RIGHT OF DISSENTERS: ENHANCING EFFICIENCY IN INSOLVENCY PROCEEDINGS

Abstract

The Insolvency and Bankruptcy Code, 2016 is an elaborate legislation providing for the timely resolution of corporate insolvency. A critical stage of the Corporate Insolvency Resolution Process is the vote of the Committee of Creditors on a proposed Resolution Plan, and dissenting financial creditors holding substantial security, unsatisfied with the amount assigned to them under an approved plan, have increasingly contested such plans before the courts. Section 30 of the Code, which governs the minimum entitlement of dissenting financial creditors, has undergone repeated amendment and inconsistent judicial interpretation, generating litigation that stalls resolution proceedings and undermines the Code's core objective of time-bound insolvency resolution. This paper undertakes a comparative analysis of two conflicting Supreme Court judgments on dissenting creditor entitlement, India Resurgence ARC Private Limited v. Amit Metaliks Limited and DBS Bank Limited Singapore v. Ruchi Soya Industries Limited, situating that conflict against the legislative intent behind the Code's 2019 amendment and the UNCITRAL Legislative Guide on Insolvency Law that substantially informed it. It proposes a two-fold resolution: a harmonious construction of Sections 30(2)(b)(ii) and 30(4) of the Code, and the recognition of a distinct sub-class of dissenting secured financial creditors capable of registering grievance collectively rather than through multiplied individual litigation. The paper argues that these reforms would preserve both the Committee of Creditors' commercial wisdom and the minimum protection the 2019 amendment was enacted to secure, reducing the litigation that presently threatens the efficiency the Code was designed to deliver.