Supreme Court restores NCLT order, upholds Kalpraj's resolution plan appeal

The Supreme Court allowed the appeals filed by Kalpraj, RP, and Deutsche Bank, setting aside NCLAT's order and restoring NCLT's order approving Kalpraj's resolution plan. The court held that KIAL's appeals before NCLAT were within the limitation period, KIAL had not waived its rights, and NCLAT erred in interfering with the CoC's commercial decision. The court directed NCLAT to decide the appeal of Fourth Dimension Solutions Limited expeditiously.

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Issues Involved:
1. Limitation period for filing appeals before NCLAT.
2. Waiver and acquiescence by KIAL.
3. Interference by NCLAT with CoC's decision on the resolution plan.

Detailed Analysis:

1. Limitation Period for Filing Appeals Before NCLAT:

The primary issue was whether the appeals filed by KIAL before NCLAT were within the limitation period. The judgment emphasized that the I&B Code is a complete code in itself, and the limitation for appeals is governed by Section 61(2) of the I&B Code, which prescribes a 30-day period for filing appeals with a possible extension of 15 days if sufficient cause is shown. KIAL filed a writ petition before the Bombay High Court on 11.12.2019, which was dismissed on 28.1.2020, and then filed the appeal before NCLAT on 18.2.2020. The court held that the period during which KIAL was bona fide prosecuting the writ petition before the High Court should be excluded when computing the limitation period, applying the principles underlying Section 14 of the Limitation Act. This made the appeal filed by KIAL within the limitation period.

2. Waiver and Acquiescence by KIAL:

The court examined whether KIAL had waived its right to challenge the acceptance of Kalpraj's resolution plan by submitting revised plans after Kalpraj was allowed to participate. The court noted that KIAL had objected to the acceptance of Kalpraj's plan immediately upon learning of it and reiterated its objections subsequently. The court found that KIAL had no meaningful choice but to submit its revised plans due to clause 11.2 of the Process Memorandum, which required submission of additional information if requested by RP or CoC. The court concluded that KIAL's actions did not amount to waiver or acquiescence, as it consistently objected to Kalpraj's participation and submitted revised plans under compulsion.

3. Interference by NCLAT with CoC's Decision on the Resolution Plan:

The court emphasized the paramount status given to the commercial wisdom of the Committee of Creditors (CoC) under the I&B Code, which is not subject to judicial intervention except on limited grounds specified in Sections 30(2) and 61(3) of the I&B Code. The court held that NCLAT exceeded its jurisdiction by interfering with the CoC's decision, which was taken by a thumping majority of 84.36%. The court reiterated that the Adjudicating Authority (NCLT) and the Appellate Authority (NCLAT) are not endowed with the jurisdiction to reverse the commercial decisions of CoC. The court restored the NCLT's order approving Kalpraj's resolution plan and quashed NCLAT's order directing CoC to reconsider the resolution plans.

Conclusion:

The Supreme Court allowed the appeals filed by Kalpraj, RP, and Deutsche Bank, setting aside NCLAT's order and restoring NCLT's order approving Kalpraj's resolution plan. The court held that KIAL's appeals before NCLAT were within the limitation period, KIAL had not waived its rights, and NCLAT erred in interfering with the CoC's commercial decision. The court directed NCLAT to decide the appeal of Fourth Dimension Solutions Limited expeditiously.

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