VALLAL RCK versus M/S SIVA INDUSTRIES AND HOLDINGS LIMITED AND OTHERS

VALLAL RCK versus M/S SIVA INDUSTRIES AND HOLDINGS LIMITED AND OTHERS

When ninety percent or more of the Committee of Creditors approve withdrawal of CIRP after due deliberation, adjudicating and appellate authorities must respect the commercial wisdom of the CoC and should not interfere unless the CoC's decision is wholly capricious, arbitrary, irrational or beyond the statute or rules; on the facts the CoC approved the Settlement Plan by 94.23% after deliberation and therefore the NCLT and NCLAT erred in rejecting withdrawal and ordering liquidation.

Parties
Appellant: Vallal RCK; Respondent; Corporate Debtor: M/s Siva Industries and Holdings Limited; Financial Creditor; Applicant Under Section 7 IBC: IDBI Bank Limited
Jurisdiction
India
Judgment Date
03 June 2022
Procedural Posture
Civil Appeal / Appeal to the Supreme Court From NCLAT Judgment Dated 28.01.2022 Arising Out of NCLT Orders Dated 12.08.2021
Outcome
Appeals allowed
Legal Topics
Section 12 a Withdrawal of Application, Regulation 30 a of 2016 Regulations, Committee of Creditors Commercial Wisdom, Withdrawal of CIRP Vs Liquidation
Insolvency and Bankruptcy Company Law Section 12 a Withdrawal of Application Regulation 30 a of 2016 Regulations Committee of Creditors Commercial Wisdom Withdrawal of CIRP Vs Liquidation

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Parties

Vallal RCK

Appellant

M/s Siva Industries and Holdings Limited

Respondent; Corporate Debtor

IDBI Bank Limited

Financial Creditor; Applicant Under Section 7 IBC

Procedural Posture

Civil Appeal / Appeal to the Supreme Court From NCLAT Judgment Dated 28.01.2022 Arising Out of NCLT Orders Dated 12.08.2021

Legal Issues

  1. 1 Whether the adjudicating authority or appellate authority can interfere with the commercial wisdom of the Committee of Creditors in approving withdrawal of CIRP under Section 12A IBC
  2. 2 Whether the Settlement Plan in this case qualified as a settlement enabling withdrawal under Section 12A and Regulation 30A

Ratio Decidendi

When ninety percent or more of the Committee of Creditors approve withdrawal of CIRP after due deliberation, adjudicating and appellate authorities must respect the commercial wisdom of the CoC and should not interfere unless the CoC's decision is wholly capricious, arbitrary, irrational or beyond the statute or rules; on the facts the CoC approved the Settlement Plan by 94.23% after deliberation and therefore the NCLT and NCLAT erred in rejecting withdrawal and ordering liquidation.

Court Disposition

Appeals allowed

Orders

  • The appeals are allowed.
  • The impugned judgment dated 28th January 2022 of the NCLAT in Company Appeal (AT)(CH)(Insolvency) Nos. 211 and 212 of 2021 and the orders dated 12th August 2021 passed by the NCLT in MA/43/CHE/2021 in IBA/453/2019 and IA/837/IB/2020 in IBA/453/2019 are quashed and set aside.