Summary
The Supreme Court restored approval of Kalpraj’s resolution plan, holding that the NCLAT had exceeded its limited review of the creditors’ commercial decision to consider a late plan within the CIRP timeline. KIAL’s appeal was nevertheless within limitation after excluding its diligent, good-faith writ proceedings, and its continued participation did not establish waiver of objections. The separate operational creditor’s pending appeal was left for the NCLAT to decide on merits.
Issues
- Whether time spent pursuing a writ remedy could be excluded in computing the insolvency appeal deadline.
- Whether a prescribed waiver clause and submission of revised bids barred KIAL’s challenge.
- Whether NCLAT could overturn the creditors’ acceptance of the resolution plan on these facts.
Provisions considered
- Section 14 and Section 29(2), Limitation Act, 1963Principles of exclusion protected time spent diligently and in good faith pursuing the writ remedy; exclusion was distinguished from condonation. (¶ 36-85)
- Sections 61 and 238A, Insolvency and Bankruptcy Code, 2016The statutory appeal period remained applicable, with bona fide writ-prosecution time excluded in its computation. (¶¶ 36-43, 64, 85)
- Sections 30 and 31, Insolvency and Bankruptcy Code, 2016Review of the approved plan remained within statutory compliance requirements rather than substitution of the creditors’ commercial judgment. (¶ 135-159)
Held
- Excluding time under Section 14 principles differs from condoning delay beyond a statutory limit. KIAL diligently pursued a bona fide natural justice challenge before the High Court, which relegated it to appeal; excluding that period made the NCLAT appeals timely. (¶¶ 44-64, 78-85)
- The compulsory prescribed acceptance clause could not bind KIAL to unconscionably surrender challenges to unlawful conduct. Its repeated objections and practical necessity of submitting revised plans defeated waiver or acquiescence; omission of the words without prejudice did not alter that conclusion. (¶¶ 90-100, 116-134)
- KIAL and its holding company were distinct legal persons; the parent bank’s participation did not establish waiver by KIAL. Detrimental reliance on an asserted waiver was also not established. (¶ 129-134)
- Commercial assessment belongs to the committee of creditors, subject to the statutory review grounds. Here the committee consciously approved the professional’s actions, including consideration of the late plan before the CIRP deadline, and approved Kalpraj’s plan by 84.36%. NCLAT wrongly displaced that decision. (¶ 135-156)
- The later approval of KIAL’s plan merely implemented the invalid NCLAT directions and could not displace the original approved decision. NCLT’s orders were restored; the disputed extent of subsequent implementation required no determination. (¶ 157-159)
- The operational creditor Fourth Dimension’s separate pending appeal was not decided on its merits. NCLAT was directed to decide it expeditiously and within two months. (¶ 160-161)
Result
Kalpraj’s, the resolution professional’s and Deutsche Bank’s appeals allowed; NCLAT order set aside and NCLT orders restored. Fourth Dimension’s appeal disposed of with directions for its pending NCLAT appeal.