Judgments

NAGAITLANG DHAR VS. PANNA PRAGATI INFRASTRUCTURE PVT. LTD.  & ORS. : CASE SUMMARY

The Supreme Court in Nagaitlang Dhar Vs Panna Pragati Infrastructure Pvt. Ltd. ( 2022)  6 SCC 172 reiterated that “commercial wisdom” of CoC has been given paramount status without any judicial intervention for ensuring completion of the processes within the timelines prescribed by Insolvency and Bankruptcy Code, 2016.

FACTS OF THE CASE

Allahabad Bank filed Application under Section 7 of IBC for initiating CIRP against Meghalaya Infratech Ltd. Application was admitted vide order dated 28th August, 2019. Allahabad Bank and Corporation Bank were only Financial Creditors.  As per provisions of the Code and regulations made therein EOI was invited from prospective Resolution Applicants.  Four EOIs including that of Respondent No. 1 were received. The Resolution Plan submitted by the Appellant was approved by the CoC with 100% voting share. Respondent No. 1 filed IA before the NCLT for directing the CoC to consider revised plan which was rejected by NCLT. NCLT approved the Resolution Plan vide order dated 18th May, 2020. The Appeal was filed before NCLAT which was allowed.

FINDINGS OF THE SUPREME COURT

The Supreme Court noted that four Resolution Plans were submitted in this matter. The 5th CoC was held on 11th and 12th February, 2020. The Respondent No. 1 requested the CoC to adjourn the meeting to be held on 12th February, 2020 which has been declined in light of timeline to be followed under IBC.  On 12th February, 2020 Respondent No. 1 was absent in the CoC meetings. CoC decided to exclude Respondent No. 1 from the process.

Only two Resolution Applicants were present i.e. Appellant and Abhishek Agrawal. Thereafter CoC adopted open swiss challenge method.  Appellant emerged highest bidder offering upfront amount of Rs. 64.30 Crore plus CIRP Costs. Resolution was approved by CoC with 100% voting share.

It is thus clear that Respondent No. 1 was well aware that CoC has decided to finalise the proceedings by 12th February, 2020. When Respondent No. 1 was asked to enhance the bid amount, it has rejected and asked for adjournment.

RP and CoC had acted in transparent manner. Equal opportunity was given to all prospective Resolution Applicants. Respondent No. 1, without improving bid amount, went on insisting for more time.

It was contended by the Respondent that there was material irregularity in decision making, which was rejected by the Supreme Court. The Supreme Court observed that the procedure adopted by the RP as well as the CoC was  fair, transparent and equitable.  The CoC was facing timeline, which was to end on 24th February, 2020, before which it has to finalize the decision. In such circumstances refusal by CoC to grant additional time cannot be said to be irregularity.

The Supreme Court observed that it is a trite law that “commercial wisdom” of CoC has been given paramount status without any judicial intervention for ensuring completion of the processes within the timelines prescribed by IBC.

The Supreme Court observed that in the present case there have not been any irregularity , leave apart any material irregularity.

The Court observed that dominant purpose of the IBC is revival of the Corporate Debtor and making it an on-going concern. In the present case, the said purpose is already achieved as all the dues of the Financial Creditors i.e. Allahabad Bank and the Corporation Bank have already been paid and the Corporate Debtor is a going concern.

The Supreme Court allowed the appeal and set aside the order of NCLAT.

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Mukesh Kumar Suman is an advocate and legal author based at Delhi. He regularly appears before various Judicial Forums including NCLT, NCLAT, High Courts and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

Mukesh Kumar Suman

Mukesh Kumar Suman

Mukesh Kumar Suman is an advocate based at Delhi. He has rich experience in civil, criminal, commercial, arbitration and corporate insolvency matters. He regularly appears before District Courts, NCLT, NCLAT, High Court and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

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