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Secured or unsecured, financial or operational creditors can’t be treated at par; wisdom of CoC is supreme: SC

November 15, 2019[2019] 111 taxmann.com 234 (SC)
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IBC: Code does not treat unequals equally and equitable treatment is to be accorded to each creditor depending upon class to which it belongs: secured or unsecured, financial or operational; wisdom of Committee of Creditors has priority in respect of resolution plan; sections 4 and 6 of Amending Act, 2019 amending sections 12 and 30 of Code not Constitutionally infirm

• Code and Regulations, read as a whole, together with observations of expert bodies and Supreme Court's judgment, alllead to conclusion that equality principle cannot be stretched to treating unequals equally, as that will destroy very objective of Code to resolve stressed assets. Equitable treatment is to be accorded to each creditor depending upon class to which it belongs: secured or unsecured, financial or operational.

• NCLAT judgment which substitutes its wisdom for commercial wisdom of Committee of Creditors and which also directs admission of a number of claims which was done by resolution applicant, without prejudice to its right to appeal against aforesaid judgment, must therefore be set aside.

• Sections 4 and 6 of Amendment Act, 2019 amending sections 12 and 30 of Code respectively are not Constitutionally infirm.

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