K. SASHIDHAR versus INDIAN OVERSEAS BANK & ORS.

K. SASHIDHAR versus INDIAN OVERSEAS BANK & ORS.

Neither the NCLT nor the NCLAT are vested with jurisdiction to reverse the commercial wisdom of the dissenting financial creditors. Since the resolution plans in question were not approved by at least 75% of voting share of financial creditors per the law prevailing at the relevant time, and no alternative plan was presented within the statutory period of 270 days, liquidation must be initiated. Amendments reducing the threshold to 66% operate prospectively and cannot revive failed plans. Grounds for interference under Sections 30(2) and 61(3) pertain only to approved plans and do not justify intervention here.

Parties
Applicant: K. Sashidhar; Respondent: Indian Overseas Bank & Ors.
Jurisdiction
India
Judgment Date
05 February 2019
Procedural Posture
Civil Appeal / Final Disposition
Legal Topics
Corporate Insolvency Resolution Process, Committee of Creditors Decision Making, Threshold for Resolution Plan Approval, Liquidation Process, Amendments to Voting Thresholds
Insolvency Law Corporate Insolvency Resolution Process Committee of Creditors Decision Making Threshold for Resolution Plan Approval Liquidation Process Amendments to Voting Thresholds

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Parties

K. Sashidhar

Applicant

Indian Overseas Bank & Ors.

Respondent

Procedural Posture

Civil Appeal / Final Disposition

Legal Issues

  1. 1 Whether the adjudicating authority (NCLT) or appellate authority (NCLAT) can revisit or override the commercial wisdom of the Committee of Creditors in rejecting a resolution plan not supported by requisite majority
  2. 2 Whether subsequent amendments reducing the voting share threshold for approval of a resolution plan have retrospective effect
  3. 3 What constitutes grounds for judicial intervention under Sections 30(2) or 61(3) of the Insolvency and Bankruptcy Code, 2016

Ratio Decidendi

Neither the NCLT nor the NCLAT are vested with jurisdiction to reverse the commercial wisdom of the dissenting financial creditors. Since the resolution plans in question were not approved by at least 75% of voting share of financial creditors per the law prevailing at the relevant time, and no alternative plan was presented within the statutory period of 270 days, liquidation must be initiated. Amendments reducing the threshold to 66% operate prospectively and cannot revive failed plans. Grounds for interference under Sections 30(2) and 61(3) pertain only to approved plans and do not justify intervention here.