Case Note & Summary
The Supreme Court allowed the appeals filed by Ngaitlang Dhar (successful resolution applicant) and Amit Pareek (Resolution Professional) against the NCLAT order dated 19th October 2020, which had set aside the NCLT orders approving Dhar's resolution plan and rejecting PPIPL's revised offer. The case arose from the Corporate Insolvency Resolution Process (CIRP) of Meghalaya Infratech Ltd., initiated on a petition by Allahabad Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional invited expressions of interest, and four applicants submitted resolution plans. In the CoC meeting held on 11-12 February 2020, Ngaitlang Dhar was declared the H1 bidder, and PPIPL was H2. PPIPL had sought time to submit a revised bid but failed to do so within the meeting; it later sent a revised offer via email on 14 February 2020. The CoC, with 100% voting share, approved Dhar's plan on 6 March 2020, which was subsequently approved by the NCLT on 18 May 2020. PPIPL challenged the rejection of its revised offer and the approval of Dhar's plan before the NCLAT, which allowed the appeals and directed resumption of CIRP from the stage of consideration of plans. The Supreme Court held that the NCLAT erred in interfering with the commercial wisdom of the CoC. The Court noted that the RP had given equal opportunity to all applicants, and PPIPL had failed to submit its revised bid within the stipulated time. The revised offer sent after the deadline was rightly ignored. The Court also observed that the dues of financial creditors had been repaid and the corporate debtor was an ongoing concern. The Supreme Court set aside the NCLAT order and restored the NCLT orders, thereby upholding the approval of Dhar's resolution plan.
Headnote
A) Insolvency Law - Commercial Wisdom of CoC - Non-Interference - The Committee of Creditors' decision to accept a resolution plan based on its commercial wisdom is not justiciable, and courts/NCLAT should not interfere unless there is a material irregularity in the procedure adopted by the Resolution Professional. (Paras 14-15, 20-24) B) Insolvency Law - Revised Bid After Deadline - Rejection Valid - A resolution applicant cannot submit a revised bid after the deadline set by the CoC, and the Resolution Professional is not obligated to present such belated offer to the CoC. (Paras 12, 15, 22-23) C) Insolvency Law - Procedural Irregularity - Scope of Appeal under Section 61(3) IBC - While the final decision of the CoC is not appealable on merits, an appeal lies if there is a material irregularity in the procedure adopted by the RP or CoC. (Para 17) D) Insolvency Law - CIRP Extension - Effect on Evaluation Process - Extension of CIRP period by NCLT does not permit reopening of the evaluation process or consideration of revised bids after the CoC has already approved a plan. (Para 18)
Issue of Consideration
Whether the NCLAT was justified in setting aside the NCLT orders rejecting the revised offer of PPIPL and approving the Resolution Plan of Ngaitlang Dhar, and whether the commercial wisdom of the CoC can be interfered with on grounds of procedural irregularity.
Final Decision
The Supreme Court allowed the appeals, set aside the NCLAT order dated 19 October 2020, and restored the NCLT orders dated 18 March 2020 and 18 May 2020, thereby upholding the approval of Ngaitlang Dhar's resolution plan.
Law Points
- Commercial wisdom of Committee of Creditors is not justiciable
- Procedure adopted by Resolution Professional must be fair
- Section 61(3) IBC permits challenge on procedural irregularity
- Revised bid submitted after deadline cannot be considered
- CIRP timeline extension does not justify reopening of completed evaluation
