Case: NGAITLANG DHAR Vs. PANNA PRAGATI INFRASTRUCTURE  PRIVATE LIMITED &amp; ORS

6. The facts in brief giving rise to the present appeals are as under:7. An application being CP(IB) No.13/GB/2019 came to be filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the IBC) for initiation of CIRP in respect of Meghalaya Infratech Ltd. (hereinafter referred to as the Corporate Debtor) by the Allahabad Bank (now known as Indian Bank) (hereinafter referred to as the Allahabad Bank). The NCLT vide order dated 28th August, 2019 admitted the petition and as such, the CIRP came to be initiated in respect of the Corporate Debtor and Mr. Amit Pareek came to be appointed as the Interim RP, who was subsequently confirmed as the RP in the first Committee of Creditors (hereinafter referred to as the CoC) meeting, held on 25th September, 2019.8. It is not in dispute that the Allahabad Bank and the Corporation Bank (now known as Union Bank) (hereinafter referred to as the Corporation Bank) were the only financial creditors.9. In accordance with the provisions of the IBC, Expression of Interest (hereinafter referred to as EOI) was invited from the prospective Resolution Applicants by the RP.10. Appellant-Ngaitlang Dhar, respondent No.1- PPIPL, Mr. Abhishek Agarwal and Mr. Ashish Jaisasaria submitted their EOI. All the four Resolution Applicants submitted their Resolution Plans. In the CoC meeting held on 11-12th February, 2020, the appellant-Ngaitlang Dhar emerged as H-1 bidder, whereas Mr. Abhishek Agarwal emerged as H-2 bidder.11. At the 7th CoC meeting, held on 6th March, 2020, the CoC, with a 100% voting share, approved the Resolution Plan of the appellant-Ngaitlang Dhar (H-1 bidder), which was further approved by the NCLT vide order dated 18th May, 2020.12. The respondent No.1-PPIPL contended that in the proceedings before the CoC held on 11-12th February, 2020, it had sought for one or two days time to submit its revised Resolution Plan, and accordingly, it submitted the same on 14th February, 2020. The respondent No.1-PPIPL, accordingly, filed I.A. No. 27 of 2020 in CP(IB) No.13/GB/2019 before the NCLT, seeking a direction to the RP to take on record its revised Resolution Plan, dated 14th February, 2020. The same came to be rejected by the NCLT, vide order dated 18th March, 2020. The RP thereafter filed an unnumbered I.A. seeking approval to the Resolution Plan submitted by the appellant-Ngaitlang Dhar (H-1 bidder). The said unnumbered I.A. was allowed by the NCLT vide order dated 18th May, 2020. Both these orders came to be challenged before the NCLAT by way of aforesaid Company Appeals by the respondent No.1-PPIPL. As stated above, by the impugned judgment and order dated 19th October, 2020, the appeals were allowed. Being aggrieved thereby, the present appeals are filed before this Court.

Reasoning: 26. It is thus clear that the respondent No.1-PPIPL was very much aware that the CoC has decided to finalise the proceedings by 12th February, 2020. It is also clear that though PPIPL was first called upon by the CoC to enhance the bid amount, it had specifically rejected the same. It insisted on disclosing the basis of score. In the proceedings of the 5th meeting of the CoC dated 11th February, 2020, post lunch, though Ngaitlang Dhar had enhanced his bid from Rs.63 crore to Rs.64 crore, the representative of PPIPL subsequently came and requested for adjourning the meeting for few days. The said request was specifically rejected by the CoC by informing the representative of PPIPL that it had to adhere to the IBC timeline and would have to conclude the matter by next day. On the next day, i.e., 12th February, 2020, when the adjourned proceedings of the CoC were held, the respondent No.1-PPIPL had sent an email, stating therein that the Directors of its Company will not be available for the said meeting and requested for deferring the meeting by a day or two. On the insistence of all the prospective Resolution Applicants present, the CoC clarified that since the timeline was coming to an end, it had decided to exclude the prospective Resolution Applicants who were not present in the said meeting. In the said meeting, Ngaitlang Dhar came to be declared as the highest bidder after he improved his bid in the open bidding held between him and Mr. Abhishek Agarwal.27. It could thus be seen that the RP as well as the CoC had acted in a totally transparent manner. An equal opportunity was accorded to all the prospective Resolution Applicants. However, the respondent No.1-PPIPL, without improving his bid amount, went on insisting for more time, which request was specifically rejected by the CoC.29. As already discussed hereinabove, we find that the procedure adopted by the RP as well as the CoC was fair, transparent and equitable. The CoC was facing the timeline, which was to end on 24th February, 2020, before which it had to finalise its decision. In these circumstances, it cannot be said that the decision of the CoC, to not grant any further time to PPIPL for submission of its revised bid and to finalise the Resolution Plan on 12th February, 2020 itself, can be said to be falling in the category of the term material irregularity.30. We have extracted the minutes of the proceedings of the 5th meeting of the CoC in extenso. It could be seen that the CoC, after due deliberations, evaluated all the proposed Resolution Plans submitted by all the prospective Resolution Applicants and after giving sufficient opportunity to all the prospective Resolution Applicants, arrived at a considerate decision of accepting the Resolution Plan of the appellant-Ngaitlang Dhar in its meeting held on 11-12th February, 2020.31. It is trite law that commercial wisdom of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the processes within the timelines prescribed by the IBC. It has been consistently held that it is not open to the Adjudicating Authority (the NCLT) or the Appellate Authority (the NCLAT) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) of the IBC. It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, is the collective business decision and that the decision of the CoCs commercial wisdom is non- justiciable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) of the IBC. This position of law has been consistently reiterated in a catena of judgments of this Court, including:(i) K. Sashidhar v. Indian Overseas Bank and Others (2019) 12 SCC 150 (ii) Committee of Creditors of Essar Steel India Limited Through Authorized Signatory v. Satish Kumar Gupta and Others (2020) 8 SCC 531 ,(iii) Maharashtra Seamless Limited v. Padmanabhan Venkatesh and others (2020) 11 SCC 467 ,(iv) Kalpraj Dharamshi and Another v. Kotak Investment Advisors Limited and Another (2021) SCC OnLine SC 204.(v) Ghanashyam Mishra and Sons Private Limited Through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited Through the Director & Ors. (2021) 9 SCC 657 32. No doubt that, under Section 61(3)(ii) of the IBC, an appeal would be tenable if there has been material irregularity in exercise of the powers by the RP during the corporate insolvency resolution period. However, as discussed hereinabove, we do not find any material irregularity.33. We may gainfully refer to the following observations of this Court in the case of Keshardeo Chamria v. Radha Kissen Chamria and others (1953) 4 SCR 136   while considering the scope of the words material irregularity, as are found in Section 115 of the Code of Civil Procedure,1908:Reference may also be made to the ob- servations of Bose, J. in his order of ref- erence in Narayan Sonaji v. Sheshrao Vithoba [AIR 1948 Nag 258] wherein it was said that the words illegally and material irregularity do not cover either errors of fact or law. They do not refer to the decision arrived at but to the manner in which it is reached. The errors con- templated relate to material defects of procedure and not to errors of either law or fact after the formalities which the law prescribes have been complied with.34. In the present case, leave apart, there being any material irregularity, there has been no irregularity at all in the process adopted by the RP as well as the CoC. On the contrary, if the CoC would have permitted the PPIPL to participate in the process, despite it assuring the other three prospective Resolution Applicants in its meeting held on 11-12th February, 2020, that the absentee prospective Resolution Applicant (PPIPL) would be excluded from participation, it could have been said to be an irregularity in the procedure followed.35. Insofar as the contention of the learned counsel, Shri Abhijeet Sinha, that the NCLT had already extended the CIRP period by 90 days vide order dated 26th February, 2020 and therefore, there was no necessity to hastily approve the Resolution Plan of Ngaitlang Dhar on 12th February, 2020, is concerned, we find the same to be without substance. It will be relevant to mention that the period of 180 days was to expire on 24th February, 2020, and therefore, in the meeting dated 12th February, 2020 itself, the CoC after resolving to declare Ngaitlang Dhar as H-1 bidder had resolved to authorise the RP to seek an extension of CIRP period before the NCLT.37. It could thus be seen that the contention in that regard is also without substance. It is further to be noted that, as has been consistently held by this Court in catena of judgments, referred to hereinabove, the dominant purpose of the IBC is revival of the Corporate Debtor and making it an on-going concern. In the present case, the said purpose is already achieved, inasmuch as all the dues of the financial creditors, i.e., the Allahabad Bank and the Corporation bank, have already been paid, and the Corporate Debtor, in respect of which CIRP was initiated, is now an on-going concern.