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2021 (12) TMI 793 - SC - Insolvency and BankruptcyFresh consideration of resolution plan after a resolution approved by the CoC - Direction given by the NCLAT that Corporate Insolvency Resolution Process (CIRP) to be resumed from the stage of consideration of the Resolution Plans - HELD THAT - The procedure adopted by the RP as well as the CoC was fair, transparent and equitable. The CoC was facing the 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 the decision of the CoC, to not grant any further time to PPIPL for submission of its revised bid and to finalise the Resolution Plan on 12th February, 2020 itself, can be said to be falling in the category of the term material irregularity . 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-Ngaitlang Dhar in its meeting held on 1112th 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 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-justiciable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) of the IBC. In the present case, leave apart, there being any material irregularity , there has been no irregularity at all in the process adopted by the RP as well as the CoC. On the contrary, if the CoC would have permitted the PPIPL to participate in the process, despite it assuring the other three prospective Resolution Applicants in its meeting held on 1112th February, 2020, that the absentee prospective Resolution Applicant (PPIPL) would be excluded from participation, it could have been said to be an irregularity in the procedure followed. The NCLAT has grossly erred in interfering with the decision of the CoC, which was duly approved by the NCLT - appeal allowed - decided in favor of appellant.
Issues involved:
1. Challenge to the NCLAT's decision setting aside the NCLT's orders. 2. Evaluation of the commercial wisdom of the CoC. 3. Allegations of material irregularity in the RP's procedure. 4. Timeliness and procedural fairness in the CIRP process. 5. Implementation of the Resolution Plan and its effects. Issue-wise detailed analysis: 1. Challenge to the NCLAT's decision setting aside the NCLT's orders: The appeals were filed against the NCLAT's judgment dated 19th October 2020, which set aside the NCLT's orders dated 18th March 2020 and 18th May 2020. The NCLT had rejected PPIPL's application to consider its revised offer and approved the Resolution Plan of Ngaitlang Dhar. The NCLAT directed the CIRP to resume from the stage of consideration of the Resolution Plans. 2. Evaluation of the commercial wisdom of the CoC: The Supreme Court emphasized that the CoC's decision, based on its commercial wisdom, should not be interfered with unless it violates Section 30(2) or Section 61(3) of the IBC. The CoC had unanimously approved Ngaitlang Dhar's Resolution Plan after due deliberation and evaluation of all bids. The Court reiterated that the commercial wisdom of the CoC is paramount and non-justiciable, except on limited grounds. 3. Allegations of material irregularity in the RP's procedure: PPIPL alleged that the RP acted with undue haste and did not consider its revised offer submitted on 14th February 2020. The Supreme Court found no material irregularity in the RP's actions. The RP had given equal opportunity to all bidders, and PPIPL had failed to improve its bid within the stipulated period. The CoC's decision to not grant further time to PPIPL was justified given the timeline constraints. 4. Timeliness and procedural fairness in the CIRP process: The CoC was facing a deadline of 24th February 2020 to finalize the Resolution Plan. The CoC had informed PPIPL that it needed to conclude the matter by 12th February 2020. Despite this, PPIPL sought additional time, which was denied. The Supreme Court found that the RP and CoC acted transparently and fairly, adhering to the IBC timeline. 5. Implementation of the Resolution Plan and its effects: Ngaitlang Dhar's Resolution Plan had already been implemented, with the dues of the financial creditors repaid, and the Corporate Debtor, Meghalaya Infratech Ltd., becoming an ongoing concern. The Supreme Court noted that the purpose of the IBC is the revival of the Corporate Debtor, which had been achieved in this case. Conclusion: The Supreme Court allowed the appeals, quashing the NCLAT's judgment and reinstating the NCLT's orders. The Court found no material irregularity in the RP's procedure and upheld the CoC's commercial wisdom in approving Ngaitlang Dhar's Resolution Plan. The decision ensured the timely completion of the CIRP process and the revival of the Corporate Debtor.
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