Writ Petition Seeking Fresh CoC Voting on Resolution Plan Dismissed as CoC’s Decision Rests With AA | HC

Case Details: Gateway Investment Management Services Ltd. v. Reserve Bank of India - [2024] 167 taxmann.com 40 (HC-Delhi)

Judiciary and Counsel Details

• Dharmesh Sharma, J.
• Rajiv Nayar, Sr. Adv. Vaibhav Mishra, Ekansh Mishra, Ashu Kansal, Akash Shrivastav, Ms. Devika Mohan & Ms Udita Singh, Advs. for the Petitioner.
• Ayush Srivastava, Adv., Jayant Mehta, Sr. Adv., Dhruv Malik, Ms Aditi Sinha, Rajnandini Singh, Prashant Mehta & Raghav Marwaha, Advs. for the Respondent.

Facts of the Case

In the instant case, in CIRP of the corporate debtor, the petitioner claimed that it was the highest bidder, both in terms of monetary value and net present value and yet its bid had not been accepted by the CoC in the meeting, throwing all commercial norms & financial prudence to wind.

Thus, the petitioner company filed an instant writ seeking direction in nature of Mandamus upon the CoC to initiate the process of fresh voting on the Resolution Plan of the petitioner.

It was noted that the Adjudicating Authority alone had the jurisdiction to regulate the conduct of the CoC and finally adjudicate upon the resolution plan through powers of judicial review, thereby ensuring that the CoC functions as per the role and responsibilities delineated under the IBC.

In other words, the Adjudicating Authority maintains a supervisory role over the entire CIRP proceedings and is empowered under Section 60 of IBC to take action on any issue relating to insolvency proceedings. Thus, the resolution plan decided by the CoC would be put up for consideration before the Adjudicating Authority, which forum alone would finally decide whether the CoC had performed its fiduciary duty as per the legislative mandate of the IBC.

High Court Held

The High Court held that the Writ Court was not enjoined to exercise its power of judicial review and thereby usurp upon powers of the NCLT to inquire into the commercial wisdom of the CoC, whereby the Resolution Plan of the petitioner was rejected.

In view of the foregoing discussion, an instant writ petition was to be dismissed with liberty to the petitioner to take appropriate recourse before the NCLT, which forum alone would decide objections of the petitioner, if any preferred, on its own merits in accordance with the law.

List of Cases Referred to

• M.K. Rajagopalan v. Dr. Periasamy Palani Gounder (para 10).