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B. V. NAGARATHNA, R. MAHADEVAN
Torrent Power Ltd. – Appellant
Versus
Ashish Arjunkumar Rathi – Respondent
JUDGMENT :
B.V. NAGARATHNA, J.
Preface:
1. The Insolvency and Bankruptcy Code, 2016 (for short “IBC”) marks a fundamental shift in India’s insolvency regime: from a court-centric model to a creditor-driven process. At its core lies the doctrine of commercial wisdom: a conscious legislative choice to vest decisive authority in the Committee of Creditors (for short “CoC”), comprising financial creditors who bear the economic consequences of failure.
1.1 The IBC recognises that decisions on viability, valuation, and acceptable haircuts are inherently commercial, not judicial. Courts, therefore, do not substitute their assessment for that of the CoC. The adjudicating authority performs a supervisory role, ensuring statutory compliance and procedural fairness but refrains from second-guessing economic bodies, in this case, the CoC.
1.2 The doctrine of commercial wisdom thus embodies both institutional discipline and legislative intent: insolvency resolution must be efficient, market-responsive and guided by those best placed to evaluate commercial risk.
The rejection of a Resolution Plan must comply with statutory requirements, and commercial wisdom of the Committee of Creditors is paramount, limiting the adjudicatory review.
Requirement of “not less than seventy five percent of voting share of the financial creditors” is mandatory.
NCLT and NCLAT not empowered to enquire into wisdom of dissenting creditors in voting a....
The commercial wisdom of the Committee of Creditors in approving a resolution plan cannot be interfered with unless there is non-compliance with regulatory requirements.
The Commercial wisdom of the Committee of Creditors in approving resolution plans must be respected, and judicial review is limited to statutory compliance under the Insolvency and Bankruptcy Code.
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