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Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan

Civil Appeal · 2025 INSC 25Decided 3 Jan 2025
C.A. No.-000048-000048 - 2025 (with connected Civil Appeal Nos. 49 and 50 of 2025)
Justice Pamidighantam Sri Narasimha · Justice Manoj Misra

Background

Corporate Insolvency Resolution Process (CIRP) proceedings began against a corporate debtor, Associate Decor Ltd, in October 2018, and the appellant company was eventually declared the successful resolution applicant after its plan was approved by the Committee of Creditors (CoC) through e-voting in February 2020. The suspended director of the corporate debtor (respondent no. 1) challenged this outcome before the Karnataka High Court in a writ petition, filed roughly three years after the disputed CoC meeting, alleging he was not given adequate notice of that meeting and that this violated principles of natural justice. The High Court ultimately set aside the approved resolution plan on this ground, prompting appeals to the Supreme Court by the successful resolution applicant, the consortium of banks on the CoC, and the Resolution Professional.

Decision Breakdown

The Supreme Court held that the respondent's writ petition to the High Court was filed with an unexplained and substantial delay of almost three years after the event complained of, and that pending proceedings before other forums (including an unrelated company's separate challenge) did not excuse this delay. The Court also noted that the respondent had himself already pursued the same grievance through the IBC's own statutory remedy by filing an application before the Adjudicating Authority (NCLT), meaning the High Court should have relegated him to that avenue rather than entertaining a writ petition in parallel. Reiterating that the IBC is a complete code with its own built-in checks, remedies, and appeals, the Court held that the High Court had erred in exercising its extraordinary writ jurisdiction to interdict CIRP proceedings that were already six years old, especially when an alternate statutory remedy was available and had in fact already been invoked. The appeals were allowed, the High Court's judgment was set aside, and the Adjudicating Authority was directed to resume and expeditiously complete the proceedings from the point where they had been interrupted.

Lesson Learnt

Where a specialised law like the Insolvency and Bankruptcy Code provides its own complete set of remedies and appeal mechanisms, courts should generally not use writ jurisdiction to bypass or interrupt that statutory process, especially when the aggrieved party has delayed for years and has already chosen to pursue the very same grievance through the law's own designated forum.

Official source (sci.gov.in)View Judgment (PDF)

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