K. Sashidhar vs Indian Overseas Bank on 5 February, 2019
“In view of this peculiar situation, where a financial creditor
has advanced money to the corporate debtor assessing the
commercial risk and covers his risk by a charge on the
assets of the corporate debtor, there can be no question of
his being entitled to the liquidation value or any other fixed
value towards his debt. In any event, the plan formulated
by the resolution applicant, has to be placed before the
COC for its final approval. It is at that juncture the
commercial wisdom of lenders forming the COC comes
into play and they are entitled to take a call on either to
approve or not to approve the resolution plan which the
FRP has put forward before the COC for its approval. In my
view, therefore, the Approved Resolution Plan would be
fully justified in classifying between secured and unsecured
financial creditor, and also according to the value of their
securities and apportioning the amounts payable to them in
the best manner which is considered reasonable. I might
add here that irrespective of what the RP considers as
reasonable, it is always open to the COC to adjudge the
commercial wisdom of the resolution plan while approving
it. As pointed out by the Supreme Court in K. Sashidhar vs
Indian Overseas Bank & Ors. (Civil Appeal No. 10673 of
2018) such commercial decision of the COC is not subject
to appeal under the Code.