RAMKRISHNA FORGINGS LIMITED versus RAVINDRA LOONKAR, RESOLUTION PROFESSION OF ACIL LIMITED & ANR.

RAMKRISHNA FORGINGS LIMITED versus RAVINDRA LOONKAR, RESOLUTION PROFESSION OF ACIL LIMITED & ANR.

The Supreme Court held that the NCLT and NCLAT erred in directing re-valuation by the Official Liquidator in the absence of any objection or material showing non-compliance with the Code; the Adjudicating Authority's jurisdiction is confined to testing the resolution plan against Sections 30 and 31 and it cannot substitute its commercial judgment for that of the CoC. The NCLT order dated 01.09.2021 and the NCLAT judgment dated 19.01.2022 were set aside and the NCLT was directed to pass appropriate orders on the approval application within three weeks.

Parties
Appellant: Ramkrishna Forgings Limited; Resolution Professional of ACIL Limited (respondent No.1): Ravindra Loonkar; Respondent (committee of Creditors): Committee of Creditors of ACIL Ltd.
Jurisdiction
India
Judgment Date
21 November 2023
Procedural Posture
Civil Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Judgment on Appeal by the Supreme Court (appeal Allowed)
Outcome
Appeal allowed; order of NCLT dated 01.09.2021 and judgment of NCLAT dated 19.01.2022 set aside
Legal Topics
Approval of Resolution Plan, Valuation of Corporate Debtor Assets, Jurisdiction of Adjudicating Authority (nclt), Committee of Creditors' Commercial Wisdom, Role of Official Liquidator, Avoidance Transactions
Insolvency and Bankruptcy Company Law Judicial Review Approval of Resolution Plan Valuation of Corporate Debtor Assets Jurisdiction of Adjudicating Authority (nclt) Committee of Creditors' Commercial Wisdom Role of Official Liquidator +1 more

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Parties

Ramkrishna Forgings Limited

Appellant

Ravindra Loonkar

Resolution Professional of ACIL Limited (respondent No.1)

Committee of Creditors of ACIL Ltd.

Respondent (committee of Creditors)

Procedural Posture

Civil Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Judgment on Appeal by the Supreme Court (appeal Allowed)

Legal Issues

  1. 1 Whether the Adjudicating Authority (NCLT) had jurisdiction to order re-valuation of the corporate debtor's assets by the Official Liquidator after the CoC had approved a resolution plan
  2. 2 Whether the NCLT/NCLAT could interfere with the commercial wisdom of the CoC absent a finding of non-compliance with Sections 30 and 31 of the IBC
  3. 3 Whether pending or potential avoidance transactions affected the approval of the resolution plan and the treatment of proceeds

Ratio Decidendi

The Supreme Court held that the NCLT and NCLAT erred in directing re-valuation by the Official Liquidator in the absence of any objection or material showing non-compliance with the Code; the Adjudicating Authority's jurisdiction is confined to testing the resolution plan against Sections 30 and 31 and it cannot substitute its commercial judgment for that of the CoC. The NCLT order dated 01.09.2021 and the NCLAT judgment dated 19.01.2022 were set aside and the NCLT was directed to pass appropriate orders on the approval application within three weeks.

Court Disposition

Appeal allowed; order of NCLT dated 01.09.2021 and judgment of NCLAT dated 19.01.2022 set aside

Orders

  • Order dated 01.09.2021 of the NCLT and impugned NCLAT judgment dated 19.01.2022 set aside
  • NCLT to pass appropriate orders on Approval Application I.A. No.1636 of 2019 in CP(IB) No.170(PB)/2018 within three weeks from production of copy of this judgment