian   Bank,
through an email sent on 25 th
  October, 2017, called upon the
corporate debtor to file an OTS scheme proposal for 600 Crore.
After   interacting   with   the   bankers,   a   counter   proposal   was
given by the corporate debtor which was eventually considered
in   the   9 th
  CoC   meeting   held   on   27 th
  October,   2017.   The
proposal   submitted   by   the   corporate   debtor   on   26 th
  October,
2017,   was   approved   by   the   members   of   the   CoC   having   only
55.73% voting share namely Indian Bank, JM Financial Asset
Reconstruction   Co.   Ltd.,   Allahabad   Bank   and   Andhra   Bank.
The   Indian   Overseas   Bank   having   voting   share   of   15.15%,
rejected the resolution proposal and cited reasons through its
letter   dated   27 th
  October,   2017.   Three   other   Banks,   namely
Oriental  Bank of  Commerce, Central Bank  of India and Bank
of   Maharashtra,   having   29.12%   voting   share,   expressed   that

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they  remained open,  awaiting  in­principle approval from  their
respective   sanctioning   authority.   Eventually,   on   30 th
  October,
2017,   Oriental   Bank   of   Commerce,   having   10.94%   voting
share, sent an email conveying their “in­principle approval” to
the   proposed   resolution   plan   qua   revised   OTS   scheme   and
that their final approval would be subject to similar approvals
from   the   co­lenders.   On  the   same   day,   Bank   of  Maharashtra,
having   6.36%   voting   share,   conveyed   that   they   were   open   to
consider   the   revised   resolution   plan.   The   Central   Bank   of
India, having 11.82% voting share, conveyed its disapproval to
the   revised   resolution   plan.   Resultantly,   as   on   30 th
  October,
2017,   the   voting   share   of   consenting   Banks   expressly
approving  the  proposed resolution  plan  was only  66.67%  and
the   voting   share   of   dissenting   lender   Banks   was   26.97%.
Maharashtra Bank, having 6.36% voting share, had not either
approved, rejected or abstained from voting but had conveyed
that   they   remained   open   to   consider   the   resolution   plan.   The
fact remains that the proposed resolution plan did not garner
approval of not less than 75% of voting  share of the financial

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creditors   until   the   resolution   professional   (IRP)   filed   an
affidavit   before   the   adjudicating   authority   (NCLT   Hyderabad)
on 3 rd
 November, 2017, submitting the outcome of the 9 th
 CoC
meeting.   The   Managing   Director   of   the   corporate   debtor
(KS&PIPL)   appeared   before   the   adjudicating   authority   (NCLT)
on   6 th
  November,   2017,   and   also   filed   a   memo   on   17 th
November,   2017,   inter   alia   submitting   that   for   the   financial
creditor   who   chose   not   to   participate   in   the   voting,   the   votes
and   the   majority   be   counted   without   their   vote.   In   that
eventuality, the percentage of financial creditors who chose to
participate   and   who   approved   of   the   resolution   plan   would
work out to 78.63% and therefore, it can be assumed that the
resolution   plan   has   been   approved   by   the   CoC.   The   NCLT
Hyderabad   vide   judgment   dated   27 th
  November,   2017,
eventually,   allowed   the   petition   filed   by   the   corporate   debtor
and   approved   the   resolution   plan/revised   OTS   scheme,   as
submitted   by   the   resolution   professional   vide   affidavit   dated
3 rd
 November, 2017, and further declared that the moratorium
imposed on 10 th
 February, 2017, ceased to have effect from the

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date of receipt of copy of the order. A further direction came to
be   issued   that   the   corporate   debtor   shall   reinstate   all   the
employees who were on the rolls of company. Aggrieved by the
said   decision,   three   financial   creditors   who   were   part   of   the
CoC, namely Indian Overseas Bank, Central Bank of India and
Bank of Maharashtra filed appeals under Section 61 before the
NCLAT   questioning   the   authority   of   NCLT   Hyderabad,   to
approve of the resolution plan, despite the fact that the same
did not receive approval of not less than 75% of voting share of
financial   creditors.   The   Managing   Director   of   the   corporate
debtor   also   filed   an   independent   appeal   under   Section   61   of
the   I&B   Code   with   reference   to  the  observations   made   by  the
NCLT   Hyderabad   regarding   the   corporate   guarantee   to   be
proceeded   with.   As   aforesaid,   these   appeals   were   heard
together   along   with   appeals   concerning   another   corporate
debtor, namely IIL and came to be disposed of by the common
impugned judgment dated 6 th
 September, 2018, wherein it has
been   held   that   approval   to   the   proposed   resolution   plan   by   a
vote   of   not   less   than   75%   of   voting   share   of   the   financial

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creditors   was   mandatory   and   it   was   not   open   to   the
adjudicating authority to disregard the mandate of the CoC by
adopting   a   convoluted   approach.   Against   this   decision,   the
Managing   Director   of   the   corporate   debtor,   namely   (KS&PIPL)
has   filed   a   civil   appeal   under   Section   62   of   the   I&B   Code   in
this Court, being Civil Appeal No.10673 of 2018.
 
8. The second set of appeals pertain to the corporate debtor­
IIL, being Civil Appeal No.10719 of 2018 filed by the promoter
of the corporate debtor who holds 21.82% shares and was the
erstwhile   Chairman   and   Managing   Director   of   the   company.
Civil Appeal No.10971 of 2018 is filed by the workers’ union of
the   same   corporate   debtor,   namely,   Innoventive   Industries
Kamgar   Sanghathana.   The   workers’   union   has   filed   another
appeal   arising   from   SLP   (C)   No.29181   of   2018   against   the
judgment and order dated 24 th
 September, 2018 passed by the
High   Court   of   Judicature   at   Bombay   in   Writ   Petition   (C)
No.136   of   2018,   filed   by   them   to   challenge   the   judgment
passed   by   the   NCLT   Mumbai   dated   23 rd
  November,   2017/8 th
December, 2017, and for directing the Union of India to revive

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the   corporate   debtor   (IIL)   and   save   it   from   liquidation   by
dispensing   with   the   8%   shortfall   for   touching   the   criteria   of
75%   of   consent   of   CoC   for   the   approval   of   revival   as   per   the
provisions   of   the   I&B   Code.   The   High   Court   rejected   the   writ
petition   filed   by   the   workers’   union   on   the   ground   that   they
had an alternative and efficacious remedy against the decision
of   the   Tribunal.   In   other   words,   the   Special   Leave   Petition
primarily   questions   the   decision   of   rejection   of   the   proposed
resolution plan in respect of the corporate debtor (IIL). 
9. As   regards   the   corporate   debtor   (IIL),   the   relevant   facts
are   as   follows.   The   said  corporate   debtor   had   suffered  losses.
As   a   result,   it   had   proposed   to   its   lender   Bankers   for
Corporate Debt Restructuring (for short “ CDR ”). The company
was   referred   to   CDR   in   September,   2013   by   19   banking
entities   and   it   invited   a   consortium,   led   by   Central   Bank   of
India.   The   lenders’   forum   approved   the   restructuring   plan   of
the   company   on   24 th
  June,   2014.   ICICI   Bank   filed   an
Insolvency   and   Bankruptcy   application   under   the   I&B   Code
against the corporate debtor (IIL) in December 2016. That was

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admitted   by   the   NCLT   Mumbai,   being   the   adjudicating
authority, on 17 th
 January, 2017. An IRP was appointed and a
moratorium   was   declared.   The   said   corporate   debtor   asserts
that   despite   the   pendency   of   applications,   the   company   had
achieved   a   turnover   of   Rs.337   Crore   upto   March   2017,   with
operational   revenues   of   Rs.125   Crore   during   the   relevant
period   till   September   2017.   The   total   indirect   tax   paid   by   the
company   is   approximately   Rs.8.27   Crore   during   the   same
period.   Be   that   as   it   may,   consequent   to   the   order   of   the
adjudicating   authority   (NCLT)   dated   17 th
  January,   2017,   the
first CoC meeting was held on 15 th
 February, 2017 wherein the
appointment   of   IRP   was   confirmed.   Eventually,   in   the   sixth
CoC   meeting   held   on   19 th
  June,   2017,   it   was   unanimously
resolved   to   extend   the   insolvency   resolution   period   till   14 th
October,   2017.   The   IRP   then   approached   27   parties   (16
prospective   financial   investors   and   11   prospective   strategic
investors) out of which 16 parties (11 financial investors and 6
strategic   investors)   showed   interest   in   the   company.   After
screening   of   the   proposed   resolution   applicants,   the   subject

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resolution   plan   was   submitted   to   the   IRP   on   3 rd
  September,
2017, which was taken up for consideration by the CoC in its
meeting  on  4 th
  October, 2017, by  e­voting.  Financial  creditors
holding   66.57%   voting   share   voted  in   favour   of   approving   the
proposed   resolution   plan   whereas   the   dissenting   financial
creditors,   having   33.43%   voting   share,   voted   against   the
proposed resolution plan. Resultantly, the proposed resolution
plan   was   not   approved   or   came   to   be   rejected   for   want   of
support   of   the   requisite   percent   of   financial   creditors,   having
voting   share   of   not   less   than   75%.   The   IRP   then   filed   an
application   on   12 th
  October,   2017,   before   the   adjudicating
authority   (NCLT)   praying   for   initiating   liquidating   process
against   IIL.   The   NCLT   Mumbai,   after   considering   the
submissions   of   both   sides,   by   order   pronounced   in   court   on
23 rd
  November,   2017   and   delivered   on   8 th
  December,   2017,
directed   initiation   of   liquidation   proceeding   against   the
corporate   debtor   (IIL).   The   appellant   in   the   leading   appeal   of
the   second   set   of   appeals,   being   the   former   Chairman   and
Managing   Director   of   the   corporate   debtor   (IIL)   had   filed   an

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interim  application  before the NCLT Mumbai praying  that  the
dissenting   financial   creditors   be   directed   to   disclose   on   oath
reasons/basis for, or the decision making process involved in,
voting   against   the   resolution   plan   and   a   declaration   that   the
dissenting financial creditors voted with malicious intention of
liquidation   and   hence,   their   votes   ought   to   be   ignored.   The
workers’   union   of   the   corporate   debtor   (IIL)   had   filed   an
interim  application, opposing  liquidation  of the company. The
resolution applicant had also filed an application to allow it to
submit   a   revised   resolution   plan   and   to   invite   a   fresh   vote
thereon   albeit   after   the   time   earlier   envisaged   for   obtaining
shareholders   approval.   According   to   the   appellants   in   the
second set of appeals, NCLT did not call for the response of the
opposite   parties   on   the   concerned   applications   and   instead
proceeded   to   pass   the   impugned   order   rejecting   the
applications   and   directing   initiation   of   liquidation   proceeding
against   the   corporate   debtor.   The   appellants   in   the   leading
appeal   concerning   the   corporate   debtor   (IIL)   filed   an   appeal
before   the   NCLAT   against   the   decision   of   the   NCLT,   Mumbai.

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This   appeal   was   heard   along   with   the   appeals   concerning
another   corporate   debtor   (KS&PIPL)   and   disposed   of   together
by   the   NCLAT   as   common   issue   was   involved   in   all   these
appeals.  As  aforesaid,  by   the   impugned  judgment   NCLAT   has
held   that   the   requirement   of   approval   of   resolution   plan   by
vote of not less than 75% of voting share of financial creditors
was   mandatory   and   hence   dismissed   the   appeal   preferred   by
the   appellant.   Aggrieved,   the   said   appellant   and   the   workers’
union of KS&PIPL have filed appeals against the said decision
of NCLAT and the High Court respectively. 
 
10. Mr. C.U. Singh, learned senior counsel appearing for the
appellant   in   the   case   of   corporate   debtor   KS&PIPL   had
canvassed two­pronged submissions.  The first is on the basis
of  the  unamended provisions  as applicable  on  the  date of  the
resolution passed by the CoC in October, 2017. It is urged that
on a fair interpretation of those provisions, it ought to be held
that   the   same   were   not   mandatory.   Even   assuming   that   the
same   were   mandatory,   considering   the   fact   that   a   significant
section of the financial creditors had abstained from voting on

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27 th
  October, 2017, their votes were required to be ignored for
the   purpose   of   computing   the   required   percentage   of   voting
share. In that case, it would work out to be more than 75%. In
that,   the   percentage   of   votes   for   approval   (55.73%)   of   the
resolution proposal and the voting share rejecting the proposal
was   only   15.15%.   Taking   these   votes   only,   the   proportionate
percentage   of   the   voting   share   for   approval   will   obviously   be
more than 75% (i.e. approximately 78.63%). Thus understood,
the   NCLT   Mumbai   ought   to   have   approved   the   resolution
proposal. The second limb of the argument is that the NCLAT,
which had decided the appeals on 6 th
  September, 2018, ought
to have taken into account the amendments brought into force
w.e.f.   23 rd
  November,   2017   and   followed   by   another
amendment   brought   into   force   w.e.f.   6 th
  June,   2018   to   the
provisions   of   I&B   Code   and   including   the   amendment   to   the
Regulations   of   the   Insolvency   and   Bankruptcy   Board   of   India
(Insolvency   Resolution   Process   for   Corporate   Persons)
Regulations, 2016 brought into force from 4 th
  July, 2018. For,
the same came into force during the pendency of the appeals.

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Further,   the   purport   of   the   said   amendments   posit   that   the
CoC   should   be   objective   in   its   approach   and   consider   the
feasibility   and   viability   of   the   resolution   proposal   and   must
assign reasons for approval or rejection of the proposal, as the
case   may   be.   Additionally,   the   requirement   of   percentage   of
votes of the financial creditors stood reduced to 66% of voting
share which, in the present case, has been fulfilled on account
of   the   approval   given   by   55.73%   in   the   meeting   convened   on
27 th
  October,   2017,   and   followed   by   in­principle   approval
conveyed via email on 30 th
 October, 2017, by Oriental Bank of
Commerce,   having   10.94%   voting   power.   In   effect,   this
argument   proceeds   on   the   assumption   that   the   amendments
to the Code brought into force w.e.f. 23 rd
  November, 2017 and
in particular on 6 th
  June, 2018, would have retroactive effect,
as   is   clear   from   the   legislative   intent   behind   the   said
amendments. The said amendments are made applicable from
the inception and to pending proceedings also because it is to
substitute the original provision as was applicable on the date
of   the   resolution   dated   27 th
  October,   2017,   and   filing   of

19
affidavit by  IRP  before the adjudicating   authority.  To buttress
this   argument,   reliance   has   been   placed   on   the   exposition   in
Gottumukkala   Venkata   Krishamraju   Vs.   Union   of   India 1
,
Government   of   India   Vs.   India   Tobacco   Association 2
  and
Zile   Singh   Vs.   State   of   Haryana 3
.   In   support   of   the
argument   that   the   amendment   to   Section   30(4)   applied   to
pending   proceedings,   reliance   has   been   placed   on   the
judgment in   Mithilesh Kumari & Another Vs. Prem Behari
Khare 4
,  Dahiben (Widow of Ranchnodji Jivanji) & Ors. Vs.
Vasanji Kevalbhai (dead) & Others 5
. Reliance is also placed
on   the   decision   in   B.K.   Educational   Services   Private   Ltd.
Vs.   Parag   Gupta   &   Associates 6
  which   had   considered   the
applicability   of   Section   238­A   inserted   by   way   of   the   same
amendment Act in the I&B Code w.e.f. 6 th
  June, 2018. In this
decision,   the   court   held   that   the   legislative   intent   behind   the
amendment   was   to   apply   the   Limitation   Act   from   the   very
1  (2018) SCC Online SC 1386­ Paragraphs 13­16. 
2  (2005) 7 SCC 396 Paragraphs 14­16, 24, 26&28. 
3  (2004) 8 SCC 1 Paragraphs 14­16. 
4  (1989) 2 SCC 95. Paragraph 24 and also see paragraphs 1, 23 and 25.
5  (1995) Supp. 2 SCC 295. Paragraph 13 and also see Paragraphs 12, 14 and 15. 
6  (2018) SCC Online SC 1921 Paragraph 45.

20
beginning to NCLT and NCLAT while deciding the applications
filed under Sections 7 and 9 of the I&B Code and the appeals
therefrom.   Reliance   is   also   placed   on   the   decision   in   State
Bank   of   India   Vs.   Ramakrishnan 7
  which   had   dealt   with
amendment by way of substitution to Section­14(3) of the I&B
Code   concerning   surety   in   a   contract   of   guarantee   for   a
corporate   debtor.   The   court   held   that   the   amendment   was
retrospective.   Reliance   is   also   placed   on   the   decision   in
Rustom   &   Hornby   (I)   Ltd.   Vs.   T.B.   Kadom 8
  in   which   this
court   gave   retrospective   construction   to   Section   2­A   of   the
Industrial   Disputes   Act,   1947   and   also   in   Bharat   Singh   Vs.
Management   of   New   Delhi   Tuberculosis   Centre,   New
Delhi 9
  to   the   same   effect.   The   thrust   of   the   argument   is   that
the object of the I&B Code is resolution rather than liquidation
as also the maximization of value of assets of such persons, to
promote entrepreneurship. To buttress this argument, reliance
is   also   placed   on   the  report   of   the   Insolvency   Law   Committee
7  (2018) SCC Online SC 963. Paragraph 34. 
8  (1976) 3 SCC 71. Paragraph 6. 
9  (1986) 2 SCC 614. Paragraphs 2, 5­6, 10­14.

21
in March 2018. Paragraph 11.6 therein states that in order to
further   the   stated   object   of   the   I&B   Code   to   promote
resolution,   the   voting   share   for   approval   of   resolution   plan
may be reduced to 66%. It is submitted that this should have
been   taken   into   account   by   the   NCLAT   in   reference   to   the
amended provisions brought into force during the pendency of
the appeal before it. It is also contended that the adjudicating
authority   (NCLT)   as   well   as   the   appellate   authority   (NCLAT),
while approving or rejecting the resolution plan, is duty bound
to   exercise   a   judicious   mind   and   be   alive   to   the   facts   and
circumstances   of   the   specific   case   before   it   and   the   socio­
economic   benefit   considering   the   favourable   opinion   noted   by
the   resolution   professional   in   his   affidavit,   that   there   was
every   possibility   of   reviving   the  corporate   debtor.  Even   as   per
the   report   submitted   by   M/s.   Atlas   Financial   Research   &
Consulting   Private   Limited   regarding   a   thorough   Techno
Economic Viability study conducted in respect of the corporate
debtor   (KS&PIPL),   it   has   been   noted   that   the   company   was
technically   feasible   and   economically   viable.   The   corporate

22
debtor   was   facing   a   financial   crisis   due   to   abrupt   and
unilateral   stoppage   of   operations   in   the   working   capital   loan
account   and   the   proposed   resolution   plan   fulfilled   all   the
eligibility   criteria   for   its   approval   under   the   provisions   of   the
I&B   Code.   Furthermore,   the   dissenting   financial   creditors
having   failed   to   offer   any   reason   whatsoever   for   rejecting   the
resolution   proposal,   it   must   follow   that   they   did   not   do   so   in
good   faith   but   with   malicious   intent,   warranting   intervention
by the adjudicating authority and the appellate authority. 
11. Mr.   A.M.   Singhvi,   learned   Senior   Counsel   appearing   for
the   appellant   concerning   the   corporate   debtor   (IIL)   would
submit that the CoC, being the custodian of public interest, is
under   a   statutory   duty   to   exercise   its   power   under   Section
30(4)   of   the   I&B   Code   reasonably   and   fairly.   Section   30(4)
posits   an   obligation   upon   the   CoC   to   adopt   a   resolution   plan
which   is   ex   facie   more   viable   than   liquidation.   According   to
him,   the   amendments   to   Section   30(4)   in   particular   brought
into   force   w.e.f.   23 rd
  November,   2017   are   only
declaratory/clarificatory   of   the   law   and   resultantly,

23
retrospective.   He   submits   that   giving   reasons   for   the   view
expressed   on   the   resolution   plan,   be   it   for   approval   or
rejection,   is   the   quintessence   to   fulfill   the   requirement   of   a
reasonable   and   fair   approach   of   the   CoC.   Reasons   so   given,
would demonstrate whether it is a bonafide or malicious act of
the   financial   creditors.   That   has   now   been   clarified   and
restated   by   the   amending   regulation   39(3)   which   has   come
into   force   w.e.f.   4 th
  July,   2018.   Being   a   clarificatory
amendment, the same would take effect retrospectively and is
applicable   even   to   pending   proceedings.   It   is   then   contended
that   if   no   reason   is   assigned   or   forthcoming,   the   court   is   not
powerless   to   strike   down   the   exercise   of   power   by   the
concerned financial creditor if it was possible to infer from the
circumstances emanating  from the record that the exercise of
such   power   was   wrongly   exercised.   To   buttress   this
submission   reliance   was   placed   upon   Mardia   Chemicals
limited and Others Vs. Union of India and Others 10
  which
had read the requirement of fairness and reasonableness into
10  (2004) 4 SCC 311, paragraph 45.

24
Section   13   of   the   SARFAESI   Act.   The   court   declared   that
reasons must be given and communicated. This “reading in” of
the   principle   of   fairness   and   reasonableness,   was   eventually
codified   in   the   form   of   Section   13(3­A)   of   that   Act.   Such
interpretation   was   inexorable   in   respect   of   provisions   as
draconian   as   Section   30(4),   resulting   in   the   inevitable
consequence   of   liquidation   of   the   corporate   debtor.   The
provisions of the I&B Code must be so construed as not to be
financial   creditor   centric   but   to   be   an   inclusive   approach
where all stakeholders’ interests are balanced and particularly
for   exploring   the   possibility   of   revival   of   the   corporate   debtor
and   maximisation   of   the   value   of   assets.   In   the   present   case,
contends   learned   counsel,   the   only   plea   taken   by   the
dissenting financial creditors before the adjudicating authority
(NCLT), was that they had taken a commercial decision and it
was   not   open   to   judicial   scrutiny.   Even   if   it   is   a   commercial
decision, contends learned counsel, it must fulfill the test of a
reasonable   and   fair   approach   to   be   supported   by   tangible
reasons. In the absence of reasons, the adjudicating authority

25
(NCLT)  must  exercise its  jurisdiction  to  ascertain whether  the
exercise  of power   by  the  CoC  is reasonable  and in  conformity
with the purpose of the Code. If the resolution plan is  ex facie
viable   and   yet   the   dissenting   financial   creditors   reject   the
same, such exercise of power would be subversive of the policy
of   the   Code,   requiring   intervention   by   the   adjudicating
authority (NCLT). Whereas, such a case would imply a duty on
the CoC to exercise its power to approve the plan. To counter
the   defence   of   the   dissenting   financial   creditors   regarding   a
commercial   decision,   reliance   was   placed   on   Padfield   and
Others   Vs.   Minister   of   Agriculture,   Fisheries   and   Food 11
and   Dhampur   Sugar   Mills   Ltd.   Vs.   State   of   U.P.   and
Others 12
.  Learned counsel contends that abdication of duty by
the CoC to consider the feasibility and viability projected in the
proposed resolution plan would be fatal. It would be a case of
non   application   of   mind   by   the   CoC,   if   not   a   malicious
approach in rejection of the proposed resolution plan. The test
of limits of judicial review, as expounded in  Tata Cellular Vs.
11  (1968) 2 WLR 924
12  (2007) 8 SCC 338

26
Union of India 13
  ought to be invoked to rein in the unbridled
exercise   of   power   by   the   CoC.   The   Tribunal   could   certainly
discard   the   view   of   the   dissenting   financial   creditors   if   it   was
satisfied   that   such   a   decision   could   not   be   reached   by   any
reasonable   and   prudent   person.   It   is   also   possible   for   the
adjudicating   authority   (NCLT)   to   intervene   if   the
circumstances suggest that the decision of dissenting financial
creditors   was   the   outcome   of   abuse   of   power   or   being
irrational   and   unreasonable.   Reliance   is   also   placed   on   the
decision in  Union of India and Another Vs. Cynamide India
Ltd.   and   Another 14
  and   Shri   Sitaram   Sugar   Company
Limited   and   Another   Vs.   Union   of   India   and   Others 15
.   As
regards   the   amendment   brought   into   effect   from   23 th
November,   2017   to   Section   30(4)   of   the   I&B   Code,   it   is
contended   that   the   same   must   be   construed   as   only
clarificatory   and   resultantly,   be   given   retrospective   effect.
Inasmuch   as   the   discretion   given   to   the   constituents   of   CoC,
namely   the   financial   creditors   under   Section   30(4)  of   the   I&B
13  (1996) 6 SCC 651 Paragraphs­73 and 77. 
14  (1987) 2 SCC 720 Paragraph 4
15  (1990) 3 SCC 223 Paragraphs ­ 47­49, 51­53, 57­58.

27
Code   is   required   to   be   exercised   in   a   just   manner   and   by
giving   due   regard   to   the   feasibility   and   viability   of   a   plan
proposed   for   revival   of   the   corporate   debtor.   There   is   nothing
else   relevant   for   discharging   the   statutory   obligation   of
approving   or   rejecting   the   proposed   resolution   plan.   With
regard   to   the   second   amendment   to   Section   30(4)   of   the   I&B
Code which came into effect from 6 th
 June, 2018, reducing the
voting   threshold   from   75%   to   66%,   learned   counsel   contends
that   even   the   same   operates   from   the   time   the   section   was
brought   on   the   statute   book.   For,   the   legislature   consciously
lowered   the   threshold   requirement   to   66%.   It   was   to   infuse
more   flexibility   in   the   resolution   processes   and   to   maximise
the effort for revival of the corporate debtor in the larger public
interests.   The   intention   of   the   Parliament   was   to   cure   the
mischief that the high threshold was causing; and by reducing
it,   Parliament   intended   to   encourage   revival   of   the   corporate
debtor   and   maximisation   of   the   value   of   assets   and   to
discourage   liquidation   resulting   in   closure   of   the   functioning
company   on   which   many   stakeholders   depended,   such   as   its

28
workers.   With   regard   to   the   objection   to   the   locus   of   the
appellant   being   the   former   Chairman   and   Managing   Director
of the corporate debtor, it is contended that the same is raised
for the first time, and in any case, cannot be countenanced in
view   of   the   express   provision   contained   in   Section   61   of   the
I&B   Code   and   moreso   because   the   appellant   had   initiated
proceedings   by   filing   an   application   before   the   adjudicating
authority   (NCLT)   and   the   appellant,   being   the   shareholder,
had reason to insist for revival of the corporate debtor instead
of its liquidation. As regards the objection about the eligibility
of   the   appellant   as   a   person   acting   jointly   or   in   concert   with
the corporate debtor in terms of Section 29A of the I&B Code,
it is contended that even this objection was being taken for the
first   time.   Notably,   Section   29A   of   the   I&B   Code   came   into
force only from 23 rd
 November, 2017, and it did not exist when
the   resolution   plan   was   considered   by   the   CoC.   Further,   the
scope of appeal preferred by the appellant was to call upon the
adjudicating   authority   to   interfere   with   the   unreasonable
rejection   of   the   resolution   plan   by   the   dissenting   financial

29
creditors   and   not   to   propound   an   independent   plan   of   the
appellant.   Thus   understood,   Section   29A   of   the   I&B   Code
would   have   no   application   and   in   any   case,   if   the   proposed
resolution   plan   is   to   be   taken   forward,   the   appellant   has   no
causal   connection   with   the   resolution   applicant.   Learned
counsel submits that the appeal be allowed and the matter be
restored   to   the   file   of   the   adjudicating   authority   (NCLT)   for
reconsideration of the proposed resolution plan afresh.
12. Mr.   Colin   Gonsalves,   learned   Senior   Counsel   appearing
for   the   workers’   union   concerning   corporate   debtor   (IIL)
submits   that   the   rejection   of   the   plan   would   have   a   direct
impact   on   the   workers   engaged   by   the   corporate   debtor.
According   to   him,   the   resolution   plan   manifests   that   the
company is a viable company and all efforts should be made to
revive   the   company   and   not   to   shove   it   into   liquidation
because   of   the   whims   and   fancies   of   the   minority   financial
creditors   or,   for   that   matter,   in   the   guise   of   their   commercial
wisdom.   Reliance   is   placed   on   United   Bank   of   India,

30
Calcutta   Vs.   Abhijit   Tea   Co.   Pvt.   Ltd.   and   Others 16
  and
Karan   Singh   and   Others   Vs.   Bhagwan   Singh   (Dead)   By
Lrs.   And   Others 17
  and   additionally,   on   the   decision   of   the
NCLAT   in   the   case   of   another   corporate   debtor   (Alok
Employees Benefit and Welfare Trust) in Company Appeal (AT)
(Insolvency)   No.344   of   2018   decided   on   29 th
  November,   2018.
He   had   also   invited   our   attention   to   the   chart   given   in
Economic Survey 2017­18 Volume 2, to contend that there will
be   hardly   any   impact   if   this   Court   was   to   remit   the   case   for
reconsideration on the basis of the amended provisions by the
adjudicating   authority   (NCLT)   and   especially   because   there   is
ample material on record to indicate that the corporate debtor
(IIL)   is   a   viable   company   and   needs   to   be   revived   and   not
liquidated.
 
13. On   the   other   hand,   Mr.   Shyam   Divan,   learned   Senior
Counsel   and   Ms.   Pragya   Baghel   countered   the   above
submissions   and   supported   the   conclusion   reached   by   the
NCLAT   that   the   requirement   specified   in   Section   30(4)   of   the
16  (2000) 7 SCC 357 Paragraph 20.
17  (1996) 7 SCC 559 Paragraph 7. 

31
I&B   Code   is   mandatory.   They   submit   that   the   I&B   Code   has
been enacted after the experience of the earlier dispensations.
There   has   been   paradigm   shift   in   adopting   the   new   regime
regarding   the   timelines   to   be   observed   by   all   concerned   at
every stage as predicated in the Code. Be it for the resolution
process   or   liquidation   process.   Both   these   processes   are
intended   to   be   disposed   of   speedily   and   in   a   time­bound
manner. The  initial  time limit  provided to revive  the company
is   180   days   from   the   date   of   admission   of   the   petition   and
extendable   by   90   days.   The   outer   limit   for   resolution   process
has   been   specified   as   270   days   and   if   the   resolution   plan   is
not approved by the CoC with requisite number of votes of the
financial   creditors   (not   less   than   of   75%),   then   there   is   no
other   option   but   to   order   liquidation.   That   is   the   inevitable
consequence   of   failure   to   approve   the   resolution   plan   within
the   specified   time.   The   adjudicating   authority   (NCLT)   would
have no other option. Further, on presentation of the rejected
resolution   plan,   it   is   not   open   to   the   adjudicating   authority
(NCLT)   to   enquire   into   the   justness   of   the   reason   or   the

32
commercial   decision   taken   by   the   financial   creditors   to
approve or not to approve the proposed resolution plan. There
is   complete   autonomy   regarding   the   commercial   decision   or
wisdom   of   the   financial   creditors.   That   cannot   be   questioned
by   the   adjudicating   authority   (NCLT).   Whereas,   the   judicial
review   is   circumscribed   to   the   grounds   specified   in   the   Act
itself,   which   is   a   self­contained   Code.   The   legislative   intent
makes it amply clear that the Parliament was conscious about
the   fact   that   some   business   entities   will   fail   and   cannot   be
revived within the specified time but that cannot suppress the
need   for   addressing   the   serious   concern   of   financial   creditors
due to increasing  financial pressure on them because of non­
performing assets of the corporate debtor. The promoters have
no   divine   right   to   continue   to   manage   such   corporate   debtor.
The   I&B   Code   predicates   the   necessity   of   interest   in   the
management   of   such   corporate   debtors   being   handed   over   to
professionals   during   the   moratorium   period   so   as   to   make   a
sincere effort to revive the company within the specified time.
Our   attention   was   invited   to   Bankruptcy   Law   Reforms

33
Committee   Report   dated   4 th
  November,   2015   and   Insolvency
Law Committee Report dated 26 th
 March, 2018, to buttress the
argument about the legislative intent behind the enactment of
the   I&B   Code   and   the   concerned   amendment.   Reliance   has
been placed on Innoventive Industries Ltd. (supra), which had
adverted to the legislative intent behind the I&B Code. 
14. Mr.   Divan,   appearing   for   ICICI   Bank   in   the   case   of
corporate   debtor   (IIL),   submits   that   there   was   only   one
resolution   plan.   Neither   has   the   resolution   applicant
challenged   the   decision   of   the   adjudicating   authority   (NCLT)
nor   has   it   been   made   party   in   the   appeal.   The   outstanding
amount   payable   by   the   corporate   debtor   (IIL)   is   around
Rs.1435   Crore.   He   submits   that   the   resolution   plan   is   a
complex   document   unlike   a   bid   or   tender   document.   The
professionals associated with the dissenting financial creditors
have   analysed   the   same   and   were   of   the   considered   opinion
that   it   is   not   a   feasible   and   achievable   target   ­   rather   it   is   a
speculative   proposal.   The   dissenting   financial   creditors
exercised   their   commercial   wisdom   after   taking   into   account

34
all the relevant aspects. It is not open to undertake scrutiny of
that decision of the dissenting financial creditors. Neither can
the IRP nor the adjudicating authority (NCLT) be allowed to sit
over   the   same   as   a   court   of   appeal.   The   decision   of   the
dissenting   financial   creditors   reckons   various   aspects
including   the   confidence   about   the   capacity   of   the   resolution
applicant to translate the projected plan into reality as per the
timelines   specified   and   the   feasibility   and   viability   of   the
proposal   and   revival   of   the   company   in   question.   He   took   us
through the relevant provisions including amended provisions
and   contended   that   the   purpose   and   intent   underlying   the
amendment   was   to   give   prospective   effect   thereto.   He
submitted   that   the   appeal   filed   by   the   former   Chairman   and
Managing   Director   of   the   corporate   debtor   (IIL)   was   not
maintainable also because the said appellant has no locus. He
submitted   that   the   appellant   was   acting   in   concert   with   the
resolution   applicant   and   for   which   the   appellant   must   be
called upon to first deposit 100% of the dues. Our attention is
invited to the recent decision in   Arcelormittal India Private

35
Limited Vs. Satish Kumar Gupta and Others 18
. He submits
that the Court has noticed the necessity of observing timelines
by   all   concerned   ­   be   it   at   the   stage   of   resolution   process   or
liquidation process ­ in terms of the mandate in the I&B Code.
The   amendments   cannot   be   construed   otherwise   so   as   to
render   the   legislative   intent   otiose.   He   submits   that,   in   law,
there   is   a   presumption   of   prospective   application   of   the
amended   provisions.   There   is   no   express   provision   ordaining
retrospective   application   of   the   amended   provisions.   The
amended   provisions   unambiguously   predicate   that   the   same
would come into force with effect from the stated date. In the
present   case,   the   timeline   for   completion   of   the   resolution
process expired on 14 th
 November, 2017, and for which reason
the   amended   provision   lowering   the   voting   share   to   66%   will
be   of   no   avail.   As   regards   the   amendment   to   Regulation   39,
that   has   come   into   force   w.e.f.   4 th
  July,   2018,   and   obviously
would   have   prospective   application.   In   any   case,   non­
disclosure   of   the   reason   by   the   dissenting   financial   creditors,
would   not   vitiate   the   concluded   cause   of   action   upon
18  (2018) SCCOnline 1733, Paragraphs 64, 78, 83 and 88

36
exercising the vote to reject the proposed resolution plan. That
position   cannot   be   unsettled   on   the   basis   of   the   amended
regulation. Learned counsel has placed reliance on the case of
Karnataka   State   Industrial   Investment   &   Development
Corpn.   Ltd.   Vs.   Cavalet   India   Ltd.   and   Others. 19
.   As
regards   the   concern   expressed   by   the   workers   union   of   the
corporate debtor (IIL), it is submitted that the workmen would
get the highest priority in terms of Section 53 of the I&B Code.
Moreover,   the   fact   that   the   liquidation   process   has   been
initiated   in   respect   of   the   company   does   not   mean   that   the
possibility   of   sale   of   the   company   as   a   running   concern   has
been   completely   ruled   out.   Thus,   the   interests   of  the   workers
engaged   by   the   corporate   debtor   will   be   taken   care   of   as   per
the   statutory   command.   The   sum   and   substance   of   the
argument   is   that   the   adjudicating   authority   (NCLT)   was
justified   in   rejecting   the   applications   filed   by   the   appellants
and   recorded   the   factum   of   rejection   of   the   proposed
resolution plan with the inevitable direction to initiate process
19  (2005) 4 SCC 456 Paragraphs 13 and 19

37
for   liquidation   of   the   company   under   Section   33   of   the   I&B
Code. In that view of the matter, no interference is warranted
with the impugned decision of the NCLAT. 
15. Ms.   Pragya   Baghel,   appearing   for   Indian   Overseas   Bank
in the case of corporate debtor (KS&PIPL), having voting share
of 15.15% and being  one of the dissenting financial creditors,
would   submit   that   the   appellant   was   disqualified   to   appeal
and   that   his   appeal   before   NCLAT   was   limited   to   the
observation regarding the personal guarantee as noted by  the
NCLT.   The   fact   remains   that   the   resolution   plan   put   to   vote
did not garner support of the requisite percentage of financial
creditors   to   the   extent   of   not   less   than   75%   of   the   voting
share.   The   provisions   as   couched   in   the   I&B   Code   do   not
permit   computation   of   the   voting   share   percentage   by
excluding   the   votes   of   financial   creditors   who   had   abstained.
Whereas, there is express provision to the contrary, making it
amply   clear   that   the   votes   of   the   financial   creditors   who   had
abstained from voting must be computed along with the votes
rejecting   the   resolution   plan,   as   being   dissenting   financial

38
creditors.   Any   other   interpretation   would   result   in   re­writing
Section 30(4) and the regulations framed under the I&B Code,
if   not   doing   violence   to   the   legislative   intent.   She   has   placed
reliance on the decisions of   S.L. Srinivasa Jute Twine Mills
(P)   Ltd.   Vs.   Union   of   India   and   Another 20
  and   Rajeev
Chaudhary   Vs.   State   (NCT)   of   Delhi 21
.   As   regards   the
argument   of   retrospective   application   of   the   amended
provisions,   in  particular,   reducing   the   voting   share   from   75%
to 66%, learned counsel has placed reliance on the decision of
this   Court   in   Hitendra   Vishnu   Thakur   and   Others   Vs.
State   of   Maharashtra   and   Others 22
.   The   appellant   and
respondents 1­3 & 5­8 in C.A. No.10673 of 2018 and appellant
and   respondents   2   &   20   in   C.A.   No.10719   of   2018   have   filed
written   submissions   through   their   counsels,   elaborating   the
above points. 
16. Ms.   Prabha   Swami,   appearing   for   the   resolution
applicant   (Suyash   Outsourcing   Pvt.   Ltd.),   has   submitted   that
20  (2006) 2 SCC 740. Paragraphs 13­19.
21  (2001) 5 SCC 34 Paragraphs. 3 and 4.
22  (1994) 4 SCC 602 Paragraph 26.

39
the   resolution   plan   was   approved   on   certain   conditions   and
the resolution applicant assures to abide by those conditions.
Further,   as   per   the   liberty   given   to   the   resolution   applicant,
appropriate   affidavit   has   now   been   filed   to   place   that
assurance on record.  
17. Ms.   Mahima   Singh,   learned   counsel   appearing   for   the
Official   Liquidator   in   the   case   of   corporate   debtor   (IIL),   had
sought   liberty   to   place   on   record   certain   subsequent
developments   which   may   have   bearing   on   the   concerned
appeals.   That   affidavit   dated   23 rd
  November,   2018,   has   also
been filed and is allowed to be taken on record. 
18. Having   heard   learned   counsel   for   the   parties,   the   moot
question   is   about   the   sequel   of  the   approval  of   the   resolution
plan   by   the   CoC   of   the   respective   corporate   debtor,   namely
KS&PIPL and IIL, by a vote of less than seventy five percent of
voting   share   of   the   financial   creditors;   and   about   the
correctness   of   the   view   taken   by   the   NCLAT   that   the
percentage   of   voting   share   of   the   financial   creditors   specified
in   Section   30(4)   of   the   I&B   Code   is   mandatory.   Further,   is   it

40
open   to   the   adjudicating   authority/appellate   authority   to
reckon any other factor (other than specified in Sections 30(2)
or 61(3) of the I&B Code as the case may be) which, according
to   the   resolution   applicant   and   the   stakeholders   supporting
the resolution plan, may be relevant? 
19. This   Court   in   its   recent   decisions   has   elaborately
adverted   to   the   legislative   history   and   delineated   the   broad
contours   of   the   provisions   of   the   I&B   Code.   The   latest   being
the   case   of   Arcelormittal   (supra)   followed   by   B.K.
Educational   (supra)   and   Innoventive   Industries   Limited
Vs. ICICI  Bank and Another . 23
 In the present case, however,
our   focus  must  be  on  the  dispensation   governing   the   process
of approval or rejection of resolution plan by the CoC. The CoC
is   called   upon   to   consider   the   resolution   plan   under   Section
30(4)   of   the   I&B   Code   after   it   is   verified   and   vetted   by   the
resolution   professional   as   being   compliant   with   all   the
statutory requirements specified in Section 30(2).
23   (2018) 1 SCC 407

41
20.   The   CoC   is   constituted   as   per   Section   21   of   the   I&B
Code, which consists of financial creditors. The term ‘financial
creditor’   has   been   defined   in   Section   5(7)   of   the   I&B   Code   to
mean   any   person   to   whom   a   financial   debt   is   owed   and
includes   a   person   to   whom   such   debt   has   been   legally
assigned   or   transferred   to.   Be   it   noted   that   the   process   of
insolvency   resolution   and   liquidation   concerning   corporate
debtors   has   been   codified   in   Part   II   of   the   I&B   Code,
comprising of seven Chapters. Chapter I predicates that Part II
shall   apply   in   matters   relating   to   the   insolvency   and
liquidation of corporate debtor where the minimum amount of
default is Rs.1,00,000/­.  Section 5 in Chapter I is a dictionary
clause specific to Part II of the Code. Chapter II deals with the
gamut of procedure to be followed for the corporate insolvency
resolution   process.   For   dealing   with   the   issue   on   hand,   the
provisions contained in Chapter II will be significant. From the
scheme of the provisions, it is clear that the provisions in Part
II   of   the   Code   are   self­contained   code,   providing   for   the
procedure for consideration of the resolution plan by the CoC. 

42
21. The stage at which the dispute concerning the respective
corporate   debtors   (KS&PIPL   and   IIL)   had   reached   the
adjudicating authority (NCLT) is ascribable to Section 30(4) of
the   I&B   Code,   which,   at   the   relevant   time   in   October   2017,
read thus:
“ 30(4)­ The   committee   of   creditors   may   approve   a   resolution
plan by a vote of not less than seventy five per cent of voting
share of the financial creditors.”
If   the   CoC   had   approved   the   resolution   plan   by   requisite
percent   of   voting   share,   then   as   per   Section   30(6)   of   the   I&B
Code, it is imperative for the resolution professional to submit
the   same   to   the   adjudicating   authority   (NCLT).   On   receipt   of
such a proposal, the adjudicating authority (NCLT) is required
to   satisfy   itself   that   the   resolution   plan   as   approved   by   CoC
meets   the   requirements   specified   in   Section   30(2).   No   more
and no less. This is explicitly spelt out in Section 31 of the I&B
Code, which read thus (as in October 2017):  
“ 31.   Approval   of   resolution   plan. ­(1)   If   the   Adjudicating
Authority is satisfied that the resolution plan as approved by
the   committee   of   creditors   under   sub­section   (4)   of   section
30 meets the requirements as referred to in sub­section(2) of
section   30,   it   shall   by   order   approve   the   resolution   plan
which   shall   be   binding   on   the   corporate   debtor   and   its

43
employees,   members,   creditors,   guarantors   and   other
stakeholders involved in the resolution plan. 
(2)   Where   the   Adjudicating   Authority   is   satisfied   that   the
resolution   plan   does   not   confirm   to   the   requirements
referred to in sub­section (1), it may, by  an order, reject the
resolution plan. 
(3) After the order of approval under sub­section (1),­
(a)   the   moratorium   order   passed   by   the   Adjudicating
Authority under section 14 shall cease to have effect; and 
(b)   the   resolution   professional   shall   forward   all   records
relating to the conduct of the corporate insolvency resolution
process and the resolution plan to the Board to be recorded
on its database.”
We may also usefully refer to Section 30(2) as applicable at the
relevant time. The same read thus: 
“ 30. Submission of resolution plan .­
(1)  xxx xxx xxx
(2) The   resolution   professional   shall   examine   each
resolution   plan   received   by   him   to   confirm   that   each
resolution plan­
(a) provides   for   the   payment   of   insolvency
resolution   process   costs   in   a   manner   specified
by   the   Board   in   priority   to   the   repayment   of
other debts of the corporate debtor;
(b) provides for the repayment of the debts of
operational creditors in such manner as may be
specified   by   the   Board   which   shall   not   be   less
than   the   amount   to   be   paid   to   the   operational
creditors   in   the   event   of   a   liquidation   of   the
corporate debtor under section 53;
(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;

44
(f) conforms   to   such   other   requirements   as
may be specified by the Board.
xxx xxx xxx”
 
22. In   Innoventive   Industries   Limited   (supra),   the   Court,
after   analysing   the   historical   background   in   which   the   Code
was enacted, opined that one of the most important objectives
of   the   Code   was   to   bring   the   insolvency   law   in   India   under   a
single,   unified   umbrella   with   the   object   of   speeding   up   the
insolvency   process.   As   regards   the   process   regarding
submission   of   resolution   plan   and,   in   particular,   in   reference
to Section 30, the Court observed as follows: 
“33.   Under   Section   30,   any   person   who   is   interested   in
putting   the   corporate   body   back   on   its   feet   may   submit   a
resolution   plan   to   the   resolution   professional,   which   is
prepared on the basis of an information memorandum. This
plan   must   provide   for   payment   of   insolvency   resolution
process   costs,   management   of   the   affairs   of   the   corporate
debtor   after   approval   of   the   plan,   and   implementation   and
supervision   of   the   plan.   It   is   only   when   such   plan   is
approved   by   a   vote   of   not   less   than   75%   of   the   voting
share   of   the   financial   creditors   and   the   adjudicating
authority   is   satisfied   that   the   plan,   as   approved,   meets
the   statutory   requirements   mentioned   in   Section   30,
that   it   ultimately   approves   such   plan,   which   is   then
binding on the corporate debtor as well as its employees,
members,   creditors,   guarantors   and   other   stakeholders.
Importantly,   and   this   is   a   major   departure   from   previous
legislation   on   the   subject,   the   moment   the   adjudicating
authority   approves   the   resolution   plan,   the   moratorium

45
order   passed   by   the   authority   under   Section   14   shall   cease
to have effect. The scheme of the Code, therefore, is to make
an   attempt,   by   divesting   the   erstwhile   management   of   its
powers   and   vesting   it   in   a   professional   agency,   to   continue
the business of the corporate body as a going concern until a
resolution plan is drawn up, in which event the management
is handed over under the plan so that the corporate body is
able to pay back its debts and get back on its feet.  All this is
to be done within a period of 6 months with a maximum
extension of another 90  days or else  the chopper  comes
down and the liquidation process begins .” 
(emphasis supplied)
(emphasis supplied)
The   Court,   however,   was   not   called   upon   to   deal   with   the
specific   issue   that   is   being   considered   in   the   present   cases
namely,   the   scope   of   judicial   review   by   the   adjudicatory
authority   in   relation   to   the   opinion   expressed   by   the   CoC   on
the proposal for approval of the resolution plan.
23. In   Arcelormittal   (supra),   the   Court   adverted   to   the
timelines   specified   in   the   Code   and   the   consequences   thereof
in paragraphs 73 and 74, which read thus: 
“73. The   time   limit   for   completion   of   the   insolvency
resolution process is laid down in Section 12. A period of 180
days from the date of admission of the application is given by
Section 12(1). This is extendable by a maximum period of 90

46
days   only   if   the   Committee   of   Creditors,   by   a   vote   of   66%,
votes to extend the said period, and only if the Adjudicating
Authority is satisfied that such process cannot be completed
within   180   days.   The   authority   may   then,   by   order,   extend
the   duration   of   such   process   by   a   maximum   period   of   90
days   (see   Sections   12(2)   and   12(3)).   What   is   also   of
importance  is the proviso to Section  12(3) which states that
any   extension   of   the   period   Under   Section   12   cannot   be
granted   more   than  once.   This   has   to  be   read   with   the   third
proviso   to   Section   30(4),   which   states   that   the   maximum
period   of   30   days   mentioned   in   the   second   proviso   is
allowable   as   the   only   exception   to   the   extension   of   the
aforesaid period not being granted more than once.
74.  What is important to note is that a consequence is
provided,   in   the   event   that   the   said   period   ends   either
without receipt of a resolution plan or after rejection of a
resolution   plan   under   Section   31.   This   consequence   is
provided  by  Section  33,   which  makes  it  clear  that  when
either   of   these   two   contingencies   occurs,   the   corporate
debtor   is   required   to   be   liquidated   in   the   manner   laid
down in Chapter III. Section 12, construed in the light of
the object sought to be achieved by the Code, and in the
light   of   the   consequence   provided   by   Section   33,
therefore,   makes   it   clear   that   the   periods   previously
mentioned are mandatory and cannot be extended .”
(emphasis supplied)
And   again,   while   dealing   with   the   purport   of   Sections   30,   33
and 61  in paragraph 76, it is observed thus: 
“76. ……………………
(viii) Section 30 is an important provision in that a resolution
applicant   may   submit   a   resolution   plan   to   the   Resolution
Professional,   who   is   then   to   examine   the   said   plan   to   see
that   it   conforms   to   the   requirements   of   Section   30(2).   Once
this plan conforms to such requirements, the plan is then to
be   presented   to   the   Committee   of   Creditors   for   its   approval
under   Section   30(3).   This   can   then   be   approved   by   the
Committee of Creditors by a vote of not less than 66% under

47
Sub­section   (4).   What   is   important   to   note   is   that   the
Committee   of   Creditors   shall   not   approve   a   resolution   plan
where   the   resolution   applicant   is   ineligible   under   Section
29A, and may require the Resolution Professional to invite a
fresh   resolution   plan   where   no   other   resolution   plan   is
available. Once approved by the Committee of Creditors, the
resolution   plan   is   to   be   submitted   to   the   Adjudicating
Authority   under   Section   31   of   the   Code.   It   is   at   this   stage
that   a   judicial   mind   is   applied   by   the   Adjudicating
Authority to the resolution plan so submitted, who then,
after   being   satisfied   that   the   plan   meets   (or   does   not
meet)   the   requirements   mentioned   in   Section   30,   may
either approve or reject such plan.
(ix) An appeal from an order approving such plan is only
on   the   limited   grounds   laid   down   in   Section   61(3).
However,   an   appeal   from   an   order   rejecting   a   resolution
plan would also lie under Section 61.
(x)   As   has   been   stated   hereinbefore,   the   liquidation
process   gets   initiated   under   Section   33   if,   (1)   either   no
resolution   plan   is   submitted   within   the   time   specified
under Section 12, or a resolution plan has been rejected
by   the   Adjudicating   Authority;   (2)   where   the   Resolution
Professional,   before   confirmation   of   the   resolution   plan,
intimates   the   Adjudicating   Authority   of   the   decision   of
the   Committee   of   Creditors   to   liquidate   the   corporate
debtor;  or  (3) where the  resolution plan approved  by  the
Adjudicating   Authority  is  contravened   by  the   concerned
corporate   debtor.   Any   person   other   than   the   corporate
debtor whose interests are prejudicially affected by such
contravention   may   apply   to   the   Adjudicating   Authority,
who   may   then   pass   a   liquidation   order   on   such
application .”
(emphasis supplied)
24. Notably,   the   resolution   plan   concerning   both   the
corporate debtors, namely KS&PIPL and IIL was considered by
the concerned CoC in October 2017, and was approved by less

48
than   75%   of   voting   share   of   the   financial   creditors.   The
inevitable   consequences   thereof   are   to   treat   the   proposed
resolution plan as disapproved or deemed to be rejected by the
dissenting   financial   creditors.   The   expression   ‘dissenting
financial   creditors,   is   defined   in   Regulation   2(1)(f)   of   The
Insolvency   and   Bankruptcy   Board   of   India   (Insolvency
Resolution   Process   for   Corporate   Persons)   Regulations,   2016,
to   mean   the   financial   creditors   who   voted   against   the
resolution   plan   approved   by   the   Committee.   This   definition
came to be amended subsequently w.e.f. 01.01.2018   to mean
the financial creditors who voted against the resolution plan or
abstained from voting for the resolution plan, approved by the
Committee. 
25. Admittedly, in the case of the corporate debtor KS&PIPL,
the resolution plan, when it was put to vote in the meeting of
CoC held on 27 th
 October, 2017, could garner approval of only
55.73%   of   voting   share   of   the   financial   creditors   and   even   if
the   subsequent   approval   accorded   by   email   (by   10.94%)   is
taken   into   account,   it   did   not   fulfill   the   requisite   vote   of   not

49
less than 75% of voting share of the financial creditors. On the
other   hand,   the   resolution   plan   was   expressly   rejected   by
15.15%   in   the   CoC   meeting   and   later   additionally   by   11.82%
by   email.   Thus,  the   resolution   plan   was  expressly  rejected   by
not less than 25% of voting share of the financial creditors. In
such   a   case,   the   resolution   professional   was   under   no
obligation to submit the resolution plan under Section 30(6) of
the   I&B   Code   to   the   adjudicating   authority.   Instead,   it   was   a
case   to   be   proceeded   by   the   adjudicating   authority   under
Section   33(1)   of   the   I&B   Code.     Similarly,   in   the   case   of
corporate   debtor   IIL,   the   resolution   plan   received   approval   of
only   66.57%   of   voting   share   of   the   financial   creditors   and
33.43%   voted   against   the   resolution   plan.   This   being   the
indisputable   position,   NCLAT   opined   that   the   resolution   plan
was deemed to be rejected by the CoC and the concomitant is
to   initiate   liquidation   process   concerning   the   two   corporate
debtors. 
26. According   to   the   resolution   applicant   and   the
stakeholders   supporting   the   concerned   resolution   plan   in

50
respect of the two corporate debtors, the stipulation in Section
30(4)   of   the   I&B   Code   as   applicable   at   the   relevant   time   in
October   2017   is   only   directory   and   not   mandatory.   This
argument   is   founded   on   the   expression   “may”   occurring   in
Section   30(4)   of   the   I&B   Code.   This   argument   does   not
commend   to   us.   In   that,   the   word   “may”   is   ascribable   to   the
discretion of the CoC ­ to approve the resolution plan or not to
approve the same. What is significant is the second part of the
said provision, which stipulates the requisite threshold of “not
less   than   seventy   five   percent   of   voting   share   of   the   financial
creditors” to treat the resolution plan as duly approved by the
CoC.   That   stipulation   is   the   quintessence   and   made
mandatory   for   approval   of   the   resolution   plan.   Any   other
interpretation   would   result   in   rewriting   of   the   provision   and
doing violence to the legislative intent. 
27. It   was   then   contended   that   the   amendment   vide
Insolvency   and   Bankruptcy   Code   Amendment   Act,   2018   (Act
No.8 of 2018, dated 18 th
  January, 2018) w.e.f. 23 rd
  November,
2017   was   to   substitute   the   amended   provision,   which   means

51
that   the   amended   provision   stood   incorporated   as   Section
30(4)   from   the   commencement   of   I&B   Code.   This   argument
will   be   dealt   with   a   little   later   while   considering   the   effect   of
the   amended   provisions.   For   the   present,   we   are   adverting   to
the   provisions   in   the   I&B   Code   and   the   regulations   framed
there under, as were in force   in October 2017, when the CoC
of the concerned corporate debtor was called upon to consider
the proposed resolution plan. 
28. We   may   now   take   note   of   the   provisions   in   the   2016
regulations   framed   under   the   I&B   Code.   Chapter­VI   of   the
regulations   deals   with   general   meetings   of   the   committee.
Chapter­VII   with   matters   relating   to   voting   by   the   committee.
Chapter­VIII   with   the   conduct   of   corporate   insolvency
resolution process and Chapter­X with the resolution plan. As
the issue under consideration is about the conduct of meeting
of   CoC   for   considering   the   proposed   insolvency   resolution
plan,   we   may   usefully   refer   to   the   dispensation   delineated   in
Chapter­VI   and   VII,   in   particular.   Regulation   18   is   about   the
meetings   of   the   committee   to   be   convened   by   the   resolution

52
professional   when   he   considers   necessary   or   upon   the
requisition   given   by   the   members   of   the   committee,
representing   33%   of   the   voting   rights.  Regulation   19   is   about
the notice period for convening such a meeting and Regulation
20   is   about   the   service   of   notice   by   electronic   means.
Regulation 21 is about the contents of the notice for meeting.
Regulation   22   provides   for   the   quorum   at   the   meeting   and
Regulation   23   recognises   participation   of   the   members   of
committee   through   video   conferencing   and   other   audio   visual
means,   as   specified   therein.   In   other   words,   the   members   of
the   committee   need   not   participate   during   voting   propria
persona  or in person but can do so through video conferencing
or   other   audio   or   visual   means.   The   conduct   of   meeting   is
governed by Regulation 24 and the method and procedure for
voting during such meeting is predicated in Regulation 25 and
26.   Regulation   25   is   about   voting   by   the   members   of   the
committee present in the meeting and Regulation 26 is about
the   voting   by   either   electronic   means   or   through   electronic
voting system. 

53
29. Be it noted, these provisions are regarding the conduct of
meetings   of   the   committee   generally   and   including   about   the
method of voting during such meetings. The specific provision
regarding   approval   of   a   resolution   plan   can   be   traced   to
Regulation 39. Regulation 39, as it was in force at the relevant
time in October 2017, read thus: 
“ 39. Approval of resolution plan. ­(1) A resolution applicant
shall   endeavour   to   submit   a   resolution   plan   prepared   in
accordance   with   the   Code   and   these   Regulations   to   the
resolution   professional,   thirty   days   before   expiry   of   the
maximum   period   permitted   under   section   12   for   the
completion of the corporate insolvency resolution process.
(2) The resolution professional shall present all resolution
plans   that   meet   the   requirements   of   the   Code   and   these
Regulations to the committee for its consideration.
(3) The   committee   may   approve   any   resolution   plan   with
such modifications as it deems fit. 
(4) The resolution professional shall submit the resolution
plan   approved   by   the   committee   to   the   Adjudicating
Authority with the certification that:
(a)   the   contents   of   the   resolution   plan   meet   all
the   requirements   of   the   Code   and   the
Regulations; and 
(b) the   resolution   plan   has   been   approved   by
the committee. 
(5) The resolution professional shall forthwith send a copy
of   the   order   of   the   Adjudicating   Authority   approving   or
rejecting   a   resolution   plan   to   the   participants   and   the
resolution applicant. 
(6) A provision in a resolution plan which would otherwise
require   the   consent   of   the   members   or   partners   of   the

54
corporate debtor, as the case may be, under the terms of the
constitutional   documents   of   the   corporate   debtor,
shareholders’   agreement,   joint   venture   agreement   or   other
document   of   a   similar   nature,   shall   take   effect
notwithstanding that such consent has not been obtained.
 
(7) No   proceedings   shall   be   initiated   against   the   interim
resolution professional or the resolution professional, as the
case may be, for any actions of the corporate debtor, prior to
the insolvency commencement date. 
(8) A   person   in   charge   of   the   management   or   control   of
the   business   and   operations   of   the   corporate   debtor   after   a
resolution   plan   is   approved   by   the   Adjudicating   Authority,
may   make   an   application   to   the   Adjudicating   Authority   for
an   order   seeking   the   assistance   of   the   local   district
administration   in   implementing   the   terms   of   a   resolution
plan.” 
 
On a conjoint reading of these provisions it is amply clear that
the stipulation is to reckon the percent of “voting share of the
financial   creditors”,   for   the   purposes   of   determining   as   to
whether   the   proposed   resolution   plan   has   been   approved   by
the  CoC  or  otherwise. When  it comes to  the  method of voting
and for determining the outcome of voting with regard to other
subjects   (other   than   the   approval   of   the   resolution   plan),
discussed in the meeting of the CoC, the same is governed by
Regulation   25   as   applicable   in   October   2017.   The   same   read
thus: 

55
“ 25.   Voting   by   the   committee. ­(1)   the   actions   listed   in
section   28(1)   shall   be   considered   in   meetings   of   the
committee.
(2) Any   action   other   than   those   listed   in   section   28(1)
requiring   approval   of   the   committee   may   be   considered   in
meetings of the committee.
(3) Where   all   members   are   present   in   a   meeting,   the
resolution   professional   shall   take   a   vote   of   the   members   of
the   committee   on  any   item   listed   for   voting   after  discussion
on the same. 
(4) At   the   conclusion   of   a   vote   at   the   meeting,   the
resolution   professional   shall   announce   the   decision
taken on items along with the names of the members of
the committee who voted  for or against the decision, or
abstained from voting. 
(5) If all members are not present at a meeting, a vote
shall   not   be   taken   at   such   meeting   and   the   resolution
professional shall­
(a) circulate the minutes of the meeting by
electronic   means   to   all   members   of   the
committee   within   forty­eight   hours   of   the
conclusion of the meeting; and 
(b) seek   a   vote   on   the   matters   listed   for
voting   in   the   meeting,   by   electronic   voting
system   where   the   voting   shall   be   kept   open
for twenty four hours  from  the  circulation  of
the minutes.”
(emphasis supplied)
Concededly,   Regulations   25   and   39   must   be   read   in   light   of
Section   30(4)   of   the   I&B   Code,   concerning   the   process   of
approval  of  a  resolution   plan.  For  that,  the  “percent  of  voting

56
share of the financial creditors” approving vis­à­vis dissenting
­ is required to be reckoned. It is not on the basis of members
present   and   voting   as   such.   At   any   rate,   the   approving   votes
must   fulfill   the   threshold   percent   of   voting   share   of   the
financial   creditors.   Keeping   this   clear   distinction   in   mind,   it
must follow that the resolution plan concerning the respective
corporate   debtors,   namely,   KS&PIPL   and   IIL,   is   deemed   to
have   been   rejected   as   it   had   failed   to   muster   the   approval   of
requisite threshold votes, of not less than 75% of voting share
of the financial creditors. It is not possible to countenance any
other   construction   or   interpretation,   which   may   run   contrary
to what has been noted herein before. 
30. Thus understood, no fault can be found with the NCLAT
for having recorded the fact that the proposed resolution plan
in respect of both the corporate debtors was approved by vote
of  “less than 75%” of voting share of the financial creditors or
deemed   to   have   been   rejected.   In   that   event,   the   inevitable
corollary   is   to   initiate   liquidation   process   relating   to   the

57
concerned   corporate   debtor,   as   per   Section   33   of   the   I&B
Code. 
31. Indeed,   in   terms   of   Section   31   of   the   I&B   Code,   the
adjudicating   authority   (NCLT)   is   expected   to   deal   with   two
situations.   The   first   is   when   it   does   not   receive   a   resolution
plan   under   sub­section   (6)   of   Section   30   or   when   the
resolution   plan   has   been   rejected   by   the   resolution
professional   for   non­compliance   of   Section   30(2)   of   the   I&B
Code or also when the resolution plan fails to garner approval
of   not   less   than   seventy   five   percent   of   voting   share   of   the
financial   creditors,   as   the   case   may   be;   and   there   is   no
alternate plan mooted before the expiry of the statutory period.
The   second   is   when   a   resolution   plan   duly   approved   by   the
CoC   by   not   less   than   75%   of   voting   share   of   the   financial
creditors   is   submitted   before   it   by   the   resolution   professional
under Section 30(6) of the Code, for its approval.
32. In   the   present   case,   we   are   concerned   with   a   situation
where   in   both   the   resolution   processes   under   consideration,
the   resolution   plan   failed   to   garner   support   of   not   less   than

58
75% of voting share of the financial creditors. That is the first
category   referred   to   above.   In   such   a   situation,   the
adjudicating authority can have no other option but to initiate
liquidation process in terms of Section 33 (1) of the I&B Code.
Section 33 of the I&B  Code as applicable at the relevant time
in October 2017, read thus: 
“ 33. Initiation   of   liquidation. ­(1)   Where   the   Adjudicating
Authority,­
(a) before   the   expiry   of   the   insolvency
resolution   process   period   or   the   maximum
period permitted for  completion of the corporate
insolvency   resolution   process   under   section   12
or the fast track corporate insolvency resolution
process   under   section   56,   as   the   case   may   be,
does   not   receive   a   resolution   plan   under   sub­
section (6) of section 30; or 
(b)   rejects   the   resolution   plan   under   section   31
for   the   non­compliance   of   the   requirements
specified therein,
 
It shall­
(i) pass   an   order   requiring   the   corporate
debtor   to   be   liquidated   in   the   manner   as   laid
down in this Chapter;
(ii) issue   a   public   announcement   stating  that
the corporate debtor is in liquidation; and 
(iii) require   such   order   to   be   sent   to   the
authority   with   which   the   corporate   debtor   is
registered.
(2) Where   the   resolution   professional,   at   any   time   during
the   corporate   insolvency   resolution   process   but   before
confirmation   of   resolution   plan,   intimates   the   Adjudicating

59
Authority   of   the   decision   of   the   committee   of   creditors   to
liquidate   the   corporate   debtor,   the   Adjudicating   Authority
shall pass a liquidation order as referred to in sub­clauses (i)
(ii) and (iii) of clause (b) of sub­section (1).
(3) Where   the   resolution   plan   approved   by   the
Adjudicating   Authority   is   contravened   by   the   concerned
corporate   debtor,   any   person   other   than   the   corporate
debtor,   whose   interests   are   prejudicially   affected   by   such
contravention, may  make an application to the Adjudicating
Authority for a liquidation order as referred to in sub­clauses
(i), (ii) and (iii) of clause (b) of sub­section (1). 
(4) On   receipt   of   an   application   under   sub­section   (3),   if
the   Adjudicating   Authority   determines   that   the   corporate
debtor has contravened the provisions of the resolution plan,
it shall pass a liquidation order as referred to in sub­clauses
(i), (ii) and (iii) of clause (b) of sub­section (1).
(5) Subject   to   section   52,   when   a   liquidation   order   has
been   passed,   no   suit   or   other   legal   proceeding   shall   be
instituted by or against the corporate debtor:
Provided   that   a   suit   or   other   legal   proceeding   may   be
instituted   by   the   liquidator,   on   behalf   of   the   corporate
debtor, with the prior approval of the Adjudicating Authority.
(6) The   provisions   of   sub­section   (5)   shall   not   apply   to
legal proceedings in relation to such transactions as may be
notified by the Central Government in consultation with any
financial sector regulator. 
(7) The   order   for   liquidation   under   this   section   shall   be
deemed to be a notice of discharge to the officers, employees
and   workmen   of   the   corporate   debtor,   except   when   the
business   of   the   corporate   debtor   is   continued   during   the
liquidation process by the liquidator.”  
33. As aforesaid, upon receipt of a “rejected” resolution plan
the   adjudicating   authority   (NCLT)   is   not   expected   to   do

60
anything   more;   but   is   obligated   to   initiate   liquidation   process
under   Section   33(1)   of   the   I&B   Code.   The   legislature   has   not
endowed   the   adjudicating   authority   (NCLT)   with   the
jurisdiction or authority to analyse or evaluate the commercial
decision   of   the   CoC   muchless   to   enquire   into   the   justness   of
the rejection of the resolution plan by the dissenting financial
creditors.   From   the   legislative   history   and   the   background   in
which   the   I&B   Code   has   been   enacted,   it   is   noticed   that   a
completely   new   approach   has   been   adopted   for   speeding   up
the recovery of the debt due from the defaulting companies. In
the   new   approach,   there   is   a   calm   period   followed   by   a   swift
resolution   process   to   be   completed   within   270   days   (outer
limit)   failing   which,   initiation   of   liquidation   process   has   been
made   inevitable   and   mandatory.   In   the   earlier   regime,   the
corporate   debtor   could   indefinitely   continue   to   enjoy   the
protection   given   under   Section   22   of   Sick   Industrial
Companies Act, 1985   or under other such enactments which
has   now   been   forsaken.   Besides,   the   commercial   wisdom   of
the CoC has been given paramount status without any judicial

61
intervention,   for   ensuring   completion   of   the   stated   processes
within   the   timelines   prescribed   by   the   I&B   Code.   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   on   the   basis   of   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   the   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.   That   is   made   non­
justiciable. 
34. In the report of the Bankruptcy Law Reforms Committee
of   November   2015,   primacy   has   been   given   to   the   CoC   to
evaluate   the   various   possibilities   and   make   a   decision.   It   has
been observed thus: 
“The key economic question in the bankruptcy process

62
When a firm (referred to as the corporate debtor in the draft
law)   defaults,   the   question   arises   about   what   is   to  be   done.
Many   possibilities   can   be   envisioned.   One   possibility   is
to   take   the   firm   into   liquidation.   Another   possibility   is
to   negotiate   a   debt   restructuring,   where   the   creditors
accept   a   reduction   of   debt   on   an   NPV   basis,   and   hope
that   the   negotiated   value   exceeds   the   liquidation   value.
Another possibility is to sell the firm as a going concern
and   use   the   proceeds   to   pay   creditors.   Many   hybrid
structures of these broad categories can be envisioned.
The   Committee   believes   that   there   is   only   one   correct
forum   for   evaluating   such   possibilities,   and   making   a
decision:   a   creditors   committee,   where   all   financial
creditors   have   votes   in   proportion   to   the   magnitude   of
debt   that   they   hold.   In   the   past,   laws   in   India   have
brought   arms   of   the   Government   (legislature,   executive
or   judiciary)   into   this   question.   This   has   been   strictly
avoided   by   the   Committee.   The   appropriate   disposition
of a defaulting firm is a business decision, and only the
creditors should make it    . ”
  (emphasis supplied)
The report also highlights that having timelines is the essence
of   the   resolution   process.   It   then   refers   to   the   principles
driving the design of the new insolvency bankruptcy resolution
frame work. While dealing with this aspect, it is noted that the
Code   would   facilitate   the   assessment   of   the   viability   of   the
enterprise   at   a   very   early   stage.   The   relevant   extract   of   the
report reads thus:
“Principles driving the design

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The   Committee   chose   the   following   principles   to   design
the   new   insolvency   and   bankruptcy   resolution
framework:
I.   The Code will facilitate the assessment of viability of
the enterprise at a very early stage .
(1) The law must explicitly state that the viability of the
enterprise   is   a   matter   of   business,   and   that   matters   of
business   can   only   be   negotiated   between   creditors   and
debtor.   While   viability   is   assessed   as   a   negotiation
between   creditors   and   debtor,   the   final   decision   has   to
be an agreement among creditors who are the financiers
willing to bear the loss in the insolvency.
(2)   The   legislature   and   the   courts   must   control   the
process   of   resolution,   but   not   be   burdened   to   make
business decisions.
(3)   The   law   must   set   up   a   calm   period   for   insolvency
resolution where the debtor can negotiate in the assessment
of   viability   without   fear   of   debt   recovery   enforcement   by
creditors.
(4)   The   law   must   appoint   a   resolution   professional   as   the
manager   of   the   resolution   period,   so   that   the   creditors   can
negotiate the assessment of viability with the confidence that
the debtors will not take any action to erode the value of the
enterprise.   The   professional   will   have   the   power   and
responsibility   to   monitor   and   manage   the   operations   and
assets   of   the   enterprise.   The   professional   will   manage   the
resolution process of negotiation to ensure balance of power
between   the   creditors   and   debtor,   and   protect   the   rights   of
all   creditors.   The   professional   will   ensure   the   reduction   of
asymmetry   of   information   between   creditors   and   debtor   in
the resolution process.
……………………
IV.  The Code will ensure a collective process .
(9)   The   law   must   ensure   that   all   key   stakeholders   will
participate   to   collectively   assess   viability .   The   law   must
ensure   that   all   creditors   who   have   the   capability   and   the
willingness to restructure their liabilities must be part of the
negotiation   process.   The   liabilities   of   all   creditors   who   are
not  part of the negotiation  process  must  also be  met  in  any
negotiated solution.
V.  The Code will respect the rights of all creditors equally .

64
(10)   The   law   must   be   impartial   to   the   type   of   creditor   in
counting   their   weight   in   the   vote   on   the   final   solution   in
resolving insolvency.
VI.   The  Code  must   ensure  that, when  the   negotiations   fail   to
establish   viability,   the   outcome   of   bankruptcy   must   be
binding .
(11)   The   law   must   order   the   liquidation   of   an   enterprise
which   has   been   found   unviable.   This   outcome   of   the
negotiations   should   be   protected   against   all   appeals   other
than for very exceptional cases.
…”
(emphasis   supplied)
35. Whereas,   the   discretion   of   the   adjudicating   authority
(NCLT)   is   circumscribed   by   Section   31   limited   to   scrutiny   of
the   resolution   plan   “as   approved”   by   the   requisite   percent   of
voting   share   of   financial   creditors.   Even   in   that   enquiry,   the
grounds   on   which   the   adjudicating   authority   can   reject   the
resolution   plan   is   in   reference   to   matters   specified   in   Section
30(2), when the resolution plan does not conform to the stated
requirements.   Reverting   to   Section   30(2),   the   enquiry   to   be
done is in respect of whether the resolution plan provides : (i)
the   payment   of   insolvency   resolution   process   costs   in   a
specified manner in priority to the repayment of other debts of
the   corporate   debtor,     (ii)   the   repayment   of   the   debts   of

65
operational   creditors   in   prescribed   manner,     (iii)   the
management   of   the   affairs   of   the   corporate   debtor,   (iv)   the
implementation   and   supervision   of   the   resolution   plan,   (v)
does   not   contravene   any   of   the   provisions   of   the   law   for   the
time   being   in   force,   (vi)   conforms   to   such   other   requirements
as   may   be   specified   by   the   Board.   The   Board   referred   to   is
established   under   Section   188   of   the   I&B   Code.   The   powers
and   functions   of   the   Board   have   been   delineated   in   Section
196   of   the   I&B   Code.   None   of   the   specified   functions   of   the
Board, directly or  indirectly, pertain to regulating the manner
in   which   the   financial   creditors   ought   to   or   ought   not   to
exercise   their   commercial   wisdom   during   the   voting   on   the
resolution   plan   under   Section   30(4)   of   the   I&B   Code.   The
subjective satisfaction  of  the  financial  creditors  at  the  time  of
voting is bound to be a mixed baggage of variety of factors. To
wit, the feasibility and viability of the proposed resolution plan
and including their perceptions about the general capability of
the  resolution  applicant  to  translate  the projected plan  into  a
reality.   The   resolution   applicant   may   have   given   projections

66
backed   by   normative   data   but   still   in   the   opinion   of   the
dissenting   financial   creditors,  it  would   not   be   free   from  being
speculative. These aspects are completely within the domain of
the   financial   creditors   who   are   called   upon   to   vote   on   the
resolution plan under Section 30(4) of the I&B Code. 
36. For the same reason, even the jurisdiction of the NCLAT
being   in   continuation   of   the   proceedings   would   be
circumscribed in that regard and more particularly on account
of   Section   32   of   the   I&B   Code,   which   envisages   that   any
appeal from an order approving the resolution plan shall be in
the   manner   and   on   the   grounds   specified   in   Section   61(3)   of
the I&B Code. Section 61(3) of the I&B Code reads thus: 
 “ 61. Appeals and Appellate Authority. ­(1) Notwithstanding
anything   to   the   contrary   contained   under   the   Companies
Act, 2013 (18 of 2013), any person aggrieved by the order of
the   Adjudicating   Authority   under   this   part   may   prefer   an
appeal to the National Company Law Appellate Tribunal.
  
(2) xxx xxx xxx
(3)   An   appeal   against   an   order   approving   a   resolution   plan
under   section   31   may   be   filed   on   the   following   grounds,
namely:­
(i)   the   approved   resolution   plan   is   in
contravention of the provisions of any law for the
time being in force;

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(ii)   there   has   been   material   irregularity   in
exercise   of   the   powers   by   the   resolution
professional   during   the   corporate   insolvency
resolution period;
(iii) the debts owed to operational creditors of the
corporate   debtor   have   not   been   provided   for   in
the   resolution   plan   in   the   manner   specified   by
the Board;
(iv)  the  insolvency  resolution  process  costs  have
not been provided for repayment in priority to all
other debts; or 
(v) the resolution plan does not comply with any
other criteria specified by the Board.
xxx xxx xxx.” 
37. On   a   bare   reading   of   the   provisions   of   the   I&B   Code,   it
would appear that the remedy of appeal under Section 61(1) is
against an “order passed by the adjudicating authority (NCLT)”
–   which   we   will   assume   may   also   pertain   to   recording   of   the
fact that the proposed resolution plan has been rejected or not
approved by a vote of not less than 75% of voting share of the
financial   creditors.   Indubitably,   the   remedy   of   appeal
including   the   width   of   jurisdiction   of   the   appellate   authority
and   the   grounds   of   appeal,   is   a   creature   of   statute.   The
provisions investing jurisdiction and authority in the NCLT or

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NCLAT   as   noticed   earlier,   has   not   made   the   commercial
decision exercised by the CoC  of not approving  the resolution
plan   or   rejecting   the   same,   justiciable.   This   position   is
reinforced from the limited grounds specified for instituting an
appeal that too against an order “approving a resolution plan”
under Section 31. First, that the approved resolution plan is in
contravention of the provisions of any law for the time being in
force. Second, there has been material irregularity  in exercise
of powers “by the resolution professional” during the corporate
insolvency   resolution   period.   Third,   the   debts   owed   to
operational   creditors   have   not   been   provided   for   in   the
resolution   plan   in   the   prescribed   manner.   Fourth,   the
insolvency   resolution   plan   costs   have   not   been   provided   for
repayment   in   priority   to   all   other   debts.   Fifth,   the   resolution
plan   does   not   comply   with   any   other   criteria   specified   by   the
Board.   Significantly,   the   matters   or   grounds   ­   be   it   under
Section   30(2)   or   under   Section   61(3)   of   the   I&B   Code   ­   are
regarding testing the validity of the “approved” resolution plan
by   the   CoC;   and   not   for   approving   the   resolution   plan   which

69
has been disapproved or deemed to have been rejected by the
CoC in exercise of its business decision.   
38. Indubitably,   the   inquiry   in   such   an   appeal   would   be
limited to the power exercisable by the resolution professional
under   Section   30(2)   of   the   I&B   Code   or,   at   best,   by   the
adjudicating   authority   (NCLT)   under   Section   31(2)   read   with
31(1) of the I&B Code. No other inquiry would be permissible.
Further,   the   jurisdiction   bestowed   upon   the   appellate
authority   (NCLAT)   is   also   expressly   circumscribed.   It   can
examine the challenge only in relation to the grounds specified
in   Section   61(3)   of   the   I&B   Code,   which   is   limited   to   matters
“other than” enquiry into the autonomy or commercial wisdom
of   the   dissenting   financial   creditors.   Thus,   the   prescribed
authorities   (NCLT/NCLAT)   have   been   endowed   with   limited
jurisdiction   as   specified   in   the   I&B   Code   and   not   to   act   as   a
court of equity or exercise plenary powers.
39. In our view, neither the adjudicating authority (NCLT) nor
the   appellate   authority   (NCLAT)   has   been   endowed   with   the
jurisdiction   to   reverse   the   commercial   wisdom   of   the

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dissenting   financial   creditors   and   that   too   on   the   specious
ground   that   it   is   only   an   opinion   of   the   minority   financial
creditors.   The   fact   that   substantial   or   majority   percent   of
financial   creditors   have   accorded   approval   to   the   resolution
plan would be of no avail, unless the approval is   by a vote of
not   less   than   75%   (after   amendment   of   2018   w.e.f.
06.06.2018, 66%) of voting share of the financial creditors. To
put   it   differently,   the   action   of   liquidation   process   postulated
in Chapter­III of the I&B Code, is avoidable, only if approval of
the   resolution   plan   is   by   a   vote   of   not   less   than   75%   (as   in
October,   2017)   of   voting   share   of   the   financial   creditors.
Conversely,   the   legislative   intent   is   to   uphold   the   opinion   or
hypothesis of the minority  dissenting  financial creditors. That
must prevail, if it is not less than the specified percent (25% in
October,   2017;   and   now   after   the   amendment   w.e.f.
06.06.2018,   44%).     The   inevitable   outcome   of   voting   by   not
less   than   requisite   percent   of   voting   share   of   financial
creditors   to   disapprove   the   proposed   resolution   plan,   de   jure ,
entails in its deemed rejection. 

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40. Notably,   the   threshold   of   voting   share   of   the   dissenting
financial   creditors   for   rejecting   the   resolution   plan   is   way
below   the   simple   majority   mark,   namely   not   less   than   25%
(and even after amendment w.e.f. 06.06.2018, 44%). Thus, the
scrutiny of the resolution plan is required to pass through the
litmus  test   of  not   less  than   requisite   (75%  or   66%  as   may   be
applicable)   of   voting   share   ­   a   strict   regime.   That   means   the
resolution plan must appear, to not less than requisite voting
share of the financial creditors, to be an overall credible plan,
capable of achieving timelines specified in the Code generally,
assuring   successful   revival   of   the   corporate   debtor   and
disavowing endless speculation. 
41. The   counsel   appearing   for   the   resolution   applicant   and
the   stakeholders   supporting   the   resolution   plan   of   the
concerned   corporate   debtor,   were   at   pains   to   persuade   us   to
take   a   view   that   voting   by   the   dissenting   financial   creditors
suffers   from   the   vice   of   being   unreasonable,   irrational,
unintelligible   and   an   abuse   of   exercise   of   power.   The   power
bestowed   on   the   financial   creditors   to   cast   their   vote   under

72
Section   30(4)   is   coupled   with   a   duty   to   exercise   that   power
with   utmost   care,   caution   and   reason,   keeping   in   mind   the
legislative   intent   and   the   spirit   of   the   I&B   Code   ­   fullest
attempt   should   be   made   to   revive   the   corporate   debtors   and
not   to   mechanically   shove   them   to   the   brink   of   liquidation
process,   which   has   the   inevitable   impact   on   larger   public
interests and the stakeholders in particular, including workers
associated with the company. 
42. The argument, though attractive at the first blush, but if
accepted,   would   require   us   to   re­write   the   provisions   of   the
I&B   Code.   It   would   also   result   in   doing   violence   to   the
legislative intent of having consciously not stipulated that as a
ground   ­   to   challenge   the   commercial   wisdom   of   the   minority
(dissenting)   financial   creditors.   Concededly,   the   process   of
resolution plan is necessitated in respect of corporate debtors
in   whom   their   financial   creditors   have   lost   hope   of   recovery
and   who   have   turned   into   non­performer   or   a   chronic
defaulter.   The   fact   that   the   concerned   corporate   debtor   was
still   able   to   carry   on   its   business   activities   does   not   obligate

73
the financial creditors to postpone the recovery of the debt due
or   to   prolong   their   losses   indefinitely.   Be   that   as   it   may,   the
scope   of   enquiry   and   the   grounds   on   which   the   decision   of
“approval” of the resolution plan by the CoC can be interfered
with by the adjudicating authority (NCLT), has been set out in
Section   31(1)   read   with   Section   30(2)   and   by   the   appellate
tribunal  (NCLAT)  under   Section   32   read   with  Section   61(3)   of
the I&B Code. No corresponding provision has been envisaged
by   the   legislature   to   empower   the   resolution   professional,   the
adjudicating  authority   (NCLT)  or  for  that  matter  the  appellate
authority (NCLAT), to reverse the “commercial decision” of the
CoC   muchless   of   the   dissenting   financial   creditors   for   not
supporting   the   proposed   resolution   plan.   Whereas,   from   the
legislative   history   there   is   contra   indication   that   the
commercial or business decisions of the financial creditors are
not   open   to   any   judicial   review   by   the   adjudicating   authority
or the appellate authority. 
43. It was argued that the dissenting financial creditors have
not   assigned   any   reason   for   recording   their   dissent   and

74
therefore,   their   action   is   vitiated.   As   per   the   provisions
applicable at the relevant time in October 2017, there was no
requirement   of   recording   reasons   for   the   dissent.   That
requirement   has   been   introduced   by   an   amendment   to   the
regulations effected in 2018 w.e.f. 4 th
 July, 2018. Whether that
amendment   is   prospective   or   has   retrospective   effect   is   a
matter which will be considered a little later. 
44. Suffice   it   to   observe   that   in   the   I&B   Code   and   the
regulations framed thereunder as applicable in October 2017,
there   was   no   need   for   the   dissenting   financial   creditors   to
record reasons for disapproving or rejecting a resolution plan.
Further,   as   aforementioned,   there   is   no   provision   in   the   I&B
Code   which   empowers   the   adjudicating   authority   (NCLT)   to
oversee the justness of the approach of the dissenting financial
creditors in rejecting the proposed resolution plan or to engage
in   judicial   review   thereof.   Concededly,   the   inquiry   by   the
resolution   professional   precedes   the   consideration   of   the
resolution plan by the CoC. The resolution professional is not
required to express his opinion on matters within the domain

75
of   the   financial   creditor(s),   to   approve   or   reject   the   resolution
plan,   under   Section   30(4)   of   the   I&B   Code.     At   best,   the
Adjudicating   Authority   (NCLT)  may   cause  an   enquiry   into   the
“approved”   resolution   plan   on   limited   grounds   referred   to   in
Section   30(2)   read   with   Section   31(1)   of   the   I&B   Code.     It
cannot make any other  inquiry nor  is competent to issue any
direction   in   relation   to   the   exercise   of   commercial   wisdom   of
the   financial   creditors   ­   be   it   for   approving,   rejecting   or
abstaining,   as   the   case   may   be.   Even   the   inquiry   before   the
Appellate   Authority   (NCLAT)   is   limited   to   the   grounds   under
Section   61(3)   of   the   I&B   Code.   It   does   not   postulate
jurisdiction   to   undertake   scrutiny   of   the   justness   of   the
opinion   expressed  by   financial  creditors  at  the   time  of  voting.
To   take   any   other   view   would   enable   even   the   minority
dissenting financial creditors to question the logic or justness
of   the   commercial   opinion   expressed   by   the   majority   of   the
financial creditors albeit by requisite percent of voting share to
approve the resolution  plan;  and in the  process authorize the
adjudicating   authority   to   reject   the   approved   resolution   plan

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upon   accepting   such   a   challenge.   That   is   not   the   scope   of
jurisdiction vested in the adjudicating authority under Section
31   of   the   I&B   Code   dealing   with   approval   of   the   resolution
plan. 
45. To  put it  differently, since none  of the  grounds available
under   Section   30(2)   or   Section   61(3)   of   the   I&B   Code   are
attracted   in   the   fact   situation   of   the   present   case,   the
Adjudicating   Authority   (NCLT)   as   well   as   the   Appellate
Authority  (NCLAT)  had  no  other  option  but  to record that  the
proposed   resolution   plan   concerning   the   respective   corporate
debtor   (KS&PIPL   and   IIL)   stood   rejected.   Further,   as   no
alternative   resolution   plan   was   approved   by   the   requisite
percent   of   voting   share   of   the   financial   creditors   before   the
expiry of the statutory period of 270 days, the inevitable sequel
is   to   pass   an   order   directing   initiation   of   liquidation   process
against   the   concerned   corporate   debtor   in   the   manner
specified in Chapter III of the I&B Code.
46. Realising   this   position,   the   resolution   applicant   and   the
stakeholders   supporting   the   proposed   resolution   plan   of   the

77
concerned   corporate   debtors,   would   contend   that   the   NCLAT
has failed to give effect to the amended provisions which came
into   effect   from   23 rd
  day   of   November,   2017   and   the   second
amendment   from   6 th
  June,   2018   to   Section   30(4)   of   the   I&B
Code   in   particular.   According   to   them,   the   said   amendment
ought   to   be   given   retrospective   effect   and   in   any   case,   being
retroactive   in   nature,   ought   to   govern   the   proceedings   before
the   NCLAT   where   the   appeal   was   pending   for   consideration.
For   considering   this   submission,   we   may   advert   to   the
Insolvency   and   Bankruptcy   Code   (Amendment)   Act,   2017
(No.8 of 2018) which is deemed to have come into force on the
23 rd
  day  of  November, 2017.  Section  6 of  this  Act purports to
substitute   Section   30(4)   of   the   principal   Act.   The   amended
sub­section (4) reads thus:
“ 6.   In section 30 of the principal Act, for sub­section (4), the
following sub­section shall be substituted, namely:­
(4) The committee of creditors may approve a resolution plan
by   a   vote   of   not   less   than   seventy­five   per   cent.   of   voting
share   of   the   financial   creditors,   after   considering   its
feasibility and viability, and such other requirements as may
be specified by the Board:
Provided   that   the   committee   of   creditors   shall   not
approve   a   resolution   plan,   submitted   before   the
commencement   of   the   Insolvency   and   Bankruptcy   Code
(Amendment)   Ordinance,   2017,   where   the   resolution
applicant is ineligible under section 29A and may require the

78
resolution   professional   to   invite   a   fresh   resolution   plan
where no other resolution plan is available with it:
Provided   further   that   where   the   resolution   applicant
referred to in the first proviso is ineligible under clause (c) of
section 29A, the resolution applicant shall be allowed by the
committee   of   creditors   such   period,   not   exceeding   thirty
days,   to   make   payment   of   overdue   amounts   in   accordance
with the proviso to clause (c) of section 29A:
Provided also that nothing in the second proviso shall
be   construed   as   extension   of   period   for   the   purposes   of   the
proviso   to   sub­section   (3)   of   section   12,   and   the   corporate
insolvency   resolution   process   shall   be   completed   within   the
period specified in that sub­section.”.
47. The   change   brought   about   by   this   amendment   is
insertion   of   words   “after   considering   its   feasibility   and
viability, and such other requirements as may be specified by
the   Board”.   In   addition,   three   provisos   have   been   added   to
sub­section (4).   For considering the issue on hand, the three
provisos are not relevant. As regards the insertion of the above
quoted   words   in   sub­section   (4),   that   does   not   alter   the
requirement regarding approval of a resolution plan, by a vote
of not less than 75% of voting share of the financial creditors.
The  amendment  is only   to  declare that the  financial  creditors
ought   to   consider   the   feasibility   and   viability   and   such   other
requirements   as   may   be   specified   by   the   Board,   while
exercising   their   option   on   the   resolution   plan   ­   to   approve   or

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not   to   approve   the   same.   It   is   rudimentary   that   the   financial
creditors (in most cases are national Bankers), who are called
upon to consider the proposed resolution plan would take into
account all the relevant materials, including the feasibility and
viability   and   such   other   requirements   as   may   be   specified   by
the   Board.   Additionally,   the   financial   creditors   are   also
required to bear in mind that the legislative intent is to bring
about resolution  and revival  of the corporate debtors so  as to
benefit   not   only   the   corporate   debtor   but   also   other   stake­
holders in equal measure. 
48. Suffice   it   to   observe   that   the   amended   provision   merely
restates as to what the financial creditors are expected to bear
in mind whilst expressing their choice during consideration of
the proposal for approval of a resolution plan. No more and no
less. Indubitably, the legislature has consciously not provided
for   a   ground   to   challenge   the   justness   of   the   “commercial
decision” expressed by the financial creditors – be it to approve
or   reject   the   resolution   plan.   The   opinion   so   expressed   by
voting   is   non­justiciable.   Further,   in   the   present   cases,   there

80
is nothing to indicate as to which other requirements specified
by the Board at the relevant time have not been fulfilled by the
dissenting   financial   creditors.   As   noted   earlier,   the   Board
established   under   Section   188   of   the   I&B   Code   can   perform
powers and functions specified in Section 196 of the I&B Code.
That  does not  empower  the  Board to  specify  requirements for
exercising   commercial   decisions   by   the   financial   creditors   in
the   matters   of   approval   of   the   resolution   plan   or   liquidation
process.   Viewed   thus,   the   amendment   under   consideration
does not take the matter any further.
  
49. We may not be understood to have expressed any opinion
either way about the effect of the three provisos introduced by
the same amendment to Section 30(4) ­ as to whether it would
have retrospective or retroactive effect.  That question does not
arise   for   consideration   in   these   appeals.   Our   discussion   is
restricted   to   the  efficacy   of   the   amendment   to   main   provision
viz.,   Section   30(4),   whereby   the   above   quoted   words   (“after
considering   feasibility   and   viability,   and   such   other

81
requirements   as   may   be   specified   by   the   Board”)   have   been
inserted. 
50. The   learned   counsel   for   the   resolution   applicant   and
other   stakeholders   supporting   the   resolution   plan   of   the
concerned     creditors,   next   relied   upon   the   amendment   to
Section 30(4) which has come into force w.e.f. 6 th
 day of June,
2018   vide     the   Insolvency   and   Bankruptcy   Code   (Second
Amendment) Act, 2018 (No.8 of 2018). Vide section 23(iii)(a) of
the   said   amendment   Act,   the   word   “seventy­five”     in   sub­
section   (4)   of   Section   30   has   been   substituted   by   the   word
“sixty­six”.     Taking   clue   from   this   amendment,   it   was   argued
that   since   the   amendment   substitutes   the   threshold
requirement   of   75%   to   66%   and   since   the   same   has   been
brought into force when appeals were pending, the NCLAT was
obliged   to   consider   its   effect   on   the   present   cases.   Further,
being   substitution,   it   must   be   assumed   that   the   amended
provision was always there from the beginning of the Code.
 
51. We are not impressed by this submission. In our opinion,
by this amendment,   a new norm  and qualifying  standard for

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approval   of   a   resolution   plan     has   been   introduced.   That
cannot   be   treated   as   a   declaratory/clarificatory   or   stricto
sensu   procedural   matter   as   such.   Whereas,   the   stated
Amendment   Act   makes   it   expressly   clear   that   it   shall   be
deemed to have come into force on the 6 th
  day of June, 2018.
Thus, by mere use of expression “substituted” in Section 23(iii)
(a)   of   the   Amendment   Act   of   2018,   it   would   not   make   the
provision   retrospective   in   operation   or   having   retroactive
effect. This interpretation is reinforced by the fact that there is
no   indication   in   the   Amendment   Act   of   2018   that   the
legislature   intended   to   undo   and/or   govern   the   decisions
already   taken   by   the   CoC   of   the   concerned   corporate   debtors
prior to 6­06­2018.
 
52. Our  attention was invited to the report of the Insolvency
Law Committee of March, 2018. Even the said report does not
mention   about   introducing   the   amendment   to   Section   30(4),
regarding   the   threshold   requirement   with   retrospective   or
retroactive   effect.   Indeed,   the   report   has   noted   about   the
necessity to alter the low threshold level of 25% of voting share

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for   rejection   of   the   resolution   plan   which,   it   felt,   should   be
increased to 44%.  It may be useful to reproduce paragraph 11
of   the   said   report   dealing   with   voting   share   threshold   for
decisions of the CoC, which reads thus:
“ 11.VOTING   SHARE   THRESHOLD   FOR   DECISIONS   OF
THE COC
11.1  Section 21(8) of the Code provides that all decisions of
the CoC shall be taken by a vote of not less than 75 percent
of the voting share of the financial creditors. Regulation 25(5)
read   with   regulation   26   of   the   CIRP   Regulations   provides
that if all members of the CoC are not present, an option to
vote through electronic means must be provided.
11.2  It   was   represented   to   the   Committee   that   the   high
threshold of 75 percent of voting share of financial creditors
for   decisions   of   the   CoC   was   proving   to   be   a   road­block   in
the   resolution   process.   Effectively,   as   a   result   of   the   high
threshold,   blocking   the   resolution   plan   and   other   decisions
of the CoC, was easier than approving these.
11.3  The Committee considered the fact that, so far, various
benches   of   the   NCLT   have   passed   liquidation   orders   in   30
cases.   76   Out   of   these   30   cases,   only   nine   cases   went   into
liquidation on account of rejection by the CoC. Further, only
in one case, a liquidation order was passed owing to lack of
consensus   of   75   percent   financial   creditors   for   approval   of
the   resolution   plan.   77   In   respect   of   the   remaining   eight
cases, the plan was rejected by an overwhelming majority of
voting   share   above   80   percent.   Thus,   empirical   evidence
suggests that the apprehension that companies are being
put into liquidation by minority creditors is pre­mature.
The Committee reiterated that the objective of the Code
is to respect the commercial wisdom of the CoC.

84
11.4 The Committee noted the voting thresholds across other
statutes   and   guidelines   that   deal/have   dealt   with
rehabilitation of companies as follows:
(a)   Section   230(6)   of   the   CA   2013   which   deals   with
power   to   compromise   or   make   arrangements   with   creditors
and members provides that any compromise or arrangement
must be approved by 75 percent in value of creditors or class
of   creditors   or   members   or   class   of   members,   as   the   case
maybe.
(b)   Section   262   of   the   CA   201378   provided   for   a
scheme   of   rehabilitation   which   required   approval   by   (i)
secured   creditors   representing   75   percent   in   value   of   the
debts   owed   by   the   company   to   such   creditors;   and   (ii)
unsecured   creditors   representing   25   percent   in   value   of   the
amount   of  debt   owed  to them.  Further,  in  case  of  voluntary
winding   up,   section   311   of   the   CA   2013   provided   for
replacement   of   the   company   liquidator   by   approval   of   75
percent   of   creditors   or   75   percent   of   members   of   the
company.79
(c)   The   Joint   Lender’s   Forum   (“JLF”)   framework
formulated   by   the   RBI   (which   has   now   been   replaced)   to
enable   creditors   to  identify   and   deal  with   stressed   assets   at
an   early   stage   prescribed   a   voting   threshold   of   60   percent
(reduced   from   75   percent)   of   creditors   by   value   and   50
percent (reduced from 60 percent) of creditors by number in
the   JLF,   for   proceeding   with   the   restructuring   of   the
account.80
(d)   Section   13(9)   of   the   Securitisation   and
Reconstruction   of   Financial   Assets   and   Enforcement   of
Security   Interest   Act,   2002   provided   that   in   the   case   of
financing   of   a   financial   asset   by   more   than   one   secured
creditors   or   joint   financing   of   a   financial   asset   by   secured
creditors,   no   secured   creditor   would   be   entitled   to   exercise
any   or   all   of   the   rights   conferred   on   her   under   the   relevant
law   (such   as   taking   possession   of   the   secured   asset   or
takeover the management of the borrower) unless exercise of

85
such   right   was   agreed   upon   by   secured   creditors
representing   not   less   than   60   percent   (reduced   from   75
percent)   81   in   value   of   the   amount   outstanding   as   on   a
record  date  and  such  action  was binding   on all the  secured
creditors.
 11.5 The   Committee   also   noted   that   globally,
bankruptcy   laws   prescribe   different   voting   thresholds   for
decisions of the CoC. In USA, approval of a plan requires 66
percent   or   more   voting   share   in   value   and   50   percent   or
more   voting   share   in   number   for   each   class   of   creditors.82
The   position   is   similar   in   Canada,   however,   such
requirement   applies   to  each   class  of  unsecured   creditors.83
In the UK, approval of a plan under administration requires
a   simple   majority   in   value   of   the   creditors   present   and
voting.   While   such   threshold   is   higher   in   Singapore   as   the
requirement therein is to obtain 75 percent or more of voting
share   by   value   and   more   than   50   percent   voting   share   in
number   of   creditors   present   and   voting,   for   approval   of   the
plan.84   The   Committee   was   of   the   view   a   higher   threshold
with   the   present   and   voting   requirement,   or   a   lower
threshold   sans   the   present   and   voting   requirement,   may   be
adopted.
11.6    After   due   deliberation   and   factoring   in   the
experience   of   past   restructuring   laws   in   India   and
international   best   practices,   the   Committee   agreed   that
to   further   the   stated   object   of   the   Code   i.e.   to   promote
resolution,   the   voting   share   for   approval   of   resolution
plan and other critical decisions may be reduced from 75
percent to 66 percent or more of the voting share of the
financial   creditors.   In   addition   to   approval   of   the
resolution   plan   under   section   30(4),   other   critical
decisions   are   extension   of   the   CIRP   beyond   180   days
under   section   12(2),   replacement   or   appointment   of   RP
under  sections   22(2)   and   27(2),   and  passing   a  resolution
for liquidation  under  section  33(2)  of  the  Code.  Further,
for approval of the other routine decisions for continuing

86
the   corporate   debtor   as   going   concern   by   the   IRP/RP,
the voting share threshold may be reduced to 51 percent
or more of the voting share of the financial creditors. ”  
(emphasis in para 11.3 supplied)
53. Significantly,   the   report   mentions   that   the   empirical
record   suggests   that   the   apprehension   regarding   companies
are   being   put   into   liquidation   by   minority   creditors   is   pre­
mature and further that the objective of the Code is to respect
the   commercial   wisdom   of   the   CoC.   As   aforesaid,   the
amendment of 2018 cannot be considered as clarificatory but
it   envisages   a   new   norm   of   threshold   for   considering   the
decision   of   the   CoC   as   approval   of   the   resolution   plan.     The
Amendment   Act   of   2018   having   come   into   force   w.e.f.   6 th
  day
of June, 2018, therefore, will have prospective application and
apply only to the decisions of CoC taken on or after that date
concerning the approval of resolution plan. 
54. Reliance was placed by the resolution applicants and the
stakeholders   supporting   the   resolution   plan   of   the   concerned
corporate   debtors,   on   the   decisions   of   this   Court   in
Gottumukkala   Venkata   Krishamraju   (supra),   B.K.

87
Educational Services Private Ltd.   (supra), and   State Bank
of   India   (supra).   In   the   case   of   Gottumukkala   (supra),   this
Court, after  adverting  to the dictum  in   Government   of India
Vs.   India   Tobacco   Association   (supra),   and   Zile   Singh   vs.
State of Haryana  (supra), opined in paragraph 15 as under: 
“15.   Ordinarily   wherever   the   word   ‘substitute’   or
‘substitution’   is   used   by   the   legislature,   it   has   the   effect   of
deleting   the   old   provision   and   make   the   new   provision
operative.  The  process  of   substitution  consists   of  two  steps:
first, the old rule is made to cease to exist and, next, the new
rule   is   brought   into   existence   in   its   place.   The   rule   is   that
when a subsequent Act amends an earlier one in such a way
as   to   incorporate   itself,   or   a   part   of   itself,   into   the   earlier,
then   the   earlier   Act   must   thereafter   be   read   and   construed
as  if  the  altered  words  had  been  written  into  the  earlier  Act
with   pen   and   ink   and   the   old   words   scored   out   so   that
thereafter   there   is   no   need   to   refer   to   the   amending   Act   at
all.   No   doubt,   in   certain   situations,   the   Court   having
regard   to   the   purport   and   object   sought   to   be   achieved
by   the   Legislature   may  construe  the   word   "substitution"
as   an   "amendment"   having   a   prospective   effect.
Therefore, we do not think that it is a universal rule that
the   word   ‘substitution’   necessarily   or   always   connotes
two   severable   steps,   that   is   to   say,   one   of   repeal   and
another of a fresh enactment even if it implies two steps.
However,   the   aforesaid   general   meaning   is   to   be   given
effect   to,   unless   it   is   found   that   legislature   intended
otherwise.   Insofar   as   present   case   is   concerned,   as
discussed   hereinafter,   the   legislative   intent   was   also   to   give
effect   to   the   amended   provision   even   in   respect   of   those
incumbents who were in service as on September 01, 2016.”
(emphasis supplied)

88
The Court has restated the position that there can be no hard
and   fast   rule   merely   because   of   the   usage   of   expression
“substituted” in the amendment Act. For, in certain situations
like   the   case   on   hand,   the   amendment   will   have   prospective
effect   as   it   is   not   intended   to   reverse   or   nullify   the   decisions
already   taken   by   the   CoC   of   the   concerned   corporate   debtors
before coming into force of the amended provision.
55. This   Court   in   Thirumalai   Chemicals   Limited   Vs.
Union of India and Ors. , 24
  in paragraph 23, observed that it
is   trite   law   that   every   statute   is   prospective   unless   it   is
expressly   or   by   necessary   implication   made   to   have
retrospective operation. This proposition has been reiterated in
Purbanchal   Cables   &   Conductors   (P)   Ltd.   Vs.   Assam   SEB
and Anr. 25
 in paragraphs 51, which reads thus: 
“51.   There   is   no   doubt   about   the   fact   that   the   Act   is   a
substantive   law   as   vested   rights   of   entitlement   to   a   higher
rate of interest in case of delayed payment accrues in favour
of   the   supplier   and   a   corresponding   liability   is   imposed   on
the buyer.   This Court, time and again, has observed that
any   substantive   law   shall   operate   prospectively   unless
retrospective   operation   is   clearly   made   out   in   the
24  (2011) 6 SCC 739
25  (2012) 7 SCC 462

89
language of the statute. Only a procedural or declaratory
law   operates   retrospectively   as   there   is   no   vested   right
in procedure .
(emphasis supplied)
It   may   be   useful   to   notice   the   exposition   in   CIT   Vs.   Vatika
Township   (P)   Ltd. 26
  In   paragraph   29,   the   Court   observed
thus:
“29.  The obvious basis of the principle against retrospectivity
is   the   principle   of   “ fairness ”,   which   must   be   the   basis   of
every   legal   rule   as   was   observed   in   L’Office   Cherifien   des
Phosphates   v.   Yamashita­Shinnihon   Steamship   Co.   Ltd. 7
Thus,   legislations   which   modified   accrued   rights   or
which impose obligations or impose new duties or attach
a new disability have to be treated as prospective unless
the   legislative   intent   is   clearly   to   give   the   enactment   a
retrospective effect; unless the legislation is for purpose
of   supplying   an  obvious  omission  in  a  former legislation
or   to   explain   a   former   legislation.   We   need   not   note   the
cornucopia   of   case   law   available   on   the   subject   because
aforesaid   legal   position   clearly   emerges   from   the   various
decisions   and   this   legal   position   was   conceded   by   the
counsel   for   the   parties.   In   any   case,   we   shall   refer   to   few
judgments containing this dicta, a little later.”
  (emphasis supplied)
Once   again,   in   Vijayalakshmi   Rice   Mills,   New   Contractors
Co.   and   Ors.   Vs.   State   of   Andhra   Pradesh 27
,   in   paragraph
5, the Court observed thus:   
26  (2015) 1 SCC 1
27  (1976) 3 SCC 37

90
“5.   Mr   Nariman   appearing   on   behalf   of   the   appellants   has
laid   great   emphasis   on   the   word   “substituted”   occurring   in
clause   2   of   the   Rice   (Andhra   Pradesh)   Price   Control   (Third
Amendment)   Order,   1964   and   has   urged   that   the   claim   of
the   appellants   cannot   be   validly   ignored.   Elaborating   his
submission,   counsel   has   contended   that   as   the   prices   fixed
by   the   Government   are   meant   for   the   entire   season,   the
appellants   have   to   be   paid   at   the   controlled   price   as   fixed
vide   the   Rice   (Andhra   Pradesh)   Price   Control   (Third
Amendment)   Order,   1964,   regardless   of   the   dates   on   which
the   supplies   were   made.   We   cannot   accede   to   this
contention.   It   is   no   doubt   true   that   the   literal   meaning
of the word “substitute” is “to replace” but the question
before   us   is   from   which   date   the   substitution   or
replacement of the new schedule took effect. There is no
deeming   clause   or   some   such   provision   in   the   Rice
(Andhra   Pradesh)   Price   Control   (Third   Amendment)
Order,   1964   to   indicate   that   it   was   intended   to   have   a
retrospective   effect.   It   is   a   well   recognized   rule   of
interpretation   that   in   the   absence   of   express   words   or
appropriate   language   from   which   retrospectivity   may   be
inferred, a notification takes effect from the date it is issued
and not from any prior date. The principle is also well settled
that   statutes   should   not   be   construed   so   as   to   create   new
disabilities or obligations or impose new duties in respect of
transactions   which   were   complete   at   the   time   of   the
amending Act came into force. See   Nani Gopal Mitra   v.   State
of Bihar 1 .”
(emphasis supplied)
56. As regards the decision in  B.K. Educational  (supra), the
Court was called upon to consider the question as to whether
the   Limitation   Act,   1963   will   apply   to   applications   that   are
made   under   Section   7   and/or   Section   9   of   the   Code   on   and
from   its   commencement   on   01­12­2016   till   06­06­2018.   That

91
question   was   examined   in   the   context   of   Section   238­A
inserted   in   the   I&B   Code   by   the   self­same   amendment   Act   of
2018. The Court after adverting to the contents of the report of
the   Insolvency   Law   Committee   of   March,   2018   and   other
provisions   of   the   Code   and   other   enactments,   opined   that
Section   238­A   was   clarificatory   in   nature   and   being   a
procedural  law,    came to  hold  that  it  had  retrospective  effect.
The Court held that  taking  any  other  view would result  in  an
incongruous   situation   as   the   provisions   of   the   Limitation   Act
would   apply   in   some   set   of   cases   to   be   decided   by   the   same
Tribunal   and   not   in   other   set   of   cases.   Besides,   the   Court
adverted to the principle that right to sue accrues on the date
when   default   occurs   and   if   the   default   occurred   even   three
years   prior   to   the   date   of   filing   of   the   application,   the   same
cannot  be treated as “debt that  is  due and  payable” or   “debt”
due.   
57. In   the   case   of   State   Bank   of   India   (supra),   the   Court
considered   the   question   as   to   whether   Section   14   of   the   I&B

92
Code, which provides for moratorium for the period mentioned
in the Code, insolvency would apply to a personal guarantor of
a   corporate   debtor.   Even   in   this   judgment,   the   Court   after
adverting   to   all   the   relevant   materials   and   the   governing
provisions   in   the   Code,   concluded   that   the   amended   Section
14   was   only   to   clarify   and   set   at   rest   what   the   Committee
thought   was   an   over­board   interpretation   of   Section   14.   On
that   reasoning   the   Court   concluded   that   the   amendment   of
Section 14 had retrospective effect.
58.   In   the   present   case,   however,   the   amendment   under
consideration   pertaining   to   Section   30(4),   is   to   modify   the
voting share threshold for decisions of the CoC and cannot be
treated   as   clarificatory   in   nature.   It   changes   the   qualifying
standards   for   reckoning   the   decision   of   the   CoC   concerning
the   process   of   approval   of   a   resolution   plan.   The
rights/obligations   crystallized   between   the   parties   and,   in
particular, the  dissenting  financial  creditors  in  October   2017,
in terms of the governing provisions can be divested or undone

93
only  by  a law made in  that behalf by  the  legislature. There is
no   indication   either   in   the   report   of   the   Committee   or   in   the
Amendment Act of 2018 that the legislature intended to undo
the decisions of the CoC already taken prior to 6 th
 day of June,
2018.   It   is   not   possible   to   fathom   how   the   provisions   of   the
amendment Act 2018, reducing the threshold percent of voting
share   can   be   perceived   as   declaratory   or   clarificatory   in
nature.   In   such   a   situation,   the   NCLAT   could   not   have
examined the case on the basis of the amended provision. For
the same reason, the NCLT could not have adopted a different
approach in these matters. Hence, no fault can be found with
the impugned decision of the NCLAT. 
59. In   our   view,   no   other   contention   raised   to   support   the
resolution plan of the concerned corporate debtors would be of
any   avail.   Even   so,   we   may   advert   to  the   argument   regarding
the effect of amendment of Regulation 39 which has come into
force with effect from 4 th
 July, 2018. Prior to that amendment,
Regulation   39(3)   merely   provided   that   the   Committee   may

94
approve   any   resolution   plan   with   such   modifications   as   it
deems fit. This was amended vide Notification dated 3rd July,
2018 and the substituted Regulation 39(3), now reads thus:
“ 39. Approval of resolution plan. ­
xxx xxx xxx
(3)   The   committee   shall   evaluate   the   resolution   plans
received   under   sub­regulation   (1)   strictly   as   per   the
evaluation   matrix   to   identify   the   best   resolution   plan   and
may approve it with such modification as it deems fit:
PROVIDED   that   the   committee   shall   record   the   reasons   for
approving or rejecting a resolution plan.”    
60. In   the   first   place,   amendment   to   regulation   cannot   have
retrospective effect so as to  impact the decision of the  CoC  of
the concerned corporate debtor – taken before the amendment
of   the   said   regulation.   There   is   no   indication   in   the   Code   as
amended or  the regulations to suggest that as a consequence
of   this   amendment   the   decisions   aleady   taken   by   the
concerned CoC prior to 3 rd
 July, 2018 be treated as deemed to
have been vitiated or for that matter, necessitating reversion of
the proposal to CoC for recording reasons, that too beyond the
statutory   period   of   270   days.   A   new   life   cannot   be   infused   in

95
the resolution plan which did not fructify within the statutory
period, by such circuitous route.   
61. Assuming that this provision was applicable to the cases
on   hand,   non­recording   of   reasons   for   approving   or   rejecting
the resolution plan by the concerned financial creditor during
the   voting   in   the   meeting   of   CoC,   would   not   render   the   final
collective   decision   of   CoC   nullity   per   se .   Concededly,   if   the
objection   to   the   resolution   plan   is   on   account   of   infraction   of
ground(s)   specified   in   Sections   30(2)   and   61(3),   that   must   be
specifically and expressly raised at the relevant time.  For, the
approval of  the  resolution  plan  by  the CoC  can  be challenged
on   those   grounds.   However,   if   the   opposition   to   the   proposed
resolution   plan   is   purely   a   commercial   or   business   decision,
the   same,   being   non­justiciable,   is   not   open   to   challenge
before the Adjudicating Authority (NCLT) or for that matter the
Appellate   Authority   (NCLAT).   If   so,   non­recording   of   any
reason  for taking such commercial decision will be of no avail.
In   the   present   case,   admittedly,   the   dissenting   financial
creditors   have   rejected   the   resolution   plan   in   exercise   of

96
business/commercial   decision   and   not   because   of   non­
compliance of the grounds specified in Section 30(2) or Section
61(3),   as   such.   Resultantly,   the   amended   regulation   pressed
into service, will be of no avail.
62. Relying   on   the   dictum   in   Mardia   Chemicals   (supra),   in
particular  paragraph 45, it was argued that even  in regard to
the option exercisable by the financial creditors under Section
30(4),   the   requirement   of   giving   reasons   for   approval   or
disapproval of the proposed resolution plan must be read into
it.   In   that   case,   the   Court   had   considered   the   mechanism
specified   in   Section   13   of   the   Securitisation   and
Reconstruction   of   Financial   Assets   and   Enforcement   of
Security Interest Act, 2002, which provided for giving a notice
to the borrower  and upon receipt of such notice the borrower
could   raise   objections   as   to   why   the   proposed   action   of   the
secured   creditor   was   uncalled   for.   In   that   context,   this   Court
in paragraph 45, observed thus:
“45.   In   the   background   we   have   indicated   above,   we   may
consider   as  to  what  forums   or   remedies  are  available   to  the

97
borrower to ventilate his grievance.   The purpose of serving
a   notice   upon   the   borrower   under   sub­section   (2)   of
Section   13   of   the   Act   is,   that  a   reply   may   be   submitted
by   the   borrower   explaining   the   reasons   as   to   why
measures may or may not be taken under sub­section (4)
of   Section   13   in   case   of   non­compliance   with   notice
within 60 days. The creditor must apply its mind to the
objections raised in reply to such notice and an internal
mechanism   must   be   particularly   evolved   to   consider
such   objections   raised   in   the   reply   to   the   notice.   There
may   be   some   meaningful   consideration   of   the   objections
raised rather than to ritually reject them and proceed to take
drastic   measures   under   sub­section   (4)   of   Section   13   of   the
Act.   Once   such   a   duty   is   envisaged   on   the   part   of   the
creditor   it   would   only   be   conducive   to   the   principles   of
fairness   on   the   part   of   the   banks   and   financial
institutions   in   dealing   with   their   borrowers   to   apprise
them   of   the   reason   for   not   accepting   the   objections   or
points   raised   in   reply   to   the   notice   served   upon   them
before proceeding to take measures under sub­section (4)
of Section 13. Such reasons, overruling the objections of
the   borrower,   must   also   be   communicated   to   the
borrower   by   the   secured   creditor.   It   will   only   be   in
fulfillment   of   a   requirement   of   reasonableness   and   fairness
in   the   dealings   of   institutional   financing   which   is   so
important   from   the   point   of   view   of   the   economy   of   the
country   and   would   serve   the   purpose   in   the   growth   of   a
healthy  economy. It  would certainly  provide  guidance to  the
secured   debtors   in   general   in   conducting   the   affairs   in   a
manner   that   they   may   not   be   found   defaulting   and   being
made   liable   for   the   unsavoury   steps   contained   under   sub­
section   (4)   of   Section   13.   At   the   same   time,   more
importantly,   we   must   make   it   clear   unequivocally   that
communication   of   the   reasons   for   not   accepting   the
objections   taken   by   the   secured   borrower   may   not   be
taken   to   give   occasion   to   resort   to   such   proceedings
which   are   not   permissible   under   the   provisions   of   the
Act.   But   communication   of   reasons   not   to   accept   the
objections   of   the   borrower,   would   certainly   be   for   the
purpose   of   his   knowledge   which   would   be   a   step   forward
towards his right to know as to why his objections have not
been accepted by the secured creditor who intends to resort

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to   harsh   steps   of   taking   over   the   management/business   of
viz. secured assets without intervention of the court. Such a
person   in   respect   of   whom   steps   under   Section   13(4)   of   the
Act are likely to be taken cannot be denied the right to know
the   reasons   of   non­acceptance   and   of   his   objections.   It   is
true, as per the provisions under the Act, he may not be
entitled   to   challenge   the   reasons   communicated   or   the
likely action of the secured creditor at that point of time
unless his right to approach the Debts Recovery Tribunal
as provided under Section 17 of the Act matures on any
measure   having   been   taken   under   sub­section   (4)   of
Section 13 of the Act .”
  (emphasis supplied)
In   the   present   case,   however,   we   are   concerned   with   the
provisions   of   I&B   Code   dealing   with   the   resolution   process.
The dispensation provided in the I&B Code is entirely different.
In  terms of  Section  30 of  the I&B   Code,  the decision  is taken
collectively   after   due   negotiations   between   the   financial
creditors   who   are   constituents   of   the   CoC   and   they   express
their   opinion   on   the   proposed   resolution   plan   in   the   form   of
votes,   as   per   their   voting   share.   In   the   meeting   of   CoC,   the
proposed resolution plan is placed for discussion and after full
interaction in the presence of all concerned and the resolution
professional,   the   constituents   of   the   CoC   finally   proceed   to
exercise   their   option   (business/commercial   decision)   to

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approve   or   not   to   approve   the   proposed   resolution   plan.   In
such a case, non­recording of reasons would not   per se  vitiate
the collective decision of the financial creditors. The legislature
has   not   envisaged   challenge   to   the   “commercial/business
decision”     of   the   financial   creditors   taken   collectively   or   for
that   matter   their   individual   opinion,   as   the   case   may   be,   on
this count.     
63. It   was   then   contended   that   NCLAT   committed   manifest
error   in   not   calling   upon   the   dissenting   financial   creditors   to
respond   to   the   applications   filed   in   the   concerned   appeals
pending   before   it,   including   with   a   prayer   to   allow   the
resolution   applicant   to   revise   the   resolution   plan.   We   find   no
merits   in   this   submission.   The   reliefs   claimed   in   the   stated
application   filed   before   the   NCLAT   would   not   take   the   matter
any   further.   For,   it   is   enough   for   the   dissenting   financial
creditors to disapprove the proposed resolution plan by voting
as per its voting share, based on commercial decision. Indeed,
if   the   opposition   of   the   dissenting   financial   creditors   is   in
regard   to   matter(s)   within   the   jurisdiction   of   the   Tribunal

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ascribable to Sections 30(2) or 61(3), then the situation may be
somewhat different. But that is not in issue in these cases.  
64. As regards the application by the resolution applicant for
taking   his revised resolution  plan on  record,  the  same is also
devoid of merits inasmuch as it is not open to the Adjudicating
Authority to entertain a revised resolution plan after the expiry
of   the   statutory   period   of   270  days.  Accordingly,  no   fault  can
be   found   with   the   NCLAT   for   not   entertaining   such
application.  
65. The   counsel   appearing   for   the   resolution   applicant   and
the stakeholders supporting the resolution plan were at pains
to   persuade   us   to   exercise   powers   under   Article   142   of   the
Constitution of India. Inasmuch as, in both the cases, the vote
of approval exceeded more than 66% of the voting share of the
financial   creditors   and   yet   the   benefit   of   the   amended
provision   could   not   be   availed,   as   it   came   only   during   the
pendency   of   the   appeal   before   the   NCLAT.   The   submission   is
that this Court may set aside the order passed by the Tribunal

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and relegate the parties in both the cases, before the NCLT for
considering   the   proceedings   afresh   in   light   of   the   amended
provision   reducing   the   threshold   requirement   of   percent   of
voting share of financial creditors to 66%.   We are afraid, it is
not possible for us to exercise powers under Article 142 of the
Constitution which will result in issuing directions in the teeth
of   the   provisions   as   applicable   to   the   cases   on   hand.   We,
therefore,   decline   to   accede   to   this   request.   Having   answered
the core issues and to avoid prolixity, we do not wish to dilate
on   the   exposition   in   other   reported   decisions   relied   upon   by
the counsel. 
66. As a result, we hold that the NCLAT has justly concluded
in   the   impugned   decision   that   the   resolution   plan   of   the
concerned   corporate   debtor(s)   has   not   been   approved   by
requisite percent of voting share of the financial creditors; and
in absence of any alternative resolution plan presented within
the   statutory   period   of   270   days,   the   inevitable   sequel   is   to
initiate liquidation process under Section 33 of the Code. That
view is unexceptional. Resultantly, the appeals must fail.

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67. In   view   of   the   above,   the   appeals   are   dismissed.   The
companion   applications   also   stand   dismissed.   No   order   as   to
costs.  
                                                          …………………………..….J.
      (A.M. Khanwilkar)
    …………………………..….J.
                 (Ajay Rastogi)
New Delhi;
February 5, 2019.