JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION & ORS. v. NBCC (INDIA) LTD. & ORS.

A terms and conditions would be a violation of the law in force and would not be permissible in terms of Section 30(2) of the Code. 94.1. Interestingly, the other reliefs and concessions in regard to YEIDA, as sought for in the aforementioned Clauses 14 and 27, were specifically declined by the Adjudicating Authority (vide the comments on these clauses in paragraph 134 of the order dated 03.03.2020). However, as regards Clause 4 of the ‘reliefs and concessions’ that YEIDA shall withdraw the arbitration case filed under Section 34 of the Arbitration Act, though the Adjudicating Authority noticed this aspect in the arguments of the parties but, did not make any specific order in that regard and in paragraph 134 of the impugned order dated 03.03.2020, merely observed that Clauses 1 to 5 were covered by the previous discussion.

95Copy pinpoint95. On behalf of the resolution applicant (NBCC), while questioning the directions and observations of the Adjudicating Authority in relation to the dealings with YEIDA and particularly in relation to the contingent liability of additional compensation, a detailed reference has been made to all the background aspects and extensive arguments have been made in support of the stipulations in the resolution plan. 95.1. It is submitted on behalf of the resolution applicant that as on date, there is no claim of YEIDA against JIL in relation to the additional amount of compensation but, keeping the larger interests in view, the resolution plan has provided for this eventuality in the manner that YEIDA would be able to collect the amounts from the end-users. While taking exception to the observations in the order impugned, it is submitted that the Adjudicating Authority has seriously erred in seeking to construe the CA because that was an issue pending in the arbitration case. It is further submitted that in terms of Regulation 37 of CIRP Regulations, the resolution plan can propose modifications/alterations of contracts of the corporate debtors and in fact, all the contracts are being modified under the plan, of course, subject to the approval by the CoC with requisite majority. As regards legal status of the Concession Agreement, it is submitted that the Adjudicating Authority has erred in assuming as if it were a statutory contract. In this regard, with reference to Section 6-A of the U.P. Act of 1976 81, it is contended that YEIDA may by an 81 Section 6-A of U.P. Act of 1976 reads as under: - “6-A Notwithstanding anything to the contrary contained in any other provisions of this Act and subject to such terms and conditions as may be specified in the regulations, the Authority may, by Agreement, authorize any

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 777 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

person to provide or maintain or continue to provide or maintain any infrastructure or amenities under this Act and to collect taxes or fees, as the case may be, levied therefore.” H

p. 778 Copy page pinpoint

A It is also submitted that in the resolution plan, a debt of INR 2,000 crores is proposed to be raised on the Expressway for the purpose of construction of flats; and in the event this liability of additional compensation on the Expressway land is not passed on to the end-user, raising of the loan may become difficult. B 95.4. NBCC has further stated its objection to the proposed tripartite agreement with reference to Clauses 4.3(d), 4.3(e) and 4.4 of CA and it is submitted that the right of transfer being available to the concessionaire, foisting of tripartite agreement with YEIDA is not justified. It is submitted that so far as the execution of tripartite agreement in relation to the Expressway SPV is concerned, this part of the order is C not being challenged but as regards Land Bank SPV, there is no requirement of entering into a tripartite agreement because JIL has unfettered rights under CA to transfer the land to any person. 95.5. As regards decision of this Court in the case of Municipal Corporation of Greater Mumbai (MCGM) v. Abhilash Lal and Ors.: D (2019) SCC OnLine SC 1479, which is relied upon by YEIDA, it is submitted that the said decision is not applicable to the facts of the present case because therein, MCGM had not entered into a binding lease agreement containing the terms similar to the CA applicable to the parties herein. Moreover, in the said decision, the statute, i.e., Municipal E Corporation of Greater Mumbai Act, 1888, itself provided that the only way MCGM’s properties could be dealt with was through lease or by way of creation of any other interest with the prior permission of MCGM, but there is no similar provision in the U.P. Act of 1976.

96Copy pinpoint96. On behalf of the IRP, it has been submitted that granting or F refusing the reliefs sought for under Schedule 3 of the resolution plan is a matter within the discretion of the Adjudicating Authority and even if the same have not been granted, they do not form a part of the commercial terms of the plan; and the referred clauses of ‘reliefs and concessions’ are not hit by Section 30(2)(e) of the Code.

97Copy pinpoint97. The associations of homebuyers as also the individual homebuyers standing in support of the plan have contended that the alleged terms of the Concession Agreement and any alleged breach thereof does not amount to a breach under Section 30(2)(e) of the Code and therefore, the Adjudicating Authority has acted wholly without jurisdiction in dealing with such terms because they do not come within the scope of Section 31 of the Code.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 779 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

97.1. However, one of the homebuyers, who has moved an application for intervention, I.A. No. 84309 of 2020, has made several submissions questioning the dealings of JIL and YEIDA and has submitted that the Concession Agreement having not been provided to the homebuyers, the CIRP proceedings are rendered void.

98Copy pinpoint98. In response to the aforesaid submissions in favour of the resolution plan, several counter arguments have been made by different parties. To avoid prolixity and repetition, we take into account the submissions of the parties directly related with these issues namely, YEIDA. Added to that, we may also refer to the submissions made on behalf of the erstwhile director of the corporate debtor JIL as also its holding company JAL. C

99Copy pinpoint99. It has been stated and reiterated, as had been the submissions before the NCLT, that YEIDA does not stand to oppose the resolution plan only for the sake of opposition; rather it would like the plan to succeed but, it has a public duty to ensure that the framework under CA is preserved; and the issues being raised by it are solely intended to preserve D the CA and to enforce the terms therein. Again, a detailed reference has been made to the background aspects concerning the land in question and the Concession Agreement as also to the findings of NCLT and thereafter, the contentions urged on behalf of the resolution applicant have been refuted. E 99.1. In the first place, YEIDA has submitted that the resolution applicant is not correct in suggesting that the Adjudicating Authority has dealt with the interpretation of CA to hold that compensation was to be paid by the concessionaire and by the proposed SPVs. Paragraph 118 of the impugned order dated 03.03.2020 has been referred wherein, the F Adjudicating Authority stated that the question, as to whether additional compensation was a part of the acquisition cost, was not being examined because it had already been adjudicated in arbitration and is pending in the Court. 99.2. While supporting the other part of impugned order dated G 03.03.2020, it is submitted that there being no privity of contract between YEIDA and the end-users, the amount towards additional compensation could only be collected from the SPVs and not directly from the end- users. According to YEIDA, the Adjudicating Authority has rightly modified the mechanism in the resolution plan for collection of additional compensation in the manner that instead of collecting the amount directly H

p. 780 Copy page pinpoint

A from the end-users, YEIDA would now be collecting it through the SPVs concerned. This has, according to YEIDA, no impact on the commercial aspects of the resolution plan. 99.3. It is also submitted that the contract in question, that is, the Concession Agreement, is a statutory contract entered into by YEIDA B for public purpose and it cannot be altered or modified through a resolution plan as an ordinary commercial contract. It is submitted that the CA grants and governs the rights of corporate debtor JIL over the land of YEIDA; that such rights are limited and distinct from ownership rights; and that the resolution applicant cannot unilaterally alter the CA and improve upon the rights granted thereunder to enhance the assets of the C corporate debtor. 99.4. As regards the land falling under Expressway, YEIDA has questioned the contentions urged on behalf of NBCC and it is submitted that such a ground was not taken in the appeal filed against the impugned order and was raised for the first time in written submissions. D Nevertheless, according to YEIDA, the argument is patently incorrect, for it ignores the fact that the corporate debtor JIL and its successor SPVs would derive the benefits of both, the toll collected from Expressway for 36 years as also from the other land for development. It has also been submitted that the additional compensation for Expressway, when to be passed on to the end-users, could only be passed on to the commuters in the form of appropriate adjustment in the toll, but not otherwise. 99.5. Moving on to the questions related with creation of SPVs, transfer of land to them and the aforesaid stipulations in the resolution plan, it is submitted that the project in question is an integrated and indivisible one, as held by this Court in the case of Nand Kishore Gupta & Ors. v. State of U.P. & Ors.: (2010) 10 SCC 282 and hence, its bifurcation is impermissible. 99.6. It is also submitted that the assumption in the resolution plan, that the approval of NCLT would waive the requirement of YEIDA’s approval, is misconceived. Regulation 37 of CIRP Regulations has been referred to submit that the plan has to provide for necessary measures for insolvency resolution including approvals from the Central and State Governments and other authorities. Therefore, according to YEIDA, such pre-emptory waiver as envisaged in the plan is contrary to the H CIRP Regulations. A further reference has been made to Clause 18.1 of

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 781 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

the CA and it is contended that in terms thereof, in case any SPV is to be set up, necessary documents involving the concessionaire JIL, YEIDA and SPV have to be executed. It is reiterated that despite such objections, YEIDA is taking a practical view of the matter so as to ensure the success of the resolution plan and, therefore, the Adjudicating Authority (NCLT) has also rightly provided for such documentation without disturbing the commercial effect of the plan while ensuring that all the future dealings shall be in terms of the CA and thereby, fulfilling the requirements of Section 30(2) of the Code. 99.7. As regards the contentions on the part of the resolution applicant that Land Bank SPV is not governed by the CA or that there is no restriction on the corporate debtor’s ability to sub-lease, it is submitted that the rights for development of the land along the proposed Expressway were to be provided at five or more locations with one location in Noida or Greater Noida in terms of Clause 3.3 of the CA. Therefore, the suggestion that this land may not be governed by CA is not correct. As regards the right to sub-lease, it is submitted on behalf of YEIDA that as per the terms of plan, it is not a mere sub-lease in favour of Land Bank SPV but the chunk of land for development is sought to be transferred to the Land Bank SPV by way of business transfer; and in any case, in terms of the referred clauses of CA, execution of tripartite agreement is a condition indispensable. E 99.8. It has also been submitted that YEIDA has consistently taken the stand that it would be ready to do everything within its power to ensure that the plan is a success but even after long length of time, the resolution applicant has not even approached YEIDA for execution of necessary documents. While relying on the aforesaid decision in MCGM, it has been argued that the provisions of the Code cannot override a F public body’s right and duty to control and regulate as to how its properties are to be dealt with. 99.9. As regards the powers of the Adjudicating Authority to modify the plan, reliance is placed on the decision in ArcelorMittal (supra), where this Court has held that the Adjudicating Authority is to apply G judicial mind to a resolution plan to satisfy itself that the plan meets the requirements under Section 30 of the Code. It is further submitted that even in Essar Steel (supra), this Court has recognised the Adjudicating Authority’s power of judicial review. Further, with reference to the decision of Allahabad High Court in the case of Pradumna Kumar H

p. 782 Copy page pinpoint

A Jain (supra), it is submitted that the power to approve or reject a plan must necessarily include the power to modify a plan. According to YEIDA, such power of the Adjudicating Authority is implicit in Section 31; and if the Adjudicating Authority finds that a resolution plan does not conform to the Code but would do so by modifications, such modifications deserve to be upheld, lest the corporate debtor is pushed to liquidation. It B is re-emphasised that the modifications provided in the impugned order dated 03.03.2020 have no commercial implications and they relate only to the mechanism prescribed by the resolution plan, which are required to be modified to uphold the CA, a statutory contract. 99.10. Apart from the above, it has also been submitted on behalf C of YEIDA, that the resolution plan carries such other terms and stipulations which cannot be approved; and objections of YEIDA to such terms were upheld but, NBCC has not appealed against that part of the order of the Adjudicating Authority. Therefore, those stipulations deserve not to be approved. In this regard, it has been pointed out that YEIDA D has taken objection to Clause 4 of Schedule 3 requiring it to give up the litigation under the Arbitration Act; and this objection was noted by the Adjudicating Authority and NBCC has not challenged those observations. Such a relief, according to YEIDA, cannot be claimed in a resolution plan and ought to be declined. It has further been pointed out that the stipulations in the said Clauses 14 and 27 of Schedule 3 of the resolution E plan, respectively for extinguishment of the liability arising under the CA and for extension of term of CA, have not been granted by the Adjudicating Authority; and these aspects having not been appealed against, the clauses in question deserve to be deleted from the resolution plan.

100Copy pinpoint100. The submissions so made on behalf of YEIDA have been supported by the erstwhile director of JIL with reference to the decision in Embassy Property (supra) and with the submissions that YEIDA being a statutory body created under the U.P. Act of 1976, the agreement entered into between YEIDA and the corporate debtor is statutory in G nature and this relationship is not just contractual but is statutorily governed. The requirement that YEIDA must collect compensation from the homebuyers or end-users in case it succeeds in the arbitration case, according to the erstwhile director, is in contravention of the law for the time being in force, for it violates the U.P. Act of 1976. It is further submitted that the Adjudicating Authority has rightly ordered execution H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 783 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

of tripartite agreement involving the proposed SPVs. In essence, the A submission has been that the treatment of YEIDA in the resolution plan is not in conformity with the law and the order passed by the Adjudicating Authority calls for no interference.

101Copy pinpoint101. While dealing with the rival submissions, we may indicate at the outset that some of the objections like questioning the dealings of JIL B and YEIDA and want of availability of CA with the homebuyers have unnecessarily been raised and carry no meaning to the real questions in controversy. They require no discussion and are left at that.

102Copy pinpoint102. Coming to the real questions in controversy, in the first place, we deem it appropriate to observe that the suggestion on behalf of YEIDA C and erstwhile director of the corporate debtor, that the Concession Agreement in question is a statutory contract, is not correct and cannot be accepted. It has rightly been pointed out on behalf of the resolution applicant NBCC that the said CA is not a statutory contract; it has only been executed by YEIDA in exercise of its enabling powers conferred by the statute, that is, U.P. Act of 1976 but the same is neither an agreement provided by the statute nor executed under a statute. This Court has clarified the law in this respect in the case of India Thermal Power Ltd. (supra) in the following terms: - “11. It was contended by Mr Cooper, learned Senior Counsel appearing for appellant GBL and also by some counsel appearing for other appellants that the appellant/IPPs had entered into PPAs under Sections 43 and 43-A of the Electricity Supply Act and as such they are statutory contracts and, therefore, MPEB had no power or authority to alter their terms and conditions. This contention has been upheld by the High Court. In our opinion the said contention is not correct and the High Court was wrong in accepting the same. Section 43 empowers the Electricity Board to enter into an arrangement for purchase of electricity on such terms as may be agreed. Section 43-A(1) provides that a generating company may enter into a contract for the sale of electricity generated by it with the Electricity Board. As regards the determination of tariff for the sale of electricity by a generating company to the Board, Section 43(1)(2) provides that the tariff shall be determined in accordance with the norms regarding operation and plant-load factor as may be laid down by the authority and in accordance with the rates of depreciation and reasonable H

p. 784 Copy page pinpoint

A return and such other factors as may be determined from time to time by the Central Government by a notification in the Official Gazette. These provisions clearly indicate that the agreement can be on such terms as may be agreed by the parties except that the tariff is to be determined in accordance with the provision contained in Section 43-A(2) and notifications issued thereunder. Merely B because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory C contract. If a contract incorporates certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of mutual agreement between the parties. Therefore, D the PPAs can be regarded as statutory only to the extent that they contain provisions regarding determination of tariff and other statutory requirements of Section 43-A(2). Opening and maintaining of an escrow account or an escrow agreement are not the statutory requirements and, therefore, merely because E PPAs contemplate maintaining escrow accounts that obligation cannot be regarded as statutory.” (emphasis in bold supplied) 102.1.Applying the principles aforesaid to the facts of the present case, we are clearly of the view that the agreement in question does not F acquire the status of a statutory contract merely for having been executed in terms of the powers with YEIDA under Section 6-A of the U.P. Act of 1976. 102.2.Apart from above, another part of the submissions on behalf of YEIDA with reference to the case of Nand Kishore Gupta (supra) G against incorporation of two SPVs cannot be accepted. The observations of this Court in the case of Nand Kishore Gupta (supra) came in the wake of challenge to the very acquisition process concerning the land parcels for the project in question, that is Yamuna Expressway Project. One of the arguments therein was that about 25 million square kilometres of land was being acquired for 5 parcels of land to be given for

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 785 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

commercial exploitation. This Court found the High Court right in commenting that such creation of 5 zones for industry, residence, amusement etc. was going to be complementary to the creation of highway. However, the observations in Nand Kishore Gupta (supra), holding all the parcels of land to be part of integrated and indivisible project, cannot be read to mean that creation of two SPVs by the concessionaire, one for the Expressway and another for the remaining land for commercial development, can never be provided. 102.3.However, even if the submissions of YEIDA are not correct in regard to the aforesaid two aspects, all other submissions made on its behalf cannot be discarded and rather, on substance, they deserve acceptance to a large extent. C

103Copy pinpoint103. The contract in question, the CA, even though not a statutory one, is nevertheless a contract entered into between the concessionaire and statutory authority, that is, YEIDA. It is needless to observe that even if in the scheme of IBC, a resolution plan could modify the terms of a contract, any tinkering with the contract in question, that is, the D Concession Agreement, could not have been carried out without the approval and consent of the authority concerned, that is, YEIDA. Any doubt in that regard stands quelled with reference to Regulation 37 of CIRP Regulations that requires a resolution plan to provide for various measures including ‘necessary approvals from the Central and State E Governments and other authorities’. The authority concerned in the present case, YEIDA, is the one established by the State Government under the U.P. Act of 1976 and its approval remains sine qua non for validity of the resolution plan in question, particularly qua the terms related with YEIDA. The stipulations/assumptions in the resolution plan, that approval by the Adjudicating Authority shall dispense with all the F requirements of seeking consent from YEIDA for any business transfer are too far beyond the entitlement of the resolution applicant. Neither any so-called deemed approval could be foisted upon the governmental authority like YEIDA nor such an assumption stands in conformity with Regulation 37 of the CIRP Regulations. G

104Copy pinpoint104. Furthermore, the suggestion that Clause 18.1 of the CA had been a one-time measure and that stands exhausted with creation of JIL as SPV and transfer of original concessionaire’s rights to JIL, has its own shortcomings. The concept and purport of Clause 18.1, of course, at the relevant time had been of the obligation on the original H

p. 786 Copy page pinpoint

A concessionaire to execute the documents for creation of SPV and this clause came in operation when JIL was created as an SPV. However, it would be wholly unrealistic to say that once JIL was created as an SPV, the said Clause 18.1 stood exhausted and there remained no obligation on the part of JIL (as the substituted concessionaire) to execute the necessary documents if it would propose to transfer its rights and obligations under the CA to another SPV; and it could do so without the consent of YEIDA. This suggestion carries an inherent fallacy because if Clause 18.1 is removed from the CA, a serious question would arise as to how the rights and obligations of the substituted concessionaire JIL could at all be transferred to another SPV? Looking to the pith and substance of the CA, the said Clause 18.1 has to be applied for creation of any SPV by or on behalf of JIL. 104.1.The other clauses in CA permitting creation of sub-lease could hardly be applied for en bloc transfer of land to the SPVs, as proposed in the resolution plan. The referred Clauses 4.3(d) and 4.3(e) D were essentially meant for creation of sub-leases when the land given to the concessionaire for development, or part thereof, was to be sub-leased to the end-user/s. Even in that regard, the provisions were made for the concessionaire to make a request to the land providing agency to execute the lease-deed directly in favour of its subsidiaries, assigns or transferees; and in case the agency and the concessionaire would consider it E appropriate, tripartite agreement for sub-lease may be executed. Taking all the relevant clauses together with the substance and purport of CA, it is difficult to countenance that the proposed transfer to SPVs could be treated as an ordinary sub-lease for which, no documentation involving YEIDA would be required. F 104.2.Although, as urged, the proposal to create two separate SPVs may not be impermissible looking to the framework of the CA, where different stipulations were made in relation to the land for constructing Expressway with its allied facilities and the land for commercial exploitation, respectively in Clauses 4.1 and 4.3 of the CA, G but the question is as to the method of transfer of concessionaire’s rights and obligations to such SPVs. That could only be in accordance with the approval of YEIDA and with the execution of necessary tripartite documents as envisaged by CA. 104.3. As observed hereinbefore, looking to the terms and purport of the CA, creation of two SPVs, one for Expressway and another for

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 787 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

the remaining land for commercial development, is not altogether prohibited but then, it cannot be suggested by NBCC that such creation of SPVs could be even without necessary documentation involving YEIDA. In this regard, YEIDA seems to be right in its contentions that such documentation is even otherwise required for avoiding any ambiguity about the rights and obligations and also for itself (YEIDA) to properly monitor the functioning of SPVs, each of which would stand in the capacity of concessionaire and would be carrying the rights and obligations under the CA. 104.4. For what has been discussed above, we need not delve into the decision of this Court in MCGM (supra), where the statutory provision itself required prior approval of the local body before dealing with its properties through lease or by creation of any other interest. Though in the present case, there is no such statutory embargo but for that matter, all the terms of the Concession Agreement cannot be forsaken. Any alteration in the essentials of the Concession Agreement would require the consent of YEIDA. D 104.5. The Adjudicating Authority (NCLT), while disapproving the stipulations in the resolution plan whereby documentation for such transfer was sought to be avoided, proceeded to order execution of such documents. According to YEIDA, this modification has no commercial effect and therefore, has rightly been ordered by NCLT. Although this E modification, prima facie, does not appear to be having any commercial effect, for it being only a matter of proper documentation but, interlaced with this process of documentation are the other stipulations, which do impact the commercial terms of the resolution plan, particularly those relating to the amount of additional compensation, if payable. F

105Copy pinpoint105. With the observations foregoing, we may now take up another important aspect of the objections, which relates to the provisions in the resolution plan towards the amount of additional compensation, if payable. 105.1. Concisely put, as per the resolution plan, the contingent liability concerning additional amount of land acquisition compensation is G proposed to be dealt with in the manner that in the event any such amount of additional compensation is to be paid, YEIDA would collect the same from the end-users; and as regards the land of Expressway, such additional compensation shall be payable by YEIDA because YEIDA will be the end-user on getting ownership of the land of Expressway after expiry of the concession period. NBCC has justified these propositions on various H

p. 788 Copy page pinpoint

A grounds as noticed hereinabove. YEIDA takes serious exception to them and particularly to the stipulation that additional compensation in regard to the land of Yamuna Expressway would be payable by it. The Adjudicating Authority has made two-fold modifications in this regard. In paragraph 120 of the impugned order dated 03.03.2020, the Adjudicating Authority has said that to iron out creases and to make the resolution plan viable, it would direct that the plan shall be read to mean that YEIDA has a right to collect acquisition cost through the SPVs concerned. On the other hand, concerning the Expressway land, the Adjudicating Authority has provided in paragraph 122 of the impugned order that the resolution plan would be read to mean that it is left open to both the parties to have proper recourse before competent forum when the time comes for payment of additional compensation. In the submissions of YEIDA, such modifications were necessary to make the plan compliant with the rights and obligations under the CA. 105.2. We find the prescriptions in the resolution plan in regard to the contingent liability of additional compensation to be questionable on more than one count.

106Copy pinpoint106. The question is yet to be finally determined as to whether such a liability towards additional amount of compensation rests with the corporate debtor JIL or with YEIDA, because the arbitral award made in favour of JIL is the subject matter of challenge in the Court. However, the contingency was required to be provided in the plan in case liability would be ultimately fastened on the corporate debtor JIL. It has not been suggested that any such bifurcation of liability, qua the land under Expressway on one hand and other parcels on the other, is a subject matter of the arbitration proceedings. However, going by the terms of the CA, prima facie, we are unable to find any indication therein that the liability for compensation with reference to the land under Expressway is not of the concessionaire. In any case, while making a provision for meeting with this contingent liability of additional amount of compensation, the resolution applicant could not have decided of its own that there will not be any liability of the concessionaire or its assigns towards the land under Expressway. 106.1. It appears that while proposing to create two different SPVs, the resolution applicant stumbled on an idea that the liability for additional compensation as regards Expressway land could be simply deflected to H YEIDA with reference to the fact that YEIDA will get this land back

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 789 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

after 36 years; and reflected this idea by way of the questioned proposition in the resolution plan. The Adjudicating Authority has chosen to leave this issue open, for being litigated at the appropriate time and before the competent forum. In our view, such a prescription as regards Expressway land amounts to alterations of the material terms of CA and cannot be made without the consent of YEIDA. This aspect could have only been disapproved. 106.2. Similarly, the resolution applicant, of its own, could not have decided that end-user would mean sub-lessee and thereby deflect even collection of the amount towards this liability on YEIDA and that too when YEIDA was not going to be a party in creation of any sub-lease. The structuring of these propositions regarding contingent liability turns out to be wholly illogical, apart from being at loggerheads with the terms of the Concession Agreement. 106.3. It needs no great deal of discussion to find that the said aspect concerning the provision for additional compensation, if not approved on material terms, is of significant commercial impact. Even D the other modification by the Adjudicating Authority, that YEIDA shall have a right to collect acquisition cost through SPVs concerned, carry their own commercial implications. These are not the terms which could be taken up for modification without disturbing the financial proposal of the resolution plan. While these prescriptions could not have been approved, in our view, the Adjudicating Authority could not have entered into any process of modification. The only course open for the Adjudicating Authority (NCLT) was to send the plan back to the Committee of Creditors for reconsideration.

107Copy pinpoint107. Apart from the aforesaid, the reliefs and concessions as sought for by the resolution applicant in relation to YEIDA in Clauses 4, 14 and 27 of Schedule 3 are also required to be disapproved. We are unable to countenance the proposition that by way of a resolution plan, it could be enjoined upon an agency of the government like YEIDA to give up or withdraw from a pending litigation. Similarly, extinguishment of existing liability qua YEIDA is not a relief that could be given to the resolution applicant for askance. For the same reason, the resolution applicant cannot seek extension of time period of the Concession Agreement by way of a clause of ‘relief’ in the resolution plan without the consent of a governmental body like YEIDA. H

p. 790 Copy page pinpoint

108Copy pinpoint108. Before concluding on this point for determination where we have accepted the major parts of the objections of YEIDA, we may, in fairness to all the parties concerned, reiterate that despite stating its objections, YEIDA has consistently maintained before the NCLT as also before this Court82 that it does not stand to oppose the resolution plan only for the sake of opposition; rather it would like the plan to succeed but, it has a public duty to ensure that the framework under CA is preserved and else, it would be ready to do everything within its power to ensure that the plan is a success. Thus, it would not be out of place to add a sanguine hope that being the owner of the land in question and public authority, YEIDA, who had envisaged and promoted the entire project, would, in future dealing with the matter, act with caution and circumspection, while earnestly reflecting upon the practical impact of its propositions/decisions on various stakeholders, including the homebuyers.

109Copy pinpoint109. For what has been discussed hereinabove, we are constrained to hold that the stipulations in the resolution plan, as regards dealings with YEIDA and with the terms of Concession Agreement, have rightly not been approved and the stipulations in question, when not being consented to by YEIDA, are required to be disapproved. Further, in the cumulative effect of the stipulations which have not been approved, the only correct course for the Adjudicating Authority was to send the plan back to the Committee of Creditors for reconsideration. Point D Treatment of the debt of dissenting financial creditor ICICI Bank Limited

110Copy pinpoint110. Now, we need to enter into another area of major dispute, which relates to the objections of a dissenting financial creditor, ICICI Bank Limited.

111Copy pinpoint111. For dealing with the issue concerning dissenting financial creditor, we need to look closely at the relevant prescriptions in the G resolution plan of NBCC. As noticed, in Schedule 2 of the resolution plan, detailed steps are mentioned for acquisition of control of the corporate debtor and implementation of the resolution plan. Steps 6A and 6B relate to the institutional financial creditors. The preceding steps, in their chronology, are (1) incorporation of NBCC SPV and acquisition of the 82 H vide paragraphs 47.2, 99 and 99.8 (supra)

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 791 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

corporate debtor by the resolution applicant through that SPV; (2) A incorporation of Expressway SPV by the corporate debtor and transfer of Yamuna Expressway to that SPV and securitisation of toll cash flow; (3) payment of unpaid CIRP costs; (4) payment of total operational debt; and (5) incorporation of Land Bank SPV. The sixth step is divided in two parts, being Step 6A concerning upfront payment to the institutional B financial creditors and 6B concerning treatment of institutional financial creditors for the remaining amount. In the second part of Step 6B, specific stipulations are contained as regards the dissenting financial creditors. For comprehension of the gamut of such prescriptions, we may reproduce Steps 6A and 6B in the resolution plan as under: - “STEP 6A: UPFRONT PAYMENT TO THE INSTITUTIONAL FINANCIAL C CREDITOR

1. Part of the Admitted Financial Debts of the Institutional Financial Creditors shall be settled to an extent of INR [Fresh Debt- 2,000] Cr by making upfront Payment of ~ INR [Fresh Debt - (less) 2,000] Cr by the Expressway SPV, to be incorporated by the D Corporate Debtor under Step 2 above. No prepayment penalty shall be payable to the Institutional Financial Creditors, in the event of any upfront payment of debt of as provided above.

2. In this regard, it is clarified that upon payment of upfront amount aggregating to INR [Fresh Debt - (less) 2,000] Cr to the E Institutional Financial Creditors, their charge over the Yamuna Expressway and toll cash flow shall be automatically released, without any further deed or act by the parties. “STEP 6B: TREATMENT OF INSTITUTIONAL FINANCIAL CREDITORS FOR THE REMAINING AMOUNT F After upfront payment is made to the Institutional Financial Creditors as contemplated under Step-6A above, the remaining Admitted Financial Debt due to the Institutional Financial Creditors shall be settled in its entirety in the following manner. G Conversion of part of Admitted Financial Debt (due to Institutional Financial Creditors) into equity shares of the Corporate Debtor and subsequent reduction of share capital to extinguish the shareholding of Institutional Financial Creditors in the Corporate Debtor in entirety; H

p. 792 Copy page pinpoint

A Transfer of 100% shareholding of Land Bank SPV from the Corporate Debtor to the Institutional Financial Creditors; Transfer of 100% shareholding of Expressway SPV from the Corporate Debtor to the Institutional Financial Creditors for a consideration equal to their then outstanding debt to be paid by way of settlement of the outstanding debt to the same extent; and It is also proposed that the Resolution Applicant shall enter into: (i) a management agreement with the Land Bank SPV (to be owned by the Institutional Financial Creditors) for the purpose of monetizing the land held by the Land Bank SPV for an initial tenure of 5 years subject to a fixed/success-based fee to be mutually agreed between the Institutional Financial Creditors and the Resolution Applicant. Detailed terms and conditions of such management agreement, including any escrow mechanism may be mutually agreed between the Institutional Financial Creditors and the Resolution Applicant. Additionally, the Resolution Applicant reserves its first right to buy back the land held by the Land Bank SPV, at the then prevailing market rate.

E (ii) an operations & maintenance agreement with the Expressway SPV (to be owned by the Institutional Financial Creditors) to operate and maintain the Expressway for a tenure of 5 years subject to a fee to be mutually agreed between the Institutional Financial Creditors and the Resolution Applicant. Detailed terms and conditions of such O&M agreement, including any escrow mechanism may be mutually agreed between the Institutional Financial Creditors and the Resolution Applicant. We have structured the transaction in a tax efficient manner to the best of our knowledge. However, in the event any income tax liability or goods and services tax (GST) liability, arises in future on account of transfer of land parcels, same shall be borne by the Institutional Financial Creditors in a pro rata manner without any recourse, express or implied, to the Resolution Applicant. As per IBC, Dissenting Financial Creditors are required to be paid a minimum of amounts in the nature of liquidation value due to them in terms of Sections 30(2) and 53 of the IBC. However,

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 793 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

p. 794 Copy page pinpoint

A 111.1. Thus, the proposal in the resolution plan is to the effect that, if the dissenting financial creditors would be entitled to some amount in the nature of liquidation value in terms of Sections 30 and Section 53 of the IBC read with Regulation 38 of the CIRP Regulations, they would be provided such liquidation value ‘in the form of proportionate share in the equity of the Expressway SPV and transfer of certain land parcels belonging to the Corporate Debtor’.

112Copy pinpoint112. The dissenting financial creditor of JIL, namely, ICICI Bank Limited, took exception to the stipulations aforesaid and submitted before the Adjudicating Authority that being a dissenting financial creditor, it was entitled to receive cash payment as per the liquidation value in terms of Section 30(2)(b) of the Code read with Regulation 38(1)(b) of the CIRP Regulations; and providing for land and equity in the proposed SPVs in lieu of the requisite payment was entirely impermissible. These objections were countered by IRP and NBCC with the submissions that it was nowhere provided in the scheme of the Code and CIRP Regulations D that payment of liquidation value to the dissenting financial creditor has to be in cash. It was also submitted that when mode of discharge of obligation towards dissenting financial creditor was not envisaged only by way of cash payment, money or other valuable thing delivered to discharge the obligation would be construed as “payment”, fulfilling the requirement of Section 30(2) of the Code. It was also submitted that when the assenting financial creditors were not being paid in cash, any such payment to the dissenting financial creditors would cause prejudice to the rights of the assenting financial creditors. As noticed, the Adjudicating Authority rejected the stand so taken by IRP and NBCC and observed that all the provisions and specifications of the Board made it clear that payment to dissenting financial creditors means payment of the amount; and it cannot be argued that the payment could also be in a manner other than cash. The Adjudicating Authority also rejected the contention made with reference to the treatment assigned to the assenting financial creditors while observing that a person agreeing might agree for anything but the same may not be acceptable to the person disagreeing. G Accordingly, the Adjudicating Authority (NCLT) did not approve the proposal in the resolution plan as regards treatment of the dissenting financial creditors. 112.1. However, after disapproving, the Adjudicating Authority proceeded on the lines that this objectionable part of the resolution plan H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 795 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

could be modified without altering the basic structure of the plan. Having A said so, the Adjudicating Authority proceeded to modify the resolution plan in the manner that the resolution applicant shall pay to the dissenting financial creditors the amount, that was receivable in terms of Section 53 of the Code, in twelve monthly instalments together with interest with other stipulations, as contained in paragraph 103 of its order, which we have reproduced in paragraph 46.4 hereinbefore. This part of the order of the Adjudicating Authority has been challenged by NBCC as also by IRP in their respective appeals. The assenting financial creditors, including IDBI Bank and the assenting homebuyers have also supported this challenge. Their submissions have been countered by the dissenting financial creditor ICICI Bank as also by the erstwhile director of the corporate debtor.

113Copy pinpoint113. We may now summarise the essential contents of extensive submissions made by the parties in challenge to this part of the order of the Adjudicating Authority, while avoiding repetition of the same contention by different parties. D 113.1. It has been strenuously contended on behalf of the IRP that the Adjudicating Authority has acted wholly without jurisdiction in modifying the terms of the resolution plan that was approved by 97.36% of the voting share of the Committee of Creditors. It is submitted that the resolution plan in question is duly compliant with the requirements of E Section 30 of the Code and if the Adjudicating Authority was at all of the view that the plan did not meet with any particular requirement, it could have only sent it back to CoC to consider the proposed modifications, so as to afford an opportunity to the resolution applicant to modify the plan and to the CoC to reconsider and vote upon the same. It is submitted that the Adjudicating Authority, by itself, could not have made any modification in the resolution plan, particularly on any commercial aspect of the plan which remains exclusively within the domain of the CoC. 113.1.1. It has also been submitted on behalf of IRP that in the meeting of CoC dated 28.11.2019, ICICI Bank did not raise any objection to the mode of payment and only objected to the amount provided by the resolution applicant and that being the position, it could not have raised any objection at a later stage. 113.1.2. It is further submitted that the requirements in Section 30(2)(b) of the Code stress upon the ‘value’ a dissenting financial creditor H

p. 796 Copy page pinpoint

A is entitled to receive but, it has nowhere been provided that the manner of payment has to be in cash; rather the manner of payment has been left to be specified by the Board and the Board has also not specified that such payment has to be in cash only. 113.1.3. Further, according to IRP, if the word “payment” is given B a prescriptive meaning, it would result in clause (b) of sub-section (2) of Section 30 prescribing the manner of distribution and that would amount to amending the word “creditor” in sub-section (4) of Section 30. It is submitted that in the scheme of the Code, dissenting financial creditors are bound to accept the manner of distribution in the resolution plan as approved by the majority of 66% or more of the voting share in the CoC C and if they are not held so bound, the provisions permitting the CoC to take decisions with requisite majority would be rendered nugatory. 113.2. The resolution applicant NBCC has also made long ranging submissions in challenge to the directions in paragraph 103 of the order of the Adjudicating Authority while defending the terms and stipulations D in the resolution plan. It is submitted that Step 6B in the resolution plan has been formulated in due compliance of the requirements of Section 30(2) of the Code and Regulation 38(1) of the CIRP Regulations. It is stated in its written submissions that the requirements of law are duly satisfied as follows: E “3. Thus, the requirements of law have been met in the following manner: a. Payment of liquidation value in terms of payment of proportionate share in the Land Bank SPV and Expressway SPV; and F b. the payment to the Dissenting Financial Creditors shall be made in terms of Regulation 38 of the CIRP Regulations and further states that on account of the payments to the Dissenting Financial Creditors in the form of proportionate equity in the Expressway SPV and transfer of certain land parcels, there would be corresponding decrease in the equity and land parcels being transferred to the lenders who vote in favour of the plan.” 113.2.1. As regards the expression “payment” for the purpose of Section 30(2) of the Code, the meaning of this term stated in Black’s Law Dictionary (9th Edition) has been referred. Further, reliance is placed on the decisions of this Court in the case of Pioneer Urban

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 797 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

(supra), Himachal Pradesh Housing and Urban Development A Authority and Anr. v. Ranjit Singh Rana: (2012) 4 SCC 505; and on the decision of the Court of Appeal for the 6th Circuit, USA in the case of Samuel Katkin and Doris Katkin v. Commissioner of Internal Revenue: 570 F.2d 139 as also on a decision of the High Court of Calcutta wherein, a decision of the Court of Appeal of England in White B v. Elmdene Estates Ltd.: 1959 ALL ER 605 has been relied upon. With reference to the Dictionary meaning and the cited decisions, the contention has been that “payment” means the discharge of an obligation by delivery of money or its equivalent; and the expression “payment” is not restricted to delivery of money or legal tender only. 113.2.2. It is argued that Section 8 of the Code, as relied upon by C ICICI Bank, uses the term “payment” to denote the payment of amounts that are “operational debts” before commencement of the insolvency resolution process, whereas the same term is used under Section 30(2) to denote the payment under a resolution plan. The language employed under Section 8(2)(b) of the Code includes payment by way of electronic transfer or by cheque. On the other hand, Section 30(2) of the Code is in relation to payment under a resolution plan, and does not in any manner stipulate the mode of payment. 113.2.3. It is also contended that the word ‘payment’ is required to be interpreted with reference to its context and placement; and to support the submissions on contextual interpretation, reliance is placed on the decisions in Commissioner of Income Tax, Madhya Pradesh & Bhopal v. Shrimati Sodra Devi: AIR 1957 SC 832; Kolkata Metropolitan Development Authority v. Gobinda Chandra Makal and Anr.: (2011) 9 SCC 207; Indian Handicrafts Emporium and Ors. v. Union of India and Ors.: 2003 (7) SCC 589; CIT, Bangalore F v. Venkateswara Hatcheries (P) Ltd.: (1999) 3 SCC 632; and Union of India v. Sankalchand Himatlal Sheth and Anr.: (1977) 4 SCC 193. 113.2.4. It has also been submitted that the context in relation to the word “payment” needs to be examined in terms of the object and G purpose of resolution of insolvency and not in terms of recovery of debt; and in the light of the fact that for the purpose of insolvency resolution, a resolution plan may provide for various ways of settlement of claims. On the scheme of the Code and object and purpose of resolution, the decisions in ArcelorMittal and Swiss Ribbons (supra) have been referred. H

p. 798 Copy page pinpoint

A Regulation 37(1) of the CIRP Regulations has also been referred wherein it is provided that a resolution plan may provide for securities in exchange of claims. It is also submitted that limiting the word “payment” only to mean cash would defeat the purpose of resolution and would rather incentivise dissent. It is submitted that such mode of payment by cash should not be read in the statute, when not provided therein. The decision of this Court in the case of State through Central Bureau of Investigation v. Parmeshwaran Subramani and Anr.: (2009) 9 SCC 729 has been referred. 113.2.5. It has also been submitted that the “value” under Section 53 is only a guiding factor for the CoC to exercise its commercial wisdom and the reference to “value” in Section 53 does not mean that the dissenting financial creditor has to be paid such value only in cash. It is also submitted that the liquidation value is not known to the resolution applicant and there is no requirement of mentioning the liquidation value in the resolution plan. It is pointed out that earlier, sub-clauses (j) and D (k) of Regulation 36(2) provided for inclusion of liquidation value of the corporate debtor and liquidation value due to the operational creditors as part of information memorandum, but these clauses were deleted w.e.f. 31.12.2017 and the resolution applicant is not given access to the liquidation value of the corporate debtor. It is also submitted that as per the decision in Maharashtra Seamless Ltd. (supra), there is no requirement for a resolution applicant to match the liquidation value of a corporate debtor. It has been vehemently contended that all the amounts being raised or made available to NBCC are going to be utilised for construction of homes and any requirement of payment in cash would be detrimental to the object of completing the construction on time, which would cause prejudice to the homebuyers. It is also submitted that ‘payment in kind’ is accepted under banking norms and in this regard, it is also indicated that on an earlier occasion, the objector ICICI Bank itself had accepted land-debt swap as a method of payment for discharge of the debt of JIL. G 113.2.6. Apart from above, NBCC has also referred to its affidavit filed during the course of hearing while submitting that the admitted debt of ICICI Bank is INR 304.1 crores which is 1.31% of total financial debt and as per the final statement available, the proportionate liquidation value payable to this bank would be about INR 238.84 crores. Thereafter, particulars of the parcels of land proposed to be offered to ICICI Bank H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 799 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

and their estimated value as also the estimated value of equity in A Expressway have been stated to suggest that adequate provision is being made for payment of debt of this bank while indicating that the bank would also be entitled to its proportionate share under Step 6A of the resolution plan. 113.3. The assenting financial creditor, IDBI Bank, has also supported the submissions aforesaid. The additional parts of its submissions are that ICICI Bank is using its dissent to obtain an advantage over the assenting financial creditors, by seeking to be paid in cash purely by virtue of dissent. It is also submitted that resolution plan was approved by 97.36% of the voting share of the creditors in CoC in its commercial wisdom after assessing the viability and feasibility of the resolution plan; and if the other institutional financial creditors also wanted to receive their money, they would have simply voted for liquidation which would have deprived thousands of homebuyers of any chance of getting their homes. It is also submitted that if cash payment is considered to be the only mode of payment available to the dissenting financial creditors, it would incentivise the financial creditors to go for dissent, leading to more liquidations and fewer resolutions and thereby defeating the theme and spirit of the Code. It has also been submitted in the alternative that if at all, this Court upholds the related part of the order of NCLT and permits cash payment, the interests of the assessing financial creditors need to be safeguarded and such payment should not result in any dilution or reduction in the amount payable to the assenting financial creditors.

114Copy pinpoint114. While opposing the submissions so made and supporting the modification of the resolution plan by NCLT, it has been emphatically argued on behalf of the dissenting financial creditor, ICICI Bank, that the resolution plan in question had been non-compliant with the requirements of law and had it not been amended to provide for payment of the amounts admittedly owed to it by the corporate debtor, the only course would have been of rejection of the plan; and that would have jeopardised the entire resolution process carried out for more than two years under exceptional circumstances and would have pushed the corporate debtor to liquidation, much to the disappointment of homebuyers. 114.1. With reference to Section 30(2)(b) of the Code and Regulation 38(1)(b) of the CIRP Regulations, it is submitted that as per the statutory mandate, a resolution applicant is required to pay a minimum H

p. 800 Copy page pinpoint

A of liquidation value [in terms of Section 53(1) of the Code] to the dissenting financial creditors in priority over the assenting financial creditors; and if a resolution plan does not provide for this mandatory payment in priority, the same cannot be approved. 114.2. It is submitted that, admittedly, the corporate debtor owed an amount of INR 304.1 crores to ICICI Bank as on the insolvency commencement date; and this bank, holding 1.3% voting share in the CoC, voted against the resolution plan proposed by NBCC and therefore, came to be categorised as a dissenting financial creditor. Consequently, this bank has the right and entitlement to be paid, and in priority over the assenting financial creditors, the amount against its dues, which shall be not less than the amount payable in accordance with Section 53(1) of the Code, that is, the liquidation value; and this payment could only be made in terms of cash and not by any other mode or method. 114.3. It is contended that Section 53 contemplates the proceeds from the sale of the liquidation assets to be utilised to pay the dissenting financial creditors and there is no such conceivable possibility that the assets of a corporate debtor would be liquidated in any other consideration, apart from cash. The payment, for the purpose of Section 30(2)(b) of the Code, would only be in terms of money or a legal tender; and it is entirely impermissible for a resolution applicant to pay such liquidation value to the dissenting financial creditor in kind, unless the latter accepts such form of payment. Various decisions on the process of interpretation have been referred on behalf of the objector bank including those in Sankalchand Himatlal Sheth (supra) and Rathi Khandsari Udyog and Ors. v. State of Uttar Pradesh and Ors.: (1985) 2 SCC 485.

F 114.4. It is further submitted that in the resolution plan, the treatment of the dissenting financial creditors is inferior to the assenting financial creditors inasmuch as the latter is being provided an upfront payment of INR 300 crores, whereas the former is not provided with any cash at all. Such treatment defeats the purpose of Section 30(2)(b) of the Code, which has been amended to protect the interests of the dissenting financial creditors. 114.5. Yet further, it is submitted that the presumption of NBCC that the liquidation value towards the dissenting financial creditors shall be nil is baseless; and the treatment of dissenting financial creditors in the resolution plan is vague and incapable of precise valuation as it is based on speculation rather than current market figures.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 801 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

114.6. While questioning the valuation suggested in the resolution plan, it is submitted that valuation of the land proposed to be transferred to the Land Bank SPV is INR 5001 crores which is based on future potential. On the other hand, the valuations conducted by the IRP comes at INR 2509 crores and by the others equals to INR 3643 crores which is significantly less than the value arrived at by NBCC. The treatment under the plan also mentions that the land so transferred shall carry with it the liabilities attached and the dissenting financial creditor shall bear such uncertain and unquantified liabilities. This, it is submitted, raises a doubt as to whether this provision even satisfies the liquidation value payable to the dissenting financial creditors. 114.7. It is further submitted that the contention of NBCC, that the intent of the legislature while using the word “amount” cannot be restricted to only payment in cash, does not have any basis in law. ICICI Bank submits that even a look at the language of Section 8 of the Code makes it clear that when it comes to the requirement of payment in relation to corporate insolvency resolution, the same has to be in monetary terms. It is submitted that once the language of a statute is clear, the meaning of the provisions cannot be altered by judicial interpretation. 114.8. It is further submitted that the purpose of guaranteeing liquidation value to the dissenting financial creditors is to protect their interests so as to make sure that they are not in a worse position than they would have been in the event of liquidation but, the treatment provided in the resolution plan for dissenting financial creditors is done in a way that they get punished for their dissent. 114.9. It is further submitted that once the resolution plan is put forth before the Adjudicating Authority for its approval, judicial mind is applied to see as to whether such plan fulfils the mandatory requirements under the Code, which involves firstly, compliance with Section 30(2) of the Code; secondly, whether the plan is fair and equitable and balances the interests of all the stakeholders; and thirdly, whether the plan maximises the value of assets. Such approval of NCLT is never a formality, but a necessity. According to the objector bank, the Adjudicating Authority, G while modifying the resolution plan, has made sure that the modifications do not alter the basic structure of the plan and hence, has not violated the principle of judicial review. Therefore, the contention that NCLT has acted beyond its jurisdiction and has overridden the commercial wisdom of CoC is incorrect. H

p. 802 Copy page pinpoint

A 114.10. It is also submitted that just because ICICI Bank has voted against the approval of both the resolution plans, it does not mean that the intention of the Bank would be the liquidation of the corporate debtor. Such contention of NBCC furthers its mala fide intentions and is placed only to undermine the dissentient bank.

115Copy pinpoint115. The submissions so made on behalf of the dissenting financial creditor bank have also been supported by the erstwhile director of the corporate debtor JIL and JAL. It is submitted that the proposition in the resolution plan to satisfy the claim of the dissenting financial creditors in the form of share and equity or transfer of land parcels is not in conformity with the requirements of Section 30(2)(b) of the Code. It is also submitted C that proposing to satisfy the claim of the dissenting financial creditors by a mode other than monetary payment is tantamount to reading the word ‘equivalent’ in the relevant provision, which is entirely impermissible in law. The decision of this Court in the case of Dadi Jagannadham v. Jammulu Ramulu and Ors.: (2001) 7 SCC 71, has been referred. It D is also submitted that reliance of NBCC on Regulation 37 of the CIRP Regulations, to justify the manner in which dissenting financial creditors are to be paid, is misplaced because instead of Regulation 37, the relevant provision which needs consideration is Regulation 38(1)(b), as it is directly related to Section 30(2)(b)(ii) of the Code. It is, therefore, maintained that the resolution plan, as regards prescription for the dissenting financial creditors, being violative of the requirements of law, could not have been approved.

116Copy pinpoint116. Having examined the rival submissions with reference to the law applicable in relation to the treatment of the debt of dissenting financial creditor in CIRP under the Code, we find the objections taken by the dissenting financial creditor in the present case fully justified; and the interpretation suggested by the IRP, the resolution applicant and the assenting financial creditor cannot be accepted.

117Copy pinpoint117. An overview of the Insolvency and Bankruptcy Code, 2016 gives the basic idea that even while the avowed objects of the Code are towards insolvency resolution in a time bound manner for maximisation of value of assets of the corporate debtors and balance of interests of all the stakeholders, the core provisions of the Code, a comparatively new legislation, have already undergone several amendments from time to time. In fact, in Pioneer Urban (supra), this Court has recognised the H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 803 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

legislature’s right to experiment when coming to the economic legislation like the Code, while observing as under: - “The Legislature’s right to experiment in matters economic

15. In Swiss Ribbons, this Court was at pains to point out, referring, inter alia, to various American decisions in paras 17 to 24, that the legislature must be given free play in the joints when it comes to economic legislation. Apart from the presumption of constitutionality which arises in such cases, the legislative judgement in economic choices must be given a certain degree of deference by the courts. In para 120 of the said judgment, this Court held: (SCC p. 112) C “120. The Insolvency Code is a legislation which deals with economic matters and, in the larger sense, deals with the economy of the country as a whole. Earlier experiments, as we have seen, in terms of legislations having failed, “trial” having led to repeated “errors”, ultimately led to the enactment of the D Code. The experiment contained in the Code, judged by the generality of its provisions and not by so-called crudities and inequities that have been pointed out by the petitioners, passes constitutional muster. To stay experimentation in things economic is a grave responsibility, and denial of the right to experiment is fraught with serious consequences to the nation. E We have also seen that the working of the Code is being monitored by the Central Government by Expert Committees that have been set up in this behalf. Amendments have been made in the short period in which the Code has operated, both the code itself as well as to subordinate legislation made under F it. This process is an ongoing process which involves all stakeholders, including the petitioners.” It is in this background that the constitutional challenge to the Amendment Act will have to be decided.”

118Copy pinpoint118. A few aspects of the vast variety of amendments to IBC G have been noticed hereinbefore and are being dealt with in this judgment, to the extent relevant for the issues involved. One part of such amendments relates to Section 30, with which we are concerned in this point for determination. As noticed, the earlier clause (b) of sub-section (2) of Section 30 of the Code required that the resolution plan should H

p. 804 Copy page pinpoint

A provide for payment of debts of operational creditors, which should not be less than the amount to be paid to the operational creditors in the event of liquidation. The treatment of various classes of creditors in the scheme then existing had been a matter of debate at various levels and in several decisions. It acquired attention of the legislature that a balance was required to be brought about in treatment of different creditors and B ‘critical gaps’ were noticed in the corporate insolvency framework, including those in the treatment of dissenting financial creditors. This led to the introduction of Bill No. XXVI of 2019, being the Insolvency and Bankruptcy Code (Amendment) Bill, 2019, in the Rajya Sabha in July

2019. The Statement of Objects and Reasons for this Bill, giving a C reasonable insight as to what was sought to be achieved, reads as under:- “STATEMENT OF OBJECTS AND REASONS The Insolvency and Bankruptcy Code, 2016 (the Code) was enacted with a view to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, D partnership firms and individuals in a time-bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance of interests of all the stakeholders including alteration in the order or priority of payment of Government dues and to establish an Insolvency and E Bankruptcy Board of India.

2. The Preamble to the Code lays down the objects of the Code to include “the insolvency resolution” in a time bound manner for maximization of value of assets in order to balance the interests of all the stakeholders. Concerns have been raised that in some cases extensive litigation is causing undue delays, which may hamper the value maximization. There is a need to ensure that all creditors are treated fairly, without unduly burdening the Adjudicating Authority whose role is to ensure that the resolution plan complies with the provisions of the Code. Various stakeholders have suggested that if the creditors were treated on an equal footing, when they have different pre-insolvency entitlements, it would adversely impact the cost and availability of credit. Further, views have also been obtained so as to bring clarity on the voting pattern of financial creditors represented by the authorized representative. H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 805 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

3. In view of the aforesaid difficulties and in order to fill A the critical gaps in the corporate insolvency framework, it has become necessary to amend certain provisions of the Insolvency and Bankruptcy Code. The Insolvency and Bankruptcy Code (Amendment) Bill, 2019, inter alia, provides for the following, namely:- B (a) to amend clause (26) of section 5 of the Code so as to insert an Explanation in the definition of “resolution plan” to clarify that a resolution plan proposing the insolvency resolution of corporate debtor as a going concern may include the provisions for corporate restructuring, including by way of merger, amalgamation and demerger to enable the market to come up C with dynamic resolution plans in the interest of value maximization; (b) to amend sub-section (4) of section 7 of the Code to provide that if an application has not been admitted or rejected within fourteen days by the Adjudicating Authority, it shall provide the reasons in writing for the same; D

(c) to amend sub-section (3) of section 12 of the Code to mandate that the insolvency resolution process of a corporate debtor shall not extend beyond three hundred and thirty days from the insolvency commencement date, which will include the time taken in legal proceedings, in order to prevent undue delays in the completion of the Corporate Insolvency Resolution Process. However, if the process, including time take in legal proceedings, is not completed within the said period of three hundred and thirty days, an order requiring the corporate debtor to be liquidated under clause (a) of sub-section (1) of section 33 shall be passed. It is clarified that the time taken for the completion of the corporate insolvency resolution process shall include the time taken in legal proceedings; (d) to insert sub-section (3A) in section 25A of the Code to provide that an authorized representative under sub-section (6A) G of section 21 will cast the vote for all financial creditors he represents in accordance with the decision taken by a vote of more than fifty per cent. of the voting share of the financial creditors he represents, who have cast their vote, in order to facilitate decision making in the committee of creditors, especially when financial creditors are large and heterogeneous group; H

p. 806 Copy page pinpoint

A (e) to amend sub-section (2) of section 30 of the Code to provide that – (i) the operational creditors shall receive an amount that is not less than the liquidation value of their debt or the amount that would have been received if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priorities in section 53 of the Code, whichever is higher; (ii) the financial creditors who do not vote in favour of the resolution plan shall receive an amount that is not less than the liquidation value of their debt; (iii) the provisions shall apply to the corporate insolvency resolution process of a corporate debtor- (A) where a resolution plan has not been approved or rejected by the Adjudicating Authority; or D (B) an appeal is preferred under section 61 or 62 or such appeal is not time barred under any provision of law for the time being in force; or (C) where a legal proceeding has been initiated in any court against the decisions of the Adjudicating Authority in respect of a resolution plan; (f) to amend sub-section (1) of section 31 of the Code to clarify that the resolution plan approved by the Adjudicating Authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, including tax authorities; (g) to amend sub-section (2) of section 33 of the Code to clarify that the committee of creditors may take the decision to liquidate the corporate debtor, in accordance with the requirements provided in sub-section (2) of section 33, any time after the constitution of the committee of creditors under sub-section (1) of section 21 until the confirmation of the resolution plan, including at any time before the preparation of the information memorandum. H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 807 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

4. The Bill seeks to achieve the above objectives.” A (emphasis in bold supplied) 118.1. The aforesaid Bill ultimately took the shape of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, being Act 26 of 2019. This Amendment Act of 2019 not only provided that operational creditors would receive an amount that is not less than liquidation value of their debts or the amount that would have been received if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priorities in Section 53 but, in addition to that, this amendment ensured that the dissenting financial creditors would also be paid a certain minimum amount, which would not be less than the amount to be paid in the event of liquidation; and the Explanation clarified that the distribution in accordance with clause (b) would be fair and equitable to all the creditors. The purport and connotation of this amendment came to be tersely explained by this Court in the case of Essar Steel as under:- “128. When it comes to the validity of the substitution of Section D 30(2)(b) by Section 6 of the Amending Act of 2019, it is clear that the substituted Section 30(2)(b) gives operational creditors something more than was given earlier as it is the higher of the figures mentioned in sub-clauses (i) and (ii) of sub-clause (b) that is now to be paid as a minimum amount to operational creditors. The same goes for the latter part of sub-clause (b) E which refers to dissentient financial creditors. Ms Madhavi Divan is correct in her argument that Section 30(2)(b) is in fact a beneficial provision in favour of operational creditors and dissentient financial creditors as they are now to be paid a certain minimum amount, the minimum in the case of operational creditors being the higher of the two figures calculated under sub- clauses (i) and (ii) of clause (b), and the minimum in the case of dissentient financial creditor being a minimum amount that was not earlier payable. As a matter of fact, pre-amendment, secured financial creditors may cramdown unsecured financial creditors who are dissentient, the majority vote of 66% voting to give them nothing or next to nothing for their dues. In the earlier regime it may have been possible to have done this but after the amendment such financial creditors are now to be paid the minimum amount mentioned in sub-section (2). Ms Madhavi Divan is also correct in stating that the order of priority of payment H

p. 808 Copy page pinpoint

A of creditors mentioned in Section 53 is not engrafted in sub-section (2)(b) as amended. Section 53 is only referred to in order that a certain minimum figure be paid to different classes of operational and financial creditors. It is only for this purpose that Section 53(1) is to be looked at as it is clear that it is the commercial wisdom of the Committee of B Creditors that is free to determine what amounts be paid to different classes and sub-classes of creditors in accordance with the provisions of the Code and the Regulations made thereunder.

129. As has been held in this judgment, it is clear that C Explanation 1 has only been inserted in order that the Adjudicating Authority and the Appellate Tribunal cannot enter into the merits of a business decision of the requisite majority of the Committee of Creditors. As has also been held in this judgment, there is no residual equity jurisdiction in the D Adjudicating Authority or the Appellate Tribunal to interfere in the merits of a business decision taken by the requisite majority of the Committee of Creditors, provided that it is otherwise in conformity with the provisions of the Code and the Regulations, as has been laid down by this judgment.” E (emphasis in bold supplied) 118.2. As noticed, the decision of this Court in Essar Steel was delivered on 15.11.2019. A few days after this decision, i.e., on 28.11.2019, amendment was carried out in clause (1) of Regulation 38 of the CIRP Regulations, which has direct co-relation with the aforesaid amended clause (b) of Section 30(2) of the Code. By way of this amendment of Regulation 38(1), the priority for the amount payable came to be specified, not only to the operational creditors but also to the dissenting financial creditors over their assenting counterparts. The aforesaid amendments and the expositions of this Court in Essar Steel make it clear that the interests of dissenting financial creditors are duly taken care of, while providing for the minimum amount they are entitled to and, for that matter, in priority over the assenting financial creditors. 118.3. Even when the legislature has filled in the gaps in IBC, particularly qua the dissenting financial creditors; and their interests are sought to be taken care of by making it mandatory to provide for the payment of their dues in terms of liquidation value, another grey area

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 809 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

has surfaced in the present case. It is concerning the mode of translating such assured returns to reality. Putting it differently, there is no doubt that now the dissenting financial creditors shall get payment and that too, in priority over the assenting financial creditors but, the question remains about the mode of fulfilling such obligations towards dissentient financial creditors. B

119Copy pinpoint119. In the present case, the resolution plan has, in the first place, stated that according to the estimate of the resolution applicant, the liquidation value to be received by the dissenting financial creditors was likely to be nil but then, has provided for discharge of any likely obligation towards them in the manner that they shall be provided a proportionate share in the equity of Expressway SPV and land parcels but not any payment in terms of money. The dissenting financial creditor, ICICI Bank, is thoroughly dissatisfied with such a prescription whereby its dues shall be satisfied by a mode other than direct payment in cash. On the other hand, the IRP, the resolution applicant and even the assenting financial creditor would assert that such a prescription satisfies all the essential requirements of Section 30(2)(b) and Regulation 38(1)(b). Both these provisions essentially use the expressions “payment”; “the amount to be paid”; “the amount payable”; and “shall be paid”. ICICI Bank asserts that these expressions refer only to the payment in monetary terms, whereas the submissions are countered with the assertions that the term “payment” is with reference to discharge of obligation and that could be brought about by any of the methods permissible in law and not necessarily by way of payment in terms of money alone. This takes us to the principles of interpretation and assigning appropriate meaning to the expressions used. 119.1. The principles in the decisions cited by the learned counsel for the contesting parties are not of much debate and hence, we need not elaborate on every cited decision. The contextual interpretation remains one of the fundamental guiding principles; and the relevant observations in paragraph 54 of the decision in Sankalchand Himatlal Sheth (supra), which have been referred to by the contesting parties, would suffice for the purpose, which read as under: - “54. Now, it is undoubtedly true that where the language of an enactment is plain and clear upon its face and by itself susceptible to only one meaning, then ordinarily that meaning would have to be given by the Court. In such a case the task of interpretation H

p. 810 Copy page pinpoint

A can hardly be said to arise. But language at best is an imperfect medium of expression and a variety of significations may often lie in a word or expression. It has, therefore, been said that the words of a statute must be understood in the sense which the legislature has in view and their meaning must be found not so much in a strictly grammatical or etymological propriety of language, nor in its popular use, as in the subject or the occasion on which they are used and the object to be attained. It was said by Mr. Justice Holmes in felicitous language in Town v. Eisner that “a word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used”. The words used in a statute cannot be read in isolation: their colour and content are derived from their context and, therefore, every word in a statute must be examined in its context. And when I use the word ‘context’, I mean it in its widest sense “as including not only other enacting provisions of the same statute but its preamble, the existing state of the law, other statutes in pari materia and the mischief which – the statute was intended to remedy”. The context is of the greatest importance in the interpretation of the words used in a statute. “It is quite true”, pointed out Judge Learned Hand in Helvering v. Gregory E “that as the articulation of a statute increases, the room for interpretation must contract; but the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes, and no degree of particularity can every obviate recourse to the setting in which all appear, and which all collectively create”. Again, it must be remembered that though the words used are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing, be it a statute, or contract, or anything else, it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary, but to remember that a statute always has some purpose or object to accomplish, whose sympathetic and imaginative discovery, is the surest guide to its meaning. The literal construction should not obsess the Court, because it has only prima facie preference, the real object of interpretation being to find out the true intent of the law maker and that can be done only by reading the statute as an organic whole, with each part throwing light H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 811 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

on the other and bearing in mind the rule in Heydon’s case which requires four things to be “discerned and considered” in arriving at the real meaning : (1) what was the law before the Act was passed; (2) what was the mischief or defect for which the law had not provided; (3) what remedy Parliament has appointed; and (4) the reason of the remedy. There is also another rule of interpretation which is equally well settled and which seems to follow as a necessary corollary, namely, where the words, according to their literal meaning “produce an inconsistency, or an absurdity or inconvenience so great as to convince the Court that the intention could not have been to use them in their ordinary signification”, C the Court would be justified in “putting on them some other signification, which, though less proper, is one which the Court thinks the words will bear”. Vide River Wear Commissioners v. Admson. It is in the light of these principles of interpretation that I must proceed to consider what is the true meaning and effect of clause (1) of Article 222: whether it permits transfer of a Judge from one High Court to another, irrespective of his consent.” (emphasis in bold supplied) 119.2. There is no doubt on the principles that, depending upon context, the same word may be used in different parts of the statute with different meanings, as observed in Kolkata Metropolitan Development Authority (supra); and the same word in the context of one provision of the enactment may convey one meaning and another meaning in different context, as pointed out in Venkateswara Hatcheries (supra). However, it is also fundamental that construction of a statute leading to absurdity is required to be rejected and if more than one meaning or interpretation is possible, the one which favours the objects of the statute ought to be adopted. When it comes to the world of business and commerce, the observations of the majority in Rathi Khandsari Udyog (supra) are pertinent where, in paragraph 34 of the decision, this Court observed that in the legislations pertaining to the world of business and commerce, the dictionary to be referred to is the dictionary of the inhabitants of that world. It is also a settled principle of statutory interpretation that the statute is required to be read as a whole; and for that matter, it would be rather pre-elementary to say that for understanding the meaning and connotation of a particular expression in a particular H

p. 812 Copy page pinpoint

A statutory provision, the provision itself is required to be read as a whole. When we look at the ‘context’ for the purpose of a particular expression, which has otherwise not been defined in the statute elsewhere, a comprehension of the sentence or phrase in which the expression occurs coupled with the frame of the provision taken as a whole and, on the broad sphere, the entire statute with its objects and intents would lead to the true construction of the expression under reference; of course, while also keeping in view the other relevant principles, including the basics that natural and ordinary meaning of a word or expression is not ignored, unless there be any reason therefor.

120Copy pinpoint120. Keeping the principles aforesaid in view, we may embark upon the interpretation required in this case, of the expressions used in the relevant provisions of Section 30(2)(b) of the Code and Regulation 38(1)(b) of the CIRP Regulations. 120.1.The expression “payment” occurs in Section 30(2) of the Code, which lays down certain basics which the resolution professional has to find in the resolution plan before he presents the same to the Committee of Creditors. As per clauses (a) and (b) of sub-section (2) of Section 30, the resolution plan ought to provide for: (a) payment of insolvency resolution process costs; and (b) payment of debts of operational creditors as also dissenting financial creditors. Such payment has to be in the manner specified by the Board and the resolution process costs rank top in priority. This provision, read with Regulation 38(1), makes it clear that the next priority is of operational creditors who are followed by the dissenting financial creditors. The question is as to what is intended by these provisions and as to how the action of “payment” is to be performed? F 120.2.The referred observations in the case of Pioneer Urban that the expression “payment” is elastic enough to include “recompense” and “repayment” had been with reference to following passages in the case of Ranjit Singh Rana (supra): -

G “13. Webster Comprehensive Dictionary (International Edn.) Vol. 2 defines “payment”: “Payment.- (1) the act of paying. (2) Pay; requital; recompense.”

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 813 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

14. The Law Lexicon by P. Ramanatha Aiyar, 2nd Edn. Reprint, A inter alia, states: “payment is defined to be the act of paying, or that which is paid; discharge of a debt, obligation or duty; satisfaction of claim; recompense; the fulfilment of a promise or the performance of an agreement; the discharge in money of a sum due”. B

15. The word “payment” may have different meaning in different context but in the context of Section 37(1)(b); it means extinguishment of the liability arising under the award. It signifies satisfaction of the award. The deposit of the award amount into the court is nothing but a payment to the credit of the decree- C holder. In this view, once the award amount was deposited by the appellants before the High Court on 24-5-2001, the liability of post-award interest from 24-5-2001 ceased. The High Court, thus, was not right in directing the appellants to pay the interest @ 18% p.a. beyond 24-5-2001.” D 120.3.We need not enter into the other observations regarding the words “pay” and “payment”, made in the context of different statutes and different provisions but, we may profitably look at the meaning assigned to these expressions in the relevant dictionaries and lexicons. In Black’s Law Dictionary (Tenth Edition, page 1309), the verb “pay”, which leads to the derivative “paid” is defined as follows: - E

“Pay, vb. (13c) 1. To give money for a good or service that one buys; to make satisfaction <pay by credit card>. 2. To transfer money that one owes to a person, company, etc. <pay the utility bill>. 3. To give (someone) money for the job that he or she does; to compensate a person for his or her occupation; COMPENSATE F (1) <she gets paid twice a month>. 4. To give (money) to someone because one has been ordered by a court to do so <pay the damages>. 5. To be profitable; to bring in a return <the venture paid 9%>.” On the same page in Black’s Law Dictionary (Tenth Edition, page G 1309), the expression “payment” is defined in the following terms: - “Payment. (14c) 1. Performance of an obligation by the delivery of money or some other valuable thing accepted in partial or full discharge of the obligation. 2. The money or other valuable thing so delivered in satisfaction of an obligation.” H

p. 814 Copy page pinpoint

A 120.4.In the Law Lexicon by P. Ramanatha Aiyar (Fifth Edition, Volume 3 at page 3796), several connotations of the expression “payment” have been mentioned. We may reproduce the relevant part thereof as under: - “Payment is defined to be the act of paying, or that which is paid; discharge of a debt, obligation, or duty; satisfaction of claim; recompense; the fulfilment of a promise or the performance of an agreement; the discharge in money of a sum due. In legal contemplation, payment is the discharge of an obligation by the delivery of money or its equivalent, and is generally made with the assent of both parties to the contract.” 120.5.Significantly, the “payment”, as envisaged by clause (b) of Section 30(2) as also Regulation 38(1), is of the “amount”. The word “amount” in its noun form is defined in Webster’s Third New International Dictionary (at page 72) in the parlance of accounting as under: - D “3 accounting: a principal sum and the interest on it”

121Copy pinpoint121. Taking up the provisions under debate, it is but clear that as per sub-section (2) of Section 30, the resolution plan ought to provide for certain payments; and first of that is the insolvency resolution process costs. An action of “payment” being that of discharge of an obligation by delivery of money or other valuable thing accepted in discharge of obligation, one could at once notice that proposing to pay the insolvency resolution process costs in any form other than money would be an exercise in absurdity. Such a payment has to be in terms of money alone. Then comes clause (b) whereby and whereunder, the resolution plan is to provide for payment of debts of operational creditors and the minimum quantum is specified in terms of ‘amount to be paid’ or ‘amount that would have been paid’ with reference to the event of liquidation and/or distribution in terms of Section 53 of the Code. Here again, if any proposition is suggested for payment of debts of operational creditors by way of something other than money, and that too in the form of equities in the other corporate entities to be carved out of the corporate debtor, that would not be shunning off the debts of operational creditors but would only be keeping them glued to the corporate debtor or its successor entities. Such a method of payment could least be a step towards insolvency resolution. The same features, with necessary variations, would apply to the second part of clause (b) of sub-section (2) of Section H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 815 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

30 in regard to the dissenting financial creditors. The operational creditors as also the dissenting financial creditors are to be paid in terms of the amount to be determined with reference to Section 53 of the Code and are to be paid in priority, as described in Regulation 38(1) of the CIRP Regulations. 121.1.Therefore, when, for the purpose of discharge of obligation mentioned in the second part of clause (b) of Section 30(2) of the Code, the dissenting financial creditors are to be “paid” an “amount” quantified in terms of the “proceeds” of assets receivable under Section 53 of the Code; and the “amount payable” is to be “paid” in priority over their assenting counterparts, the statute is referring only to the sum of money and not anything else. In the frame and purport of the provision and also the scheme of the Code, the expression “payment” is clearly descriptive of the action of discharge of obligation and at the same time, is also prescriptive of the mode of undertaking such an action. And, that action could only be of handing over the quantum of money, or allowing the recovery of such money by enforcement of security interest, as per the entitlement of the dissenting financial creditor. 121.2.We would hasten to observe that in case a dissenting financial creditor is a secured creditor and a valid security interest is created in his favour and is existing, the entitlement of such a dissenting financial creditor to receive the “amount payable” could also be satisfied by allowing him to enforce the security interest, to the extent of the value receivable by him and in the order of priority available to him. Obviously, by enforcing such a security interest, a dissenting financial creditor would receive “payment” to the extent of his entitlement and that would satisfy the requirement of Section 30(2)(b) of the Code 83. In any case, that is, whether by direct payment in cash or by allowing recovery of amount via the mode of enforcement of security interest, the dissenting financial creditor is entitled to receive the “amount payable” in monetary terms and not in any other term.

122Copy pinpoint122. The indications as emerging from the text of other provisions as also from the scheme of the Code, are to the effect that the resolution applicant, with approval of resolution plan, is to proceed on a clean slate 83 Though it is obvious, but is clarified to avoid any ambiguity, that the “security interest” referred herein for the purpose of money recovery by dissenting financial creditor would only be such security interest which is relatable to the “financial debt” and not to any other debt or claim. H