IBC - Kalparaj Dharamshi & Anr v. Kotak Investment Advisors Ltd & Anr.

► Appeal Number : 2943-2944/2020 with other appeals

► Date : Mar 10, 2021

► Court : Supreme Court of India

► Name of Act : Insolvency and Bankruptcy Code

► Section : sections 30 and 31 of the Insolvency and Bankruptcy Code

► In favour of : Kalparaj Dharamshi

► Cases referred : Ketan V. Parekh vs. Special Director, Directorate of Enforcement & Anr.18, M.P. Steel Corporation vs. Commissioner of Central Excise19 and Union of India & Ors. vs. West Coast Paper Mills Ltd. & Anr., Engg.Enterprises v. Irrigation Deptt., See Shakti Tubes Ltd. v. State of Bihar, State of Goa v. Western Builders, Rashid Ahmed v. The Municipal Board, Kairana

► Name of Judge : A.M.Khanwilkar, B.R.Gavai, Krishna Murari

► Order:

Brief/Facts of the Case: Kalparaj Dharamshi and Rekha Jhunjhunwala in consortium were successful resolution applicants. Kotak Investment Advisors Limited (KIAL) being another prospective resolution applicant challenged the plan reason being it was accepted beyond the time period. NCLT dismissed such challenge. Hence, aggrieved by this decision, KIAL applied to NCLAT who set aside the order of NCLT and interfered with the decision of CoC of accepting the resolution plan of Kalpraj.

Though the date of resolution plan was beyond the time specified in Form G but it was well within the time period as specified under the code. Moreover, this action was backed by a thumping majority of 84.36%. It has further been held that, the commercial wisdom of CoC has been given paramount status without any judicial intervention for ensuring competition of the stated process within the timelines prescribed by the CoC.

Supreme Court’s Order: The Apex Court set aside the order of NLCAT which had annulled the decision of the CoC in order to accept certain resolution plan and reinstated the order of NCLT. NCLAT was not correct in law in interfering with the commercial decision taken by CoC. Apex Court observed that the commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the Insolvency and Bankruptcy Code, 2016

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