Ngaitlang Dhar v. Panna Pragati Infrastructure Private Limited & Ors., Civil Appeal Nos. 3665-3666 of 2020
“Commercial wisdom’ of the CoC has been given paramount status for ensuring completion of the CIRP processes within the timelines
Brief: In the instant decision, the Hon’ble Supreme Court set aside the impugned order of the Hon’ble NCLAT interfering with the commercial wisdom of CoC while approving Resolution Plan submitted by other Resolution Applicant and denying any further extension to Respondent herein.
RELEVANT PARAGRAPH
31. It is trite law that ‘commercial wisdom’ of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the processes within the timelines prescribed by the IBC. It has been consistently held that it is not open to the Adjudicating Authority (the NCLT) or the Appellate Authority (the NCLAT) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) of the IBC. It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, is the collective business decision and that the decision of the CoC’s ‘commercial wisdom’ is nonjusticiable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) of the IBC.
32. No doubt that, under Section 61(3)(ii) of the IBC, an appeal would be tenable if there has been material irregularity in exercise of the powers by the RP during the corporate insolvency resolution period. However, as discussed hereinabove, we do not find any material irregularity.
33. We may gainfully refer to the following observations of this Court in the case of Keshardeo Chamria v. Radha Kissen Chamria and others while considering the scope of the words ‘material irregularity’, as are found in Section 115 of the Code of Civil Procedure, 1908:
“Reference may also be made to the observations of Bose, J. in his order of reference in Narayan Sonaji v. Sheshrao Vithoba [AIR 1948 Nag 258] wherein it was said that the words “illegally” and “material irregularity” do not cover either errors of fact or law. They do not refer to the decision arrived at but to the manner in which it is reached. The errors contemplated relate to material defects of procedure and not to errors of either law or fact after the formalities which the law prescribes have been complied with.”
34. In the present case, leave apart, there being any ‘material irregularity’, there has been no ‘irregularity’ at all in the process adopted by the RP as well as the CoC.