Emphasizing the need to avoid casual interference with the commercial judgment of the Committee of Creditors (CoC), the Hon’ble Supreme Court has overturned a directive from the National Company Law Tribunal (NCLT) to reevaluate the assets of the Corporate Debtor.
In the matter of Ramkrishna Forgings Limited v. Ravindra Loonkar & Anr, the Supreme Court addressed a pivotal issue concerning the approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The case involved an application filed by the Resolution Professional under Section 30(6) of the IBC, seeking approval for the resolution plan submitted by the Successful Resolution Applicant (SRA), Ramkrishna Forgings Limited.
The Committee of Creditors (CoC) had already approved the resolution plan for the Corporate Debtor, ACIL, leading to the application for approval before the National Company Law Tribunal (NCLT). However, instead of granting approval, the NCLT took an unusual step by keeping the resolution plan in abeyance and appointing an Official Liquidator to conduct a re-valuation of the Corporate Debtor's assets.
The Supreme Court, composed of Justice Vikram Nath and Justice Ahsanuddin Amanullah, intervened to address the legality and justification of the NCLT's decision. The Court emphasized that the Resolution Professional had adhered to the statutory requirements for asset valuation, involving two approved valuers and presenting reports on fair market value and liquidation value to the CoC. Notably, no objections were raised by any party regarding irregularities in the resolution process.
The Court expressed its disapproval of the NCLT's and the National Company Law Appellate Tribunal's (NCLAT) failure to recognize the fundamental aspect of the Resolution Plan – the intent to revive the Corporate Debtor rather than liquidate it. The bench rebuked the unwarranted interference by the tribunals, particularly when there were no objections raised during the approval process by any party.
Further, the Court upheld the commercial decision of the Successful Resolution Applicant, which had received an overwhelming 88.56% majority vote from the CoC after extensive negotiations. It asserted that the commercial wisdom exercised by the CoC should not be casually questioned or interfered with by the NCLT or NCLAT.