The High Court's direction to defer the Corporate Insolvency Resolution Process was unjustified after declining to grant the main relief of consolidation, breaching the provisions of the Insolvency and Bankruptcy Code.

ORDER

1. Leave granted.

2 The challenge in these proceedings under Article 136 of the Constitution is to an order of the Single Judge of the High Court of Telangana at Hyderabad dated 10 September 2024.

3. The appeal has been instituted by the Committee of Creditors [“CoC”] of a company by the name of KSK Mahanadi Power Company Limited, a public limited company engaged in the generation of electricity, which is currently undergoing Corporate Insolvency Resolution Process [“CIRP”].

4. The first respondent, Uttar Pradesh Power Corporation Limited instituted a petition under Article 226 of the Constitution, seeking, inter alia, a consolidation of the appellant together with the CoCs of KSK Water Infrastructure Private Limited and Raigarh Champa Rail Infrastructure Private Limited. The consolidation of the CIRP of all the three companies through their respective Resolution Professionals was sought before the National Company Law Tribunal [“NCLT”], Hyderabad Bench II.

5. The High Court by its impugned order dated 10 September 2024 declined to grant the main relief seeking consolidation of the CIRP of the Corporate Debtor with two other companies for the reasons which are indicated in paragraph 7 of its judgment which is extracted below:

“7 As seen from the material placed on record, the Financial Creditor has filed I.A.No.32/2020 in CP(IB) No.492/07/HDB/2019 on the file of NCLT seeking consolidation of CIRP of Corporate Debtors with two other companies and the said application was rejected by the NCLT vide order, dated 12.02.2021. Challenging the same. Financial Creditor filed Company Appeal (AT)(CH) (Ins) No.46 of 2021 on the file of NCALT. During pendency of the appeal on the file of NCLAT, Financial Creditor has filed lA(IBC)/374/2022 and IA(IBC)/403/2022 in CP(IB) No.492/7/HDB/2019 on the file of NCLT and in the said applications, vide common order, dated 07.06.2022, the NCLT deferred the Resolution Process until further orders subject to the outcome of the appeal pending before the NCLAT and in the meanwhile granted stay of CIRP proceedings and directed the Resolution Professional not to undertake any such process till the lA (IB)/374/2022 is disposed of. Admittedly, the petitioner herein has not filed any appeal or sought for any direction either from the NCLT or NCALT. Since the petitioner has not filed any application either before the NCLT or NCALT. it is not having any right to question the withdrawal of the appeal by the Financial Creditor.” (emphasis supplied)

6. Having declined to grant the relief of consolidation, the High Court relegated the first respondent to file an application before the NCLT and “raise all grounds available under law”. However, the High Court proceeded to pass the following order:

“…..Upon filing such application, the NCLT is directed to examine the same and pass appropriate orders, in accordance with law, within a period of two (02) weeks from the date of receipt of such application. Until such time, the Resolution Process shall be deferred.” (emphasis supplied)

7. The CoC of KSK Mahanadi Power Company Limited has moved this appeal, aggrieved by the direction of the High Court deferring the CIRP. The grievance is that this order was passed by the High Court on the very first date of listing without issuing notice to the CoC or the other respondents.

8. We have heard Mr Tushar Mehta, learned Solicitor General for the appellant and Ms Pallavi Pratap, counsel for the contesting first respondent, who is the original petitioner before the High Court in the proceedings under Article 226.

9. Mr Nalin Kohli, senior counsel has also appeared on behalf of the Resolution Professional of the Corporate Debtor. The Resolution Professional has also supported the submissions of the appellant before this Court.

10. We find merit in the grievance that the High Court had no justification, to direct the deferment of the CIRP in the exercise of its jurisdiction under Article 226 of the Constitution. Significantly, the High