Dissenting Financial Creditors under the IBC: The DBS Bank v. Ruchi Soya Reference and the New Section 30(2)(ba)

A resolution plan under the Insolvency and Bankruptcy Code, 2016 (“IBC”) binds every creditor once approved, including financial creditors who voted against it. This raises an important question for a dissenting financial creditor under IBC: what is the minimum amount it must receive, particularly where it holds valuable security? In DBS Bank Ltd., Singapore v. Ruchi Soya Industries Ltd. & Anr., 2024 INSC 14 (Supreme Court, 3 January 2024), a two-judge Bench referred this issue to a larger Bench. More than two years later, Parliament has introduced a new clause in Section 30(2) prescribing a different formula for determining the minimum payment to dissenting financial creditors. This article examines the DBS Bank reference, the competing interpretations of the pre-amendment law, and how the 2026 amendment changes the position.

The Provision Before 26 May 2026

Section 30(2)(b), as amended in 2019, required a resolution plan to provide for payment to financial creditors who did not vote in favour of the plan of an amount not less than the amount payable to them in the event of liquidation of the corporate debtor under Section 53(1). An Explanation applied this to pending CIRPs and to pending appeals and proceedings.

Section 53(1) sets out the liquidation waterfall. Separately, Section 52 allows a secured creditor in liquidation either to relinquish its security to the liquidation estate and receive proceeds under Section 53, or to realise its security itself.

Competing Interpretations on Dissenting Financial Creditors

The narrower reading. In India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd. (Supreme Court, 13 May 2021), the Court rejected a dissenting secured creditor’s claim to be paid according to the value of its security interest, holding that the provision did not entitle it to more than what the plan provided in terms of its liquidation entitlement, and emphasised the primacy of the committee of creditors’ (“CoC”) commercial wisdom.

The view taken in DBS Bank. DBS Bank held exclusive charges over certain assets of Ruchi Soya Industries Ltd. and dissented from the plan approved by the CoC. The two-judge Bench (Sanjiv Khanna and S.V.N. Bhatti, JJ.) examined whether Section 30(2)(b)(ii) entitles a dissenting financial creditor under the IBC to be paid the minimum value of its security interest. It reasoned that Section 53 should not be read in isolation from Section 52; that a dissenting secured creditor, being unable to enforce its security because the plan binds it, should receive at least the monetary value it would have realised had it enforced that security in liquidation; and that the 2019 amendment applied to the case. The Bench expressed reservations about the observations in India Resurgence ARC, considering them difficult to reconcile with the three-judge Bench decisions in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2019) and Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd. (2021), and referred the matter to a larger Bench.

Status. The reference judgment records the two-judge Bench’s reasoning; it is not a final answer binding on the point. As on 16 September 2026, no judgment of a larger Bench answering the reference had been reported. Readers should check the current status before relying on either line of authority.

What the 2026 Amendment Does?

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), in force in this respect from 26 May 2026, restructured Section 30(2):

• The portion of clause (b) dealing with payment to dissenting financial creditors was omitted.
• A new clause (ba) requires the plan to provide for payment to financial creditors who do not vote in favour, in the manner specified by the Insolvency and Bankruptcy Board of India, of not less than the lower of:
• the amount payable to them in a liquidation under Section 53; or
• the amount they would have received if the amount distributed under the resolution plan had been distributed in accordance with the order of priority in Section 53(1).
• Explanation I clarifies that a distribution in accordance with clause (ba) shall be fair and equitable to such creditors.
• Explanation II provides that the amended provision does not apply to a CIRP where, on or before the commencement date, the CoC had approved a resolution plan, the Adjudicating Authority had passed a liquidation order under Section 33(1), or the CoC had approved intimating the Adjudicating Authority to initiate liquidation under Section 33(2).

Two related changes affect secured creditors:

• An Explanation to Section 53(1)(b)(ii) now provides that where a secured creditor relinquishes security whose value is less than its total debt, it is a secured creditor to the extent of the value of that security, determined as specified, and an unsecured creditor for the balance.
• An Explanation to Section 3(31) clarifies that a “security interest” exists only if created by agreement or arrangement between two or more parties, and not merely by operation of law.

How the Pieces Fit Together

The new formula measures the dissenting financial creditor’s floor by reference to Section 53 and the Section 53(1) waterfall, and caps it at the lower of the two computations. It does not adopt, in terms, the security-value approach reasoned in the DBS Bank reference. Explanation I, by deeming such a distribution fair and equitable, also limits arguments that a clause (ba)-compliant plan unfairly treats a dissenting secured creditor.

The practical effect of Section 30(2)(ba) of the IBC can be illustrated with a simplified, hypothetical example. Suppose a dissenting secured creditor would receive ₹40 crore in liquidation under Section 53, but would receive ₹55 crore if the total plan value were distributed in Section 53(1) order. Under clause (ba), the minimum is the lower figure, ₹40 crore. If instead the plan value is modest and a waterfall distribution of it would yield only ₹30 crore, the floor is ₹30 crore. These figures are purely illustrative and do not represent any actual case or statutory result.

Why the DBS Bank Reference Still Matters

Because Explanation II makes clause (ba) inapplicable to CIRPs that had crossed the specified milestones by 26 May 2026, the interpretation of the pre-amendment Section 30(2)(b)(ii) remains relevant for:

• appeals and challenges arising from plans approved by the CoC before that date;
• cases where liquidation had been ordered or intimated before that date; and
• the pending reference in DBS Bank itself.

For those cases, the tension between India Resurgence ARC and the reasoning in DBS Bank has not been resolved by statute. How tribunals treat plans in this transitional category, and whether the larger Bench’s eventual decision will address the relationship with clause (ba), are matters to watch.

Key Points

• Before 26 May 2026, a dissenting financial creditor under the IBC was entitled to at least its liquidation entitlement under Section 53(1); whether that includes the value of security interest is the question referred to a larger Bench in DBS Bank.
• From 26 May 2026, for CIRPs that had not reached the specified milestones, Section 30(2)(ba) of the IBC fixes the floor at the lower of the liquidation amount and a waterfall-based share of the plan value, and deems such distribution fair and equitable.
• Secured creditors’ status in the waterfall is now limited to the value of the relinquished security, and statutory charges created only by operation of law are not “security interests”.

FAQs

Legal Information Disclaimer

This article provides general information about Indian law as it stood on 16 September 2026. It is not legal advice, and reading it does not create an advocate–client relationship. Statutes, rules and judicial interpretations change, and their application depends on the facts of each matter. Readers should consult the current official text of the laws and judgments cited and should not act on this information without advice specific to their circumstances. This article is published for legal awareness and education and is not intended to advertise or solicit professional work.

Sources / Authorities

1. Insolvency and Bankruptcy Code, 2016 — Sections 3(31), 30(2), 52, 53 (as amended) — IBBI – Legal Framework
2. Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), clauses 2, 18 and 32 — Gazette text (IBBI); Notification S.O. 2625(E) dated 22 May 2026 — IBBI
3. DBS Bank Ltd., Singapore v. Ruchi Soya Industries Ltd. & Anr., 2024 INSC 14, Supreme Court of India, 3 January 2024 — report, Verdictum
4. India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd., Supreme Court of India, 13 May 2021
5. Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, Supreme Court of India, 15 November 2019
6. Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd., (2022) 1 SCC 401, Supreme Court of India, 24 March 2021