Monitoring Committee cannot modify distribution mechanisms approved by the Committee of Creditors and Adjudicating Authority.

Indian Bank initiated Section 7 IBC proceedings against the Corporate Debtor (CD), OCL Iron and Steel Ltd., leading to insolvency commencement on 20.09.2021

During the CIRP, the Committee of Creditors (CoC) in its 18th and 19th meetings (Sept 2022) resolved that resolution proceeds would be distributed based on the liquidation value attributable to each secured financial creditor's security interest

An independent advisor determined the liquidation value for the State Bank of India (SBI), a dissenting financial creditor, at ₹64.56 crores based on its interest in the CD's Steel Unit

The Resolution Plan by M/s Indrani Patnaik (SRA) was approved by the CoC and subsequently by the Adjudicating Authority (NCLT) on 20.03.2023

However, the Monitoring Committee (MC), in its 4th meeting on 04.05.2023, reduced SBI's payout to ₹35.20 crores, departing from the CoC-approved mechanism

SBI challenged this before the NCLT, which set aside the MC's distribution and directed payment of ₹64.56 crores

The Appellants (assenting banks) challenged this order, arguing it interfered with the CoC's commercial wisdom

1. Whether the Monitoring Committee, constituted to oversee plan implementation, has the legal authority to alter the distribution mechanism previously approved by the CoC in its commercial wisdom and sanctioned by the Adjudicating Authority

2. Whether the payment of liquidation value to a dissenting financial creditor, as determined by a CoC-appointed evaluation advisor, violates Section 30(2)(b) of the IBC or contradicts the Supreme Court's ruling in India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd.

Section 30(2)(b) of the IBC, which mandates that dissenting financial creditors must receive at least the liquidation value of their debt

Section 30(4) regarding the CoC’s commercial wisdom in determining distribution

Regulation 38(1)(b) of the CIRP Regulations, which ensures priority payment to dissenting creditors

The Tribunal followed Bank of Baroda v. IDBI Bank Limited, holding that a distribution mechanism, once approved by the CoC and NCLT, cannot be tinkered with

India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd., clarifying that while a dissenting creditor cannot claim the entire value of its security interest, it is entitled to its proportionate share of the liquidation value as determined within the resolution framework

The Tribunal found that the CoC had explicitly exercised its commercial wisdom during the 18th and 19th meetings to adopt a distribution formula based on liquidation value per security interest

This formula was incorporated into the Resolution Plan and became binding upon NCLT approval under Section 31

The MC, being a creature of the plan with a limited mandate for implementation, lacked the jurisdiction to revisit or modify these commercial terms

SBI was not seeking the full value of its security independent of the plan, but rather the specific liquidation value (₹64.56 crores) already quantified by the CoC’s own advisor and accepted during the plan approval process

Reducing this amount to ₹35.20 crores constituted an arbitrary deviation from both the statutory floor under Section 30(2)(b) and the CoC's own prior binding decisions

The Tribunal upheld the NCLT’s direction to pay SBI ₹64.56 crores, confirming that such payment is strictly in accordance with Section 30(2)(b) read with Section 53(1) of the Code

No order was made as to costs