Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(SC) 841

SUPREME COURT OF INDIA
(From the National Company Law Apellate Tribunal)
L. NAGESWARA RAO, B.R. GAVAI, JJ.
Ngaitlang Dhar – Appellant
Versus
Panna Pragati Infrastructure Private Limited and Others – Respondents
Civil Appeal Nos. 3665-3666, 3742-3743 of 2020
Decided On : 17-12-2021

Advocates appeared:
For the Appellant(s) :Mukul Rohatgi, Arvind Kumar Gupta, Anindita Pujari, Ravindra Sadanand Chingale, Advocates
For the Respondent(s):Abhijeet Sinha, Shaunak Mitra, Avik Chaudhuri, Soumya Dutta, Anindita Pujari, Siddhartha Srivastava, Kavita Bhardwaj, Azad Bansala, Rajesh Kumar Gautam, Anant Gautam, Nipun Sharma, Ravi Solanki, Ekta Choudhary, Chakshu Thakral, Arvind Kumar Gupta, Purti Gupta, Henna George, Shivani Sharma, Advocates

IMPORTANT POINT
Corporate Insolvency Resolution Process – ‘Commercial wisdom’ of CoC has been given paramount status without any judicial intervention, for ensuring completion of processes within timelines prescribed by IBC.

Headnote:
Insolvency and Bankruptcy Code, 2016 – Sections and 61(3) – Corporate Insolvency Resolution Process – Procedure adopted by RP as well as Committee of Creditors (CoC) was fair, transparent and equitable – CoC was facing timeline, which was to end on 24th February, 2020, before which it had to finalise its decision – In these circumstances, it cannot be said that decision of CoC, to not grant any further time to PPIPL for submission of its revised bid and to finalise Resolution Plan on 12th February, 2020 itself, can be said to be falling in category of term “material irregularity – ‘Commercial wisdom’ of CoC has been given paramount status without any judicial intervention, for ensuring completion of processes within timelines prescribed by IBC – It is not open to Adjudicating Authority (NCLT) or Appellate Authority (NCLAT) to take into consideration any other factor other than one specified in Section 30(2) or Section 61(3) of IBC – Under Section 61(3)(ii) of IBC, appeal would be tenable if there has been material irregularity in exercise of powers by RP during corporate insolvency resolution period – However, there is no material irregularity – NCLAT has grossly erred in interfering with decision of CoC, which was duly approved by NCLT – Impugned judgment and order passed by NCLAT quashed and set aside. (Paras 29, 31, 32 and 38)
Facts of the case:
Instant appeals assail the judgment and order passed by National Company Law Appellate Tribunal, New Delhi (NCLAT) dated 19th October, 2020, in Company Appeal (AT) (Insolvency) Nos. 515 of 2020 and 516 of 2020, thereby allowing the appeals of the respondent No. 1Panna Pragati Infrastructure Private Limited (“PPIPL”) and the respondent No. 2Arihant International Limited.
Findings of Court:
Period of 180 days was to expire on 24th February, 2020, and therefore, in the meeting dated 12th February, 2020 itself, the CoC after resolving to declare Ngaitlang Dhar as H-1 bidder had resolved to authorise the RP to seek an extension of CIRP period before the NCLT.
Result : Appeals allowed.

JUDGMENT :

B.R. GAVAI, J.

1. Civil Appeal Nos. 3665-3666 of 2020 are filed by Ngaitlang Dhar, the successful Resolution Applicant (H-1 bidder) and Civil Appeal Nos. 3742-3743 of 2020 are filed by Amit Pareek, the Resolution Professional.

2. These appeals assail the judgment and order passed by the National Company Law Appellate Tribunal, New Delhi (hereinafter referred to as “the NCLAT”) dated 19th October, 2020, in Company Appeal (AT) (Insolvency) Nos. 515 of 2020 and 516 of 2020, thereby allowing the appeals of the respondent No. 1Panna Pragati Infrastructure Private Limited (hereinafter referred to as “PPIPL”) and the respondent No. 2Arihant International Limited.

3. Company Appeal (AT) (Insolvency) No. 515 of 2020 was filed assailing the order dated 18th March, 2020, passed by the National Company Law Tribunal, Guwahati Bench, Guwahati (hereinafter referred to as “the NCLT”) in I.A. No. 27 of 2020 in C.P. (IB) No. 13/GB/2019, filed by PPIPL and another, by which the application seeking direction to the Resolution Professional (hereinafter referred to as “the RP”) to take on record and consider its revised offer submitted by email dated 14th February, 2020, came to be rejected.

4. Company Appeal (AT) (Insolvency) No. 516 of 2020 was filed assailing the order dated 18th May, 2020 passed by the NCLT, in an unnumbered I.A. filed by the RP, vide which the appellant-Ngaitlang Dhar’s (H-1 bidder) Resolution Plan came to be approved by the NCLT.

5. Vide the impugned judgment and order dated 19th October, 2020, the NCLAT has set aside both the orders, dated 18th March, 2020, and 18th May, 2020, and directed the Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) to be resumed from the stage of consideration of the Resolution Plans.

6. The facts in brief giving rise to the present appeals are as under.

7. An application being CP (IB) No. 13/GB/2019 came to be filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the IBC”) for initiation of CIRP in respect of Meghalaya Infratech Ltd. (hereinafter referred to as “the Corporate Debtor”) by the Allahabad Bank (now known as Indian Bank) (hereinafter referred to as “the Allahabad Bank”). The NCLT vide order dated 28th August, 2019 admitted the petition and as such, the CIRP came to be initiated in respect of the Corporate Debtor and Mr. Amit Pareek came to be appointed as the Interim RP, who was subsequently confirmed as the RP in the first Committee of Creditors (“hereinafter referred to as “the CoC”) meeting, held on 25th September, 2019.

8. It is not in dispute that the Allahabad Bank and the Corporation Bank (now known as Union Bank) (hereinafter referred to as “the Corporation Bank”) were the only financial creditors.

9. In accordance with the provisions of the IBC, Expression of Interest (hereinafter referred to as “EOI”) was invited from the prospective Resolution Applicants by the RP.

10. Appellant-Ngaitlang Dhar, respondent No. 1-PPIPL, Mr. Abhishek Agarwal and Mr. Ashish Jaisasaria submitted their EOI. All the four Resolution Applicants submitted their Resolution Plans. In the CoC meeting held on 11-12th February, 2020, the appellant-Ngaitlang Dhar emerged as H-1 bidder, whereas Mr. Abhishek Agarwal emerged as H-2 bidder.

11. At the 7th CoC meeting, held on 6th March, 2020, the CoC, with a 100% voting share, approved the Resolution Plan of the appellant-Ngaitlang Dhar (H-1 bidder), which was further approved by the NCLT vide order dated 18th May, 2020.

12. The respondent No. 1-PPIPL contended that in the proceedings before the CoC held on 11-12th February, 2020, it had sought for one or two days’ time to submit its revised Resolution Plan, and accordingly, it submitted the same on 14th February, 2020. The respondent No. 1-PPIPL, accordingly, filed I.A. No. 27 of 2020 in CP (IB) No. 13/GB/2019 before the NCLT, seeking a direction to the RP to take on record its revised Resolution Plan, dated 14th February, 2020. The same came to

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2021 Supreme(SC) 841

SUPREME COURT OF INDIA(From the National Company Law Apellate Tribunal)L. NAGESWARA RAO, B.R. GAVAI, JJ.Ngaitlang Dhar – AppellantVersusPanna Pragati Infrastructure Private Limited and Others – RespondentsCivil Appeal Nos. 3665-3666, 3742-3743 of 2020Decided On : 17-12-2021

IMPORTANT POINTCorporate Insolvency Resolution Process – ‘Commercial wisdom’ of CoC has been given paramount status without any judicial intervention, for ensuring completion of processes within timelines prescribed by IBC.

Cases Referred (7)

SUPREME COURT OF INDIA
(From the National Company Law Apellate Tribunal)
L. NAGESWARA RAO, B.R. GAVAI, JJ.
Ngaitlang Dhar – Appellant
Versus
Panna Pragati Infrastructure Private Limited and Others – Respondents
Civil Appeal Nos. 3665-3666, 3742-3743 of 2020
Decided On : 17-12-2021

IMPORTANT POINT
Corporate Insolvency Resolution Process – ‘Commercial wisdom’ of CoC has been given paramount status without any judicial intervention, for ensuring completion of processes within timelines prescribed by IBC.