Dissenting Financial Creditors’ Entitlement To The Minimum Value Of Security Interest As Per The Insolvency And Bankruptcy Code – DBS Bank Ltd. v. Ruchi Soya Industries Ltd. & Anr.     

Posted On - 29 January, 2024 • By - King Stubb & Kasiva

Civil Appeal No. 9133/2019

Decided on 3rd January 2024.


In this judgment, the Court was faced with the proposition of whether a dissenting financial creditor was to be paid the minimum value of its security interest under the Insolvency and Bankruptcy Code. The Division Bench of Justice Sanjiv Khanna and Justice S.V.N. Bhatti differed in opinion from the previous precedents on this question and referred this to a larger bench.

Facts of the Case:

In the case, an appeal was filed by DBS Bank Limited Singapore (the Appellant) against Ruchi Soya Limited (Respondent No.1) and the Committee of Creditors (CoC) (Respondent No.2). The appeal challenged the Order of the National Company Law Appellate Tribunal (NCLAT) dismissing the appeal against the National Company Law Tribunal (NCLT) Orders dated 18.11.2019 and 09.12.2019.

DBS Bank had extended a financial debt of USD 50,000,000 to Ruchi Soya Industries Limited, secured by charges over immovable assets in Gujarat and assets in Rajasthan and Madhya Pradesh. The Corporate Insolvency Resolution Process (CIRP) was initiated on 15.12.2017 under the Insolvency and Bankruptcy Code (IBC). Patanjali Ayurvedic Limited submitted a resolution plan of Rs. 4134 crore, representing 49.22% of the total admitted claims.

DBS Bank raised concerns about the proposed pay-out and requested the CoC to consider the liquidation value of its security during distribution. Despite the concerns being noted in CoC meetings, the Resolution Plan was approved with a pari-passu distribution mechanism. DBS Bank, dissenting from the decision, challenged the distribution mechanism before the NCLT, Mumbai.

The NCLT provisionally approved the Resolution Plan and dismissed DBS Bank’s application on 24.07.2019. DBS Bank appealed this dismissal to the NCLAT on 31.07.2019. During the appeal, the Insolvency and Bankruptcy Code (Amendment) Act, 2019, was notified, amending Section 30(2)(b) of the IBC. DBS Bank, at the 26th CoC meeting, requested reconsideration based on the amendments, but the CoC declined.

Despite the pending appeals, the NCLT approved the Resolution Plan on 30.08.2019. DBS Bank challenged this plan before the NCLAT on 11.10.2019, and the first NCLAT appeal filed on 31.07.2019 was still pending. The NCLAT, through Orders dated 18.11.2019 and 09.12.2019, dismissed both appeals.


  1. Whether Section 30(2)(b)(ii) of the Insolvency and Bankruptcy Code, 2016,  as amended in 2019, entitles the dissenting financial creditor to be paid the minimum value of its security interest?
  2. Whether the amendments made in the substantive portion of Section 30(2) of the Insolvency and Bankruptcy Code, as introduced by the Insolvency and Bankruptcy Code (Amendment) Act, 2019, and explained by Explanation 2, are applicable to the first Appeal filed by the Appellant before the National Company Law Appellate Tribunal (NCLAT)? This question arises in the context that the Amendment Act was notified and came into effect on 16.08.2019, while the Appellant had filed the first Appeal on 31.07.2019, challenging the provisional approval Order passed by the National Company Law Tribunal (NCLT) on 24.07.2019.


  1. The Supreme Court while answering the second issue dismissed the argument asserting that Section 30(2)(b)(ii) of the Insolvency and Bankruptcy Code (IBC) is impractical due to its inclusion of a deeming fiction regarding liquidation, which is considered inapplicable during the Corporate Insolvency Resolution Process (CIRP). The court highlighted that adopting such an interpretation would run counter to the legislative intent and would not be acceptable. The apex court further held that only when the resolution plan, as approved, has attained finality as no proceedings are pending, that the amendments will not apply to re-write the settled matter.
  2. Further, the court did not agree with the Committee of Creditors (CoC), which asserted that the proceeds from the Resolution Plan should be distributed proportionately, rendering Section 30(2)(b)(ii) irrelevant. The court rejected this argument, clarifying that Section 30(2)(b)(ii) specifically concerns the proportion of proceeds or the amount dissenting financial creditors would be entitled to under Section 53(1) in the event of liquidation. It emphasized that a dissenting financial creditor has the statutory right to object to the distribution of proceeds if it falls below what they would receive under Section 53(1) in the case of liquidation.
  3. The bench disagreed with the previous judgment of the Supreme Court in the case of India Resurgence ARC Private Limited v. Amit Metaliks Limited & Another, where a coordinate bench had concluded that a dissenting secured creditor couldn’t contest an approved resolution plan, arguing that a higher amount should have been paid to it based on its security interest in the corporate debtor. The court also noted a contradiction between the decision in India Resurgence ARC Private Ltd and the legal principles established in the three-Judge Bench judgments of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta (2019) and Jaypee Kensington Boulevard Apartments Welfare Association vs. NBCC (India) Ltd (2021).
  4. Since the bench was adopting a stance that differed from a judgment by a coordinate bench, it deemed it suitable and fitting to refer the issue to a larger bench.


This judgement plays a pivotal role in activating the chain reaction on clarity of understanding the position of law on the issue at hand which as of right now is unclear and unsettled. A settled position on this issue is required since it decides the fate of the dissenting creditors and their position. The court has taken a balanced approach in the opinion given by them by taking into consideration the legislative intent behind the 2019 amendment and protecting the rights of the dissenting creditors while making sure that they do not exceed the power given to them.