Dineshbhai Premjibhai Lathidadia Vs. Sarvodaya Sahakari Bank Ltd. and Anr. - “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.

  NCLAT (2026.04.24) in Dineshbhai Premjibhai Lathidadia Vs. Sarvodaya Sahakari Bank Ltd. and Anr. [(2026) ibclaw.in 558 NCLAT, Company Appeal (AT) (Ins) No. 2147 of 2024 with Company Appeal (AT) (Ins) No. 621 of 2025] held that;-

• There is therefore, little difficulty in holding that the date of admission of a Claim by the IRP grants a fresh date for commencement of limitation and when the Claims are subsequently updated it pushes the date of terminus a quo to that date.

• An Acknowledgment for liability itself is sufficient and it need not necessarily be accompanied by a promise to pay as per decision in Hetal Enterprises v. New India Assurance Company Ltd. 2012 (1CCC 458 Bom). Further, an acknowledgment under Section 18 of the Limitation Act, 1963 can be with respect to not only the property or Right, but it can be even in regard to the Liability.

• There is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgment in writing, signed by a party or its agent authorised in that behalf, have the effect of creating a fresh starting of limitation.

• In view of the foregoing discussion, we are not persuaded to accept the submission of the Appellant that Notice under Rule 7 (1) issued in Form-B to the Guarantor, demanding repayment of the default amount, has to be treated as Notice for invoking guarantee. Default before issuance of Notice under Rule 7(1), must exist on the part of the Guarantor.

• Secondly, we notice that there is no dispute between the parties pertaining to the invocation of guarantee on 11.08.2016, filing of summary suit before the JR on 24.10.2016 and passing of decree by the JR on 15.09.2017 and this period was admittedly expiring on 14.09.2020 and in our considered opinion the decree passed by the JR would provide a fresh cause of action of three years which would conclude in ordinary way on 14.09.2020.

• “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.

Excerpts of the Order;

Both above placed appeals are connected with each other and the issue involved in both the appeals is identical, therefore for the sake of convenience and for the purpose of appreciation of evidence, both these appeals are being disposed of by passing this common judgment.

Analysis and Findings

# 31. Having heard Ld. Counsel for the parties and having perused the record a short question which arise for adjudicating is as to whether the application filed by the Respondent no. 1 under Section 95 of the Code was within the limitation period and secondly, as to whether if the civil court has passed a decree during the commencement of the original period of limitation of three years whether the same would provide a fresh cause of action starting the three years’ limitation a fresh.

# 32. We also notice that almost all the facts pertaining to the happening of events appears to be admitted to the parties and in this regard a timeline prepared by the RP and has also been filed through its written submissions appears to be the true depiction of the facts and is reproduced as under for our convenience:

# 33. We notice that the factual matrix barring some minor facts is admitted to the parties. It appears to be an admitted fact as is also reflected from the petition filed by the Respondent No. 1 under Section 95 of the Code before the Ld. Adjudicating Authority that the guarantee advanced by the appellants was invoked on 11.08.2016 and thereafter on 24.10.2016 a summary suit no. 144 of 2016 was filed under Section 99 (4) of the Gujarat Co-operative Societies Act (Act) before Ld. Joint Registrar and Member, Board of nominees, Surat, Gujarat, JR.

# 34. It is also an admitted fact that the above mentioned suit was decreed on 15.09.2017 directing repayment of Rs. 28,865,468.35/- along with 13% compound interest thereon payable by the CD and all personal guarantors, including appellants to the Respondent No.1.

# 35. It also appears to be an admitted fact that no amount after the passing of this decree has been paid by the Appellants to the Respondent Bank.

# 36. It also appears to be an admitted fact that on 01.07.2022, a demand notice under Section 95 (4) (b) of the Code was issued by the Respondent Bank to the appellants which is stated to have been returned by the appellants and it is claimed by the Respondent Bank that this notice was again delivered to the appellants through email on 14.07.2022 and 16.07.2022.

# 37. It also appears to be an admitted fact that the Respondent Bank has filed petition under Section 95 of the IBC before the Ld. Adjudicating Authority on 14.11.2022 which was registered on 11.01.2023, however was dismissed on 22.12.2023 as defective with the liberty to file fresh petition and it was thereafter on 18.06.2024, petition under Section 95 of the Code was filed by the Respondent Bank whereon, after appointment of the Resolution Professional and having perused its reports the impugned orders have been passed by the Ld. Adjudicating Authority admitting the petitions filed by the Respondent Bank under Section 95 of the Code.

# 38. It is to be recalled that part I of the Code is placed under the heading preliminary which contains definition clause and under Section 3, subsection (11) of it the “debt” has been defined as under: –

(11) “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt;

# 39. It is also fruitful to mention here the manner in which the “default” has been defined under the Code under Section 3(12) of the Code which is also reproduced as under: –

(12) “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not 1[Paid] by the debtor or the corporate debtor, as the case may be;

# 40. In part II of the Code which is dedicated to insolvency resolution and liquidation for corporate persons in Section 5(22) “personal guarantor” has been defined as under: –

(22) “personal guarantor” means an individual who is the surety in a contract of guarantee to a corporate debtor;

# 41. Since, the application has been filed by the Respondent No. 1/ Financial Creditor under Section 95 of the code, therefore, the same is also reproduced as under: – . . . 

# 42. This Appellate Tribunal in IDBI Bank vs. Hemangi Patel [(2025) ibclaw.in 599 NCLAT] : 2025 SCC OnLine NCLAT 1263 Opined as under:

• 8. Hon’ble Supreme Court, however, held that claim of acknowledgment under Section 18 on basis of letter dated 29.01.2020 cannot be accepted since the said acknowledgement was subsequent to expiry of 3 years. Hon’ble Supreme Court relied on earlier judgment of Hon’ble Supreme Court in the matter of ‘B.K. Educational Services Pvt. Ltd.’ v. ‘Parag Gupta & Associates’, [(2019) 11 SCC 633], where Article 137 of the Limitation Act was held to be applicable and limitation as 3 years. Hon’ble Supreme Court held that recovery certificate will give a fresh cause of action and application brought within 3 years of issue of recovery certificate is well within time. With regard to two recovery certificates, with respect to which Section 7 was initiated within 3 years, Hon’ble Supreme Court held the same to be within limitation relying on Article 137 of the Limitation Act. In the above context, following was laid down in paragraph 24:

• “24. What has been filed before NCLT is a composite application based on three recovery certificates, two of which have been instituted within the three-year period as postulated in Article 137 of the Limitation Act. The third recovery certificate was issued in the year 2015. Thus, there is more than three years’ gap between the date of issue thereof and the date of filing of the application before NCLT. But a recovery certificate under the 1993 Act is also clothed with the character of a deemed decree. The provisions of Section 19 (22-A) of the 1993 Act specifies:

• “19. Application to the Tribunal.—(1)-(22) * * * (22-A) Any recovery certificate issued by the Presiding Officer under sub-section (22) shall be deemed to be decree or order of the Court for the purposes of initiation of winding-up proceedings against a company registered under the Companies Act, 2013 (18 of 2013) or limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009) or insolvency proceedings against any individual or partnership firm under any law for the time being in force, as the case may be.”

• 10. From the above it is clear that Hon’ble Supreme Court in the above case which is relied by the appellant relying on the earlier judgment in the matter of ‘Kotak Mahindra Bank Ltd.’ (Supra) held that limitation for filing Section 7 application is only 3 years as per Article 137. We, thus are of the view that submission of the appellant relying on the above judgment that Hon’ble Supreme Court held that limitation will be 12 years with respect to a decree is wholly incorrect and is not borne out from the judgment.

• 13. We thus do not find any substance in the submission of the counsel for the appellant that for filing an application under IBC 12 years limitation will apply. The judgment relied by the counsel for the appellant in ‘Tottempudi Salalith’ (Supra) also does not lay down any such proposition as contended by the counsel for the appellant. The adjudicating authority in the impugned order come to the conclusion that Section 95 application filed by the IDBI Bank was filed after expiry of three years period of limitation even after giving the benefit of judgment of the Hon’ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 in ‘Re: Cognizance for Extension of Limitation’.

• 14. We do not find any error in the order of the adjudicating authority rejecting Section 95 application filed by the appellant as barred by time. There is no merit in the appeals. Both the appeals are dismissed.

# 43. In Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. and Anr., (2025) ibclaw.in 845 NCLAT, it is Observed as under:

• 19. There is therefore, little difficulty in holding that the date of admission of a Claim by the IRP grants a fresh date for commencement of limitation and when the Claims are subsequently updated it pushes the date of terminus a quo to that date.

# 44. In State Bank of India vs. Gourishankar Poddar & Anr. (2025) ibclaw.in 17 NCLAT this Appellate Tribunal held as under:

• 48. The last issue relates to the limitation in filing the CIRP petition. In this regard it is a settled law that the liability of the Corporate Debtor and the guarantor being Respondent No. 1 are co-terminus. Thus, liability for Respondent No. 1 would arise only when amounts became and went due by the Corporate Debtor. Consequently, any acknowledgement of debt by the principal borrower is also considered an acknowledgement by the guarantor under the Act of 1963. This position has been upheld by this Appellate Tribunal in E.M. Najeeb Ellias Mohammed, Promoter of Air Travel Enterprises India Ltd. v. Union Bank of India [2024 SCC OnLine NCLAT 254]. Relevant paras 65 to 67 are extracted below:

• “65. An Acknowledgment for liability itself is sufficient and it need not necessarily be accompanied by a promise to pay as per decision in Hetal Enterprises v. New India Assurance Company Ltd. 2012 (1CCC 458 Bom). Further, an acknowledgment under Section 18 of the Limitation Act, 1963 can be with respect to not only the property or Right, but it can be even in regard to the Liability.

• 66. An Acknowledgment of a liability made by the Principal Borrower should be considered as an acknowledgment of liability, on behalf of Guarantor.

• 67. A Revival Letter/ an acknowledgment, executed by the Principal Borrower on the authorization binds the Guarantor.”

# 45. The Hon’ble Supreme Court again in Kotak Mahindra Bank Ltd. vs. Key Precision Parts Pvt. Ltd. & Ors. [(2022) ibclaw.in 99 SC] : 2022 SCC OnLine SC 978 observed as under:

• 31. Under Section 25(3), a debtor can enter into an agreement in writing, to pay the whole or part of a debt, which the creditor might have enforced, but for the limitation of a suit in law. A written promise to pay the barred debt is a valid contract. Such a promise constitutes novation and can form the basis of a suit independent of the original debt, for it is well settled that the debt is not extinguished, the remedy gets barred by passage of time as held by this Court in Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay.

• 33. There is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgment in writing, signed by a party or its agent authorised in that behalf, have the effect of creating a fresh starting of limitation. The difference is that an acknowledgment under Section 18 of the Limitation Act has to be made within the period of limitation and need not be accompanied by any promise to pay. If an acknowledgment shows existence of jural relationship, it may extend limitation even though there may be a denial to pay. On the other hand, Section 25(3) is only attracted when there is an express promise to pay a debt that is time-barred or any part thereof. Promise to pay can be inferred on scrutinising the document. Only the promise should be clear and unconditional.

# 46. The Hon’ble Supreme Court in Laxmi Pat Surana vs Union Bank of India & Anr. [(2021) ibclaw.in 53 SC] : (2021) SCC OnLine SC 267 Opined as under:

• 43. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate action under Section 7 IBC. However, Section 7 comes into play when the corporate debtor commits “default”. Section 7, consciously uses the expression “default” – not the date of notifying the loan account of the corporate person as NPA. Further, the expression “default” has been defined in Section 3(12) to mean non-payment of “debt” when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. In cases where the corporate person had offered guarantee in respect of loan transaction, the right of the financial creditor to initiate action against such entity being a corporate debtor (corporate guarantor), would get triggered the moment the principal borrower commits default due to non-payment of debt. Thus, when the principal borrower and/or the (corporate) guarantor admit and acknowledge their liability after declaration of NPA but before the expiration of three years therefrom including the fresh period of limitation due to (successive) acknowledgments, it is not possible to extricate them from the renewed limitation accruing due to the effect of Section 18 of the Limitation Act. Section 18 of the Limitation Act gets attracted the moment acknowledgment in writing signed by the party against whom such right to initiate resolution process under Section 7 IBC enures. Section 18 of the Limitation Act would come into play every time when the principal borrower and/or the corporate guarantor (corporate debtor), as the case may be, acknowledge their liability to pay the debt. Such acknowledgment, however, must be before the expiration of the prescribed period of limitation including the fresh period of limitation due to acknowledgment of the debt, from time to time, for institution of the proceedings under Section 7 IBC. Further, the acknowledgment must be of a liability in respect of which the financial creditor can initiate action under Section 7 IBC.

# 47. The Hon’ble Supreme Court again in Order dated 10.01.2022 passed in Suo Motu W.P. (C) No. 03/2020 exempting limitation during Covid-19. Held as under:

• 5. Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions:

• I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings.

• II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.

• III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.

• IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. As prayed for by learned Senior Counsel, M.A. No. 29 of 2022 is dismissed as withdrawn.

# 48. The only issue which has been raised by the appellant in this appeal is pertaining to the fact that both the petitions are barred by limitation. According to the appellants the personal guarantee given by the appellants was invoked on 11.08.2016 and summary suit was filed on 24.10.2016 whereon a decree was passed on 15.09.2017 and the demand notices to the personal guarantors under Form B was issued on 11.07.2022 and 14.07.2022 and the earlier petitions CP (IB) No. 13 of 2023 and CP (IB) No. 11 of 2023 were filed on 14.11.2022 dismissed on 22.12.2023 being defective, with the liberty to file a fresh petitions and thereafter the fresh petitions have been filed whereon the impugned orders have been passed.

# 49. At this juncture, it is also important to see as to how the Ld. Adjudicating Authority has disposed of the petitions filed by the Respondent Bank and in both the impugned orders the relevant paragraph no. 18 to 22 are identical and therefore reproduced below for the purpose of convenience.

• “18. As regards limitation aspect is concerned, in the present case admittedly Corporate Debtor after availing Credit facilities committed default. Consequently, the loan accounts of the Corporate Debtor were classified as NPA on 30.07.2016. Thereafter, on 24.10.2016 the Applicant Bank filed Summary Suit No.144/2016 U/s 99(4) of the Gujarat Co-Operative Societies Act against the Corporate Debtor, Respondent/PG & others for recovery which was allowed vide order dated 15.09.2017. On non-payment/fresh default, gave fresh cause of auction. Thus, the period of Limitation was stand extended for three years w.e.f. order dated 15.09.2017 to 14.09.2020 in terms of section 18 of the Limitation Act, 1963.

• 19. However, in view of the COVID pandemic period, Hon’ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 in Re: Cognizance for Extension of Limitation as well as in the matter of M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd. (2024 INSC 155) dated 01.03.2024 held that the period i.e. 15.03.2020 to 28.02.2022 is liable to be excluded for the purpose of calculating the period of limitation. It is also held that in the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.

• 20. In the present case the said excluded period comes to total number of 531 days. In ordinary circumstances the limitation period would have come to an end on 14.09.2020. However, after exclusion of 531 days, the three years’ limitation period would come to an end on 16.08.2024. Thereby meaning that the limitation period available to the Applicant Bank for invoking the personal guarantee would come to an end on 16.08.2024.

• 21. In the present case the Applicant Bank has invoked the personal guarantee by serving Form-B being Demand Notice dated 01.07.2022 Section 95(4) (b) of the IBC, 2016 r.w. Rule 7(1) of the I&B (AAA for IRP for PGCD) Rules, 2019 after fresh default in terms of order dated 15.09.2017 passed in the Summary Suit No.144/2016 U/s 99(4) of the Gujarat Co-Operative Societies Act with in period of limitation in terms of section 18 of the Limitation Act, 1963.

• 22. Hence, in our view, even taking the date of invocation of Guarantee dated 01.07.2022 applying the judgment of Hon’ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 (should be 2020) In Re: Cognizance for Extension of Limitation as well as in the matter of M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd. (2024 INSC 155) dated 01.03.2024, the present Petition filed on 19.06.2024 is very much within limitation as period of limitation for the same is available to the Applicant Bank till 16.08.2024”.

# 50. Perusal of the impugned orders passed by the Ld. Adjudicating Authority would reveal that Ld. Adjudicating Authority has taken the date i.e. 30.07.2016 as the date on which the loan account of the CD was classified as NPA and thereafter considered the decree passed by the Ld. JR under the Section 99 (4) of the Act on 15.09.2017 and goes on to hold that non-payment/ fresh default provided fresh cause of action and thus found the period of limitation extended for three years with effect from order of the JR dated 15.09.2017 which is to end on 14.09.2020 and thereafter by the implication of the happening of the Covid Pandemic and in view of the Suo Motu- WP (Civil) No. 3 of 2020 In Re: Cognizance for extension of limitation dated 10.01.2022 as well as the law laid down in M/s Arif Azim Company Ltd. vs. M/s Aptech Ltd. [(2024) ibclaw.in 80 SC] : (2024 INSC 155) dated 01.03.2024 held that the period from 15.03.2020 to 28.02.2022 is liable to be excluded from calculating the period of limitation and that when the actual balance period of limitation is remaining w.e.f. 01.03.2022 is greater than 90 days than longer period shall apply and has calculated that period as of 531 days and found that this period (after exclusion of 531 days) was ending on 16.08.2024 and thus hold that the limitation period available to the applicant bank for invoking the personal guarantee would come to an end on 16.08.2024.

# 51. It was further held by Ld. Adjudicating Authority that the bank has invoked personal guarantee by serving Form-B (demand notice on 01.07.2022) under Section 95 (4) (b) of the Code read with Rule 7 (1) of the PG to CD Rules, 2019 and found that in terms of decree dated 15.09.2017 passed by the JR the petitions are within limitation.

# 52. We notice that the Ld. Adjudicating Authority has committed a manifest illegality in taking the guarantee invocation date as 01.07.2022 by issuance of demand notice on 01.07.2022 under Section 95 (4) (b) of the Code read with Rule 7 (1) of the PG to CD Rules, 2019 while the guarantee had already been invoked by the Respondent Bank admittedly on 11.08.2016. It appears to be a settled law that by issuance of notice under Form-B the guarantee may not be invoked and in this regard the law laid down by a Co-ordinate Bench of this Appellate tribunal in SBI vs. Deepak Kumar Singhania, (2025) ibclaw.in 153 NCLAT may be recalled and relevant part of the same is reproduced as under:

• “17. The Notice, thus, contemplate demanding payment of the amount of default. The above Rule clearly indicate that Demand Notice has to be issued, demanding payment of the amount in default. Thus, the default by Guarantor has to exist on the date when Notice in Form-B is being issued. When we read Section 95, sub-section (4) and Rule 7 of 2019 Rules, the above is the only intendment of the legislative scheme, i.e. default on the part of Guarantor should exist on the date when Notice in Form-B has to be issued. We have noticed the definitions of ‘debt’ and ‘default’ in Section 3 (11) and (12) of the IBC. Default shall arise on account of non-payment of debt, when whole or part of it become due. ‘Debt’ means a liability or obligation in respect of a claim which is due from any person. Thus, for a default, debt has to be due and Debtor shall be only that person, to whom debt is due. A Personal Guarantor becomes a Debtor only when guarantee is invoked, making him liable to make the payment to the Lender. We have noticed Clause 2 and Clause 21 of the Deed of Guarantee in the foregoing paragraphs of this judgment, which clearly contemplate that liability on Guarantor shall arise only when demand is made by the Lender, in event Principal Borrower fails to repay the amount. In the present case, there is no case setup by the Appellant that at any point of time guarantee was invoked, except issuance of Notice in Form-B, which is claimed by the Appellant to be treated as Notice for invocation of guarantee. Further, we have noticed the definition of ‘Guarantor’ under Rule 3(1)(e), which while defining a ‘Guarantor’ contain two conditions, i.e. (i) who is a Personal Guarantor to a Corporate Debtor; and (ii) in respect of whom, guarantee has been invoked by the Creditor and remains unpaid in full or part. Learned Counsel for the Appellant has contended that expression ‘and’ used in Rule 3 (1)(e) needs to be read as ‘or’ to make the provision workable and to avoid producing an unintelligible and absurd result. Learned Counsel for the Appellant has relied on two judgments of the Hon’ble Supreme Court in support of the above submission, i.e. AIR 1968 SC 1450 – Ishwar Singh Bindra and Ors. vs. State of U.P. The Hon’ble Supreme Court in the above case had occasion to consider the definition of ‘drug’ contained in Section 3(b)(i) of Drugs Act 1940. Expression ‘and’ used in Section 3(b)(1) of the Drugs Act was considered in the said case and in paragraph 11 of the judgment, following was laid down:

• “11. Now if the expression “substances” is to be taken to mean something other than “medicine” as has been held in our previous decision it becomes difficult to understand how the word “and” as used in the definition of drug in Section 3(b)(i) between “medicines” and “substances” could have been intended to have been used conjunctively. It would be much more appropriate in the context to read it disconjunctively. In Stroud’s Judicial Dictionary, 3rd Edn. it is stated at p. 135 that “and” has generally a cumulative sense, requiring the fulfilment of all the conditions that it joins together, and herein it is the antithesis of or. Sometimes, however, even in such a connection, it is, by force of a contexts, read as “or”. Similarly, in Maxwell on Interpretation of Statutes, 11th Edn., it has been accepted that “to carry out the intention of the legislature it is occasionally found necessary to read the conjunctions ‘or’ and ‘and’ one for the other”.

• The coordinate bench of this Appellate Tribunal in the above noted case further opined as under: –

• “20. The above judgment reiterates that one of the basic principles of interpretation of statutes is to construe them according to plain, literal and grammatical meaning of the words. When we look into definition of ‘Guarantor’ in Rule 3(1)(e), fulfilment of both the condition that Debtor is a Personal Guarantor to a Corporate Debtor and in respect of whom guarantee has been invoked, has been cumulatively used. The submission of the Appellant that use of the expression ‘and’ has to be read as ‘or’, shall not further the statutory object and purpose. Guarantor with regard to whom guarantee has not been invoked, shall not be a Debtor and no default can be committed by Guarantor, unless guarantee is invoked as per the terms of Deed of Guarantee. Thus, the insolvency resolution process against a Guarantor, against whom debt has not become due, is not understandable. We, thus, reject the submission of the Appellant that word ‘and’ used in Rule 3(1)(e) has to be read as ‘or’. Reading of word ‘or’ in place of ‘and’ shall be not in accordance with the statutory scheme and shall be against the statutory intendment.

• 22. The requirement of date, when the default occurred, itself contemplate the default by Guarantor, when Application is filed against Guarantor. Obviously, the default has to be of the Guarantor and mentioning of date when the default occurred, itself contemplate default on the part of Guarantor, i.e. invocation of guarantee as per Deed of Guarantee. Thus, non-mention of requirement of whether guarantee has been invoked and proof thereof, is inconsequential, since the date when default occurred is specifically asked for.

• It was further held that default shall arise on the part of Guarantor only when Demand Notice is issued, as contemplated in the Deed of Guarantee in following words: –

• “27. In view of the foregoing discussion, we are not persuaded to accept the submission of the Appellant that Notice under Rule 7 (1) issued in Form-B to the Guarantor, demanding repayment of the default amount, has to be treated as Notice for invoking guarantee. Default before issuance of Notice under Rule 7(1), must exist on the part of the Guarantor. Hence, we reject the submission of the Appellant that Notice under Rule 7, sub-rule (1) is a Notice, invoking the guarantee. We, thus, do not find any error in the order of the Adjudicating Authority, rejecting Section 95 Application filed by the SBI. There is no merit in the Appeal. The Appeal is dismissed. There shall be no order as to costs.”

• The aforesaid law propounded by a Bench of this Appellate Tribunal comprising three Hon’ble Members has clearly laid down the law that it would be mandatory on the part of the Financial creditor to invoke the guarantee before issuing a notice under Rule 7(1) in Form B of 2019 Rules and also that default before issuance of such notice must exist on the part of the guarantor and has therefore rejected the submissions as canvassed by Ld. Counsel for the Appellant by holding that the notice given under Rule 7(1) of 2019 Rules is not a notice for the purpose of invoking the guarantee.

# 53. Secondly, we notice that there is no dispute between the parties pertaining to the invocation of guarantee on 11.08.2016, filing of summary suit before the JR on 24.10.2016 and passing of decree by the JR on 15.09.2017 and this period was admittedly expiring on 14.09.2020 and in our considered opinion the decree passed by the JR would provide a fresh cause of action of three years which would conclude in ordinary way on 14.09.2020. In this regard the law laid down by this Appellate tribunal in IDBI Bank vs. Hemangi Patel (supra) and by the Hon’ble Supreme Court in B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates [(2018) ibclaw.in 32 SC] may be recalled and relevant part of these judgments is reproduced as under:

• 41. Shri Dholakia argued that the Code being complete in itself, an intruder such as the Limitation Act must be shut out also by application of Section 238 of the Code which provides that, “notwithstanding anything inconsistent therewith contained in any other law for the time being in force”, the provisions of the Code would override such laws. In fact, Section 60(6) of the Code specifically states as follows: “60. Adjudicating authority for corporate persons. – (1)- (5) * * * (6) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded.” This provision would have been wholly unnecessary if the Limitation Act was otherwise excluded either by reason of the Code being complete in itself or by virtue of Section 238 of the Code. Both, Section 433 of the Companies Act as well as Section 238-A of the Code, apply the provisions of the Limitation Act “as far as may be”. Obviously, therefore, where periods of limitation have been laid down in the Code, these periods will apply notwithstanding anything to the contrary contained in the Limitation Act. From this, it does not follow that the baby must be thrown out with the bathwater. This argument, therefore, must also be rejected.

• 42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.

# 54. In Dena Bank vs. C. Shivakumar Reddy [(2021) ibclaw.in 69 SC] : (2021) 10 SCC 330 Hon’ble Supreme Court held as under:

• “141. Moreover, a judgment and/or decree for money in favour of the financial creditor, passed by the DRT, or any other tribunal or court, or the issuance of a certificate of recovery in favour of the financial creditor, would give rise to a fresh cause of action for the financial creditor, to initiate proceedings under Section 7 IBC for initiation of the corporate insolvency resolution process, within three years from the date of the judgment and/or decree or within three years from the date of issuance of the certificate of recovery, if the dues of the corporate debtor to the financial debtor, under the judgment and/or decree and/or in terms of the certificate of recovery, or any part thereof remained unpaid”.

# 55. Ld. Adjudicating Authority after holding that the period of limitation to file a petition was available till 14.09.2020 calculated that 531 days in view of the judgment of the Hon’ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022, would be excluded from counting the limitation period and in this way the limitation period would come to end on 16.08.2024.

# 56. We are of the considered view that Ld. Adjudicating authority has also committed patent illegality in computing the period which may be excluded from counting the limitation period as according to the law laid down by the Hon’ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022 and M/s Arif Azim Company Ltd. vs. M/s Aptech Ltd. [(2024) ibclaw.in 80 SC] : (2024 INSC 155), the period from 15.03.2020 to 28.02.2022 could only be excluded however where the limitation period has expired before 28.02.2022 is greater than 90 days that longer period would be available to the petitioner from 01.03.2022.

# 57. The appellant in their written submissions filed before us has calculated this period from 15.03.2020 to 14.09.2020 as 182 days while the Respondent No. 1 in his written submissions has counted this period from 15.03.2020 to 14.09.2020 (184 days) and by such computation the period was to expire on 31.08.2022 and according to the appellants this period was to expire on 30.08.2022. We are unable to understand as to on what basis Ld. Adjudicating Authority has calculated the period which may be excluded in view of the order of the Hon’ble Supreme Court In Re: Cognizance for extension of limitation as 531 days, therefore in his regard also Ld. Adjudicating Authority has committed an illegality.

# 58. Ld. Counsel for the Respondent no. 1 has submitted that even if the period of limitation was to expire on 31.08.2022 but the same has extended first on the score that a letter has been written by the appellants to the Respondent Bank on 17.03.2022 unconditionally promising and undertaking to pay 77% of the principal debt owed to the appellants and by this acknowledgment in writing the period of limitation has further extended for another three years.

# 59. Secondly, it is also argued by the Respondent Bank that another letter of date 12.07.2022 was send by the appellant to pay entire principal debt amount owed to him which would further extend the limitation period from another three years in view of Section 18 of the Indian Limitation Act and the petitions filed by the Respondent No. 1 on 14.11.2022 and thus the same were within limitation.

# 60. Another argument which has been taken by the Ld. Counsel for the Respondent No. 1 is in terms that the claim of the Bank was admitted in the CIRP of the CD on 02.03.2020 and keeping in view the law laid down by the Co-ordinate Bench of this Appellate tribunal in Shankar Khandelwal (supra) and SBI vs. Gauri Shankar Poddar it will amount to an acknowledgment by which the limitation has further extended for another three years and since by writing letters dated 17.03.2022, 12.07.2022 unconditional promise to pay the debt has been acknowledged by the appellants the same would amount to acknowledgment in writing under Section 18 of the limitation act and thus the limitation has extended till 12.07.2025. Reliance in this regard has been placed on Kotak Mahindra Bank Ltd. vs. Key Precision(supra).

# 61. It appears to be prima facie true that since the decree was passed by the JR on 15.09.2017 the limitation period according to this decree which has provided a fresh cause of action would have extended the limitation period till 14.09.2020 and keeping in view the order of the Hon’ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022 the period of 184 days would have been excluded from counting the limitation period and by such exclusion the limitation would have expired on 31.08.2022. Keeping in view the communication of the appellants dated 17.03.2022 and 12.07.2022 a copy of which has been placed at (page no. 256 to 265) (268 to 269) of the appeal paper book of CA (AT) (Ins) No. 2147 of 2024 the same may amount to an acknowledgment in writing and this acknowledgment would have extended the limitation for a further period of three years from such date and the petition appears to have been filed within this period.

# 62. However, we notice that in none of the impugned order Ld. Adjudicating Authority has discussed anything about the filing of claim by the Respondent Bank before the IRP or the RP in the CIRP of the CD nor any discussion has been made pertaining to the letters dated 17.03.2022 and 12.07.2022 written by the appellants to Respondent No. 1 acknowledging the debt and therefore in absence of the same we are not in a position to dispose of the issue of limitation emerging between the parties and therefore there appears no option before us except to remand the matter again to the Ld. Adjudicating Authority for deciding it afresh.

# 63. Keeping in view all the facts and circumstances of the case and for the reasons given herein before the impugned order may not with stand the test of law and therefore are set aside.

# 64. Resultantly, the appeals filed by the appellants are allowed. The matter is remanded back to Ld. Adjudicating Authority for deciding it afresh after providing an opportunity by passing a reasoned order. For this purpose, the CP (IB) No. 249/NCLT/AHM/2024 with I.A. No. 1563/NCLT/AHM/2024 and CP (IB) No. 231/NCLT/AHM/2024 with I.A. No. 1270/NCLT/AHM/2024 is revived on the board of the Ld. Adjudicating Authority.

# 65. The parties shall appear before Ld. Adjudicating Authority on 12.05.2026. There is no order as to costs.

# 66. Pending I.A.’s if any is also disposed of.

# 67. We request the Ld. Adjudicating authority to make all endeavor to dispose of the aforesaid matter afresh within two months from appearance of the party before it.

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Indian Bank and Ors. Vs. State Bank of India and Ors. - Once liquidation value for secured creditor has been computed on the basis of resolution plan and approved within the CoC framework by the AA, the entitlement of a creditor cannot be re-opened even by the CoC, not to say the Monitoring Committee.

  NCLAT (2026.04.08) in Indian Bank and Ors. Vs. State Bank of India and Ors. [(2026) ibclaw.in 456 NCLAT, Company Appeal (AT) (Ins.) No. 629 of 2024] held that;-

• Section 30(2)(b) provides a statutory safeguard to dissenting financial creditors by ensuring that they receive not less than the amount they would have received in liquidation.

• The fact that the resolution value is lower than the liquidation value does not permit deviation from the mandate of Section 30(2)(b). The CoC itself, being fully aware of this position, adopted a distribution mechanism that ensures compliance with the statutory requirement.

•  At this juncture, it is also necessary to emphasize that once the CoC, in exercise of its commercial wisdom under Section 30(4), approves a Resolution Plan and the same is thereafter approved by the Adjudicating Authority under Section 31, the plan attains finality and binding force in law. Such approval creates a complete and enforceable framework governing the rights and obligations of all stakeholders.

• The Monitoring Committee, which is constituted by the CoC, only for a limited purpose of supervising and facilitating the implementation of the approved plan, cannot assume the role of the CoC or the Adjudicating Authority to revisit or modify the terms of the plan.

• The sanctity and finality attached to an approved Resolution Plan cannot be diluted by subsequent decisions of the Monitoring Committee.

• The Monitoring Committee is not vested with any power to revisit or alter the commercial decisions of the CoC. Its role is limited to monitoring and implementing the approved Resolution Plan. Any deviation from the distribution mechanism would amount to modifying the Resolution Plan itself, which is impermissible in law.

• It was categorically held that the commercial wisdom of CoC regarding manner of distribution, once exercised, cannot be changed subsequently even by the CoC.

• Once liquidation value for secured creditor has been computed on the basis of resolution plan and approved within the CoC framework by the AA, the entitlement of a creditor cannot be re-opened even by the CoC, not to say the Monitoring Committee.

Excerpts of the Order;

The present Appeal has been preferred by Indian Bank, UCO Bank, Bank of Baroda, ICICI Bank Limited and Union Bank of India (collectively, the Appellant Banks), under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as Code), assailing the common Judgment and Order dated 05.02.2024 passed by the Ld. Adjudicating Authority (National Company Law Tribunal, Cuttack Bench) in I.A. No. 149/CB/2023, I.A. No. 150/2023 and I.A. No. 285/2023 in CP(IB) No. 111/CTB/2020.

# 2. The I.A. No. 149/CB/2023 was filed by State Bank of India, the dissenting Financial Creditor and Respondent No.1 herein seeking appropriate orders of Adjudicating Authority for setting aside distributions of payments to dissenting Financial Creditors decided in the 4th meeting of Monitoring Committee held on 04.05.2023 being void and contrary to the provisions of Section 30 (2) (b) r/w Section 53 (1) of the Code and to direct to make payment of the amount of Rs. 64.47 crores to the applicant. The I.A. No. 150/2023 was filed by Indrani Patnaik, the Successful Resolution Applicant (SRA) and Respondent No.2 in this appeal, for a declaration that the SRA has complied with the resolution plan dated 27.05.2022 as modified by the addendum dated 29.02.2022 and that the resolution plan stands implemented. The I.A. No. 285/2023 was filed by State Bank of India seeking leave of Adjudicating Authority to amend I.A. No. 149 to bring on record a copy of the resolution plan as approved by the Adjudicating Authority vide order dated 20.03.2023 and also relevant minutes of Monitoring Committee meetings.

# 3. By the aforesaid impugned order, the Ld. Adjudicating Authority issued directions affecting the distribution of Resolution Plan proceeds to State Bank of India, which was a dissenting secured financial creditor in the Committee of Creditors of the Corporate Debtor, OCL Iron and Steel Ltd. The impugned directions also concern the implementation of the Resolution Plan submitted by M/s Indrani Patnaik, the Successful Resolution Applicant (Respondent No. 2), and impact other stakeholders including Asia Opportunities (III) Mauritius Limited (Respondent No. 3) and Punjab National Bank (Respondent No. 4 – Performa Respondent). The Appellant Banks herein are assenting financial creditors, who had voted in favour of the Resolution Plan and the approved distribution mechanism, and have now challenged the order of the Adjudicating Authority on the grounds that it interferes with the commercial wisdom of the Committee of Creditors.

Brief facts of the case

# 4. The brief facts of the case are as given below:

i. Indian Bank, being one of the financial creditors, initiated proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor (OCL Iron and Steel Ltd.) and pursuant to an order dated 20.09.2021, the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP). Mr. Vijay Kumar Iyer was appointed as Resolution Professional (RP) by the Adjudicating Authority vide order dated 25.11.2021.

ii. Upon collation of claims, the Committee of Creditors was constituted comprising of nine financial creditors with the following voting shares: Asia Opportunities (III) Mauritius Limited (36.22%), ICICI Bank (12.68%), State Bank of India (10.39%), Indian Bank (10.32%), UCO Bank (9.82%), Bank of Baroda (7.87%), Union Bank of India (7.11%), Punjab National Bank (0.63%) and Ganesh Ores Pvt. Ltd. (4.98%).

iii. During the 18th CoC meeting held on 23.09.2022, deliberations were undertaken regarding the distribution mechanism and formula for payment to creditors under the proposed Resolution Plan, and it was resolved that the agenda for approval of the distribution mechanism would be placed for e-voting along with the Resolution Plan.

iv. In the 19th CoC meeting held on 30.09.2022, the CoC unanimously resolved to appoint M/s K.G. Somani & Co. LLP to calculate and determine the amount payable to each creditor on the basis of the approved distribution mechanism, and it was further clarified that in the event of liquidation, proceeds attributable to secured financial creditors would be distributed as per their share in security interest, whereas in case of approval of a Resolution Plan, distribution would be in accordance with the mechanism approved in the 18th meeting.

v. An Evaluation Report estimating the attributable liquidation value was submitted by M/s K.G. Somani & Co. LLP on 07.10.2022, and in the 20th CoC meeting held on the same date, further deliberations were undertaken with respect to the distribution mechanism in the event of approval of the Resolution Plan.

vi. The Resolution Plan submitted by M/s Indrani Patnaik (SRA) was approved by the CoC through e-voting conducted between 25.09.2022 and 12.10.2022, receiving 88.98% majority vote. The Adjudicating Authority thereafter approved the Resolution Plan by order dated 20.03.2023, and a Monitoring Committee was constituted to oversee implementation of resolution plan.

vii. The 1st Monitoring Committee meeting held on 27.03.2023 and the 2nd meeting held on 02.05.2023, wherein discussions took place regarding the distribution of Resolution Plan proceeds, particularly in relation to dissenting financial creditors; however, no consensus was reached and the issue was deferred.

viii. In the 3rd and 4th Monitoring Committee meetings held on 03.05.2023 and 04.05.2023 respectively, the lack of consensus regarding distribution to dissenting financial creditors was recorded, and calculations regarding distribution of Resolution Plan proceeds were placed before the members.

ix. M/s Indrani Patnaik, being the Successful Resolution Applicant, transferred an amount of Rs. 35.20 crores on 15.05.2023 to State Bank of India as a dissenting financial creditor.

x. Aggrieved by the same State Bank of India (Respondent No.1) thereafter filed I.A. No. 149/2023 on 18.05.2023 before the Adjudicating Authority seeking to set aside the distribution decided in the 4th Monitoring Committee meeting. The Successful Resolution Applicant filed I.A. No. 150/2023 on 19.05.2023 seeking a declaration regarding compliance with the Resolution Plan.

xi. Ld. Adjudicating Authority by the impugned common order dated 05.02.2024, disposed of I.A. Nos. 149, 150 and 285 of 2023 and directed that distribution to State Bank of India, being the dissenting financial creditor, be made in accordance with Section 30(2)(b) of the Code as computed by the Evaluation Advisor, and further directed that the computation of liquidation value be re-checked and payment be made accordingly.

xii. Aggrieved by the impugned order mandating distribution to the dissenting secured financial creditor out of the upfront payment in a manner allegedly contrary to the CoC-approved mechanism and settled law, the present Appeal has been preferred by the Appellant Banks under Section 61 of the Insolvency and Bankruptcy Code, 2016.

Submissions of the Appellants

# 5. At the outset, Ld. Counsel for the Appellants submits that the present Appeal has been preferred against the impugned order dated 05.02.2024 passed by the Ld. Adjudicating Authority, wherein it has been directed that Respondent No. 1, being a dissenting secured financial creditor, be paid in proportion to its security interest in one of the Units of the Corporate Debtor, namely the Steel Unit. It is submitted that the said direction travels beyond the express terms of the Resolution Plan approved by the Committee of Creditors and is contrary to the commercial decision taken by the CoC.

# 6. Ld. Counsel further submits that the Committee of Creditors, in exercise of its commercial wisdom and as specifically clarified in the 20th CoC Meeting dated 07.10.2022, categorically resolved that dissenting secured financial creditors shall be paid strictly in terms of the distribution mechanism proposed under the approved Resolution Plan. It was never resolved that distribution would be linked to or proportionate to the individual security interest of a dissenting secured financial creditor. The Resolution Plan, as approved by the CoC, does not contemplate any distribution based on the extent or nature of the security interest held by any dissenting financial creditor.

# 7. It is submitted that the Ld. Adjudicating Authority, in the impugned order, has erroneously relied upon the decision recorded in the 19th CoC Meeting, wherein it had been discussed that liquidation proceeds attributable to secured financial creditors shall be distributed in proportion to their respective share in the security interest. He submits that the said reliance is misplaced and legally unsustainable in light of subsequent developments.

# 8. Learned Counsel submits that the Ld. Adjudicating Authority failed to take into consideration the subsequent and binding decision taken in the 20th CoC Meeting, wherein the CoC consciously and expressly resolved that in the event of approval of the Resolution Plan, dissenting secured financial creditors would be paid strictly in accordance with the distribution mechanism contained in the Resolution Plan. The decision taken in the 20th meeting was a later, deliberate, and conclusive determination of the CoC and necessarily supersedes all earlier deliberations or proposals recorded in prior meetings, including the 19th CoC Meeting.

# 9. Ld. Counsel further submits that Clause 4.1.5.2 of the Resolution Plan, which was duly approved by the CoC, expressly provides that a dissenting secured financial creditor shall be paid in terms of Section 30(2)(b) read with Section 53 of the Insolvency and Bankruptcy Code, 2016, subject to the maximum consideration agreed to be paid by the Resolution Applicant. The clause clearly limits the entitlement of a dissenting secured financial creditor to the statutory minimum as contemplated under the Code and does not confer any right to claim payment based on the entire realizable value of its security.

# 10. Further, Clause 4.1.5.3 of the Resolution Plan specifically provides that in respect of the Auto Division of the Corporate Debtor, which was proposed to be sold after implementation of the Plan, the entire sale proceeds shall be distributed exclusively among the Assenting Financial Creditors. This clause unequivocally excludes dissenting secured financial creditors from any entitlement to such proceeds.

# 11. Ld. Counsel submits that upon a conjoint reading of the decision of the CoC in its 20th meeting and Clauses 4.1.5.2 and 4.1.5.3 of the approved Resolution Plan, it is manifest that there exists no provision mandating payment to a dissenting financial creditor in proportion to its individual security interest. The impugned direction, therefore, effectively rewrites the Resolution Plan and overrides the commercial wisdom of the CoC, which is impermissible in law.

# 12. Ld. Counsel reiterates that the CoC, in its 20th meeting, expressly resolved that upon approval of the Resolution Plan, dissenting secured financial creditors would be paid strictly as proposed under the respective Resolution Plan and not on the basis of any independent computation linked to their security interest.

# 13. He further submitted that Clause 4.1.5.3 of the Resolution Plan clearly stipulates that the Auto Unit of the Corporate Debtor was proposed to be sold after implementation of the Plan and that the entire sale proceeds arising therefrom shall be distributed only among the Assenting Financial Creditors. The language of the clause is explicit and leaves no scope for any alternative interpretation.

# 14. However, the Ld. Adjudicating Authority, while passing the impugned order, has granted Respondent No. 1 the value of its security interest computed with reference to the liquidation value of both the Steel Unit and the Auto Unit of the Corporate Debtor. By adopting such an approach, the Ld. Adjudicating Authority has effectively permitted Respondent No. 1 to derive benefit not only from the liquidation value of the Steel Unit, but also from the liquidation value attributable to the Auto Unit.

# 15. Ld. Counsel submits that this direction is directly contrary to Clause 4.1.5.3 of the Resolution Plan, which specifically provides that the sale proceeds of the Auto Unit shall accrue exclusively to the Assenting Financial Creditors. The Resolution Plan does not contemplate any entitlement whatsoever of a dissenting secured financial creditor to the value or proceeds of the Auto Unit. By granting such benefit, the Ld. Adjudicating Authority has altered the distribution mechanism approved by the CoC and disturbed the inter se rights of assenting financial creditors.

# 16. Ld. Counsel submits that the issue relating to the entitlement of a dissenting financial creditor has been conclusively settled by the Hon’ble Supreme Court in ‘India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd.’ [(2021) ibclaw.in 87 SC] : [(2021) 19 SCC 672], wherein, while relying upon the earlier judgment in Jaypee Kensington Boulevard Apartments Welfare Association vs. NBCC (India) Ltd., it has been held that the limitation on the extent of the amount receivable by a dissenting financial creditor is inherent in Section 30(2)(b) of the Code. The Hon’ble Supreme Court has clarified that it was never the legislative intent that a security interest held by a dissenting financial creditor over the assets of the Corporate Debtor should enable such creditor to enforce the entire value of its security independent of the resolution framework and thereby receive an amount exceeding the liquidation value receivable within its class. Such a situation would result in inequity and imbalance among similarly placed creditors.

# 17. Ld. Counsel further submits that in the present case, there has been no statutory violation whatsoever. The distribution mechanism provided under the Resolution Plan is fully compliant with Section 30(2)(b) read with Section 53 of the Insolvency and Bankruptcy Code, 2016. The Plan ensures that dissenting secured financial creditors receive at least the amount payable to them in the event of liquidation, as mandated by law. The mechanism adopted is fair, equitable, and in consonance with the binding principles laid down by the Hon’ble Supreme Court in India Resurgence ARC (Pvt. Ltd.) vs. Amit Metaliks Ltd. [(2021) ibclaw.in 87 SC].

# 18. In view of the foregoing submissions, Ld. Counsel submits that the impugned order dated 05.02.2024 is liable to be set aside to the extent it directs payment to Respondent No. 1 in proportion to its security interest, as the same is contrary to the express terms of the approved Resolution Plan, the commercial wisdom of the CoC, and the settled position of law under the Insolvency and Bankruptcy Code, 2016.

Submissions of Respondent No.1/SBI

# 19. Shri Krishnendu Datta, Ld. Sr. Counsel appearing for Respondent No.1 / State Bank of India submits that the present Appeal filed by the assenting financial creditors is wholly misconceived and deserves to be dismissed. It is submitted that the Impugned Order dated 05.02.2024 passed by the Ld. AA correctly recognizes the legal position that the Monitoring Committee cannot alter the distribution mechanism which had already been deliberated upon and approved by the Committee of Creditors (“CoC”) in exercise of its commercial wisdom during the Corporate Insolvency Resolution Process (“CIRP”) of OCL Iron and Steel Ltd. (“Corporate Debtor”).

# 20. Learned Sr. Counsel submits that the present Appeal has been filed by the assenting financial creditors namely Indian Bank (A1), UCO Bank (A2), Bank of Baroda (A3), ICICI Bank (A4), and Union Bank of India (A5) who were members of the CoC in the CIRP of the Corporate Debtor. The Appeal challenges the Adjudicating Authority’s order dated 05.02.2024 whereby the Adjudicating Authority held that the decision of the Monitoring Committee to pay an amount of Rs. 35.2 crores to Respondent No.1, who is a dissenting financial creditor, was contrary to the distribution mechanism earlier decided by the CoC in the 18th and 19th CoC meetings, and therefore violated Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The NCLT accordingly directed that the amount payable to Respondent No.1 as determined by the evaluation advisor, namely Rs. 64.56 crores, be paid to Respondent No.1.

# 21. Learned Sr. Counsel further submits that the Appellants have challenged the Impugned Order on three principal grounds, namely: 

• (i) that the Impugned Order is allegedly contrary to the judgment of the Hon’ble Supreme Court in ‘India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd.’ [(2021) ibclaw.in 87 SC] : [(2021) 19 SCC 672]; 

• (ii) that the distribution directed to be made to Respondent No.1 allegedly grants a premium to a dissenting financial creditor since the total resolution amount under the plan is lower than the liquidation value; and 

• (iii) that Respondent No.1 allegedly has security interest only in the steel unit and not the auto unit of the Corporate Debtor.

# 22. Learned Sr. Counsel submits that each of the aforesaid grounds raised by the Appellants is completely misplaced, factually incorrect and legally unsustainable.

# 23. Learned Sr. Counsel submits that the distribution mechanism which forms the basis of the present dispute was not devised subsequently, but was specifically deliberated upon and approved by the Committee of Creditors during the CIRP process itself. The said distribution mechanism was discussed and finalized during the 18th and 19th CoC meetings, and therefore the same is binding upon all stakeholders including the Monitoring Committee, which was constituted subsequently for implementation of the resolution plan.

# 24. He submits that during the 18th CoC meeting held on 23.09.2022, the members of the CoC deliberated extensively upon the proposed distribution formula and distribution mechanism in respect of the resolution plan received during the CIRP. After detailed discussions, the CoC approved by e-voting concluded on 28.09.2022 that in the event the amount available under the resolution plan was lower than the liquidation value of the Corporate Debtor, the distribution of the proceeds would be carried out as per the share of liquidation value attributable to each secured financial creditor.

# 25. Learned Sr. Counsel further submits that during the 19th CoC meeting held on 30.09.2022, the said distribution mechanism was again taken up for discussion. During the said meeting, the CoC reaffirmed the distribution mechanism already approved in the 18th CoC meeting and further clarified that the distribution among secured financial creditors would be carried out on the basis of the share of liquidation value attributable to each creditor based on the security interest held by such creditor.

# 26. Learned Sr. Counsel submits that in the said 19th CoC meeting, all members of the CoC including the present Appellants unanimously agreed to appoint M/s KG Somani and Co. LLP as the evaluation advisor for the purpose of calculating and determining the amount payable to each creditor in accordance with the distribution formula approved by the CoC.

# 27. Pursuant to the aforesaid decision, the evaluation advisor submitted its report dated 07.10.2022 wherein the liquidation value attributable to Respondent No.1 was determined at Rs. 64.56 crores. The said computation was carried out strictly in accordance with the distribution mechanism approved by the CoC.

# 28. He further submits that during the 20th CoC meeting held on 07.10.2022, the members of the CoC specifically considered the issue of payment to dissenting financial creditors and unanimously agreed that dissenting financial creditors would be paid at least the minimum liquidation value payable to them in terms of Section 30(2)(b) read with Section 53 of the IBC.

# 29. Learned Sr. Counsel submits that thereafter the resolution plan submitted by M/s Indrani Patnaik came to be approved by the Hon’ble NCLT by order dated 20.03.2023. Respondent No.1 did not vote in favour of the resolution plan and therefore remained a dissenting financial creditor.

# 30. He submits that the approved resolution plan itself incorporates the aforesaid distribution mechanism. In particular, Clause 4.1.5.5 of the resolution plan provides that dissenting financial creditors shall be paid in priority to assenting financial creditors as per the distribution decided by the CoC, and Clause 4.1.5.6 provides that dissenting financial creditors are to be paid in accordance with Section 30(2)(b) read with Section 53 of the IBC.

# 31. Learned Sr. Counsel further submits that in terms of the distribution mechanism approved by the CoC as well as the provisions of the resolution plan, Respondent No.1 was entitled to receive the liquidation value determined by the evaluation advisor, i.e., Rs. 64.56 crores. Respondent No.1 accordingly submitted before the Monitoring Committee that approximately Rs. 64.74 crores was payable to it as a dissenting financial creditor.

# 32. Learned Sr. Counsel however submits that despite the above binding decisions of the CoC, the Monitoring Committee in its 4th meeting held on 04.05.2023 arbitrarily decided that only Rs. 35.2 crores would be paid to Respondent No.1. This decision of Monitoring Committee was incomplete departure from the distribution mechanism approved by the CoC, and amounted to an impermissible attempt by the Monitoring Committee to alter the decision of the CoC.

# 33. Learned Sr. Counsel further submits that even the Chairperson of the Monitoring Committee (the Resolution Professional) and the Monitoring Committee’s legal counsel recorded in the minutes of the Monitoring Committee meetings that any attempt to modify the distribution mechanism approved by the CoC would be contrary to law. Despite these observations, the Monitoring Committee proceeded to reduce the amount payable to Respondent No.1.

# 34. Learned Sr. Counsel states that the question as to whether the distribution of proceeds under the resolution plan as approved by the CoC. can subsequently be modified or changed by other members of the CoC after approval of a Resolution plan by the NCLT came up for consideration before this Appellate Tribunal in the matter of ‘Bank of Baroda v. IDBI Bank Limited’ [(2025) ibclaw.in 1127 NCLAT] : [2025 SCC OnLine NCLAT 2115]. In the said case one of the assenting financial creditors sought to alter the distribution mechanism approved by the CoC, after approval of Resolution plan by the NCLT and at the stage of its implementation. This Appellate Tribunal categorically held that the same is not permissible and one or more members of the CoC cannot change the distribution already approved by the majority of CoC, prior to the approval of the Resolution plan by the Hon’ble NCLT. In this regard they have highlighted para 23 and 28 of the said judgment.

# 35. Ld. Sr. Counsel submits that the Monitoring Committee had no authority to alter the distribution mechanism approved by the CoC, and the Impugned Order merely enforces the decision already taken by the CoC.

# 36. Regarding the reliance placed by the Appellants on the judgment of the Hon’ble Supreme Court in India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd. [(2021) ibclaw.in 87 SC] : (2021) 19 SCC 672, the Ld. Sr. Counsel states that the reliance on the said judgement is entirely misplaced, as Hon’ble Supreme Court in Amit Metaliks held that a dissenting financial creditor cannot claim the entire value of its security interest and is entitled only to receive its proportionate share of the liquidation value.

# 37. It is the submission of Learned Sr. Counsel that in the present case, Respondent No.1 has never sought payment beyond the liquidation value attributable to its security interest. The Respondent 1 is not seeking any share from the proceeds of Auto unit in accordance with the resolution plan. Respondent No.1 has merely sought payment of the liquidation value determined by the evaluation advisor appointed by the CoC itself, which amounts to Rs. 64.56 crores.

# 38. He submits that the dispute in the present case does not concern the entitlement of a dissenting creditor to the value of its security. Rather, the dispute arises because the Monitoring Committee attempted to modify the distribution mechanism approved by the CoC, which is impermissible under the IBC.

# 39. Learned Sr. Counsel further submits that it is a settled principle of law that the ratio of a judgment must be applied only in the factual context in which it was delivered, and in this regard he placed reliance on the judgment of the Hon’ble Supreme Court in Union of India v. Dhanwanti Devi (1996) 6 SCC 44. Accordingly, learned Sr. Counsel submits that the reliance placed by the Appellants on Amit Metaliks is completely misconceived.

# 40. Regarding the third issue Learned Sr. Counsel submits that the payment directed to Respondent No.1 is fully consistent with Section 30(2)(b) of the IBC as well as the distribution mechanism approved by the CoC under Section 30(4). The amount payable to Respondent No.1 has been determined by the evaluation advisor appointed by the CoC itself.

# 41. Learned Sr. Counsel submits that the evaluation advisor calculated the liquidation value attributable to each secured creditor by examining the security interest held by such creditors in the assets of the Corporate Debtor. Based on this analysis, the liquidation value attributable to Respondent No.1, which holds security interest in the steel unit of the Corporate Debtor was determined to be Rs. 64.56 crores.

# 42. Learned Counsel further submits that the argument raised by the Appellants during oral submissions that Respondent No.1 has also received payment attributable to the auto division of the Corporate Debtor is completely baseless and factually incorrect. The evaluation advisor’s report clearly demonstrates that the amount payable to Respondent No.1 was computed solely on the basis of the security interest held by Respondent No.1 in the steel unit.

# 43. Accordingly, learned Sr. Counsel submits that the payment directed by the NCLT does not grant any undue advantage or premium to Respondent No.1 and merely ensures compliance with Section 30(2)(b) of the IBC and the distribution mechanism approved by the CoC.

Analysis and findings

# 44. We have heard the Ld. Counsels from both sides in great detail and have gone through the voluminous records of the case including the written submissions of Appellants and Respondent No. 1. The other respondents are performa respondents.

# 45. At the outset, it is necessary to briefly note the rival submissions advanced by the parties before proceeding to examine the issue on merits. The Appellants, who are assenting financial creditors, have contended that the Adjudicating Authority has erred in directing payment of a higher amount to Respondent No.1. It is their case that the CoC, in its 20th meeting, had clarified that dissenting secured financial creditors would be paid strictly in terms of the Resolution Plan and not on the basis of security interest. According to them, the Resolution Plan does not contemplate distribution based on security interest, and therefore the reliance placed by the Adjudicating Authority on the 18th and 19th CoC meetings is misplaced. It is further argued that the amount directed to be paid is excessive and contrary to the law laid down by the Hon’ble Supreme Court in India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd. [(2021) ibclaw.in 87 SC], as it allegedly grants a premium to the dissenting financial creditor.

# 46. Per contra, Respondent No.1 has submitted that the CoC, in its commercial wisdom, had conclusively approved the distribution mechanism in its 18th and 19th meetings, wherein it was clearly resolved that the distribution of resolution proceeds would be based on the liquidation value attributable to each secured financial creditor. It is further submitted that pursuant to such decision, an independent evaluation advisor was appointed, who determined the liquidation value payable to Respondent No.1 at Rs. 64.56 crores. It is contended that this determination formed the basis of the Resolution Plan, which was subsequently approved by the Adjudicating Authority and has attained finality. According to Respondent No.1, the Monitoring Committee had no authority to alter the distribution mechanism at the stage of implementation and its decision to reduce the amount to Rs. 35.2 crores is totally arbitrary and contrary to both the Resolution Plan and the statutory mandate under Section 30(2)(b) of the Code. It is also submitted that the reliance on Amit Metaliks is misplaced, as Respondent No.1 is only claiming its liquidation value and nothing beyond.

# 47. The first and foremost question which arises is whether the distribution of the resolution amount, including to dissenting financial creditors, as decided and approved by the CoC in its commercial wisdom during the 18th and 19th CoC meetings, is valid in law and binding upon the Monitoring Committee.

# 48. In this regard we take note of the relevant portions of the Resolution Plan, which are extracted below:

“4.1.5.2 Resolution Applicant proposes to pay Rs. 150.00 Cr. as upfront cash payment to the Secured Financial Creditors within 45 days from the effective date, in accordance with per Section 30(2)(b) read with Section 53 of the Code. Post the payment of CIRP Costs in the manner set out above in this Resolution Plan and the Liquidation Value or the amount proposed under the Resolution Plan whichever is higher, due to Operational Creditors, Workmen and Employee and Dissenting Financial Creditors as per Section 30(2)(b) read with Section 53 of the Code, the admitted Debt of Financial Creditors shall be paid and the same shall be distributed in the proportion agreeable to the CoC, subject to the maximum consideration agreed to be paid by the Resolution Applicant.

4.1.5.3 Additionally, the RA proposes to sell the auto division of the Corporate Debtor after implementation of the Plan. The entire sale proceeds shall be distributed between the assenting financial creditors.

4.1.5.5 As per Regulation 38(1)(b) of the (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the financial creditors, who have a right to vote under sub-section]; (2) of section 21 and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan.

4.1.5.6. In the event, some of the Financial Creditors out of CoC are dissenting to the proposed Resolution Plan, such Financial Creditors shall be paid in accordance Section 30(2)(b) read with Sub-section (1) of section 53 of the Code.”

(Emphasis supplied)

# 49. The following points emerge from the aforesaid clauses of the Resolution plan:

i. Out of the amount of Rs. 150 crores paid by the SRA, Payment to be made to the dissenting Financial Creditors in accordance with Section 30(2)(b) of the code read with section 53 of the code;

ii. Dissenting Financial Creditors are to be paid amount provided in the plan or Liqudation value whichever is higher;

iii. Under Regulation 38(1)(b) of the CIRP Regulations 2016, dissenting Financial Creditors to be paid in priority over Financial Creditors who voted in favour of the plan; and

iv. Dissenting Financial Creditors to be paid in accordance with Section 30(2)(b) of the Code read with Section 53(1) of the Code.

v. After implementation of the Resolution Plan the Auto division of the Corporate Debtor would be sold by RA and its proceeds distributed amongst the accenting Financial Creditors only.

# 50. It is clear from the above that the dissenting financial creditors have to be paid the higher value among the amount provided in Resolution Plan and the liquidation value.

# 51. We now take a look at the decision taken in the 18th and 19th CoC meetings. The 18th CoC meeting was held on 23.09.2022 and the e-voting for the same was completed on 28.09.2022. The following resolution was passed in the said meeting regarding distribution mechanism/ principles or formulae for payment to creditors proposed in the resolution plan:

# 52. A perusal of the same clearly establishes that in the 18th CoC meeting held on 23.09.2022, the CoC deliberated upon the manner of distribution of the resolution proceeds in a situation, where the resolution value is lower than the liquidation value. After due deliberation, the CoC approved a specific and structured mechanism, namely, that the distribution shall be made on the basis of the liquidation value attributable to each secured financial creditor. This was a conscious commercial decision taken after evaluating the financial implications and rights of all stakeholders.

# 53. The relevant extracts of the 19th CoC meeting held on 30.09.2022 are reproduced below:

# 54. We note that in the 19th CoC meeting held on 30.09.2022, the CoC clarified that the distribution among secured financial creditors would be based on their respective share in the security interest and the corresponding liquidation value attributable thereto. Significantly, the CoC also decided to appoint an independent evaluation advisor, M/s K.G. Somani & Co. LLP, to compute the liquidation value attributable to each creditor in accordance with the approved mechanism. The CoC also reconfirmed the distribution mechanism as approved in the 18th CoC meeting. This demonstrates that the CoC not only approved the principle of distribution, but also ensured its precise implementation through an expert determination.

# 55. Pursuant to this decision, the evaluation advisor submitted its report determining the liquidation value payable to Respondent No.1 at Rs. 64.56 crores. This quantification was not challenged at the relevant stage and formed an integral part of the framework within which the Resolution Plan was considered and approved.

# 56. We further note that, in the 20th CoC meeting, the CoC reiterated that dissenting financial creditors would be paid at least the minimum liquidation value in terms of Section 30(2)(b) of the Code, thereby reinforcing rather than diluting the earlier decisions. The relevant portions of the discussion in 20th CoC meeting are extracted below:

• “Post detailed discussion, it was concluded that the suggestion by ICICI Bank vide email dated 4th October 2022, as regards the proposed distribution mechanism for dissenting financial creditors, the same may be clarified in the following manner:

• ………in the event of approval of resolution plan, dissenting secured financial creditors will be paid as proposed under the respective resolution plan.”

# 57. The evaluation advisor appointed by the CoC had given the estimates of share of each secured financial creditor based on their security interest. The same is extracted below:

# 58. We note from the same that the share proposed for SBI/ Respondent No.1 is Rs.64.56 crores and the same is based on the liquidation value of the steel unit. Contrary to the submission of the Appellants, the liquidation value used for determining SBI’s share only relates to the steel unit. The share of Auto unit has not been considered in the computation of the SBI’s share of liquidation value.

# 59. The Resolution Plan, which was subsequently approved by the Adjudicating Authority on 20.03.2023, incorporates this framework and provides that dissenting financial creditors shall be paid in accordance with Section 30(2)(b). Once such a plan is approved under Section 31 of the Code, it becomes binding on all stakeholders, including the CoC itself as well as any committee constituted for its implementation.

# 60. Another important aspect for consideration is whether the payment directed to Respondent No.1 is in accordance with Section 30(2)(b) of the Code and the distribution decided by the CoC under Section 30(4), and whether such payment is inequitable in any manner. At this stage we take note of relevant portions of Section 30 of the Code, which are extracted below: . . . .

# 61. Section 30(2)(b) provides a statutory safeguard to dissenting financial creditors by ensuring that they receive not less than the amount they would have received in liquidation. In the present case, the liquidation value attributable to Respondent No.1 has been determined through an independent and expert evaluation process at Rs. 64.56 crores. Therefore, payment of this amount is not discretionary but mandatory.

# 62. Further, Section 30(4) vests the CoC with the power to approve the Resolution Plan and determine the manner of distribution in its commercial wisdom. As already discussed, the CoC has exercised this power by approving a distribution mechanism based on liquidation value attributable to security interest. This decision has been taken after due deliberation and has been consistently applied.

# 63. The contention of the Appellants that such payment is inequitable or results in granting a premium to the dissenting creditor is untenable. The amount payable to Respondent No.1 is its statutory entitlement and not a premium. The fact that the resolution value is lower than the liquidation value does not permit deviation from the mandate of Section 30(2)(b). The CoC itself, being fully aware of this position, adopted a distribution mechanism that ensures compliance with the statutory requirement.

# 64. Another provision to be considered in this regard is Regulation 38 of CIRP Regulations. Relevant clauses 38(1) and 38(4) of the same are extracted below: . . .

# 65. This Regulation 38(1)(b) stipulates that the dissenting financial creditors will be paid in priority over the financial creditors who voted in favour of the resolution plan in the CoC meeting. Further, Regulation 38(4) provides for setting up of Monitoring Committee for monitoring and supervising the implementation of Resolution Plan. It is to be noted that such a committee is to be setup based on the requirements of the specific resolution plans and is not mandatory to setup a monitoring committee in each and every case. The Monitoring Committee itself is to be setup by the CoC and it has a very limited mandate relating to monitoring and implementation of the resolution plan for which it submits quarterly reports to the Adjudicating Authority.

# 66. At this juncture, it is also necessary to emphasize that once the CoC, in exercise of its commercial wisdom under Section 30(4), approves a Resolution Plan and the same is thereafter approved by the Adjudicating Authority under Section 31, the plan attains finality and binding force in law. Such approval creates a complete and enforceable framework governing the rights and obligations of all stakeholders. The Monitoring Committee, which is constituted by the CoC, only for a limited purpose of supervising and facilitating the implementation of the approved plan, cannot assume the role of the CoC or the Adjudicating Authority to revisit or modify the terms of the plan. Any attempt to alter the distribution mechanism at this stage would amount to rewriting the Resolution Plan itself, which is impermissible and contrary to the scheme of the Code. The sanctity and finality attached to an approved Resolution Plan cannot be diluted by subsequent decisions of the Monitoring Committee.

# 67. We note that the Chairperson of Monitoring Committee (being the RP) and the Monitoring Committee’s own legal counsel, were of the view that any attempt to change the distribution approved by the CoC is contrary to the provisions of the Code as borne by the minutes of the 2nd MC meeting held on 02.05.2023 and 3rd MC meeting held on 03.05.2023. In this background, the decision of the Monitoring Committee in its 4th meeting dated 04.05.2023, wherein it reduced the amount payable to Respondent No.1 from Rs. 64.56 crores to Rs. 35.2 crores, is clearly beyond its jurisdiction. The Monitoring Committee is not vested with any power to revisit or alter the commercial decisions of the CoC. Its role is limited to monitoring and implementing the approved Resolution Plan. Any deviation from the distribution mechanism would amount to modifying the Resolution Plan itself, which is impermissible in law.

# 68. In ‘Bank of Baroda v. IDBI Bank Limited’ [(2025) ibclaw.in 1127 NCLAT] : [2025 SCC OnLine NCLAT 2115], decided by this Appellate Tribunal, one of the assenting financial creditors sought to alter the distribution mechanism approved by the CoC, after approval of Resolution plan by the NCLT and at the stage of its implementation. It was categorically held that the commercial wisdom of CoC regarding manner of distribution, once exercised, cannot be changed subsequently even by the CoC. In this case, such a change has been attempted by the Monitoring Committee, which is a creature of CoC itself. The relevant paras of the judgment are extracted below:

• “23. The further statutory scheme contemplated by the l& B Code is that after approval of the Resolution Plan, the CoC itself is also bound by its finality and cannot be allowed to tinker with or modify the resolution plan including the mechanism of distribution. Thus, the decision of the CoC taken on 27.10.2023 could not be said to be in accordance with the I&B Code and is clearly contrary to the scheme and object of the I&B Code.

• Furthermore, the resolution plan as was submitted by the Respondent No. 3. without any modification, was approved by the Adjudicating Authority on 19.12.2023. The Adjudicating Authority while approving the plan has also noticed the Clauses of resolution plan where Reliance Bhutan Loan was to be assigned to the Approving Financial Creditors. When in final approval of resolution plan assignment of the Reliance Bhutan Loan was to the Approving Financial Creditor, we fail to see any justification/validity in action of the CoC in reassigning the Reliance Bhutan Loan to the Dissenting Financial Creditors.

• 28. It is true that the CoC with commercial wisdom can take a decision regarding different aspects of the plan including manner of distribution, which is also statutory scheme under section 30(4) but once the commercial wisdom has been exercised by approving the resolution plan in meeting dated 05.08.2021, the modification of the said distribution mechanism, which is impermissible, cannot be saved in the name of commercial wisdom of the CoC.”

# 69. The next contention of the Appellants is that the Impugned Order is contrary to the judgment of the Hon’ble Supreme Court in India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd.. [(2021) ibclaw.in 87 SC] : 2021 (19) SCC 672. The facts in Amit Metaliks (supra) related to non-consideration of value of the security interest of the appellant by the Committee of Creditors, which has decided to distribute the plan proceeds based on the admitted claims of the secured creditors. The appellant in that case had challenged the commercial wisdom of the CoC. It should be mentioned that the appellant did not raise this issue during the plan approval process at the level of AA. The challenge by the appellant was against the commercial wisdom of the CoC.

# 70. The ratio of Amit Metaliks does not apply to the present case as the Respondent No.1 is not claiming any amount beyond its liquidation value which has been duly approved by the CoC and AA. The appellant, on the contrary, is seeking a review of the decision of CoC and AA via a decision taken in the Monitoring Committee. Respondent No.1 is seeking enforcement of the liquidation value as determined by the evaluation advisor and accepted within the CoC framework. The amount of Rs. 64.56 crores represent the liquidation value attributable to Respondent No.1 and is therefore fully consistent with Section 30(2)(b).

# 71. We further note that the Impugned Order does not interfere with or alter the commercial wisdom of the CoC. It merely enforces the very distribution mechanism which was approved by the CoC and incorporated in the Resolution Plan. Hence, it cannot be said that the Impugned Order is contrary to the law laid down by the Hon’ble Supreme Court.

# 72. It was also contended during the course of oral submissions that Respondent No.1 holds security interest only in the steel unit of the Corporate Debtor and, therefore, ought not to receive any amount relatable to the auto unit. As we have seen earlier in para 57, that the distribution proposed by the evaluation advisor, had only considered the liquidation value of steel unit. The resolution plan clearly states that the proceeds of the Auto Unit would be distributed amongst the assenting Financial Creditors only. The Respondent No.1 has clearly stated that they have no claim in the Auto Unit of the CD. Once liquidation value for secured creditor has been computed on the basis of resolution plan and approved within the CoC framework by the AA, the entitlement of a creditor cannot be re-opened even by the CoC, not to say the Monitoring Committee. The Impugned Order does not confer any undue or additional benefit upon Respondent No.1, but merely enforces the liquidation value already determined and approved. Therefore, this contention is misconceived, contrary to the approved distribution framework, and liable to be rejected.

# 73. We, therefore, hold that the distribution mechanism approved by the CoC in its commercial wisdom and subsequently by the AA is valid, lawful, and binding, and the Monitoring Committee could not have altered the same. We are of the view that the payment directed to Respondent No.1 is strictly in accordance with Section 30(2)(b), read with Section 53(1) of the Code which has been duly approved by the CoC and thereafter, by the AA, under Section 30(4), does not suffer from any inequity or illegality.

# 74. In view of the findings above, we hold that the Impugned Order dated 05.02.2024, does not warrant any interference. The Appeal is devoid of merit and is accordingly dismissed. No order as to costs.

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