NCLT/NCLAT Can’t Interfere With Commercial Wisdom Of CoC Except Within Limited Scope Under Sections 30 & 31 IBC: Supreme Court
Case Title: Kalparaj Dharamshi and another vs Kotak Investment Advisors Ltd and Others and connected cases
Bench: Justices AM Khanwilkar, BR Gavai and Krishna Murari
Case No: Civil Appeal no. 2943 of 2020
Court Observation: “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 observed referring to precedents such as Committee of Creditors of Essar Steel India Ltd vs Satish Kumar Gupta and others, Maharashtra Seamless Ltd v Padmanabhan Venkatesh and others, K. Sashidhar vs. Indian Overseas Bank etc.
“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”, the judgment authored by Justice BR Gavai stated.
“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%”, the Court observed.
Sections 30 & 31 IBC, NCLT, NCLAT