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Ngaitlang Dhar v. Panna Pragati Infrastructure Private Limited

Civil Appeal · 2021 INSC 923Decided 17 Dec 2021
Civil Appeal Nos. 3665-3666 of 2020
Justice L. Nageswara Rao · Justice B.R. Gavai

Background

During the insolvency resolution process of Meghalaya Infratech Ltd., the Committee of Creditors (CoC) evaluated competing bids from prospective buyers and ultimately approved the Resolution Plan submitted by Ngaitlang Dhar, the highest bidder, after a competing bidder (PPIPL) failed to improve its offer within the CoC's timeline and was absent from a crucial meeting. The National Company Law Tribunal (NCLT) approved this plan, but the National Company Law Appellate Tribunal (NCLAT) later set aside that approval, holding that PPIPL should have been given more time to submit a revised bid.

Decision Breakdown

The Supreme Court reaffirmed the well-settled principle that the "commercial wisdom" of the Committee of Creditors is given primacy under the Insolvency and Bankruptcy Code and is not open to judicial review except on narrow grounds of "material irregularity" in the decision-making process. After examining the CoC's meeting minutes in detail, the Court found the process followed was fair and transparent, that PPIPL had been given adequate opportunity to improve its bid and was being held to a legitimate statutory timeline, and that no material irregularity existed. It therefore set aside the NCLAT's order and restored the approval of Ngaitlang Dhar's Resolution Plan, noting that the plan's purpose, reviving the company, had in fact already been achieved.

Lesson Learnt

Courts will generally not second-guess the business decisions of a creditors' committee in an insolvency process so long as the procedure followed was fair and transparent; bidders who are given a genuine opportunity but fail to act within the prescribed timeline cannot later claim unfair treatment.

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

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