NGAITLANG DHAR versus PANNA PRAGATI INFRASTRUCTURE PRIVATE LIMITED & ORS. on 17 December 2021

[2021] 9 S.C.R. 1009

NGAITLANG DHAR

v.

PANNA PRAGATI INFRASTRUCTUREPRIVATE LIMITED & ORS.

(Civil Appeal Nos.3665-3666 of 2020)

DECEMBER 17, 2021

[L. NAGESWARA RAO AND B. R. GAVAI, JJ.]

Insolvency and Bankruptcy Code, 2016 – ‘Materialirregularity’ – When not – Corporate Insolvency Resolution Process(CIRP) initiated in respect of Corporate Debtor – Resolution Planswere received from four prospective Resolution Applicants includingthe appellant, respondent no.2 and other two – In the meeting ofCommittee of Creditors (CoC), the appellant emerged as H-1 bidder– Resolution Plan of the appellant approved by CoC, furtherapproved by NCLT – Respondent No.1- contended that in theproceedings before the CoC it had sought some time to submit itsrevised Resolution Plan and had accordingly submitted the same –Filed application seeking direction to the Resolution Professional(RP) to take on record its revised Resolution Plan – Rejected byNCLT – RP sought approval to the Resolution Plan submitted by theappellant – Allowed by NCLT – Both the orders challenged byrespondent no.1 before NCLAT – Appeals allowed – Held:Commercial wisdom of the CoC should not be interfered with, it isonly the process of decision making, which can be challenged ifthere is any material irregularity in the said proceedings – In thepresent case, CoC evaluated the Resolution Plans of all the fourprospective Resolution Applicants – Equal opportunity was accordedto all – However, the respondent no.1, without improving his bidamount, went on insisting for more time – Procedure adopted by theRP as well as the CoC was fair, transparent and equitable – Nomaterial irregularity – NCLAT erred in interfering with the decisionof the CoC which was duly approved by the NCLT – Impugnedjudgment set aside.

Insolvency and Bankruptcy Code, 2016 – ss.30(2), 61(3) –Held: Opinion expressed by Committee of Creditors (CoC) after duedeliberations in the meetings through voting, as per voting shares,

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Ais the collective business decision – Decision of the CoC’s‘commercial wisdom’ is non-justiciable, except on limited groundsfor challenge u/ss.30(2) or 61(3).

Allowing the appeals, the Court

1.1 The respondent No.1-PPIPL was very much aware thatBthe CoC has decided to finalise the proceedings by 12th February,2020. It is also clear that though PPIPL was first called upon bythe CoC to enhance the bid amount, it had specifically rejectedthe same. It insisted on disclosing the basis of score. In theproceedings of the 5th meeting of the CoC dated 11th February,C2020, post lunch, though the appellant had enhanced his bid fromRs.63 crore to Rs.64 crore, the representative of PPIPLsubsequently came and requested for adjourning the meeting forfew days. The said request was specifically rejected by the CoCby informing the representative of PPIPL that it had to adhere tothe IBC timeline and would have to conclude the matter by nextDday. On the next day, i.e., 12th February, 2020, when theadjourned proceedings of the CoC were held, the respondentNo.1-PPIPL had sent an email, stating therein that the Directorsof its Company will not be available for the said meeting andrequested for deferring the meeting by a day or two. On theEinsistence of all the prospective Resolution Applicants present,the CoC clarified that since the timeline was coming to an end, ithad decided to exclude the prospective Resolution Applicantswho were not present in the said meeting. In the said meeting,the appellant came to be declared as the highest bidder after heimproved his bid in the open bidding held between him and Mr.F‘AA’. The Resolution Plan of the appellant was approvedunanimously by Allahabad Bank having 68.34% voting rights andthe Corporation Bank having 31.66% voting rights. It could thusbe seen that the RP as well as the CoC had acted in a totallytransparent manner. An equal opportunity was accorded to allGthe prospective Resolution Applicants. However, the respondentNo.1-PPIPL, without improving his bid amount, went on insistingfor more time, which request was specifically rejected by the CoC.[Paras 25-27][1019-D-H; 1020-A-B]

1.2 The procedure adopted by the RP as well as the CoCHwas fair, transparent and equitable. The CoC was facing the timeline, which was to end on 24 th February, 2020, before whichit had to finalise its decision. In these circumstances, it cannotbe said that the decision of the CoC, to not grant any further timeto PPIPL for submission of its revised bid and to finalise theResolution Plan on 12th February, 2020 itself, can be said to befalling in the category of the term ‘material irregularity’.[Para 29][1020-D]

1.3 ‘Commercial wisdom’ of the CoC has been givenparamount status without any judicial intervention, for ensuringcompletion of the processes within the timelines prescribed bythe IBC. It has been consistently held that it is not open to theAdjudicating Authority (the NCLT) or the Appellate Authority(the NCLAT) to take into consideration any other factor otherthan the one specified in Section 30(2) or Section 61(3) of theIBC. The opinion expressed by the CoC after due deliberationsin the meetings through voting, as per voting shares, is thecollective business decision and that the decision of the CoC’s‘commercial wisdom’ is non-justiciable, except on limited groundsas are available for challenge under Section 30(2) or Section 61(3)of the IBC. No doubt that, under Section 61(3)(ii) of the IBC, anappeal would be tenable if there has been material irregularity inexercise of the powers by the RP during the corporate insolvencyresolution period. However, there is no material irregularity. Inthe present case, leave apart, there being any ‘materialirregularity’, there has been no ‘irregularity’ at all in the processadopted by the RP as well as the CoC. On the contrary, if theCoC would have permitted the PPIPL to participate in theprocess, despite it assuring the other three prospectiveResolution Applicants in its meeting held on 11-12th February,2020, that the absentee prospective Resolution Applicant (PPIPL)would be excluded from participation, it could have been said tobe an irregularity in the procedure followed. The dominantpurpose of the IBC is revival of the Corporate Debtor and makingit an on-going concern. In the present case, the said purpose isalready achieved, inasmuch as all the dues of the financialcreditors, i.e., the Allahabad Bank and the Corporation bank,have already been paid, and the Corporate Debtor, in respect ofwhich CIRP was initiated, is now an on-going concern. TheNCLAT grossly erred in interfering with the decision of the CoC, A

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Awhich was duly approved by the NCLT. The impugned judgmentand order passed by the NCLAT is quashed and set aside.[Paras 31, 32, 34, 37 and 38][1020-F-H; 1021-A, D-E; 1022-B-C,G-H; 1023-A-B]

K. Sashidhar v. Indian Overseas Bank and OthersB(2019) 12 SCC 150 : [2019] 3 SCR 845; Committee ofCreditors of Essar Steel India Limited ThroughAuthorized Signatory v. Satish Kumar Gupta and Others(2020) 8 SCC 531 : [2019] 16 SCR 275; MaharashtraSeamless Limited v. Padmanabhan Venkatesh and others(2020) 11 SCC 467: [ 2020] 2 SCR 1157; KalprajCDharamshi and Another v. Kotak Investment AdvisorsLimited and Another (2021) SCC OnLine SC 204;Ghanashyam Mishra and Sons Private LimitedThrough the Authorized Signatory v. Edelweiss AssetReconstruction Company Limited Through the DirectorD& Ors. (2021) 9 SCC 657; Keshardeo Chamria v.Radha Kissen Chamria and others [1953] 4 SCR 136 –relied on.

Pratap Technocrats (P) Ltd. and others v. MonitoringCommittee of Reliance Infratel Limited and another 2021ESCC OnLine SC 569 – referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.3665-3666 of 2020.

GFrom the Judgment and Order dated 19.10.2020 of the NationalCompany Law Appellate Tribunal, New Delhi in Company Appeal (AT)(Insolvency) Nos.515 and 516 of 2020.

With

Civil Appeal Nos.3742-3743 of 2020.

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Mukul Rohatgi, Sr. Adv., Arvind Kumar Gupta, Ravindra SadanandChingale, Ms. Anindita Pujari, Abhijeet Sinha, Shaunak Mitra, AvikChaudhuri, Soumya Dutta, Rajesh Kumar Gautam, Anant Gautam, NipunSharma, Ravi Solanki, Ms. Ekta Choudhary, Chaksu Thakral, Advs. forthe appearing parties.

The Judgment of the Court was delivered by

B. R. GAVAI, J.

1. Civil Appeal Nos.3665-3666 of 2020 are filed by NgaitlangDhar, the successful Resolution Applicant (H-1 bidder), and Civil AppealNos. 3742-3743 of 2020 are filed by Amit Pareek, the ResolutionProfessional.

2. These appeals assail the judgment and order passed by theNational Company Law Appellate Tribunal, New Delhi (hereinafterreferred to as “the NCLAT”) dated 19[th] October, 2020, in CompanyAppeal (AT) (Insolvency) Nos. 515 of 2020 and 516 of 2020, therebyallowing the appeals of the respondent No.1-Panna Pragati InfrastructurePrivate Limited (hereinafter referred to as “PPIPL”) and the respondentNo.2-Arihant International Limited.

3. Company Appeal (AT) (Insolvency) No.515 of 2020 was filedassailing the order dated 18[th] March, 2020, passed by the NationalCompany Law Tribunal, Guwahati Bench, Guwahati (hereinafter referredto as “the NCLT”), in I.A. No.27 of 2020 in CP (IB) No.13/GB/2019,filed by PPIPL and another, by which the application seeking directionto the Resolution Professional (hereinafter referred to as “the RP”) totake on record and consider its revised offer submitted by email dated14[th] February, 2020, came to be rejected.

4. Company Appeal (AT) (Insolvency) No.516 of 2020 was filedassailing the order dated 18[th] May, 2020 passed by the NCLT, in anunnumbered I.A. filed by the RP, vide which the appellant-NgaitlangDhar’s (H-1 bidder) Resolution Plan came to be approved by the NCLT.

5. Vide the impugned judgment and order dated 19[th] October, 2020,the NCLAT has set aside both the orders, dated 18[th] March, 2020, and18[th] May, 2020, and directed the Corporate Insolvency Resolution Process(hereinafter referred to as “CIRP”) to be resumed from the stage ofconsideration of the Resolution Plans.

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A6. The facts in brief giving rise to the present appeals are asunder:

7. An application being CP(IB) No.13/GB/2019 came to be filedunder Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafterreferred to as “the IBC”) for initiation of CIRP in respect of MeghalayaBInfratech Ltd. (hereinafter referred to as “the Corporate Debtor”) bythe Allahabad Bank (now known as Indian Bank) (hereinafter referredto as “the Allahabad Bank”). The NCLT vide order dated 28[th] August,2019 admitted the petition and as such, the CIRP came to be initiated inrespect of the Corporate Debtor and Mr. Amit Pareek came to beappointed as the Interim RP, who was subsequently confirmed as theCRP in the first Committee of Creditors (“hereinafter referred to as “theCoC”) meeting, held on 25[th] September, 2019.

8. It is not in dispute that the Allahabad Bank and the CorporationBank (now known as Union Bank) (hereinafter referred to as “theCorporation Bank”) were the only financial creditors.D9. In accordance with the provisions of the IBC, Expression ofInterest (hereinafter referred to as “EOI”) was invited from theprospective Resolution Applicants by the RP.

10. Appellant-Ngaitlang Dhar, respondent No.1-PPIPL, Mr.EAbhishek Agarwal and Mr. Ashish Jaisasaria submitted their EOI. Allthe four Resolution Applicants submitted their Resolution Plans. In theCoC meeting held on 11-12[th] February, 2020, the appellant-NgaitlangDhar emerged as H-1 bidder, whereas Mr. Abhishek Agarwal emergedas H-2 bidder.

F11. At the 7[th] CoC meeting, held on 6[th] March, 2020, the CoC,with a 100% voting share, approved the Resolution Plan of the appellant-Ngaitlang Dhar (H-1 bidder), which was further approved by the NCLTvide order dated 18[th] May, 2020.

12. The respondent No.1-PPIPL contended that in the proceedingsbefore the CoC held on 11-12[th] February, 2020, it had sought for one orGtwo days’ time to submit its revised Resolution Plan, and accordingly, itsubmitted the same on 14[th] February, 2020. The respondent No.1-PPIPL,accordingly, filed I.A. No. 27 of 2020 in CP(IB) No.13/GB/2019 beforethe NCLT, seeking a direction to the RP to take on record its revisedResolution Plan, dated 14[th] February, 2020. The same came to be rejectedHby the NCLT, vide order dated 18[th] March, 2020. The RP thereafter filed an unnumbered I.A. seeking approval to the Resolution Plansubmitted by the appellant-Ngaitlang Dhar (H-1 bidder). The saidunnumbered I.A. was allowed by the NCLT vide order dated 18[th] May,2020. Both these orders came to be challenged before the NCLAT byway of aforesaid Company Appeals by the respondent No.1-PPIPL. Asstated above, by the impugned judgment and order dated 19[th] October,2020, the appeals were allowed. Being aggrieved thereby, the presentappeals are filed before this Court.

13. We have heard Shri Mukul Rohatgi, learned Senior Counselappearing on behalf of the appellant-Ngaitlang Dhar, the successfulResolution Applicant (H-1 bidder) and Shri Abhijeet Sinha, learned counselappearing on behalf of the respondent No.1-PPIPL.

14. Shri Mukul Rohatgi, learned Senior Counsel appearing on behalfof Ngaitlang Dhar, the successful Resolution Applicant (H-1 bidder),submitted that the entire approach adopted by the NCLAT in the impugnedjudgment and order was erroneous. He submitted that the NCLAT oughtto have taken into consideration that the CoC after exercising its‘commercial wisdom’ has resolved to accept the Resolution Plansubmitted by Ngaitlang Dhar. He submitted that the RP had given anequal opportunity to all the bidders/resolution applicants. He submittedthat though adequate opportunity was given to all the ResolutionApplicants by adjourning the proceedings in CoC meetings on numberof occasions, the respondent No.1-PPIPL failed to revise its bid withinthe stipulated period. He submitted that the CoC, in its meeting, held on11-12[th] February, 2020, had resolved to declare Ngaitlang Dhar as thesuccessful resolution applicant. He submitted that, not only that, thereafterthe NCLT had also allowed the application filed by the RP to approvethe Resolution Plan of Ngaitlang Dhar.

15. Shri Rohatgi submitted that it is only after 12[th] February, 2020,the respondent No.1-PPIPL, on 14[th] February, 2020, had sent an emailto the RP, revising its offer to Rs.65.65 crore. He submitted that whenan initial offer given by the respondent No.1-PPIPL was only of makingan upfront payment of Rs.24 crore, it is clear that the revised offer ofRs.65.65 crore was only with a mala fide intention of protracting theproceedings. He submitted that the NCLAT ought not to have interferedwith the ‘commercial wisdom’ of the CoC. In this respect, he relies onvarious judgments of this Court.

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A16. Shri Rohatgi further submits that the Resolution Plan ofNgaitlang Dhar now stands implemented, inasmuch as the dues of allthe Banks (financial creditors) have been repaid and now the CorporateDebtor, i.e., Meghalaya Infratech Ltd. is an on-going concern.

17. Shri Abhijeet Sinha, learned counsel appearing on behalf ofBthe respondent No.1-PPIPL would submit that there is a distinctionbetween the decision of the CoC and the procedure adopted by the RPand the CoC to arrive at that decision. He submitted that though a finaldecision of the CoC cannot be a matter of challenge on the ground thatthe ‘commercial wisdom’ of the CoC should not be interfered with, yetif there is a material irregularity in the procedure adopted by the RP, anCappeal under Section 61(3) of the IBC would be tenable. He submittedthat the RP acted with undue haste in the present matter. Learned counselsubmitted that in the proceedings of the meeting of the CoC, held on 11-12[th] February, 2020, the Director of PPIPL, had sought one or two days’time to submit its revised offer. He submitted that, however, the saidDtime was not granted. He further submitted that the revised offer wassubmitted within two days and it was the duty of the RP to present itsrevised offer before the CoC. Having not done that and having hastilyapproved the plan of Ngaitlang Dhar, the NCLAT has rightly interferedwith the decision of the CoC. In this respect, he relies on the judgmentof this Court in the case of Pratap Technocrats (P) Ltd. and others v.EMonitoring Committee of Reliance Infratel Limited and another[1].

18. Shri Sinha further submitted that when the NCLT itself hadextended the period of CIRP by another 90 days beyond 180 days videorder dated 26[th] February, 2020, there was no reason for the RP to havehastily accepted the bid of Ngaitlang Dhar.F

19. Learned counsel appearing on behalf of the respondents –Banks (the financial creditors) also support the arguments of the learnedcounsel appearing on behalf of Ngaitlang Dhar. They submit that theBanks have received the entire payment that was owed to them. It isfurther submitted that the email dated 14[th] February, 2020 sent by PPIPLGwas also endorsed to the Allahabad Bank as well as the CorporationBank. It is submitted that both the Banks had refused to consider thesaid offer inasmuch as such an offer was not valid in law.

20. The facts are not in dispute in the present matter.

H1 2021 SCC OnLine SC 569

21. Vide order dated 28[th] August, 2019, the application filed byAllahabad Bank under Section 7 of the IBC for initiation of CIRP inrespect of the Corporate Debtor came to be allowed. Vide the saidorder dated 28[th] August, 2019, Mr. Amit Pareek came to be appointedas the Interim RP.

22. The interim RP, in compliance with Section 15 of the IBC,made public announcement calling for claims from creditors of theCorporate Debtor. Upon receipt of claims from the creditors, the CoCcame to be formed on 17[th] September, 2019. Thereafter, in the firstmeeting of the CoC, held on 25[th] September, 2019, the Interim RP cameto be appointed as the RP. Thereafter, the RP invited EOI from theprospective Resolution Applicants. Four EOIs came to be received from(a) PPIPL & others; (b) Mr. Ngaitlang Dhar; (c) Mr. Abhishek Agarwal;and (d) Mr. Ashish Jaisasaria & others. The provisional list of ResolutionApplicants came to be published and objections to the provisional listwere invited by 25[th] December, 2019. Since no objection in respect ofany of the prospective Resolution Applicants was received, a final list ofprospective Resolution Applicants was placed before the CoC forevaluation. Thereafter, all the Resolution Applicants were invited to submittheir respective Resolution Plans by 24[th] January, 2020. In response tothat, four Resolution Plans were received from the four prospectiveResolution Applicants.

23. The 5[th] meeting of the CoC was held on 11[th] February, 2020.The minutes of the said meeting, particularly Agenda No.6, would revealthat the RP informed the CoC that there were numerous anomalies anddeficiencies observed in the Resolution Plan of PPIPL and the samewas intimated to the Resolution Applicant through email dated 30[th] January,2020 with a request to rectify/correct the same and submit the same by1[st] February, 2020. However, PPIPL had failed to do so within thestipulated period. It would further reveal that an email dated 1[st] February,2020, was received from PPIPL with a request to grant time forsubmission of rectified Resolution Plan by 3[rd] February, 2020. Accordingly,the rectified Resolution Plan came to be filed by PPIPL on 3[rd] February,2020. In the said meeting, the CoC evaluated the Resolution Plans of allthe four prospective Resolution Applicants. Paragraph 5 of theconsideration of the proposed Resolution Plan of PPIPL reads thus:

“5. The CoC requested PRA to improve their bid amount thePRA refused to do so unless individual score of all disclosed further A

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Afor increase of the bid amount he has to discuss with BOD of theapplicant”

24. It would further reveal that the CoC continued the secondround of negotiation after a lunch break. It will be relevant to refer to thefollowing excerpt of the minutes of the meeting of the CoC dated 11[th]BFebruary, 2020:

“2. The CoC decided to invite Panna Pragati Infrastructure Pvt.Ltd. for further negotiation. The RP informed that in first round ofnegotiation the PRA has not revised their bid amount and informedthe CoC about the brief details of plan. The PRA also want toCknow about the basis of score, the RP & CoC informed at thismature stage of CIRP this is not the right time and place to discussabout the evaluation and also informed that the evaluation hasbeen done as per the RFRP, IM & evaluation matrix which has been circulated to all the PRA in due time.

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3. The CoC & RP informed the PRA about the anomalies &deficiency in the rectified Resolution Plan submitted by them stillpersist despite of given them opportunity earlier after thesubmission of original resolution plan for the rectification. ThePRA requested to allow some more time for the rectification andEsubmit revise plan. The casual approach of PRA noted.4. The CoC requested to improve the bid amount to the PRA, thePRA states that at this stage we will not increase the bid amount”

25. The minutes of the 5[th] meeting of the CoC would further revealthat the CoC thereafter invited Ngaitlang Dhar for negotiation of the bidFand requested him to enhance the bid amount. Ngaitlang Dhar agreed toenhance the bid amount from Rs.63 crore to Rs.64 crore. Thereafteragain, the representative of PPIPL returned back and requested to adjournthe meeting for a few days. The said request was specifically rejectedby the CoC informing the representative of PPIPL that they were boundto follow the IBC timeline and wanted to conclude the matter by nextGday. The said 5[th] meeting of the CoC was adjourned to next day andwas held on 12[th] February, 2020. The minutes of the said meeting wouldfurther reveal that the representative of PPIPL had informed the CoC/RP that the Directors of their Company will not be available for themeeting to be held on 12[th] February, 2020 and the meeting should beH

deferred by one or two days. The minutes of the meeting would furtherreveal that all the prospective Resolution Applicants present in the meetingsought clarification from the CoC members and the RP about the statusof Resolution Applicant, who was absent in the meeting, as to whether itwould be allowed to participate in the further bidding process or not.The CoC members specifically replied that since they were at the neckof the timeline (i.e. 180 days were to get over on 24[th] February, 2020), itwas decided to exclude the respondent No.1-PPIPL, who was not presentin the said meeting. The proceedings commenced after lunch break,wherein only two prospective Resolution Applicants, i.e., Ngaitlang Dharand Mr. Abhishek Agarwal were present. Thereafter, the CoC adoptedSwiss Challenge open bidding method. In the said bidding process, bothprospective Resolution Applicants present increased their offer. In thesaid open bidding process between the two prospective ResolutionApplicants present, Ngaitlang Dhar was found to be the highest bidder/prospective Resolution Applicant having offered the bid of an upfrontamount of Rs.64.30 crore plus CIRP costs. The said Resolution Plan ofNgaitlang Dhar was approved unanimously by Allahabad Bank having68.34% voting rights and the Corporation Bank having 31.66% votingrights.

26. It is thus clear that the respondent No.1-PPIPL was verymuch aware that the CoC has decided to finalise the proceedings by12[th] February, 2020. It is also clear that though PPIPL was first calledupon by the CoC to enhance the bid amount, it had specifically rejectedthe same. It insisted on disclosing the basis of score. In the proceedingsof the 5[th] meeting of the CoC dated 11[th] February, 2020, post lunch,though Ngaitlang Dhar had enhanced his bid from Rs.63 crore to Rs.64crore, the representative of PPIPL subsequently came and requestedfor adjourning the meeting for few days. The said request was specificallyrejected by the CoC by informing the representative of PPIPL that ithad to adhere to the IBC timeline and would have to conclude the matterby next day. On the next day, i.e., 12[th] February, 2020, when the adjournedproceedings of the CoC were held, the respondent No.1-PPIPL hadsent an email, stating therein that the Directors of its Company will notbe available for the said meeting and requested for deferring the meetingby a day or two. On the insistence of all the prospective ResolutionApplicants present, the CoC clarified that since the timeline was comingto an end, it had decided to exclude the prospective Resolution Applicantswho were not present in the said meeting. In the said meeting, Ngaitlang A

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ADhar came to be declared as the highest bidder after he improved hisbid in the open bidding held between him and Mr. Abhishek Agarwal.

27. It could thus be seen that the RP as well as the CoC had actedin a totally transparent manner. An equal opportunity was accorded toall the prospective Resolution Applicants. However, the respondent No.1-BPPIPL, without improving his bid amount, went on insisting for moretime, which request was specifically rejected by the CoC.

28. Shri Abhijeet Sinha, learned counsel, fairly concedes that thoughthe final decision of the CoC would not be challenged on the ground thatthe ‘commercial wisdom’ of the CoC should not be interfered with, it isConly the process of decision making, which can be challenged if there isany material irregularity in the said proceedings.

29. As already discussed hereinabove, we find that the procedureadopted by the RP as well as the CoC was fair, transparent and equitable.The CoC was facing the timeline, which was to end on 24[th] February,D2020, before which it had to finalise its decision. In these circumstances,it cannot be said that the decision of the CoC, to not grant any furthertime to PPIPL for submission of its revised bid and to finalise theResolution Plan on 12[th] February, 2020 itself, can be said to be falling inthe category of the term ‘material irregularity’.

E30. We have extracted the minutes of the proceedings of the 5[th]meeting of the CoC in extenso. It could be seen that the CoC, after duedeliberations, evaluated all the proposed Resolution Plans submitted byall the prospective Resolution Applicants and after giving sufficientopportunity to all the prospective Resolution Applicants, arrived at aconsiderate decision of accepting the Resolution Plan of the appellant-FNgaitlang Dhar in its meeting held on 11-12[th] February, 2020.

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31. It is trite law that ‘commercial wisdom’ of the CoC has beengiven paramount status without any judicial intervention, for ensuringcompletion of the processes within the timelines prescribed by the IBC.It has been consistently held that it is not open to the AdjudicatingGAuthority (the NCLT) or the Appellate Authority (the NCLAT) to takeinto consideration any other factor other than the one specified in Section30(2) or Section 61(3) of the IBC. It has been held that the opinionexpressed by the CoC after due deliberations in the meetings throughvoting, as per voting shares, is the collective business decision and thatthe decision of the CoC’s ‘commercial wisdom’ is non-justiciable, exceptH

NGAITLANG DHAR v. PANNA PRAGATI INFRASTRUCTUREPRIVATE LIMITED & ORS. [B. R. GAVAI, J. ]

on limited grounds as are available for challenge under Section 30(2) orSection 61(3) of the IBC. This position of law has been consistentlyreiterated in a catena of judgments of this Court, including:

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(i) K. Sashidhar v. Indian Overseas Bank and Others[2]

(ii) Committee of Creditors of Essar Steel India LimitedBThrough Authorized Signatory v. Satish Kumar Guptaand Others[3],

(iii) Maharashtra Seamless Limited v. PadmanabhanVenkatesh and others[4],

(iv) Kalpraj Dharamshi and Another v. Kotak InvestmentAdvisors Limited and Another[5].

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(v) Ghanashyam Mishra and Sons Private LimitedThrough the Authorized Signatoryv. Edelweiss AssetReconstruction Company Limited Through the Director& Ors.[6]

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32. No doubt that, under Section 61(3)(ii) of the IBC, an appealwould be tenable if there has been material irregularity in exercise of thepowers by the RP during the corporate insolvency resolution period.However, as discussed hereinabove, we do not find any materialirregularity.

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33. We may gainfully refer to the following observations of thisCourt in the case of Keshardeo Chamria v. Radha Kissen Chamriaand others[7] while considering the scope of the words ‘materialirregularity’, as are found in Section 115 of the Code of Civil Procedure,1908:

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“Reference may also be made to the observations of Bose, J. inhis order of reference in Narayan Sonaji v. SheshraoVithoba [AIR 1948 Nag 258] wherein it was said that the words“illegally” and “material irregularity” do not cover either errors offact or law. They do not refer to the decision arrived at but to the G

2 (2019) 12 SCC 1503 (2020) 8 SCC 5314 (2020) 11 SCC 4675 (2021) SCC OnLine SC 2046 (2021) 9 SCC 6577 (1953) 4 SCR 136

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Amanner in which it is reached. The errors contemplated relate tomaterial defects of procedure and not to errors of either law orfact after the formalities which the law prescribes have beencomplied with.”

34. In the present case, leave apart, there being any ‘materialBirregularity’, there has been no ‘irregularity’ at all in the process adoptedby the RP as well as the CoC. On the contrary, if the CoC would havepermitted the PPIPL to participate in the process, despite it assuring theother three prospective Resolution Applicants in its meeting held on 11-12[th] February, 2020, that the absentee prospective Resolution Applicant(PPIPL) would be excluded from participation, it could have been saidCto be an irregularity in the procedure followed.

35. Insofar as the contention of the learned counsel, Shri AbhijeetSinha, that the NCLT had already extended the CIRP period by 90 daysvide order dated 26[th] February, 2020 and therefore, there was no necessityto hastily approve the Resolution Plan of Ngaitlang Dhar on 12[th] February,D2020, is concerned, we find the same to be without substance. It will berelevant to mention that the period of 180 days was to expire on 24[th]February, 2020, and therefore, in the meeting dated 12[th] February, 2020itself, the CoC after resolving to declare Ngaitlang Dhar as H-1 bidderhad resolved to authorise the RP to seek an extension of CIRP periodEbefore the NCLT.

36. It will be relevant to refer to paragraph 2 of the order dated26[th] February, 2020 passed by the NCLT, which reads thus:

“2. It is the submission of the RP that the CoC in its 5[th] meetingheld on 11.02.2020 concluded on 12.02.2020 declared one Mr. N.FDhar as highest bidder and the said decision of theCoC is underconsideration for approval with the higher authority of the CoCand, therefore, prayed for further extension of CIRP period to 90days with effect from 25.02.2020”

37. It could thus be seen that the contention in that regard is alsoGwithout substance. It is further to be noted that, as has been consistentlyheld by this Court in catena of judgments, referred to hereinabove, thedominant purpose of the IBC is revival of the Corporate Debtor andmaking it an on-going concern. In the present case, the said purpose isalready achieved, inasmuch as all the dues of the financial creditors, i.e.,Hthe Allahabad Bank and the Corporation bank, have already been paid, NGAITLANG DHAR v. PANNA PRAGATI INFRASTRUCTUREPRIVATE LIMITED & ORS. [B. R. GAVAI, J. ]

and the Corporate Debtor, in respect of which CIRP was initiated, isnow an on-going concern.

38. We are, therefore, of the considered view that the NCLAThas grossly erred in interfering with the decision of the CoC, which wasduly approved by the NCLT. The appeals are, therefore, allowed. Theimpugned judgment and order passed by the NCLAT, dated 19[th] October,2020 is quashed and set aside. There shall be no order as to costs. Allpending applications shall stand disposed of.

Divya Pandey

Appeals allowed.

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