RBI resolution framework and asset assignment provisions do not compel dissenting lenders to accept proposals or bar insolvency action.

Paragraph 6.4(d)(ii) of the RBI Master Circular was read as requiring each bank or financial institution to make its own assessment of the offer for a financial asset and to accept or reject it individually; the majority approval mechanism did not override that discretion, so no mandatory obligation arose on dissenting lenders to assign the asset. Paragraphs 9 and 10 of the RBI Prudential Framework for Resolution of Stressed Assets were similarly treated as enabling a lender-driven resolution process through board-approved policies and an inter-creditor arrangement, but not as compelling lenders to accept a resolution plan or barring recourse to proceedings under the Insolvency and Bankruptcy Code, 2016.

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Issues: (i) Whether paragraph 6.4(d)(ii) of the RBI Master Circular created a mandatory obligation on the remaining banks or financial institutions to assign financial assets once 75% by value had agreed to the offer; (ii) Whether paragraphs 9 and 10 of the RBI Prudential Framework for Resolution of Stressed Assets compelled lenders to accept a resolution plan and restrained a lender from initiating proceedings under the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether paragraph 6.4(d)(ii) of the RBI Master Circular created a mandatory obligation on the remaining banks or financial institutions to assign financial assets once 75% by value had agreed to the offer.

Analysis: The relevant circular expressly required each bank or financial institution to make its own assessment of the value offered for the financial asset and to decide whether to accept or reject the offer. The majority approval mechanism did not displace that individual assessment in the manner contended for.

Conclusion: The paragraph did not impose a mandatory obligation on the remaining banks or financial institutions to accept the offer.

Issue (ii): Whether paragraphs 9 and 10 of the RBI Prudential Framework for Resolution of Stressed Assets compelled lenders to accept a resolution plan and restrained a lender from initiating proceedings under the Insolvency and Bankruptcy Code, 2016.

Analysis: The framework contemplated a lender-driven resolution process through board-approved policies and an inter-creditor agreement, but it did not confer a right to compel public sector banks or financial institutions to accept a proposed resolution plan. The provisions also did not bar a lender from taking recourse to insolvency proceedings where the framework permitted such action.

Conclusion: The framework did not compel acceptance of the resolution plan or prevent initiation of proceedings under the Insolvency and Bankruptcy Code, 2016.

Final Conclusion: The challenge to the High Court's view failed on both sets of claims, and the decisions refusing relief were left undisturbed.

Ratio Decidendi: A prudential banking framework that requires individual lender assessment and an inter-creditor arrangement does not, without express language, create a legally enforceable obligation compelling acceptance of an asset sale or resolution proposal by dissenting lenders.

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