LI Network
Published on: November 23, 2023 at 18:35 IST
The Supreme Court has nullified an order by the National Company Law Tribunal (NCLT) that suspended the approval of a resolution plan and mandated a re-valuation of a Corporate Debtor’s assets.
The court also set aside the National Company Law Appellate Tribunal’s (NCLAT) confirmation of the NCLT’s decision.
The case involved an application under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (IBC), filed by the Resolution Professional seeking approval of a resolution plan submitted by a Successful Resolution Applicant (SRA).
The NCLT, despite the valuation of the Corporate Debtor’s assets being conducted by the Resolution Professional as per IBC and its regulations, deferred approval and appointed an Official Liquidator for a re-valuation.
The Supreme Court bench, comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah, held that interference with the resolution plan, especially without objections raised by any party, was not justified.
The court emphasized that the Commercial Wisdom of the Committee of Creditors (CoC) should not be casually questioned or interfered with, and the NCLT and NCLAT erred in their approach.
The court stated, “Stricto sensu, it is now well-settled that it is well within the CoC’s domain as to how to deal with the entire debt of the Corporate Debtor. In this background, if after repeated negotiations, a Resolution Plan is submitted, as was done by the appellant (Resolution Applicant), including the financial component which includes the actual and minimum upfront payments, and has been approved by the CoC with a majority vote of 88.56%, such commercial wisdom was not required to be called into question or casually interfered with.”
The judgment reprimanded the unwarranted interference by the NCLT and NCLAT, especially when no objections were raised during the approval process of the SRA’s resolution plan. The court set aside the orders of the NCLT and NCLAT and directed the NCLT to make appropriate decisions regarding the approval of the resolution plan.
The case title is “Ramkrishna Forgings Limited v Ravindra Loonkar & Anr.”