The case of DBS Bank Ltd. Singapore vs. Ruchi Soya Industries Ltd., decided on January 3, 2024, by the Supreme Court of India, centered around the contentious issue of the rights of dissenting financial creditors under the Insolvency and Bankruptcy Code, 2016 (IBC). DBS Bank Ltd. Singapore appealed against Ruchi Soya Industries Ltd. and another respondent in Civil Appeal No. 9133/2019.
A significant aspect of this case was the Supreme Court’s consideration of whether a dissenting financial creditor is entitled to the minimum value of its security interest as per the IBC. This consideration arose against the backdrop of amendments made to the IBC in 2019 and previous judgments that touched upon similar issues. The Supreme Court, comprising Justices Sanjiv Khanna and SVN Bhatti, expressed reservations about the interpretation and application of Section 30(2)(b)(ii) of the IBC, specifically in relation to the entitlements of dissenting financial creditors. The Court noted a contradiction with a coordinate bench’s judgment in a previous case, leading to a referral of the matter to a larger bench for a definitive ruling.
This case underscores the ongoing judicial scrutiny of the IBC’s provisions and their implications for financial creditors, dissenting creditors, and the insolvency resolution process at large. The Supreme Court’s decision to refer the matter to a larger bench highlights the complexities involved in balancing the interests of various stakeholders within the insolvency framework, aiming for a resolution that aligns with both the letter and the spirit of the law.
