R. RAGHAVENDRAN versus C. RAJA JOHN & ORS.

R. RAGHAVENDRAN versus C. RAJA JOHN & ORS.

The Supreme Court held that the NCLAT's broad observations in paragraph Nos. 32 and 34—that if the corporate debtor is an MSME promoters need not compete with other resolution applicants—were an incorrect generalization of the Tribunal's decision in Bafna's case. Bafna is limited to exceptional circumstances (e.g. settlements before constitution of the CoC or under Section 12A). Consequently the Resolution Professional was justified in inviting other proposals, putting them to e-voting before the CoC and declaring the results; paragraph Nos. 32 and 34 of the impugned judgment were set aside, and proceedings (including contempt) emanating from those observations were dissolved, with a...

Parties
Appellant Resolution Professional: R. Raghavendran; Respondent Promoter: C. Raja John & Ors.
Jurisdiction
India
Judgment Date
13 September 2023
Procedural Posture
Civil Appeal / Appeal From the National Company Law Appellate Tribunal Judgment Dated 01.12.2021; Final Disposition by Supreme Court
Outcome
Appeal allowed
Legal Topics
Promoter Eligibility Under Section 29 a, Section 12 a Settlements, Committee of Creditors Procedure, Resolution Plan Approval, One Time Settlement, Contempt Proceedings
Insolvency and Bankruptcy Law Company Law MSME Law Promoter Eligibility Under Section 29 a Section 12 a Settlements Committee of Creditors Procedure Resolution Plan Approval One Time Settlement +1 more

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Parties

R. Raghavendran

Appellant Resolution Professional

C. Raja John & Ors.

Respondent Promoter

Procedural Posture

Civil Appeal / Appeal From the National Company Law Appellate Tribunal Judgment Dated 01.12.2021; Final Disposition by Supreme Court

Legal Issues

  1. 1 Whether promoters of an MSME need to compete with other resolution applicants under the Insolvency and Bankruptcy Code, 2016
  2. 2 Whether the NCLAT observations in paragraph Nos. 32 and 34 of the impugned judgment can be sustained in light of the Tribunal's observations in Saravana Global Holdings Ltd. & Anr. Vs. Bafna Pharmaceuticals Ltd. & Ors.
  3. 3 Whether the Resolution Professional was justified in inviting and putting multiple proposals to the Committee of Creditors for e-voting

Ratio Decidendi

The Supreme Court held that the NCLAT's broad observations in paragraph Nos. 32 and 34—that if the corporate debtor is an MSME promoters need not compete with other resolution applicants—were an incorrect generalization of the Tribunal's decision in Bafna's case. Bafna is limited to exceptional circumstances (e.g. settlements before constitution of the CoC or under Section 12A). Consequently the Resolution Professional was justified in inviting other proposals, putting them to e-voting before the CoC and declaring the results; paragraph Nos. 32 and 34 of the impugned judgment were set aside, and proceedings (including contempt) emanating from those observations were dissolved, with a...

Court Disposition

Appeal allowed

Orders

  • Paragraph Nos. 32 and 34 of the impugned NCLAT judgment dated 01.12.2021 set aside
  • All proceedings (including contempt) emanating from the premise of paragraph Nos. 32 and 34 of the impugned judgment are set aside