Court dismisses writ petitions challenging NCLT order in insolvency case, emphasizes appeal remedy under

The High Court dismissed the writ petitions challenging the NCLT order approving the Resolution Plan in a Corporate Insolvency Resolution Process. The court held that the petitioners should have pursued the appeal remedy under the Insolvency and Bankruptcy Code instead of seeking intervention through Article 226. Emphasizing the self-contained nature of the Code's appellate process, the court concluded that writ petitions against NCLT orders were not maintainable, aligning with legal precedents and the Code's objective.

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Issues:
Challenge against NCLT proceedings in Corporate Insolvency Resolution Process; Maintainability of writ petitions under Article 226 against NCLT orders.

Analysis:
The judgment pertains to the challenge against the proceedings of the National Company Law Tribunal (NCLT) in the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016. The proceedings were initiated concerning a Corporate Debtor at the instance of two Operational Creditors. The NCLT appointed an Interim Resolution Professional (IRP) who was later reappointed as the Resolution Professional (RP) by the Committee of Creditors. The RP filed an application seeking approval of the Resolution Plan submitted by the Resolution Applicant, which was approved by the NCLT. The Operational Creditors, aggrieved by this order, filed appeals before the National Company Law Appellate Tribunal (NCLAT), leading to the filing of writ petitions challenging the maintainability of the appeals.

The maintainability of the writ petitions was challenged on the ground that the petitioners had an alternative remedy of appeal under Section 61 of the Insolvency and Bankruptcy Code. The respondents argued that the NCLAT was functional, and the appeals were defective, hence not taken up until the defects were rectified. They contended that interference by the High Court under Article 226 would defeat the objective of the Code. The petitioners, on the other hand, argued that their appeals were accepted by the NCLAT but were yet to be numbered and posted for admission. They sought the High Court's intervention to safeguard their interests until the appeals were considered. The Corporate Debtor also supported the petitioners' submissions, alleging that the order was illegal and its implementation would prejudice the Corporate Debtor and its creditors.

The judgment referred to the three-tier mechanism provided by the Insolvency and Bankruptcy Code, involving the NCLT as the adjudicating authority, the NCLAT as the appellate authority, and the Supreme Court as the final authority for issues related to insolvency resolution. Referring to the Supreme Court's decision in a previous case, the judgment emphasized the self-contained nature of the Code and the need to adhere to the appellate process outlined in the legislation. Citing a Division Bench decision, the judgment concluded that writ petitions under Article 226 against NCLT orders were not maintainable. Considering the objective of the Code and the legal precedents, the High Court dismissed the writ petitions.

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