Homogeneous creditor classification failed constitutional scrutiny, requiring fresh repayment terms under the rehabilitation scheme.

Unsecured creditors supplying raw material were treated as a homogeneous class, and a further split into current and non-current creditors for differential repayment under a rehabilitation scheme was not supported by any disclosed cut-off date or rational basis. The scheme produced substantially unequal treatment between similarly situated creditors without satisfying the requirement of intelligible differentia and rational nexus to the scheme's object. The repayment terms in paragraph 18 therefore required reconsideration, and similar treatment was to be accorded to the affected creditors on fresh determination.

---

---

Issues: Whether the classification of unsecured creditors into current and non-current creditors for differential repayment under the sanctioned rehabilitation scheme was legally sustainable and whether the impugned scheme gave discriminatory treatment to similarly situated unsecured creditors.

Analysis: The unsecured creditors supplying raw material formed one class with commonality of interest. A further division into current and non-current creditors on the basis of the period of supply was not supported by any disclosed cut-off date or rational basis in the sanctioned scheme. The material on record showed that the dues of the appellant and OCP, Morocco related to the same period of supply up to 2002, and the impugned scheme itself did not establish any legally relevant distinction justifying markedly different repayment terms. A classification that produces substantially unequal treatment between creditors within the same homogeneous class must satisfy the constitutional test of intelligible differentia and rational nexus, which was not met here.

Conclusion: The classification of unsecured creditors as current and non-current was held unsustainable, and the differential dispensation in favour of one creditor and against the appellant could not be sustained.

Final Conclusion: Paragraph 18 of the rehabilitation scheme required reconsideration so that the appellant and OCP, Morocco were given similar treatment, and the matter was sent back for fresh determination of the repayment terms.

Ratio Decidendi: Creditors belonging to the same homogeneous class cannot be divided for differential treatment unless the classification is founded on an intelligible differentia having a rational relation to the object of the scheme.

---