M. K. Rajagopalan vs Dr. Periasamy Palani Gounder & Anr.

Court

Supreme Court of India

Date

3 May 2023

Case No.

Civil Appeal Nos. 1682-1683 of 2022

Result

Disposed

Bench

Dinesh Maheshwari, Vikram Nath

Citation

[2023] 9 S.C.R. 783 : 2023 INSC 486

Headnote

Insolvency and Bankruptcy Code, 2016 – ss. 12A, 29-A(e), 30(2)(e) & 30(6) – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Regulation 36-A(2)(iii) – Disapproval of resolution plan by the Appellate Tribunal (NCLAT) for want of presentation of final resolution plan before CoC – Held: Is unexceptionable and calls for no interference – When the modified resolution plan, even if carrying minor modification /revision was not finally approved by CoC, its presentation to the Adjudicating Authority amounts to a material irregularity and this defect cannot be cured – There is no and there cannot be any concept of post facto approval of any resolution plan by CoC which had not been placed before it prior to the filing before the Adjudicating Authority – Requirement of CIRP Regulations, particularly of placing the resolution plan in its final form before the CoC, has to be scrupulously complied with – This is so for the specific reason concerning law that if the process as adopted in the present matter is approved, the very scheme of the Code and CIRP regulations would be left open-ended and would be capable of inviting arbitrariness at any level – The irregularity in the process of approval by CoC and filing before Adjudicating Authority are not the matters of such formal nature that deviation in that regard could be ignored or condoned – When commercial wisdom of CoC is assigned primacy, it presupposes a considered decision on the resolution plan in its final form – The principles underlying the decisions of this Court respecting the commercial wisdom of CoC cannot be over-expanded to brush aside a significant shortcoming in the decision making of CoC when it had not duly taken note of the operation of any provision of law for the time being in force – On facts, disapproval of the resolution plan in question by the Appellate Tribunal (NCLAT) in the impugned order is not to be interfered with but, not for all the reasons which weighed with the Appellate Tribunal – The reasons and findings of the Appellate Tribunal in relation to the valuation process and alleged non-compliance of some of the procedural provisions as also the observations against increase of fees of resolution professional are not approved – Similarly, the Appellate Tribunal was not right in holding the resolution applicant ineligible to submit a resolution plan with reference to s.164(2)(b) of the Companies Act, 2013 – The disapproval by the Appellate Tribunal, with reference to the settlement offer of promoter in terms of s.12-A of the Code, and its purported non-consideration is also not approved and such findings of the Appellate Tribunal are required to be set aside – Similarly, the Appellate Tribunal erred in applying the principles of nondiscrimination in relation to the related party – However, even while respecting the commercial wisdom of CoC, in the present case, the resolution plan in question could not have been approved by the Adjudicating Authority for two major reasons: one, for the ineligibility of the resolution applicant; and second, for not placing of the revised resolution plan in the CoC before seeking approval from the Adjudicating Authority – So far the subsequent events concerning invitation of fresh Expression of interest (EOIs) and approval of the fresh settlement proposal of the promoter by the CoC are concerned, all the relevant aspects are kept open for consideration of the Adjudicating Authority.

The Judgment of the Court was delivered by DINESH MAHESHWARI, J. Preliminary and brief outline .......................................... 2* Particulars of the proceedings and the parties ................... 7* The relevant factual and background aspects .................. 13* Initiation of CIRP ...........................................................14* CoC Meetings and ancillary proceedings ................... 16* Resolution plan approved by the Adjudicating Authority (NCLT) .............................................................................26* Disapproval of the Appellate T

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