Supreme Court reinstates NCLT's Resolution Plan approval, setting aside NCLAT's order

The Supreme Court reinstated the National Company Law Tribunal's approval of the Resolution Plan, setting aside the National Company Law Appellate Tribunal's order. The Court held that the interference by the NCLAT on various grounds, including viability of the plan, breach of confidentiality, ownership of assets, and validity of the advertisement, was unjustified and lacked factual and legal basis. The appeals were allowed, and the NCLT's decision was restored without costs.

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Issues Involved:
1. Viability and feasibility of the Resolution Plan.
2. Alleged breach of confidentiality regarding liquidation value.
3. Ownership of the ethanol plant and machinery.
4. Validity of the advertisement inviting Expression of Interest.

Detailed Analysis:

1. Viability and Feasibility of the Resolution Plan:
The Supreme Court emphasized that the commercial wisdom of the Committee of Creditors (CoC) is paramount and should not be interfered with lightly by tribunals. The court cited precedents from *K. Sashidhar vs. Indian Overseas Bank* and *Essar Steel India Ltd.* to assert that the CoC’s decision on the viability and feasibility of a resolution plan is a collective business decision and non-justiciable. The court noted that the CoC and the Successful Resolution Applicant (SRA) were fully aware of the issues regarding the ethanol plant and machinery and had accounted for these in their decision-making process. Therefore, the NCLAT's interference on this ground was deemed "wholly untenable, misconceived, and unjustified."

2. Alleged Breach of Confidentiality:
The Supreme Court found that the NCLAT's conclusion of a breach of confidentiality was not supported by substantial evidence. The court noted that the Resolution Plan was submitted before the last date, and the matching liquidation value was a coincidence rather than proof of collusion. The SRA’s total payout was significantly higher than the liquidation value, negating any benefit from alleged leaked information. The court criticized the NCLAT for rejecting email evidence submitted by the Resolution Professional and concluded that the finding of a breach of confidentiality was "legally and factually untenable."

3. Ownership of the Ethanol Plant and Machinery:
The court reiterated that the issue of the ethanol plant and machinery was known to all parties involved, including the CoC and the SRA. The SRA's plan did not hinge solely on the ethanol plant, and they had provisions for capital expenditure to address any contingencies. The court found that the NCLAT's interference on this ground was also unjustified, as the Resolution Plan accounted for the potential unavailability of the ethanol plant and machinery.

4. Validity of the Advertisement Inviting Expression of Interest:
The Supreme Court pointed out that the NCLAT failed to appreciate the regulatory context under which the advertisement was issued. Regulation 36A, which mandated the publication of the invitation in Form G in newspapers, came into effect after the advertisement was issued. The court noted that the Promoter/Director of the corporate debtor had not raised any objections during the CoC meetings or in earlier proceedings. Therefore, the NCLAT's conclusion that the advertisement was defective was incorrect. The court emphasized that if the NCLAT believed the process was vitiated, it should have ordered a fresh start, which it did not.

Conclusion:
The Supreme Court set aside the NCLAT's order, reinstating the NCLT's approval of the Resolution Plan. The court found that the NCLAT's grounds for interference were flawed and unsupported by the facts and legal standards. The appeals were allowed, and the NCLT's decision was restored without any order as to costs.

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