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A three-judge bench of the Supreme Court comprising Justices A.M. Khanwilkar, B.R. Gavai and Krishna Murari, on the 10th of March, 2021 held that the National Company Law Tribunal (NCLT) or the Appellate Authority, i.e., the National Company Law Appellate Tribunal (NCLAT) cannot interfere in the collective wisdom of the Committee of Creditors (CoC) except within the limited scope under Sections 30 and 31 of the Insolvency and Bankruptcy Code (IBC).

Such a principle was reiterated by the Apex Court in the case of Kalparaj Dharamshi and another vs Kotak Investment Advisors Ltd and Others and connected cases, while it set aside an order of NCLAT which had annulled the decision of Committee of Creditors (CoC) in order to accept a certain resolution plan, and the original order of NCLT was made applicable.

The scope of interference by the adjudicating authority in limited judicial review earlier been laid down in Essar Steel [Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531], K. Sashidhar v. Indian Overseas Bank & Ors. and Maharashtra Seamless Limited v. Padmanabhan Venkatesh and others. That very principle has been reiterated by the Court in the instant case.


The appellants in the instant case before the Supreme Court were Kalparaj Dharamshi and Rekha Jhunjhunwala.

They were successful resolution applicants for a Corporate Insolvency Resolution Process (CIRP).

The respondent, Kotak Investment Advisories Ltd (KIAL), who was also a resolution applicant, challenged before the NCLT, the acceptance of such resolution plan, contending that it was accepted beyond the time-period.

The NCLT dismissed such challenge.

However, in further appeal by KIAL, the NCLAT interfered with the decision and rejected such order of NCLT.

Being aggrieved with the NCLAT decision, the respondent, Kotak Investment Advisories Ltd. approached the Supreme Court of India.

The Supreme Court held in the judgement authored by Justice B. R. Gavai, “It will therefore be clear, that this Court, in unequivocal terms, held, that the appeal is a creature of statute and that the statute has not invested jurisdiction and authority either with NCLT or NCLAT, to review the commercial decision exercised by CoC of approving the resolution plan or rejecting the same.”


In the case of Kalparaj Dharamshi and another vs Kotak Investment Advisors Ltd and Others and connected cases, the Apex Court observed, “It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code.” The Supreme Court had considered 3 issues in this regard.

The first issue, being whether the appeals filed by KIAL before NCLAT were within limitation, related to the fact that the Kotak Investment Advisors Limited, being aggrieved by the order of NCLT had approached the High Court, who instructed such Investment company to seek remedy by an appeal to the Appellate tribunal of NCLT, i.e., NCLAT. The question of law here is whether such time period in which the Hon’ble High Court was approached fruitlessly would be excluded from the time for limitation under the provisions of Section 14 of the Limitation Act, 1963. In this regard, the Supreme Court observed that the Supreme Court noted that the writ petition filed in High Court was not just pertaining to the CoC decision; there were allegations with regard to the manner of functioning of NCLT and thus arrived at the decision that the conditions which enable a party to invoke the provisions of Section 14 of the Limitation Act are very much available to Kotak.

The second issue in this regard is whether there was waiver and acquiescence by KIAL, so as to estop it from challenging the participation of Kalpraj. The Court held that KIAL's conduct cannot be regarded as "acquiescence" or "waiver" and answered in favour of the Investment Company. It stated that "Taking into consideration the fact, that KIAL had objected to participation of any other applicant submitting plan after the due date as per the last Form ‘G’ and also reiterated its objection, we are of the considered view, that it cannot be held, that having participated by submitting the revised plans, KIAL is estopped from challenging the process on the ground of acquiescence and waiver.” The Supreme Court further noted that the writ petition filed in High Court other than being concerned with the decision of CoC; were also allegations with regard to the manner of functioning of NCLT.

The third issue considered by the Court was whether NCLAT was right in law in interfering with the decision of CoC of accepting the resolution plan of Kalpraj, and it held that NCLAT overstepped its jurisdiction by interfering with the CoC decision. Such decision was against the petitioner Investment Advisory Committee. “No doubt, it is sought to be urged, that since there has been a material irregularity in exercise of the powers by RP, NCLAT was justified in view of the provisions of clause (ii) of subsection (3) of Section 61 of the I&B Code to interfere with the exercise of power by RP. However, it could be seen, that all actions of RP have the seal of approval of CoC. No doubt, it was possible for RP to have issued another Form ‘G’, in the event he found, that the proposals received by it prior to the date specified in last Form ‘G’ could not be accepted. However, it has been the consistent stand of RP as well as CoC, that all actions of RP including acceptance of resolution plans of Kalpraj after the due date, albeit before the expiry of timeline pecified by the I&B Code for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority of 84.36%,” the Court stated.

The Court observed, that the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront.

“We are of the considered view, that in view of the paramount importance given to the decision of CoC, which is to be taken on the basis of ‘commercial wisdom’, NCLAT was not correct in law in interfering with the commercial decision taken by CoC by a thumping majority of 84.36 per cent,” the Court commented in the order.


The Apex court, on Thursday, held that the decision of NCLT or its Appellate Authority, NCLAT, cannot interfere with the decisions reached by the Committee of Creditors on CoC except within the limited scope of the Sections 30 and 31 of the Insolvency and Bankruptcy Code, 2016.

The order, in this regard, states that “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.”

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