Pratap Technocrats (P) Ltd. and Ors. vs. Monitoring Committee of Reliance Infratel Limited and Ors. - (Supreme Court) (10 Aug 2021)

NCLT/NCLAT has no residual equity jurisdiction while dealing with Resolution Plan approved by Committee of Creditors

MANU/SC/0516/2021

Insolvency

Present appeal arises under Section 62 of the Insolvency and Bankruptcy Code, 2016 against a judgment of the National Company Law Appellate Tribunal. Reliance Infratel Limited is the corporate debtor. The Appellants are operational creditors. By its order, the National Company Law Tribunal, Mumbai, approved the resolution plan formulated in the course of the insolvency resolution process of the Corporate Debtor. The NCLAT has upheld the order.

The resolution plan was approved by the CoC, in compliance with the provisions of the IBC. The jurisdiction of the Adjudicating Authority under Section 31(1) of IBC is to determine whether the resolution plan, as approved by the CoC, complies with the requirements of Section 30(2) of IBC. The NCLT is within its jurisdiction in approving a resolution plan which accords with the IBC. There is no equity-based jurisdiction with the NCLT, under the provisions of the IBC.

The jurisdiction of the Adjudicating Authority and the Appellate Authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom. Nor is there a residual equity based jurisdiction in the Adjudicating Authority or the Appellate Authority to interfere in this decision, so long as it is otherwise in conformity with the provisions of the IBC and the Regulations under the enactment.

The IBC is a complete code in itself. It defines what fair and equitable treatment is by constituting a comprehensive framework within which the actors partake in the insolvency process. The process envisaged by the IBC is a direct representation of certain economic goals of the Indian economy. It is enacted after due deliberation in Parliament and accords rights and obligations that are strictly regulated and coordinated by the statute and its regulations. To argue that a residuary jurisdiction must be exercised to alter the delicate economic coordination that is envisaged by the statute would do violence on its purpose and would be an impermissible exercise of the Adjudicating Authority's power of judicial review.

Once the requirements of the IBC have been fulfilled, the Adjudicating Authority and the Appellate Authority are duty bound to abide by the discipline of the statutory provisions. It needs no emphasis that, neither the Adjudicating Authority nor the Appellate Authority has an unchartered jurisdiction in equity. The jurisdiction arises within and as a product of a statutory framework.

In the present case, the resolution plan has been duly approved by a requisite majority of the CoC in conformity with Section 30(4) of IBC. Whether or not some of the financial creditors were required to be excluded from the CoC is of no consequence, once the plan is approved by a 100 per cent voting share of the CoC. The jurisdiction of the Adjudicating Authority was confined by the provisions of Section 31(1) of IBC to determining whether the requirements of Section 30(2) of IBC have been fulfilled in the plan as approved by the CoC. As such, once the requirements of the statute have been duly fulfilled, the decisions of the Adjudicating Authority and the Appellate Authority are in conformity with law. Appeal dismissed.

Tags : RESOLUTION PLAN COC JURISDICTION