Summary
The Supreme Court set aside a Karnataka High Court judgment that, in writ jurisdiction, quashed a resolution plan approved by the Committee of Creditors in 2020 for want of notice to a suspended director. The writ petition was filed almost three years after the meeting, the director had already invoked the remedy under the Insolvency and Bankruptcy Code on the same grounds, and the Code is a complete code with its own remedies, so the High Court should not have interdicted the CIRP.
Issues
- Whether the High Court should have entertained a writ petition under Article 226 challenging the Committee of Creditors' approval of a resolution plan, filed about three years after the meeting complained of.
- Whether the High Court ought to have relegated the suspended director to the remedy under the Insolvency and Bankruptcy Code, which he had already invoked on the same grounds.
Provisions considered
- Article 226, Constitution of IndiaThe Court held that the High Court's supervisory and judicial review powers, though a constitutional safeguard, must be exercised with rigorous scrutiny, and that this was not a case for interdicting CIRP proceedings given the delay and the availability and actual use of the statutory remedy. (¶¶ 9, 10, 14, 15)
- Section 60(5)(c), Insolvency and Bankruptcy Code, 2016Relied on the Adjudicating Authority's jurisdiction over any question of law or fact arising out of or in relation to the insolvency resolution, as reiterated in earlier decisions, as the proper forum for the suspended director's grievance. (¶ 13)
Held
- Proceedings by a third party (Swamitva Consortium) before the Adjudicating Authority, the NCLAT or the Supreme Court do not justify a suspended director approaching the High Court almost three years after the Committee of Creditors' meeting of 11.02.2020 that he alleged was held without notice to him; the writ petition, filed on 04.01.2023, suffered from delay. (¶ 11)
- Where the writ petitioner had already moved an interlocutory application before the Adjudicating Authority seeking rejection of the resolution plan on the same grounds, the High Court should have relegated him to the remedy under the Code that he had chosen; the Court did not enter into the comparative merits of the offers. (¶¶ 12, 14)
- The Insolvency and Bankruptcy Code is a complete code with sufficient checks, balances, remedies and appeals; the Adjudicating Authority has jurisdiction under Section 60(5)(c), CIRP proceedings must be concluded without unjustified interference, and the High Court erred in interdicting a CIRP that began in 2018 and in which the plan was approved in 2020. (¶¶ 13, 15)
Result
Appeals allowed; the High Court's judgment dated 22.04.2024 in W.P. No. 483 of 2023 set aside; Adjudicating Authority directed to resume the proceedings from the stage at which they were interdicted and complete them expeditiously; no order as to costs.