Supreme Court rules on resolution plan modification, upholding pre-amendment plan, no discrimination against financial creditors.

The Supreme Court overturned NCLAT's decision modifying a resolution plan due to alleged discrimination against financial creditors. The Court held that the plan, approved before the amendment to Regulation 38, did not violate Section 30 of the IBC. The appellant's offer exceeded liquidation value, and the plan had been implemented, leading to the restoration of NCLT's decision. The appeal succeeded, with no costs awarded.

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Issues:
1. Discrimination between financial creditors in a resolution plan approved by NCLT.
2. Interpretation of Regulation 38 of the Insolvency and Bankruptcy Board of India Regulations.
3. Application of Section 30 of the Insolvency and Bankruptcy Code.
4. Justifiability of NCLAT's order modifying the resolution plan.

Issue 1: Discrimination between financial creditors
The appellant, a resolution applicant, challenged NCLAT's decision modifying a resolution plan approved by NCLT due to alleged discrimination against financial creditors. The plan offered dissenting financial creditor Hero Fincorp Ltd. a lower percentage of its admitted claim compared to other financial creditors. NCLAT relied on precedents to assert that the plan was discriminatory under Section 30(2)(e) of the IBC. The appellant failed to update the plan post-amendment of Regulation 38, leading to the NCLAT's directive to remove discrimination.

Issue 2: Interpretation of Regulation 38
NCLAT's order was based on the amended Regulation 38 prioritizing operational creditors over financial creditors. The appellant's failure to align the plan with the amended regulation was deemed discriminatory. The NCLAT emphasized the importance of fair treatment for operational creditors and the need for resolution plans to adhere to statutory requirements post-amendment.

Issue 3: Application of Section 30 of the IBC
Section 30 outlines the duties of a resolution professional and the criteria for examining resolution plans. The provision mandates fair repayment to operational creditors, ensuring it is not less than liquidation value payable in case of insolvency. The NCLAT's decision was in line with Section 30's requirement to prevent discrimination among creditors of the same class.

Issue 4: Justifiability of NCLAT's order
The Supreme Court found NCLAT's order unjustified as the resolution plan was approved before the amendment to Regulation 38. The appellant's offer exceeded the liquidation value, and the plan had been implemented, except for Hero's dissent. Considering these factors, the Court set aside NCLAT's order, restoring NCLT's decision. The appeal succeeded, with no costs awarded.

This detailed analysis of the judgment addresses the issues of discrimination between financial creditors, the interpretation of Regulation 38, the application of Section 30 of the IBC, and the justifiability of NCLAT's order, providing a comprehensive understanding of the legal complexities involved in the case.

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