Ngaitlang Dhar vs. Panna Pragati Infrastructure Private Limited and Ors. - (Supreme Court) (17 Dec 2021)

Decision of the CoC’s ‘commercial wisdom’ is non¬ justifiable, except on limited grounds

MANU/SC/1276/2021

Insolvency

Present appeals assail the judgment and order passed by the National Company Law Appellate Tribunal, New Delhi (“the NCLAT”), thereby allowing the appeals of the Respondent No.1¬ Panna Pragati Infrastructure Private Limited (“PPIPL”) and the Respondent No.2 ¬Arihant International Limited.

Learned Senior Counsel appearing on behalf of Appellant ¬Ngaitlang Dhar, the successful Resolution Applicant (H-1 bidder), submitted that the entire approach adopted by the NCLAT in the impugned judgment and order was erroneous. The NCLAT ought to have taken into consideration that the CoC after exercising its 'commercial wisdom' has resolved to accept the Resolution Plan submitted by Appellant. The RP had given an equal opportunity to all the bidders/resolution applicants. Though adequate opportunity was given to all the Resolution Applicants by adjourning the proceedings in CoC meetings on number of occasions, the Respondent No. 1-PPIPL failed to revise its bid within the stipulated period. He submitted that the CoC, in its meeting had resolved to declare Appellant as the successful resolution applicant. Thereafter the NCLT had also allowed the application filed by the RP to approve the Resolution Plan of Appellant.

It could be seen that, the CoC, after due deliberations, evaluated all the proposed Resolution Plans submitted by all the prospective Resolution Applicants and after giving sufficient opportunity to all the prospective Resolution Applicants, arrived at a considerate decision of accepting the Resolution Plan of the Appellant in its meeting held on ¬12th February, 2020.

It is trite law that, ‘commercial wisdom’ of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the processes within the timelines prescribed by the IBC. It has been consistently held that, it is not open to the Adjudicating Authority (the NCLT) or the Appellate Authority (the NCLAT) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) of the Insolvency and Bankruptcy Code, 2016 (IBC). It has been held that, the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, is the collective business decision and that the decision of the CoC’s ‘commercial wisdom’ is non¬ justifiable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) of the IBC.

There has been no ‘irregularity’ at all in the process adopted by the RP as well as the CoC. The dominant purpose of the IBC is revival of the Corporate Debtor and making it an on¬going concern. In the present case, the said purpose is already achieved, inasmuch as all the dues of the financial creditors, i.e., the Allahabad Bank and the Corporation bank, have already been paid, and the Corporate Debtor, in respect of which CIRP was initiated, is now an on¬going concern.

The NCLAT has grossly erred in interfering with the decision of the CoC, which was duly approved by the NCLT. The impugned judgment and order passed by the NCLAT, is quashed and set aside. Appeals allowed.

Tags : RESOLUTION PLAN PROCESS COMMERCIAL WISDOM