caselaws.org

Supreme Court of India
Ngaitlang Dhar vs Panna Pragati Infrastucture … on 17 December, 2021Author: B.R. Gavai

Bench: L. Nageswara Rao, B.R. Gavai

1

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.3665­3666 OF 2020

NGAITLANG DHAR …APPELLANT(S)

VERSUS

PANNA PRAGATI INFRASTRUCTURE
PRIVATE LIMITED & ORS. …. RESPONDENT(S)

WITH

CIVIL APPEAL NOS. 3742­3743 OF 2020

JUDGMENT

B.R. GAVAI, J.

1. Civil Appeal Nos.3665­3666 of 2020 are filed by

Ngaitlang Dhar, the successful Resolution Applicant (H­1

bidder), and Civil Appeal Nos. 3742­3743 of 2020 are filed

by Amit Pareek, the Resolution Professional.

2. These appeals assail the judgment and order

passed by the National Company Law Appellate Tribunal,
2

New Delhi (hereinafter referred to as “the NCLAT”) dated 19 th

October, 2020, in Company Appeal (AT) (Insolvency) Nos.

515 of 2020 and 516 of 2020, thereby allowing the appeals

of the respondent No.1­Panna Pragati Infrastructure Private

Limited (hereinafter referred to as “PPIPL”) and the

respondent No.2­Arihant International Limited.

3. Company Appeal (AT) (Insolvency) No.515 of 2020

was filed assailing the order dated 18 th March, 2020, passed

by the National Company Law Tribunal, Guwahati Bench,

Guwahati (hereinafter referred to as “the NCLT”), in I.A.

No.27 of 2020 in CP (IB) No.13/GB/2019, filed by PPIPL

and another, by which the application seeking direction to

the Resolution Professional (hereinafter referred to as “the

RP”) to take on record and consider its revised offer

submitted by email dated 14 th February, 2020, came to be

rejected.

4. Company Appeal (AT) (Insolvency) No.516 of 2020

was filed assailing the order dated 18 th May, 2020 passed by

the NCLT, in an unnumbered I.A. filed by the RP, vide which
3

the appellant­Ngaitlang Dhar’s (H­1 bidder) Resolution Plan

came to be approved by the NCLT.

5. Vide the impugned judgment and order dated 19 th

October, 2020, the NCLAT has set aside both the orders,

dated 18th March, 2020, and 18th May, 2020, and directed

the Corporate Insolvency Resolution Process (hereinafter

referred to as “CIRP”) to be resumed from the stage of

consideration of the Resolution Plans.

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
4

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. Appellant­Ngaitlang 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 11­12th February, 2020, the appellant­Ngaitlang Dhar

emerged as H­1 bidder, whereas Mr. Abhishek Agarwal

emerged as H­2 bidder.
5

11. At the 7th CoC meeting, held on 6th March, 2020,

the CoC, with a 100% voting share, approved the Resolution

Plan of the appellant­Ngaitlang Dhar (H­1 bidder), which

was further approved by the NCLT vide order dated 18 th

May, 2020.

12. The respondent No.1­PPIPL contended that in the

proceedings before the CoC held on 11­12 th 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.1­PPIPL,

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 14 th

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 appellant­Ngaitlang Dhar (H­1

bidder). The said unnumbered I.A. was allowed by the NCLT

vide order dated 18th May, 2020. Both these orders came to
6

be challenged before the NCLAT by way of aforesaid

Company Appeals by the respondent No.1­PPIPL. As stated

above, by the impugned judgment and order dated 19 th

October, 2020, the appeals were allowed. Being aggrieved

thereby, the present appeals are filed before this Court.

13. We have heard Shri Mukul Rohatgi, learned

Senior Counsel appearing on behalf of the appellant­

Ngaitlang Dhar, the successful Resolution Applicant (H­1

bidder) and Shri Abhijeet Sinha, learned counsel appearing

on behalf of the respondent No.1­PPIPL.

14. Shri Mukul Rohatgi, learned Senior Counsel

appearing on behalf of Ngaitlang Dhar, the successful

Resolution Applicant (H­1 bidder), submitted that the entire

approach adopted by the NCLAT in the impugned judgment

and order was erroneous. He submitted that the NCLAT

ought to have taken into consideration that the CoC after

exercising its ‘commercial wisdom’ has resolved to accept

the Resolution Plan submitted by Ngaitlang Dhar. He

submitted that the RP had given an equal opportunity to all
7

the bidders/resolution applicants. He submitted that

though adequate opportunity was given to all the Resolution

Applicants by adjourning the proceedings in CoC meetings

on number of occasions, the respondent No.1­PPIPL failed

to revise its bid within the stipulated period. He submitted

that the CoC, in its meeting, held on 11­12 th February,

2020, had resolved to declare Ngaitlang Dhar as the

successful resolution applicant. He submitted that, not

only that, thereafter the NCLT had also allowed the

application filed by the RP to approve the Resolution Plan of

Ngaitlang Dhar.

15. Shri Rohatgi submitted that it is only after 12 th

February, 2020, the respondent No.1­PPIPL, on 14 th

February, 2020, had sent an email to the RP, revising its

offer to Rs.65.65 crore. He submitted that when an initial

offer given by the respondent No.1­PPIPL was only of

making an upfront payment of Rs.24 crore, it is clear that

the revised offer of Rs.65.65 crore was only with a mala fide

intention of protracting the proceedings. He submitted that
8

the NCLAT ought not to have interfered with the

‘commercial wisdom’ of the CoC. In this respect, he relies

on various judgments of this Court.

16. Shri Rohatgi further submits that the Resolution

Plan of Ngaitlang Dhar now stands implemented, inasmuch

as the dues of all the Banks (financial creditors) have been

repaid and now the Corporate Debtor, i.e., Meghalaya

Infratech Ltd. is an on­going concern.

17. Shri Abhijeet Sinha, learned counsel appearing

on behalf of the respondent No.1­PPIPL would submit that

there is a distinction between the decision of the CoC and

the procedure adopted by the RP and the CoC to arrive at

that decision. He submitted that though a final decision of

the CoC cannot be a matter of challenge on the ground that

the ‘commercial wisdom’ of the CoC should not be interfered

with, yet if there is a material irregularity in the procedure

adopted by the RP, an appeal under Section 61(3) of the IBC

would be tenable. He submitted that the RP acted with

undue haste in the present matter. Learned counsel
9

submitted that in the proceedings of the meeting of the CoC,

held on 11­12th February, 2020, the Director of PPIPL, had

sought one or two days’ time to submit its revised offer. He

submitted that, however, the said time was not granted. He

further submitted that the revised offer was submitted

within two days and it was the duty of the RP to present its

revised offer before the CoC. Having not done that and

having hastily approved the plan of Ngaitlang Dhar, the

NCLAT has rightly interfered with the decision of the CoC.

In this respect, he relies on the judgment of this Court in

the case of Pratap Technocrats (P) Ltd. and others v.

Monitoring Committee of Reliance Infratel Limited and

another1.

18. Shri Sinha further submitted that when the NCLT

itself had extended the period of CIRP by another 90 days

beyond 180 days vide order dated 26 th February, 2020,

there was no reason for the RP to have hastily accepted the

bid of Ngaitlang Dhar.

1 2021 SCC OnLine SC 569
10

19. Learned counsel appearing on behalf of the

respondents – Banks (the financial creditors) also support

the arguments of the learned counsel appearing on behalf of

Ngaitlang Dhar. They submit that the Banks have received

the entire payment that was owed to them. It is further

submitted that the email dated 14 th February, 2020 sent by

PPIPL was also endorsed to the Allahabad Bank as well as

the Corporation Bank. It is submitted that both the Banks

had refused to consider the said offer inasmuch as such an

offer was not valid in law.

20. The facts are not in dispute in the present matter.

21. Vide order dated 28th August, 2019, the

application filed by Allahabad Bank under Section 7 of the

IBC for initiation of CIRP in respect of the Corporate Debtor

came to be allowed. Vide the said order dated 28 th August,

2019, Mr. Amit Pareek came to be appointed as the Interim

RP.

22. The interim RP, in compliance with Section 15 of

the IBC, made public announcement calling for claims from
11

creditors of the Corporate Debtor. Upon receipt of claims

from the creditors, the CoC came to be formed on 17 th

September, 2019. Thereafter, in the first meeting of the

CoC, held on 25th September, 2019, the Interim RP came to

be appointed as the RP. Thereafter, the RP invited EOI from

the prospective Resolution Applicants. Four EOIs came to

be received from (a) PPIPL & others; (b) Mr. Ngaitlang Dhar;

(c) Mr. Abhishek Agarwal; and (d) Mr. Ashish Jaisasaria &

others. The provisional list of Resolution Applicants came

to be published and objections to the provisional list were

invited by 25th December, 2019. Since no objection in

respect of any of the prospective Resolution Applicants was

received, a final list of prospective Resolution Applicants

was placed before the CoC for evaluation. Thereafter, all the

Resolution Applicants were invited to submit their

respective Resolution Plans by 24 th January, 2020. In

response to that, four Resolution Plans were received from

the four prospective Resolution Applicants.
12

23. The 5th meeting of the CoC was held on 11 th

February, 2020. The minutes of the said meeting,

particularly Agenda No.6, would reveal that the RP informed

the CoC that there were numerous anomalies and

deficiencies observed in the Resolution Plan of PPIPL and

the same was intimated to the Resolution Applicant through

email dated 30th January, 2020 with a request to

rectify/correct the same and submit the same by 1 st

February, 2020. However, PPIPL had failed to do so within

the stipulated period. It would further reveal that an email

dated 1st February, 2020, was received from PPIPL with a

request to grant time for submission of rectified Resolution

Plan by 3rd February, 2020. Accordingly, the rectified

Resolution Plan came to be filed by PPIPL on 3 rd February,

2020. In the said meeting, the CoC evaluated the

Resolution Plans of all the four prospective Resolution

Applicants. Paragraph 5 of the consideration of the

proposed Resolution Plan of PPIPL reads thus:

“5. The CoC requested PRA to improve
their bid amount the PRA refused to do
13

so unless individual score of all
disclosed further for increase of the bid
amount he has to discuss with BOD of
the applicant”

24. It would further reveal that the CoC continued

the second round of negotiation after a lunch break. It will

be relevant to refer to the following excerpt of the minutes of

the meeting of the CoC dated 11th February, 2020:

“2. The CoC decided to invite Panna
Pragati Infrastructure Pvt. Ltd. for
further negotiation. The RP informed
that in first round of negotiation the PRA
has not revised their bid amount and
informed the CoC about the brief details
of plan. The PRA also want to know
about the basis of score, the RP & CoC
informed at this mature stage of CIRP
this is not the right time and place to
discuss about the evaluation and also
informed that the evaluation has been
done as per the RFRP, IM & evaluation
matrix which has been circulated to all
the PRA in due time.
3. The CoC & RP informed the PRA
about the anomalies & deficiency in the
rectified Resolution Plan submitted by
them still persist despite of given them
opportunity earlier after the submission
of original resolution plan for the
rectification. The PRA requested to allow
some more time for the rectification and
14

submit revise plan. The casual
approach of PRA noted.

4. The CoC requested to improve the
bid amount to the PRA, the PRA states
that at this stage we will not increase the
bid amount”

25. The minutes of the 5th meeting of the CoC would

further reveal that the CoC thereafter invited Ngaitlang Dhar

for negotiation of the bid and requested him to enhance the

bid amount. Ngaitlang Dhar agreed to enhance the bid

amount from Rs.63 crore to Rs.64 crore. Thereafter again,

the representative of PPIPL returned back and requested to

adjourn the meeting for a few days. The said request was

specifically rejected by the CoC informing the representative

of PPIPL that they were bound to follow the IBC timeline and

wanted to conclude the matter by next day. The said 5 th

meeting of the CoC was adjourned to next day and was held

on 12th February, 2020. The minutes of the said meeting

would further reveal that the representative of PPIPL had

informed the CoC/RP that the Directors of their Company

will not be available for the meeting to be held on 12 th
15

February, 2020 and the meeting should be deferred by one

or two days. The minutes of the meeting would further

reveal that all the prospective Resolution Applicants present

in the meeting sought clarification from the CoC members

and the RP about the status of Resolution Applicant, who

was absent in the meeting, as to whether it would be

allowed to participate in the further bidding process or not.

The CoC members specifically replied that since they were

at the neck of the timeline (i.e. 180 days were to get over on

24th February, 2020), it was decided to exclude the

respondent No.1­PPIPL, who was not present in the said

meeting. The proceedings commenced after lunch break,

wherein only two prospective Resolution Applicants, i.e.,

Ngaitlang Dhar and Mr. Abhishek Agarwal were present.

Thereafter, the CoC adopted Swiss Challenge open bidding

method. In the said bidding process, both prospective

Resolution Applicants present increased their offer. In the

said open bidding process between the two prospective

Resolution Applicants present, Ngaitlang Dhar was found to
16

be the highest bidder/prospective Resolution Applicant

having offered the bid of an upfront amount of Rs.64.30

crore plus CIRP costs. The said Resolution Plan of

Ngaitlang Dhar was approved unanimously by Allahabad

Bank having 68.34% voting rights and the Corporation

Bank having 31.66% voting rights.

26. It is thus clear that the respondent No.1­PPIPL

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 11 th 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
17

conclude the matter by next day. On the next day, i.e., 12 th

February, 2020, when the adjourned proceedings of the CoC

were held, the respondent No.1­PPIPL 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.1­PPIPL, without

improving his bid amount, went on insisting for more time,

which request was specifically rejected by the CoC.
18

28. Shri Abhijeet Sinha, learned counsel, fairly

concedes that though the final decision of the CoC would

not be challenged on the ground that the ‘commercial

wisdom’ of the CoC should not be interfered with, it is only

the process of decision making, which can be challenged if

there is any material irregularity in the said proceedings.

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 24 th 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 12 th 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
19

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

appellant­Ngaitlang Dhar in its meeting held on 11­12 th

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 CoC’s ‘commercial wisdom’ is non­
20

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

Others2
(ii) Committee of Creditors of Essar Steel India

Limited Through Authorized Signatory v. Satish

Kumar Gupta and Others3,
(iii) Maharashtra Seamless Limited v.

Padmanabhan Venkatesh and others4,
(iv) Kalpraj Dharamshi and Another v. Kotak

Investment Advisors Limited and Another5.
(v) Ghanashyam Mishra and Sons Private Limited

Through the Authorized Signatory v. Edelweiss

Asset Reconstruction Company Limited Through

the Director & Ors.6

2 (2019) 12 SCC 150
3 (2020) 8 SCC 531
4 (2020) 11 SCC 467
5 (2021) SCC OnLine SC 204
6 (2021) 9 SCC 657
21

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 others7 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

7 (1953) 4 SCR 136
22

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 11­12th 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 26 th February,

2020 and therefore, there was no necessity to hastily

approve the Resolution Plan of Ngaitlang Dhar on 12 th

February, 2020, is concerned, we find the same to be

without substance. It will be relevant to mention that the
23

period of 180 days was to expire on 24 th February, 2020,

and therefore, in the meeting dated 12 th February, 2020

itself, the CoC after resolving to declare Ngaitlang Dhar as

H­1 bidder had resolved to authorise the RP to seek an

extension of CIRP period before the NCLT.

36. It will be relevant to refer to paragraph 2 of the

order dated 26th February, 2020 passed by the NCLT, which

reads thus:

“2. It is the submission of the RP that
the CoC in its 5th meeting held on
11.02.2020 concluded on 12.02.2020
declared one Mr. N. Dhar as highest
bidder and the said decision of the CoC
is under consideration for approval with
the higher authority of the CoC and,
therefore, prayed for further extension of
CIRP period to 90 days with effect from
25.02.2020”

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
24

making it an on­going 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 on­going concern.

38. We are, therefore, of the considered view that the

NCLAT has grossly erred in interfering with the decision of

the CoC, which was duly approved by the NCLT. The

appeals are, therefore, allowed. The impugned judgment

and order passed by the NCLAT, dated 19 th October, 2020 is

quashed and set aside. There shall be no order as to costs.

All pending applications shall stand disposed of.

…….……………………, J.
[L. NAGESWARA RAO]

…….……………………, J.
[B.R. GAVAI]

NEW DELHI;
DECEMBER 17, 2021

Comments

Leave a Reply

Sign In

Register

Reset Password

Please enter your username or email address, you will receive a link to create a new password via email.