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TMI Blog2024 (2) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... n should be adopted in the same form as presented to it or in a modified form and whether the attempt for the revival of the Corporate Debtor is made or not. The final decision on a resolution plan is taken by the CoC and for approval, a resolution plan is required to be voted in favour by not less than 66% of the voting share of the financial creditors, as per Section 30(4) of the Code. It is also relevant to point out that though the Resolution Professional is obligated to run the business of the Corporate Debtor as a going concern during the CIRP but as per Section 28(3) of the Code, he cannot take certain decisions relating to the management of the Corporate Debtor without prior approval of the CoC by a vote of at least 66% of the voting share. It is crystallized that the entire CIRP is aimed at bringing the Corporate Debtor back on its feet and it is acknowledged that the appropriate disposition of a defaulting Corporate Debtor and the choice of solution, to keep the Corporate Debtor as a going concern or to liquidate it, is to be made by the financial creditors, who could assess the viability and may take decisions in terms of the existing liabilities. It is undoubtedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conduct of the CoC through powers of judicial review as formulated aforesaid to ensure that it is functioning as per the role and responsibilities delineated under the Code. The Adjudicating Authority maintains a supervisory role over the entire CIRP and is empowered under Section 60 of the Code to take action in any question relating to the insolvency proceedings. As per the mandate of the IBC, the IBBI is entrusted with the responsibility of framing guidelines with respect to the insolvency professionals, insolvency professional agencies and information utilities and other institutions, in furtherance of the purposes of this Code. Section 196(1)(u) of the IBC also gives the mandate to the IBBI to perform any other function as may be prescribed - the respondent-IBBI has submitted that the IBBI notified a Discussion Paper on 27.08.2021 on various issues involving CIRP, including the code of conduct for the CoC. Comments were invited on that Discussion Paper and the IBBI is still in the process of framing guidelines. However, till date, there exists no code of conduct or guidelines framed by the IBBI for the effective functioning of the CoC. Considering the significant rol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 19 of the RDDBFI Act, 1993 against the Petitioner by Respondent No. 1 to 6 before the Hon ble DRT for recovery through personal guarantees; (c) A Writ of Mandamus and/ or any other Writ, order and/or direction in the nature thereof may kindly be issued in the matter, thereby barring initiation of any proceedings by the Respondents under the RDDBFI Act 1993 or IBC 2016, against the Petitioner; (d) A Writ of Mandamus and/ or any other Writ, order and/or direction in the nature thereof may kindly be issued in the matter, thereby ordering that the name of the Petitioner be expunged from the proceedings initiated by the Respondents No. 1 for recovery of amounts due under vendor bill discounting facilities extended by the Respondent No. 1 to various vendors; and (e) any other Writ/order/direction and further orders, as this Hon ble Court may deem fit and proper, under the facts and circumstances of the case. 2. It is noted that vide order dated 20.09.2021, this court recorded that the petitioner is the ex-Director of Su-Kam Power Systems Limited (hereinafter Company ). The said Company already went into the Corporate Insolvency Resolution Process (hereinafter CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Although the framing of the guidelines contemplated by prayer (a) appears prima facie to be in the realm of a policy decision, the respondents are directed to place on record the mechanism in place with regard to any grievances regarding the functioning of the CoC or the IRP. 5. As far as prayers (b), (c) and (d) are concerned, they relate to proceedings initiated against the petitioner in respect of personal guarantees issued by him. No orders have yet been passed by the Debts Recovery Tribunal in this regard. If any such orders are passed, the petitioner will have the remedy of appeal to the Debt Recovery Appellate Tribunal. No relief of the nature contemplated in prayers (b), (c) and (d)can be granted at this stage. 4. With respect to prayer (a), this court was of the prima facie opinion that the said prayer is in the realm of a policy and therefore, the respondents were directed to place on record the mechanism for dealing with grievances, if any, regarding the functioning of the CoC and the IRP. It is thus, seen that the instant petition requires adjudication only in the context of prayer (a). 5. Mr. Sudhir Nandrajog and Mr. Siddharth Yadav, learned senior cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that, to a great extent, the grievance raised by the petitioner in the instant petition has been supported by the stand of respondent 14-IBBI. Learned senior counsel have extensively read over the discussion paper, annexed with the reply of respondent 14-IBBI and they submitted that there are grey areas which ought to be filled up and should not be left to the discretion of the CoC merely because of the reason that the CoC happens to be the best judge to take commercial decision with respect to the Corporate Debtor. He submitted that merely on the ground that the commercial wisdom of the CoC is unassailable, the constitutional court is not bereft of the power to issue an appropriate writ directing for framing appropriate guidelines to fill up the voids. Supporting his stand, he placed reliance on the decisions of the Hon ble Supreme Court in the case of Vishaka v. State of Rajasthan (1997) 6 SCC 241 and Anoop Baranwal v. Union of India [Election Commission Appointments] (2023) 6 SCC 161. 11. The submissions made by learned senior counsel have been strongly opposed by learned counsel appearing for the respective respondents. 12. The learned counsel appearing on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstratum of the business of the Corporate Debtor, by including the brand in his net worth certificate submitted along with the Expression of Interest (hereinafter EOI ). 17. He submitted that due to the aforesaid attempts of the petitioner to usurp the brand name of the Corporate Debtor, the Resolution Professional was unable to get prospective resolution applications. Accordingly, in October 2018, the Resolution Professional was constrained to approach this court to protect and preserve the most valuable asset of the Corporate Debtor and this court vide order dated 30.10.2019 in C.S. (Comm.) No. 1155/2018 permanently restrained the petitioner from using the brand name. According to him, it is due to these acts of the petitioner and the frivolous litigations agitated by the petitioner, the value of the Corporate Debtor diminished. 18. Mr. Amol Sharma, learned counsel appearing for Reserve Bank of India (hereinafter respondent-5 ) also supported the contentions raised by respondent-1 and respondent-7. 19. Mr. V.K. Gupta and Ms. Kaushiki Kashyap, learned counsel appearing on behalf of Bank of Maharashtra (hereinafter respondent- 8 ) submit that the present writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich facilitate a formal and time-bound insolvency resolution process and liquidation. The Resolution Professional identifies the financial creditors and constitutes a CoC. Operational creditors above a certain threshold are allowed to attend meetings of the CoC but do not have voting power. Most of the decisions of the CoC require 66% majority of votes. Decisions of the CoC are binding on the Corporate Debtor and all its creditors. The CoC considers proposals for the revival of the debtor and must decide whether to proceed with a revival plan or liquidation within a period of 180 days (subject to a one-time extension of 90 days). 24. He further submitted that Section 196(1)(q) of the IBC empowers IBBI to specify a mechanism for redressal of grievances against insolvency professionals, insolvency professional agencies and information utilities. Accordingly, the IBBI has framed the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017 ( Complaint Regulations ). The Complaint Regulations lay down a comprehensive mechanism in consonance with the mandate of the IBC for consideration and disposal of grievances against the insolvency p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 33(1)(a) of the IBC before the Adjudicating Authority on 27.03.2019 and the Adjudicating Authority approved the liquidation of the Corporate Debtor. 29. It is pertinent to note that this court vide order dated 20.09.2021 has prima facie held that what remains to be adjudicated is only with respect to the prayer (a) of the instant writ petition, as already reproduced above. 30. Before embarking on the moot question, this court finds it appropriate to go down the memory lane and understand the fundamental features of the Insolvency and Bankruptcy Code, 2016. Considering the compelling need for a robust insolvency regime, the IBC is enacted with the objective to not drive companies into liquidation but to revive the companies from the debt trap. Legislative intent behind IBC 31. The IBC, which came into force on 28.05.2016, has consolidated the insolvency and bankruptcy laws in India in a uniform regime with an objective to streamline the process of insolvency in India. At this juncture, it is pertinent to mention about the prologue to the IBC which led to the enactment of this Code. The Bankruptcy Law Reforms Committee ( BLRC ) in its report dated 04.11.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of legislative and judicial uncertainty, the outcomes on insolvency and bankruptcy are poor. World Bank (2014) reports that the average time to resolve insolvency is four years in India, compared to 0.8 years in Singapore and 1 year in London. Sengupta and Sharma, 2015 compare the number of new cases that file for corporate insolvency in the U.K., which has a robust insolvency law, to the status of cases registered at the BIFR under SICA, 1985, as well as those filed for liquidation under Companies Act, 1956. They compare this with the number of cases files in the UK, and find a significantly higher turnover in the cases that are filed and cleared through the insolvency process in the UK. If we are to bring financing patterns back on track with the global norm, we must create a legal framework to make debt contracts credible channels of financing. This calls for a deeper redesign of the entire resolution process, rather than working on strengthening any single piece of it. India is not unusual in requiring this. In all countries, bankruptcy laws undergo significant changes over the period of two decades or more. For example, the insolvency resolution framework in the UK is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amework for dealing with firm failure is the need for speed. [Emphasis supplied] 32. At this stage, it is also crucial to point out that while placing the Code before the Parliament, the then Finance Minister, laid emphasis on the fundamental objective that the Code strives to achieve and stated that: SHRI ARUN JAITLEY: One of the differences between your Chapter 11 and this is that in Chapter 11, the debtor continues to be in possession. Here the creditors will be in possession. Now, the SICA is being phased out, and I will tell you one of the reasons why SICA didn t function. Under SICA, the predominant experience has been this, and that is why a decision was taken way back in 2002 to repeal SICA when the original Company Law amendments were passed. Now since they were challenged before the Supreme Court, it didn t come into operation. Now, the object behind SICA was revival of sick companies. But not too many revivals took place. But what happened in the process was that a protective wall was created under SICA that once you enter the BIFR, nobody can recover money from you. So, that became more non-performing investment non-performing because the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Preamble of the Code clearly elucidates that the intention of the legislature was always to set free the Corporate Debtor from the clutches of the debt trap and at the same time, without causing prejudice to the interests of all other stakeholders like financial creditors, operational creditors etc. Reliance can also be placed upon the decision of the Hon ble Supreme Court in the case of Arcelor Mittal (India) (P) Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1., wherein, the Hon ble Supreme Court emphasized on the importance of the maximisation of the assets of the Corporate Debtor as compared to driving the Corporate Debtor into the liquidation. The relevant paragraph of the said decision is being reproduced herein for reference:- 11. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless such reorganization is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor s assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends [Emphasis supplied] 37. In paragraph no. 27 of Swiss Ribbons (supra), the Hon ble Supreme Court reiterated that the Code was beneficial legislation to put the Corporate Debtor on its feet and not merely recovery legislation for the creditors. The court also discussed the importance of the Code in stabilising the economy by contributing to the development of credit markets. Paragraph nos. 27 and 28 of the said decision read as under:- 27. As is discernible, the Preamble gives an insight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests .. [Emphasis supplied] 38. Thus, from the foregoing discussion, it is crystal clear that the sacrosanct intention behind this Code is to revive the Corporate Debtor from the shackles of the debt trap by protecting the Corporate Debtor from its own management and from a corporate death by liquidation. Scheme of IBC 39. In view of the legislative intent behind this Code, at this juncture, it is pertinent to understand the scheme of the IBC, which is divided into different parts. Part I of the IBC deals with preliminary matters, such as its application and definitions. Part II deals with insolvency resolution and liquidation for corporate persons. Part III deals with insolvency resolution and bankruptcy for individuals and partnership firms. Part IV provides for the regulation of insolvency professionals, agencies and information utilities. Part V contains miscellaneous provisions. 40. The process of the CIRP kickstarts with the application before the Adjudicating Authority. Section 7 of IBC lays down the procedure for the initiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares [or completion of such transactions as may be prescribed], prior to the insolvency commencement date.] (3) [Subject to sub-sections (6) and (6A), where] the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them. (4) Where any person is a financial creditor as well as an operational creditor, - (a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor; (b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor. (5) Where an operational creditor has assigned or legally transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of sub-section (6A) shall be as specified which shall be form part of the insolvency resolution process costs.] [(7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A). (8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified.] (9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process. (10) The resolution professional shall make available any financial information so required by the committee of creditors under sub-section (9) within a period of seven days of such requisition. 44. The CoC is the pivotal body under the Code which is resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw Reforms Committee of November 2015 while remarking on the essential theme that the appropriate disposition of a defaulting firm is a business decision, and only the creditors should make it . 97.2. In K. Sashidhar, while setting out the relevant extracts from the said Report, this Court exposited on the primacy of the commercial wisdom of the Committee of Creditors in the corporate insolvency resolution process in the following terms : (SCC pp. 183- 84, paras 52-53) 52. As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold. In the past, laws in India have brought arms of the Government (legislature, executive or judiciary) into this question. This has been strictly avoided by the Committee. The appropriate disposition of a defaulting firm is a business decision, and only the creditors should make it. 97.3. In Essar Steel, a three-Judge Bench of this Court surveyed almost all the relevant provisions concerning corporate insolvency resolution process; and, as noticed above, explained the assignments of different role players in this process. In that context, this Court again explained the primacy endowed on the commercial wisdom of the Committee of Creditors and reasons therefor, with a further detailed reference to the aforesaid report of the Bankruptcy Law Reforms Committee of November 2015. Apart from the passage from the said report that was noticed in K. Sashidhar (reproduced hereinabove), the Court noticed various other passages from this report in Essar Steel; and one part thereof, which further underscores the rationale for only financial creditors handling the process of resolution, could be usefully reproduced as under (part of para 56 at pp. 578-79 of SCC): 56. 5.3.1. Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is ultimately in the hands of the majority vote of the Committee of Creditors, nothing can be done qua the management of the corporate debtor by the resolution professional which impacts major decisions to be made in the interregnum between the taking over of management of the corporate debtor and corporate resolution by the acceptance of a resolution plan by the requisite majority of the Committee of Creditors. Most importantly, under Section 30(4), the Committee of Creditors may approve a resolution plan by a vote of not less than 66% of the voting share of the financial creditors, after considering its feasibility and viability, and various other requirements as may be prescribed by the Regulations. *** 64. Thus, what is left to the majority decision of the Committee of Creditors is the feasibility and viability of a resolution plan, which obviously takes into account all aspects of the plan, including the manner of distribution of funds among the various classes of creditors. As an example, take the case of a resolution plan which does not provide for payment of electricity dues. It is certainly open to the Committee of Creditors to suggest a modification to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emphasized on the importance of the commercial wisdom of the CoC and upheld the sanctity of the CoC while recognising the legislative intent of the Code. Paragraph no. 142 of the said decision is reproduced hereunder:- 142. This Court has held, that it is not open to the Adjudicating Authority or Appellate Authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the I B Code. It has further been held, that the commercial wisdom of CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the I B Code. This Court thus, in unequivocal terms, held, that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. It has been held, that the opinion expressed by CoC after due deliberations in the meetings through voting, as per voting shares, is a collective business decision. It has been held, that the legislature has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors, which is the decision-maker and in the driver s seat, so to say, of the corporate debtor. K. Sashidhar v. Indian Overseas Bank [(2019) 213 Comp Cas 356 (SC); (2019) 12 SCC 150.] and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta [(2020) 219 Comp Cas 97 (SC); (2020) 8 SCC 531.] are clear authorities that the committee of creditors s decision is not to be subjected to unnecessary judicial scrutiny and intervention. This came to be reiterated in Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh [(2020) 9 Comp Cas-OL 683 (SC); (2020) 11 SCC 467], which also emphasised that the committee of creditors s commercial analysis ought not to be qualitatively examined and the direction therein of the National Company Law Appellate Tribunal to direct the successful resolution applicant to enhance its fund flow was disapproved of by this court. Thus, if the committee of creditors, including the financial creditors to whom money is due from the corporate debtor, had undertaken repeated negotiations with the appellant with regard to the resolution plan and thereafter, with a majority of 88.56 per cent. votes, approved the final negotiated resolution plan of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant extracts of the report is reproduced herein for reference:- 12.3. However, given the importance of the CoC in the scheme of the CIRP, the Committee agreed that institutional financial creditors should take necessary steps to ensure that their representatives are capable of discharging their duties in a timely and efficient manner. In this regard, the Committee took the view that: ● Financial institutions should build strong verticals for stressed asset management, with personnel that has adequate training and expertise. Mechanisms for the periodic review of the performance of these verticals should also be put in place. ● The personnel that represents financial creditors in meetings of the CoC should be sufficiently empowered to take decisions on the spot, and discharge their duties consistent with the letter and spirit of the Code. ● There is a need to develop guidance to help members of CoCs discharge their duties consistent with the letter and spirit of the Code. This may be developed in the form of Best Practices, by industry bodies such as the IBA. 12.4. The Committee also agreed that any training delivered or guidance develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n effective code of conduct for CoC members, the Insolvency Law Committee in its report dated 20th May, 2022 has again raised the said issue. The committee, inter alia, recommended that: 2.62. The Committee took note of the above and discussed that the recommendations made in its last report have not resulted in a change in the conduct of financial creditors in the CoC. It felt that since the CoC drives the CIRP and is given wide powers to utilise its commercial wisdom, such powers should be balanced with adequate accountability. Since the decisions of the CoC impact the life of the corporate debtor, and consequently its stakeholders, it needs to be fair and transparent in its decisions. Therefore, the Committee agreed that it would be suitable for the IBBI to issue guidelines providing the standard of conduct of the CoC while acting under the provisions governing the corporate insolvency resolution process, pre-packaged insolvency resolution process and fast track insolvency resolution process. This may be in the form of guidance that provides a normative framework for conducting these processes . In order to empower the IBBI to issue such guidelines, the Committee recommen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them after due deliberations in the CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable. 39. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors . 44. . The resolution professional is not required to express his opinion on matters within the domain of the financial creditor(s), to approve or reject the resolution plan, under Section 30(4) of the I B Code. At best, the Adjudicating Authority (NCLT) may cause an enquiry into the approved resolution plan on limited grounds referred to in Section 30(2) read with Section 31(1) of the I B Code. It cannot make any other inquiry nor is competent to issue any direction in relation to the exercise of commercial wisdom of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (2010) 6 SCC 614, wherein, the Hon ble Supreme Court observed as under:- 36. Wednesbury principle applies to a decision which is so reprehensible in its defiance of logic or of accepted moral or ethical standards that no sensible person who had applied his mind to the issue to be decided could have arrived at it. Proportionality as a legal test is capable of being more precise and fastidious than a reasonableness test as well as requiring a more intrusive review of a decision made by a public authority which requires the courts to assess the balance or equation struck by the decisionmaker. Proportionality test in some jurisdictions is also described as the least injurious means or minimal impairment test to safeguard the fundamental rights of citizens and to ensure a fair balance between individual rights and public interest. Suffice it to say that there has been an overlapping of all these tests in its content and structure, it is difficult to compartmentalise or lay down a straitjacket formula and to say that Wednesbury has met with its death knell is too tall a statement. Proportionality requires the court to judge whether action taken was really needed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons appointed under Schedule B1 of the Insolvency Act, 1986 to manage the company s affairs, business and property. On appointment, an Administrator becomes an officer of the court. The Administrator must generally perform his/her functions in the interests of the creditors as a whole. The Administrator is duty bound to follow the Statements of Insolvency Practice (SIP) which is a set of guidance notes issued to insolvency practitioners with a view to maintain standards by setting out required practice and harmonising practitioners approach to particular aspects of insolvency. The purpose of SIPs is to outline basic principles and essential procedures with which insolvency practitioners are required to comply. Analysis 62. Considering the case in hand, the dispute revolving around the CIRP of the company and the commercial wisdom of the CoC of the Corporate Debtor has travelled through numerous judicial forums. It is undoubtedly clear that the decision to sell Corporate Debtor as a going concern has been upheld by the NCLAT vide order dated 03.02.2023, wherein, the NCLAT held that: 24. In view of what has been said above, we are of the view that Adjudicating Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction of any civil court with respect to a matter where the Adjudicating Authority would have jurisdiction. Section 63 of the Code is reproduced herein for the reference - 63. No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which the National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil court not to have jurisdiction. 66. Thus, the Adjudicating Authority has the sole authority to decide any question of law or facts arising out of pending insolvency proceedings including any alleged mismanagement of assets done by the CoC or any other wrongdoing. The Adjudicating Authority is the main adjudicating body which ensures that the resolution process is carried out in a time-bound manner following the principles of fairness, reasonableness and transparency. It also ensures that all the key players in the resolution process have acted in accordance with their responsibilities and law. 67. The Hon ble Supreme Court in Committee of Creditors of Essar Steel India Ltd (supra) has held:- 73...Adjudicating Authority cannot interfere on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. [Emphasis supplied] 70. It is relevant to point out that the CoC is entrusted with fiduciary duties as per the legislative mandate of the IBC. The functions entrusted to the CoC are wide in nature and in order to effectively deliver the duties entrusted upon it, a code of conduct is of pertinent value. 71. It is widely said that, with great power comes great responsibility . One of the foremost functions of law is to circumscribe power with responsibility. The CoC, being entrusted with the fiduciary duty to bring back the Corporate Debtor from the vicious cycle of debt trap and revive the company, must be saddled with the responsibility of ensuring that the decisions taken by it in the exercise of its commercial wisdom shall be in tune with the bonafide objectives of the Code. In order to facilitate an effective and responsible functioning of the CoC, an elaborate, determinative and efficient code of conduct for the functioning of CoC assumes great relevance. 72. Thus, there is an urgent need for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinction has been substantially watered down, if not obliterated. In other words, the requirement to observe the principles of natural justice arises both in the context of purely judicial or quasi-judicial action as well as administrative action which has an adverse impact on the individual or entity against which action is initiated. 75. Further, it was held that the principles of natural justice cannot be applied in a straight-jacket manner and the extent of application is to be seen in specific circumstances of the case. From a full-fledged hearing to a bare minimum opportunity, the range is wide. Paragraph no. 64 in this regard reads thus:- 64. At the same time, it needs to be noted that the principles of natural justice are not to be construed in a straitjacket. The nature of natural justice is liable to vary with the exigencies of the situation. In a given situation, it may extend to a fully-fledged evidentiary hearing while, on the other hand, the principles of natural justice may require that a bare minimum opportunity should be given to an individual who is liable to be affected by an action, to furnish an explanation to the allegations or the nature of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutional provision. But judicial review cannot encroach upon the basic constitutional function which is entrusted to the legislature to determine whether a law should be enacted. Whether a provision of law as enacted subserves the object of the law or should be amended is a matter of legislative policy. The court cannot direct the legislature either to enact a law or to amend a law which it has enacted for the simple reason that this constitutional function lies in the exclusive domain of the legislature... 78. Reference is also made to the decision of this court in the case of Rahul Bhardwaj and Anr. v. State and Ors. 2022 SCC OnLine Del 189., and the decision of the Hon ble Supreme Court in the case of Ashwini Kumar v. Union of India (2020) 13 SCC 585., wherein, it was categorically held that it is a settled law that framing policies is the domain of the legislature. 79. At this juncture, it is pertinent to look at the Section 196 of the Code which delineates the functions of the IBBI and empowers the IBBI to frame guidelines. Section 196 is reproduced herein for the reference:- 196. Powers and functions of Board. (1) The Board shall, subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arency and best practices in its governance; (n) maintain websites and such other universally accessible repositories of electronic information as may be necessary; (o) enter into memorandum of understanding with any other statutory authorities; (p) issue necessary guidelines to the insolvency professional agencies, insolvency professionals and information utilities; (q) specify mechanism for redressal of grievances against insolvency professionals, insolvency professional agencies and information utilities and pass orders relating to complaints filed against the aforesaid for compliance of the provisions of this Code and the regulations issued hereunder; (r) conduct periodic study, research and audit the functioning and performance of to the insolvency professional agencies, insolvency professionals and information utilities at such intervals as may be specified by the Board; (s) specify mechanisms for issuing regulations, including the conduct of public consultation processes before notification of any regulations; (t) make regulations and guidelines on matters relating to insolvency and bankruptcy as may be required under this Code, including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything contained in any other law for the time being in force, while exercising the powers under this Code, the Board shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely: (i) the discovery and production of books of account and other documents, at such place and such time as may be specified by the Board; (ii) summoning and enforcing the attendance of persons and examining them on oath; (iii) inspection of any books, registers and other documents of any person at any place; (iv) issuing of commissions for the examination of witnesses or documents. 80. The aforesaid provision duly indicates that the IBBI is entrusted with a wide set of powers and functions to regulate the exercise of insolvency resolution. It is relevant to take a cue from the latin maxim Quando lex aliquid alicut camadit, concedere videtur id sine quo ipsaesse which translates as when the law gives anything to anyone, it gives also all those things without which the thing itself could not exist. Even otherwise also, the aforesaid provision contains a re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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