No Residual Equity-Based Jurisdiction In Appellate Authority While Dealing With The Resolution Plan Approved By The COC: Supreme Court

BACKGROUND OF THE CASE

• Prior to the present case, an appeal was filed before the NCLAT/NCLT.
• The National Company Law Appellate Authority and National Company Law Tribunal had approved the resolution plan which was formulated during the insolvency resolution process of the Corporate Debtor.

OBSERVATIONS MADE BY THE COURT

• The bench of Justices DY Chandrachud and MR Shah had reiterated that the said authorities cannot enter the commercial wisdom which had the approval of the CoC.
• The bench further observed that the provisions of Section 31(1) for determining if the requirements of Section 30(2) have been fulfilled in the plan as approved by the CoC is confined by the jurisdiction of the said authorities.
• The bench upheld the orders passed by National Company Law Appellate Authority and National Company Law Tribunal.
• The bench said that the IBC, in itself, is a complete code. It defines the fair and equitable treatment by constituting a comprehensive framework within which the actors partake in the insolvency process. The IBC has envisaged a direct representation of certain economic goals of the Indian economy, which has been enacted after due deliberation in Parliament and accords rights and obligations that are strictly regulated and coordinated by the statute and its regulations. Therefore, once the requirements of the IBC have been fulfilled, the Adjudicating Authority and the Appellate Authority are duty bound to follow the discipline of the statutory provisions.

REFERRED JUDGEMENTS

• The observations made by K Shashidhar vs Indian Overseas Bank and Committee of Creditors of Essar Steel India Limited vs Satish Kumar Gupta bench were referred to by this court.
• It held that the decisions of the jurisdiction of the Adjudicating Authority and the Appellate Authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom. Nor can there be any residual equity-based jurisdiction in the Adjudicating Authority or the Appellate Authority to interfere in this decision, as long as it follows the provisions of the IBC and the Regulations under the enactment.

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