IMPORTANT POINT
Corporate Insolvency Resolution Proceedings – Unjustified interference with proceedings initiated under Insolvency and Bankruptcy Code 2016, breaches discipline of law.

JUDGMENT :

1. Leave Granted.

2. These appeals under Article 136 of the Constitution are against the judgment of the High Court of Karnataka exercising power of judicial review¹ [In Writ Petition No. 483 of 2023 (GM-RES) dated 22.04.2024] interdicting Corporate Insolvency Process culminating in the acceptance of a resolution plan by the Committee of Creditors in minutes of meeting dated 11.02.2020. In this batch of matters, there are three appeals, one by the successful resolution applicant METL, the other by the Bank comprising the Committee of Creditors, and the third appeal by the Resolution Professional appointed by the adjudicating authority to conduct CIRP against Associate Decor Ltd (“Corporate Debtor”).

3. The short facts are that the Corporate Insolvency Resolution Proceedings were admitted against the corporate debtor at the instance of Oriental Bank of Commerce² [Merged with Punjab National Bank in 2020] (a financial creditor) on 26.10.2018. It is submitted by Dr Abhishek Manu Singhvi, Ld. Senior Advocate appearing on behalf of the successful resolution applicant that upon the resolution professional issuing the Information Memorandum under Section 29 of the Code on 28.11.2018, his client submitted his expression of interest. It is submitted that at the 16th, 17th and 18th meeting of the Committee of Creditors, resolution plans were discussed and deliberated. Further, even at the first adjourned meeting of the 19th COC, resolution plans were reviewed, and the appellant was asked to incorporate certain items, and the meeting was adjourned to 11.02.2020. It is submitted that one Mr. Sachin Misal, another director of the corporate debtor representing the suspended director, Mohd. Farouk Darvesh was present, and he confirmed that “they have no objection to the plans or to the process that was followed.” We may mention at this very stage that this fact is opposed by Mr. Shyam Divan, Ld. Senior Counsel representing the suspended director of the corporate debtor. Be that as it may, the resolution professional is said to have issued notice to the suspended directors of the corporate debtor on 11.02.2020, including respondent no. 1, that the meeting will be held at 3.00 pm.

4. While the appellant contends that the second adjourned 19th COC meeting was convened after notice to all, Mr. Shyam Divan has submitted that no such notice was ever received by his client. In the meeting, a slightly revised, amended, and re-stated resolution plan was considered, deliberated upon by the COC and put to vote. The resolution plan is said to have been approved by the COC through e-voting on 11.02.2020, the appellants’ plan was approved and the resettlement proposal submitted by respondent no. 1 was rejected. This decision of the COC led to the declaring of appellant as the successful resolution applicant unanimously by 100% voting share of the CoC.

5. In the meanwhile, there were certain proceedings initiated by yet another company named Swamitva, whose request for filing a resolution plan was rejected, leading to the said company filing an interlocutory application before the Adjudicating Authority seeking directions to the COC to reconsider the resolution plan. The Adjudicating Authority's decision to place the resolution plan for reconsideration by the CoC was appealed to the NCLAT. The appellant submitted that respondent no. 1, the suspended director of the corporate debtor also filed an interlocutory application before the NCLAT seeking rejection of the resolution plan of the applicant on the same grounds that were raised before us. Having considered the appeal in detail, the NCLAT, by its order dated 19.09.2022, allowed the appeal and set aside the directions of the Adjudicating Authority.

6. In the meanwhile, even the appeal filed by Swamitva against the order of the NCLAT dated 19.02.2022 before this Court came to be dismissed by an order dated 25.11.2022.

7. It is in the above said background that first respondent approached the High Court