1. Case study: Essar Steel –
Insolvency Resolution Plan
CA Divakar Vijayasarathy

2. Credits and Acknowledgments
Sundar Rajan S &
Meenakshi J

3. Legends used in the Presentation
AMIPL Arcelor Mittal India Private Limited
Board/ IBBI Insolvency and Bankruptcy Board of India
CIRP/ IRP Corporate Insolvency Resolution Process / Insolvency Resolution Process
CD Corporate Debtor
CoC Committee of Creditors
ESIL Essar Steel India Limited
FC Financial Creditors
IBC Insolvency and Bankruptcy Code
NCLT / AA National Company Law Tribunal / Adjudicating Authority
NCLAT National Company Law Appellate Tribunal
NPA Non-Performing Assets
OC Operational Creditors
RBI Reserve Bank of India
Regulation(s) IBBI (IRP for Corporate Persons) Regulations, 2016
RP Resolution Professional
SBI State Bank of India
SC Supreme Court

4. Presentation Schema
Snapshot of key dates
and significant events
Significant provisions of
IBC relevant to the case
Hon'ble SC judgment on
Section 29A of IBC
Approval of Arcelor’s
resolution plan
NCLAT judgment on 4th
July, 2019
Amendments in IBC
Hon'ble SC judgment on
15th November, 2019
Key inferences from
Hon'ble SC judgment

5. Snapshot of key dates and significant events
Key Dates Significant events
13th June, 2017 RBI identified 12 stressed accounts in steel, infrastructure sectors for immediate resolution under IBC (including
Essar Steel)
27th June, 2017 Sec. 7 application filed for CIRP by SBI and Standard Chartered bank (company’s lenders) for outstanding debts
4th July, 2017 Company filed Writ Petition in Gujarat High Court (GHC) challenging RBI’s move to resolve via IBC as arbitrary
31st July, 2017 GHC dismissed the plea of Essar Steel to quash IBC proceedings in big win for banks to initiate resolution process
2nd August, 2017 NCLT (Ahmedabad) admitted the application filed by company’s lenders to initiate bankruptcy proceedings; NCLT
held that the ongoing Debt Resolution Process was not a bar to initiate CIRP. NCLT appointed Sathish Kumar Gupta as
interim resolution professional, suggested by SBI having debt of greater value
6th October, 2017 Sathish Kumar Gupta had sought resolution plans from potential investors by inviting Expression of Interest
2nd October, 2017 Essar Steel’s parent company Essar Group submitted Expression of Interest as one of the bidders
23rd November, 2017
(Notified-19th Jan’18)
Section 29A was introduced in IBC to streamline the selection of bidders which prevented wilful defaulter, defaulter
promoters and related parties from bidding. Essar Steel promoters, were thus barred from bidding
December, 2017 Promoters were looking to repay their dues to take part in the bidding process
12th February, 2018 Numetal and Arcelor Mittal submitted bids again pursuant to the introduction of Section 29A
March 2018 RP holds both the bidders ineligible under Section 29A of IBC due to Numetal’s connection with Essar Group’s Ruias
and Arcelor Mittal’s stake in NPA account. Both the applicants moved to NCLT challenging the rejection of their bids

6. Contd.
Date Events
2nd April, 2018 RP invited fresh bids. AMIPL, Numetal and Vedanta submitted their bids
19th April, 2018 NCLT orders CoC to reconsider the bids of resolution applicants and to give sufficient time to cure the disabilities
in resolution plan in accordance with Section 29A of IBC. Time spent on litigation will be excluded from 270 days
26th April, 2018 Numetal, Arcelor Mittal move NCLAT against the disqualification of first round of bids
7th September, 2018 NCLAT hold Numetal’s bid valid after it severs ties with Ruias. Arcelor Mittal is asked to clear dues of Rs 7,000
Crore of Uttam Galva and KSS Petron in three days
10th September, 2018 Arcelor Mittal moves Hon'ble SC against NCLAT order
12th September, 2018 Numetal challenged the decision of NCLAT allowing ArcelorMittal a chance to clear dues, before the Hon'ble SC
4th October, 2018 Hon'ble SC judgment - gave 2 weeks time to Arcelor Mittal and Numetal to pay off the NPAs failing which the
corporate debtor would go into liquidation
18th October, 2018 ArcelorMittal made payments as per the Hon'ble SC’s judgment dated 04.10.2018. However, Numetal did not
make any such payment.
19th October, 2018 Arcelor Mittal resubmitted its resolution plan which was then evaluated by the CoC on the same date
25th October, 2018 Final negotiated resolution plan of ArcelorMittal was approved by the CoC by a 92.24% majority
Date Events
2nd April, 2018 RP invited fresh bids. AMIPL, Numetal and Vedanta submitted their bids
19th April, 2018 NCLT orders CoC to reconsider the bids of resolution applicants and to give sufficient time to cure the disabilities
in resolution plan in accordance with Section 29A of IBC. Time spent on litigation will be excluded from 270 days
26th April, 2018 Numetal, Arcelor Mittal move NCLAT against the disqualification of first round of bids
7th September, 2018 NCLAT holds Numetal’s bid valid after severance of ties with Ruias. Arcelor Mittal was asked to clear dues of Rs
7,000 Crore of Uttam Galva and KSS Petron in three days
10th September, 2018 Arcelor Mittal moves Hon'ble SC against NCLAT order
12th September, 2018 Arcelor Mittal tells SC it had already divested its shares in Uttam Galva Steel and KSS Petron.
20th September, 2018 Numetal challenged the decision of NCLAT allowing Arcelor Mittal a chance to clear dues, before the Hon'ble SC
27th September, 2018 SC reserves its verdict
4th October, 2018 Hon'ble SC judgment - gave 2 weeks time to Arcelor Mittal and Numetal to pay off the NPAs failing which the
corporate debtor would go into liquidation. SC allows Arcelor Mittal, NuMetal to bid for Essar Steel; asks CoC to
decide the issue within eight weeks
18th October, 2018 ArcelorMittal made payments as per the Hon'ble SC’s judgment dated 04.10.2018. However, Numetal did not
make any such payment
19th October, 2018 Arcelor Mittal resubmitted its resolution plan which was then evaluated by the CoC on the same date
25th October, 2018 Final negotiated resolution plan of ArcelorMittal was approved by the CoC by a 92.24% majority

7. Contd.
Date Events
November 2018 Operational Creditors file petitions challenging Arcelor Mittal’s plan. Standard Chartered files
separate petition against Arcelor Mittal’s plan
28th February, 2019 NCLAT asked NCLT, Ahmedabad Bench to pass its final order by March 8
8th March, 2019 NCLT approves Arcelor Mittal’s Rs 42000 Crore bid for Essar Steel
20th March, 2019 NCLAT directed the CoC to take a decision on certain suggestions pertaining to increase in the share
of Operational Creditors
30th March, 2019 CoC appealed before Hon'ble SC aggrieved by NCLAT’s interim order
12th April, 2019 Hon'ble SC directed non-implementation of the judgment dated 08.03.2019 of the NCLT and
expeditious disposal of the appeal before the NCLAT
4th July, 2019 NCLAT gave its final judgment giving equal status to financial and operational creditors
12th July, 2019 Aggrieved Financial Creditors filed an appeal before Hon'ble SC against NCLAT’s order
15th November , 2019 Hon'ble SC gave its judgment which set aside NCLAT’s order giving Financial Creditors upper hand
over Operational Creditors

8. Significant provisions of IBC relevant to the case
Consequences of non-submission of the resolution plan
Preparation and approval of the resolution plan
Formation of the Committee of Creditors
Appointment of Interim Resolution Professional
Moratorium and public announcement
Adjudication: Admission or rejection of application
Filing of application before NCLT
Insolvency and liquidation of CDs can be done only when the minimum amount of default is Rs. 1,00,000
•Time limit for completion of entire process is 180 days from admission of application, which may be further extended by 90 days by AA
•Overall time limit: 330 days from the insolvency commencement date including extensions and time taken in legal proceedings
Corporate Insolvency Resolution Process

9. Contd.
Section 29A of IBC - Persons not eligible to act as Resolution Applicant
An undischarged insolvent
Wilful defaulter in accordance with the guidelines of RBI or is prohibited by SEBI from trading in securities or accessing the
securities market
Has been convicted for any offence punishable with imprisonment for 2 years or more (for acts specified in 12th Schedule) /
7 years or more (for any other acts)
Is disqualified to act as a director under Companies Act,2013
Has been a promoter or in the management or control of a corporate debtor in which a preferential transaction or
fraudulent transaction has taken place in respect of which an order has been made by AA under this Code
At the time of submission of the resolution plan has an account classified as non performing asset
Who has a connected person (meaning in subsequent slide) not eligible under any of the clauses mentioned above

10. Contd.
Meaning of Connected person
Connected person means,
i. any person who is the promoter or in the management or control of the resolution applicant or
ii. any person who shall be the promoter or in management or control of the business of the
corporate debtor during the implementation of the resolution plan or
iii. the holding company, subsidiary company, associate company or related party of a person
referred to in clauses (i) and (ii)

11. Contd.
Submission of resolution plan – Section 30
A resolution applicant may submit a resolution plan, along with an affidavit stating that he is eligible under section 29A, to the
RP, prepared on the basis of information memorandum
provides for the payment of insolvency resolution process costs in priority to all other debts of CD
provides for the payment of debts of operational creditors in such manner as may be specified by the Board
(discussed in the later slides)
provides for the management of the affairs of the Corporate debtor after approval of the resolution plan
the implementation and supervision of the resolution plan
does not contravene any of the provisions of the law for the time being in force
confirms to such other requirements as may be specified by the Board
RP shall examine each resolution plan received by him to confirm that each resolution plan,

12. Contd.
RP shall present to CoC for its approval, such resolution plans which confirm the conditions specified in Section 30(2)
CoC may approve a resolution plan by a vote of not less than 66% of voting share of the FCs after considering its
feasibility and viability, manner of distribution proposed and such other requirements as may be specified by the Board
The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the
applicant is considered but shall not have a right to vote at the meeting unless such resolution applicant is also a FC
The RP shall submit the resolution plan as approved by the CoC to the Adjudicating Authority
Submission of resolution plan – Section 30 (Contd.)

13. Contd.
Cost and Expenses of Insolvency
Workmen’s dues for the period of 24 months and dues of secured creditors preceding the liquidation
commencement date
Wages and any unpaid dues owed to employees, other than workmen, for the period of 12 months preceding
the liquidation commencement date
Unsecured Financial Creditors
Dues of Central Government and State Government for the period of two years preceding the liquidation
commencement date
Other debts and dues
Order of distribution of proceeds of sale of assets after liquidation
Priority of Claims – Section 53

14. Hon'ble SC judgment on Section 29A of IBC
NCLT admitted applications filed by Financial Creditors of ESIL and subsequently CIRP was initiated. AMIPL, Numetal and Vedanta
submitted their resolution plans
RP found both the resolution plans of AMIPL and Numetal ineligible under Section 29A of IBC and hence refused to place their
resolution plans before CoC
ArcelorMittal Netherlands BV (“AMNLBV”), which was a ‘connected person’ of AMIPL, was a promoter of Uttam Galva Steels
Limited (“Uttam Galva”), and the account of Uttam Galva was classified as non-performing asset (“NPA”) for more than a year
before commencement of the CIRP. Further, the ‘connected person’ of AMIPL, was a promoter of KSS Petron Pvt. Ltd. (KSS
Petron), which also had NPA for more than a year before commencement of the CIRP.
Numetal’s 25% shareholding at the time of submission of RP, was held by Aurora Enterprises Limited (“AEL”). AEL was held
completely by Rewant Ruia (through a trust and companies). Rewant Ruia was deemed to be ‘connected person’ since his father
Ravi Ruia was a promoter of ESIL, whose account was classified as an NPA for more than a year before commencement of the CIRP
Facts

15. Contd.
S. No Issues Judgment (by Hon'ble SC)
1 Whether the stage of ineligibility of the resolution
applicant under Section 29A(c) of the IBC attaches at
the date of commencement of the CIRP or at the time
when the resolution plan is submitted by the resolution
applicant?
The stage of ineligibility attaches when the resolution plan is
submitted by the resolution applicant
2 Whether the resolution applicant can challenge the
rejection of the resolution plan by the RP?
The resolution applicant cannot challenge the rejection of the
resolution plan by the RP. However, it was also held that the RP
does not have the power to reject the resolution plan and
directed him to present all the plans before the CoC for their
consideration
3 Whether the NCLAT was right in holding that AMIPL was
ineligible to submit the resolution plan and Numetal was
eligible to submit the resolution plan in accordance
with Section 29A of IBC in its judgment dated 7th
September, 2018?
Since both the resolution applicants had not paid their
respective NPAs prior to submission of their resolution plans,
they were hit by Section 29A of IBC and therefore were ineligible
to submit their plans. On request of the CoC, the Hon’ble SC gave
one more opportunity to the resolution applicants to clear their
respective NPAs within 2 weeks from this date of judgment (i.e.
04-10-2018) and then re-submit the resolution plans

16. Inference
Section 29A of IBC is introduced in order to prevent promoters related to management of Corporate Debtor from bidding
for their own assets at steep discounts, thereby benefiting at the cost of the lenders
Further, promoters having NPAs existing in any of their entities shall not be eligible to apply for resolution plan unless
those NPAs are cleared eventhough their stake is sold in such entities prior to the resolution plan which is treated as just
to get out of the ineligibility under Section 29A of IBC
RP is not required to take any decision, but merely to ensure that the resolution plans submitted are complete in all
respects before they are placed before the CoC, which may or may not approve it

17. Approval of Arcelor’s resolution plan
On 18th October, 2018, AMIPL cleared off their NPAs as ordered by Hon’ble SC. However, Numetal did not settle
the dues
On 19th October, 2018, AMIPL resubmitted its resolution plan of 2nd April, 2018
AMIPL was declared as the highest bidder vis-s-vis Vedanta
Final negotiated resolution plan of AMIPL was approved by CoC with a 92.24% majority on 25th October, 2018

18. Resolution plan as approved on 25th October, 2018
Distribution as per the successful resolution plan of AMIPL as approved by the CoC of ESIL on 25th October, 2018 and as placed
before the NCLT for approval in terms of IBC
S.
No.
Category of Stakeholder Name of the
stakeholder
Amount
admitted by
RP (In Rs.
Crores)
Proposed payment under the
Successful Resolution Plan as
approved by the COC on 25th
October, 2018 (In Rs. Crores)
Percentage of admitted
claim allowed under the
Successful Resolution Plan
as approved by the COC on
25th October, 2018 (In %)
A Workmen & Employees - 18.07 18.07 100
B1 Secured FC
(having charge on project
assets of CD)
SBI, IDBI,
Canara bank,
etc.
45,559.24 41,909.29 91.99
B2 Secured FC
(having no charge on
project assets of CD)
Standard
Chartered
Bank
3,487.10 60.71 1.74
C1 Unsecured Financial
Creditors (With admitted
claims less than
Rs.10,00,000)
- 0.3 0.3 100

19. Contd.
S.
No.
Category of Stakeholder Name of
the
stakeholder
Amount
admitted
by RP (In
Rs. Crores)
Proposed payment under
the Successful Resolution
Plan as approved by the
COC on 25th October, 2018
(In Rs. Crores)
Percentage of admitted claim
allowed under the Successful
Resolution Plan as approved
by the COC on 25th October,
2018 (In %)
C2 Unsecured Financial
Creditors (with admitted
claims equal to or above
Rs. 10,00,000)
- 426.51 17.40 4.08
D1 Operational Creditors with
admitted claim amount
less than Rs. 1 crore*
1600 out of
total 1855
OCs
196 196 100
D2 Operational Creditors with
admitted claim amount
equal to or more than Rs.
1 crore*
- 4,877.99 NIL NIL
* Other than workmen and employees

20. NCLT approval on 8th March, 2019
AMIPL’s resolution plan was submitted by RP to NCLT for approval. OCs and Standard Chartered Bank filed
petition against AMIPL’s resolution plan in NCLT
NCLT, in its order dated 8th March, 2019, approved AMIPL’s resolution plan with directions to CoC of ESIL
to modify the plan so as to benefit Standard Chartered Bank and operational creditors
CoC of ESIL had appealed before NCLAT against the directions of NCLT. In the same way, OCs and Standard
Chartered Bank also made their appeals before NCLAT

21. Stay on Arcelor’s Resolution Plan
Interlocutory orders were given by NCLAT which were then appealed before the Hon’ble SC
Hon’ble SC, by its order dated 12th April, 2019 stayed the order issued by NCLT on 8th
March, 2019
Hon’ble SC had asked the NCLAT to speed up the disposal of pending appeal

22. Resolution plan as on 27th March, 2019
S.
No.
Category of Stakeholder Name of the
stakeholder
Amount
admitted by
RP (In Rs.
Crores)
Proposed payment under the
Successful Resolution Plan as
approved by the COC on 25
October, 2018 and as further
amended by the COC on 27th
March, 2019 (In Rs. Crores)
Percentage of admitted
claim allowed under the
Successful Resolution Plan as
approved by the COC on 25
October, 2018 and as further
amended by the COC on 27th
March, 2019 (In %)
A Workmen & Employees - 18.07 18.07 100
B1 Secured FC
(having charge on project
assets of CD)
SBI, IDBI,
Canara bank,
etc.
45,559.24 40,910.74 89.80
B2 Secured FC
(having no charge on
project assets of CD)
Standard
Chartered
Bank
3,487.10 59.26 1.70
C1 Unsecured Financial
Creditors (With admitted
claims less than
Rs.10,00,000)
- 0.3 0.3 100
Distribution as per the successful resolution plan of AMIPL as amended by the COC on 27th March, 2019 based on NCLAT’s direction

23. Contd.
S.
No.
Category of Stakeholder Name of
the
stakeholder
Amount
admitted
by RP (In
Rs. Crores)
Proposed payment under
the Successful Resolution
Plan as approved by the
COC on 25 October, 2018
and as further amended by
the COC on 27th March,
2019 (In Rs. Crores)
Percentage of admitted claim
allowed under the Successful
Resolution Plan as approved
by the COC on 25 October,
2018 and as further
amended by the COC on 27th
March, 2019 (In %)
C2 Unsecured Financial
Creditors (with admitted
claims equal to or above
Rs. 10,00,000)
- 426.51 17.40 4.08
D1 Operational Creditors with
admitted claim amount
less than Rs. 1 crore*
1600 out of
total 1855
OCs
196 196 100
D2 Operational Creditors with
admitted claim amount
equal to or more than Rs.
1 crore*
- 4,877.99 1,000 20.50
* Other than workmen and employees

24. NCLAT judgment on 4th July, 2019
S. No Issues Judgment (by NCLAT)
1 Mr. Prashant Ruia, the promoter of ESIL, had challenged
the order dated 8th March, 2019 on the ground that
AMIPL ('Successful Resolution Applicant') is ineligible in
terms of Section 29A of IBC
An issue which has been settled by the Hon'ble SC i.e., eligibility
of AMIPL as a 'Resolution Applicant' for ESIL, cannot be re-
agitated again and again. Any such attempt is clearly barred by
the principles of res judicata. Therefore, the Application
preferred by Mr. Prashant Ruia deserves to be rejected
2 Whether the CoC can delegate its power to a 'Sub
Committee' or 'Core Committee' for negotiation with
the 'Resolution Applicant' for revision of plan?
A 'Sub-Committee or 'Core Committee' is unknown and against
the provisions of the IBC. There is no provision under IBC which
permits constitution of a 'Core Committee' or 'Sub-Committee'
nor the IBC or Regulations empowers the CoC to delegate the
duties of the CoC to such 'Core Committee'/'Sub-Committee'
3 CoC has approved the Resolution Plan in such a manner
that is detrimental to the interests of operational
creditors and one financial creditor (Standard Chartered
Bank). Whether CoC is empowered to decide the
manner in which the distribution is to be made
between one or other creditors?
CoC has no role to play in the manner of distribution of amount
amongst the Creditors including the 'financial creditors' or the
'Operational Creditors'. CoC is only required to notice the
viability, feasibility of the 'Resolution Plan', apart from other
requirements as specified by the Board and ineligibility of the
'Resolution Applicant' in terms of section 29A

25. Contd.
S. No Issues Judgment (by NCLAT)
4 What is the treatment of profits arising out of business
of Corporate Debtor during the CIRP?
•The amount of profit if generated during the CIRP, cannot be
given to the 'Successful Resolution Applicant' as the 'Successful
Resolution Applicant' has not invested any money during the
CIRP.
•The profit should be distributed amongst all the Creditors
including the FCs and the OCs on pro-rata basis of their claims
subject to the fact that it should not exceed the admitted claim
5 Whether the 'Resolution Applicant' can take advantage
of Section 53 for the purpose of determination of the
manner in which distribution of the proposed upfront
amount is to be made in favour of one or other
stakeholders?
•Section 30(2)(b) mandates that the 'Resolution Plan' must
provide for the payment of the debts of 'Operational Creditors'
in such manner as may be prescribed 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.
•It was held that Section 53 cannot be made applicable for
distribution of amount amongst the stakeholders, as proposed
by the 'Resolution Applicant' in its Resolution Plan

26. Manner of arriving at final distribution amount

27. NCLAT’s distribution of resolution plan amount
#Operational Creditors- I : Claim is Rs.1 Crore or more; ##Operational Creditors- II : Claim is < Rs.1 Crore including Workmen and Employees
Financial Creditors- I : Claim is Rs.10 lakhs or more; Financial Creditors- II : Claim is < Rs.10 lakhs

28. Results of NCLAT judgment
Financial Creditors should be treated in par with operational creditors thereby getting an equal share of 60.7% of their
total admitted claim each
Standard Chartered Bank, one of the secured financial creditors, but has no charge on project assets, gets 60.7% share
against its previous 1.7%
Operational Creditors (other than workmen and employees with admitted claim of Rs. 1 Crore or more), gets 60.7% share
against its previous 20.5%

29. Amendments in IBC post NCLAT judgment
• CIRP shall mandatorily be completed within a period of 330 days from the insolvency
commencement date, including any extension of the period of CIRP granted under this section
and the time taken in legal proceedings in relation to such CIRP of the CD
• Where the CIRP of a CD is pending and has not been completed within 330 days from the
insolvency commencement date, such CIRP shall be completed within 90 days from the date
of commencement of the IBC (Amendment) Act, 2019
Section 12(3)
[Proviso inserted]

30. Contd.
• RP shall examine each resolution plan received by him to confirm that each
resolution plan,
• provides for the payment of debts of operational creditors in such manner as may
be specified by the Board which shall not be less than-
• (i) the amount to be paid to such creditors in the event of a liquidation of the
CD under section 53; or
• (ii) the amount that would have been paid to such creditors, if the amount to
be distributed under the resolution plan had been distributed in accordance
with the order of priority in section 53(1), whichever is higher
• provides for the payment to dissenting financial creditors, who do not vote in
favour of the resolution plan, in such manner as may be specified by the Board,
which shall not be less than the amount to be paid to such creditors in
accordance with section 53(1) in the event of a liquidation of the CD
Section 30(2)
[Insertion]

31. Hon'ble SC judgment on 15th November, 2019
S. No. Issues Judgment (by Hon’ble SC)
1 Role of CoC in CIRP a. It is the commercial wisdom of the CoC to decide as to whether or not to rehabilitate
the CD by accepting a particular resolution plan
b. The insolvency resolution is ultimately in the hands of the majority vote of the CoC. It
may approve a resolution plan by a vote of not less than 66% of the voting share of the
FCs, after considering its feasibility and viability, and various other requirements as
may be prescribed by the Regulations
c. What is left to the majority decision of the CoC is the “feasibility and viability” of a
resolution plan, which obviously takes into account all aspects of the plan, including
the manner of distribution of funds among the various classes of creditors
d. It is the commercial wisdom of the majority of creditors to determine, through
negotiation with the prospective resolution applicant, as to how and in what manner
the CIRP is to take place

32. Contd.
S. No. Issues Judgment (by Hon’ble SC)
2 Secured and
Unsecured Creditors
a. If an “equality for all” approach recognising the rights of different classes of creditors
as part of CIRP is adopted, secured FCs will, in many cases, be incentivised to vote for
liquidation rather than resolution, as they would have better rights if the CD is
liquidated. This would defeat the objective of IBC which is resolution of distressed
assets and only if the same is not possible, should liquidation follow
b. The amended Regulation 38 does not lead to the conclusion that FCs and OCs, or
secured and unsecured creditors, must be paid the same amounts, percentage wise,
under the resolution plan. Fair and equitable dealing of OCs rights under the
Regulation 38 involves the resolution plan stating as to how it has dealt with the
interests of OCs, which is not the same thing as saying that they must be paid the
same amount of their debt proportionately
c. So long as the provisions of IBC and the Regulations have been met, it is the
commercial wisdom of the requisite majority of the CoC which is to negotiate and
accept a resolution plan, which may involve differential payment to different classes
of creditors, together with negotiating with a prospective resolution applicant for
better or different terms which may also involve differences in distribution of
amounts between different classes of creditors

33. Contd.
S. No. Issues Judgment (by Hon’ble SC)
3 Utilisation of profits
of the CD during CIRP
a. The Request for Proposal issued in terms of Section 25 of IBC and consented to by
AMIPL and the CoC had provided that distribution of profits made during the CIRP will
not go towards payment of debts of any creditor
4 Amendment in
Section 12 of IBC
a. While leaving the provision otherwise intact, the term “mandatorily” is struck down
as being manifestly arbitrary under Article 14 of the Constitution of India and as
being unreasonable restriction on the litigant’s right to carry on business under Article
19(1)(g) of the Constitution.
b. The effect of this declaration is that ordinarily the time taken in relation to the CIRP
must be completed within the outer limit of 330 days from the insolvency
commencement date, including extensions and the time taken in legal proceedings. If
the delay or a large part thereof is attributable to the tardy process of the AA and/or
the NCLAT itself, it may be open in such cases for the AA and/or NCLAT to extend time
beyond 330 days.
5 AMIPL’s resolution
plan
a. The appeals filed by the CoC of ESIL and other Civil Appeals are allowed thereby
setting aside NCLAT’s order
b. CIRP of the CD in this case will take place in accordance with the resolution plan of
AMIPL as amended and accepted by the CoC on 27th March, 2019

34. Key inferences from Hon'ble SC judgment
It is the commercial wisdom of the requisite majority of the CoC that must prevail on the facts of any given
case, which would include distribution of assets. It is, therefore, not possible that the AA and consequently,
the NCLAT would be vested with the discretion that is vested in the CoC
However, while executing the commercial wisdom by the CoC, it is their duty to take into consideration the
interests of operational and dissenting financial creditors as provided in Section 30(2) of IBC
The limited judicial review available to AA has to be within the four corners of section 30(2) of IBC. In respect
of the NCLAT, it has to be within parameters of section 32 read with section 61(3) of the Code. Such review can
in no circumstance trespass upon a business decision of the majority of the CoC

35. Thank You
DVS Advisors LLP
India-Singapore-London-Dubai-Malaysia-Africa
www.dvsca.com
Copyrights © 2019 DVS Advisors LLP
Scan the QR Code to Join our
Research Group on WhatsApp
Scan the QR Code to explore more
Research from our Website