Mohammed Enterprises (Tanzania) Ltd vs Farooq Ali Khan

2025 INSC 25 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 48/2025 Arising out of SLP (C) No. 11599 OF 2024

MOHAMMED ENTERPRISES (TANZANIA) LTD. ...APPELLANT(S)

VERSUS

FAROOQ ALI KHAN & ORS. …RESPONDENT(S)

WITH CIVIL APPEAL NO. 49/2025 Arising out of SLP (C) No. 11095 OF 2024

WITH CIVIL APPEAL NO. 50/2025 Arising out of SLP (C) No. 13493 OF 2024

JUDGMENT

1. Leave Granted.

2. These appeals under Article 136 of the Constitution are against Signature Not Verified Digitally signed by

the judgment of the High Court of Karnataka exercising power of KAPIL TANDON Date: 2025.01.03 18:02:08 IST Reason: 1 judicial review1 interdicting Corporate Insolvency Process

culminating in the acceptance of a resolution plan by the Committee

of Creditors in minutes of meeting dated 11.02.2020. In this batch of

matters, there are three appeals, one by the successful resolution

applicant METL, the other by the Bank comprising the Committee of

Creditors, and the third appeal by the Resolution Professional

appointed by the adjudicating authority to conduct CIRP against

Associate Decor Ltd (“Corporate Debtor”).

3. The short facts are that the Corporate Insolvency Resolution

Proceedings were admitted against the corporate debtor at the

instance of Oriental Bank of Commerce2 (a financial creditor) on

26.10.2018. It is submitted by Dr Abhishek Manu Singhvi, Ld. Senior

Advocate appearing on behalf of the successful resolution applicant

that upon the resolution professional issuing the Information

Memorandum under Section 29 of the Code on 28.11.2018, his client

submitted his expression of interest. It is submitted that at the 16th,

17th and 18th meeting of the Committee of Creditors, resolution plans

were discussed and deliberated. Further, even at the first adjourned

1 In Writ Petition No. 483 of 2023 (GM-RES) dated 22.04.2024. 2 Merged with Punjab National Bank in 2020.

2 meeting of the 19th COC, resolution plans were reviewed, and the

appellant was asked to incorporate certain items, and the meeting

was adjourned to 11.02.2020. It is submitted that one Mr. Sachin

Misal, another director of the corporate debtor representing the

suspended director, Mohd. Farouk Darvesh was present, and he

confirmed that “they have no objection to the plans or to the process

that was followed.” We may mention at this very stage that this fact

is opposed by Mr. Shyam Divan, Ld. Senior Counsel representing the

suspended director of the corporate debtor. Be that as it may, the

resolution professional is said to have issued notice to the suspended

directors of the corporate debtor on 11.02.2020, including

respondent no.1, that the meeting will be held at 3.00 pm.

4. While the appellant contends that the second adjourned 19th

COC meeting was convened after notice to all, Mr. Shyam Divan has

submitted that no such notice was ever received by his client. In the

meeting, a slightly revised, amended, and re-stated resolution plan

was considered, deliberated upon by the COC and put to vote. The

resolution plan is said to have been approved by the COC through

e-voting on 11.02.2020, the appellants’ plan was approved and the

resettlement proposal submitted by respondent no.1 was rejected.

3 This decision of the COC led to the declaring of appellant as the

successful resolution applicant unanimously by 100% voting share

of the CoC.

5. In the meanwhile, there were certain proceedings initiated by

yet another company named Swamitva, whose request for filing a

resolution plan was rejected, leading to the said company filing an

interlocutory application before the Adjudicating Authority seeking

directions to the COC to reconsider the resolution plan. The

Adjudicating Authority's decision to place the resolution plan for

reconsideration by the CoC was appealed to the NCLAT. The

appellant submitted that respondent no.1, the suspended director of

the corporate debtor also filed an interlocutory application before the

NCLAT seeking rejection of the resolution plan of the applicant on the

same grounds that were raised before us. Having considered the

appeal in detail, the NCLAT, by its order dated 19.09.2022, allowed

the appeal and set aside the directions of the Adjudicating Authority.

6. In the meanwhile, even the appeal filed by Swamitva against the

order of the NCLAT dated 19.02.2022 before this Court came to be

dismissed by an order dated 25.11.2022.

4

7. It is in the above said background that first respondent

approached the High Court of Karnataka by filing the writ petition

seeking quashing of Minutes of Meeting dated 11.02.2020, letter of

intent dated 09.03.2020, declaration of respondent no.1 as

successful resolution applicant, direction to the CoC for acceptance

of its proposal dated 07.12.2022 and for setting aside of Minutes of

Meeting dated 21.12.2022, wherein the CoC Members had

unanimously rejected the settlement proposal of respondent no.1. It

is apparent from these prayers that the main grievance of the

respondent no.1 was with respect to the decision of the Minutes of

Meeting dated 11.02.2020, out of which all other orders and

decisions have emanated.

8. The High Court initially granted ex-parte stay directing

adjudicating authority to maintain the status quo, and finally by

order dated 22.11.2023 allowed the writ petition whereby appellant’s

resolution plan was set aside. Review Petitions were filed by the

consortium banks were allowed on 22.11.2023 and the writs were

restored. However, by the impugned order dated 22.04.2024, the

High Court again allowed the writ petition and set aside the

5 resolution plan, primarily on the ground that principles of natural

justice are violated as 24 hours’ notice was not granted.

9. Mr. Tushar Mehta, Ld. Solicitor General supported Dr. Singhvi’s

submissions and objected to the High Court exercising jurisdiction

under Article 226 interdicting proceedings under the Code. He

referred to the decision of the court in CoC of KSK Mahanadai Power

Company Limited v. M/S UP Power Corporation Limited3 taking

exception to the High Court exercising its discretionary jurisdiction

under Article 226 of the Constitution, breaching the discipline of

alternate remedy as contemplated under the Insolvency and

Bankruptcy Code.

10. Mr. Shyam Divan, Ld. Senior Counsel appearing for the

Corporate Debtor had a three-fold submission. In the outset, he

would submit that the writ petition under Article 226 is not barred,

particularly when there is violation of the principle of natural justice.

For this purpose, he relied on the decision of this Court in Whirlpool

Corporation v. Registrar of Trade Marks, Mumbai and Ors.4 Secondly,

he specifically referred to the provisions of the Code and in particular

3 Civil Appeal No. 11086 of 2024, dated 14.10.2024. 4 (1998) 8 SCC 1

6 to Section 12(A) of the IBC 2016, read with Regulation 19 of IBBI

(Insolvency Resolution Process for Corporate Persons) Regulations,

2016. Through his short note of submissions, he would further

submit that by contrasting the amounts submitted as per the

information memorandum, it would be clear that the offer made by

the resolution applicant is much inferior to the proposal made by the

first respondent under Section 12(A) of the Code. Finally, he sought

to clarify that there is no delay in filing the writ petition as the contest

raised by Swamitva Consortium was pending between the cause of

action and the filing of the writ petition.

11. Having considered the matter in detail, we are of the opinion

that the last point taken by Mr. Shyam Divan, that there is no delay

in approaching the High Court, must be rejected. The reason is this.

The CIRP proceedings commenced on 26.10.2018. The sheet anchor

of Mr. Divan submission and also the justification for the High Court

to assume jurisdiction on the ground that principles of natural

justice were violated, when respondent no.1 was not given a notice

before the 19th COC meeting, occurred way back on 11.02.2020.

However, the jurisdiction of the High Court was invoked only on

04.01.2023. The time gap between these two events is almost three

7 years. The initiation and continuation of proceeding by Swamitva

Consortium before the Adjudicating Authority, NCLT or the Supreme

Court cannot lend any justification whatsoever in approaching the

High Court so late.

12. Further, it is also an admitted fact that on 06.10.2022,

respondent no. 1 moved an interlocutory application before the

Adjudicating Authority seeking rejection of the resolution plan filed

by the appellant. The grounds taken in the interlocutory application

are the same as those in this appeal. It is not as if the High Court

was unaware of respondent no. 1 availing the statutory remedy under

the Code. At least on this ground, the High Court should have

relegated respondent no. 1 to the procedure under the Code and

permitted him to continue the remedy that he has chosen to adopt.

We may hasten to add that it is not necessary for us to enter into the

merits of the matter to examine the amounts offered by respondent

no. 1 and to contrast with the offer made by the applicant.

13. The jurisdiction and power of the Adjudicating Authority under

Section 60(5)(c) has already been reiterated by this Court in

Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar

8 Gupta5 and Gujarat Urja Vikas Nigam Limited v. Amit Gupta6. It is

important to note that CIRP proceedings commenced on 26.10.2018,

six years ago, and the resolution plan of the appellant was approved

in 2020, four years back. The importance of concluding the CIRP

proceedings was highlighted by this Court, on a number of

occasions7. In a recent order in Committee of Creditors of KSK

Mahanadi Power Company Ltd. v. M/s Uttar Pradesh Power

Corporation Ltd (supra), this Court has observed that an unjustified

interference with the proceedings initiated under the Insolvency and

Bankruptcy Code 2016, breaches the discipline of law.

14. In view of the delay in approaching the High Court, particularly

when respondent no.1 himself has initiated proceedings under the

Code by filing interlocutory applications seeking similar relief, we are

of the opinion that the High Court committed an error in entertaining

the writ petition.

15. Apart from delay and laches, High Court should have noted

that Insolvency and Bankruptcy Code is a complete code in itself,

having sufficient checks and balances, remedial avenues and

5 (2020) 8 SCC 531 6 (2021) 7 SCC 209 7 In State Bank of India & Ors. v. Consortium of Mr. Murai Lal Jalan & Ors; 2024 SCC Online SC

3187 pars 151 and 152.

9 appeals. Adherence of protocols and procedures maintains legal

discipline and preserves the balance between the need for order and

the quest for justice. The supervisory and judicial review powers

vested in High Courts represent critical constitutional safeguards, yet

their exercise demands rigorous scrutiny and judicious application.

This is certainly not a case for the High Court to interdict CIRP

proceedings under the Insolvency and Bankruptcy Code.

16. In view of the above, we allow these appeals and set aside the

final judgment and order passed by the High Court in Writ Petition

No. 483 of 2023 (GM-RES) dated 22.04.2024. We further direct that

the Adjudicating Authority will now commence the proceedings from

where it was interdicted by the High Court and complete the same as

expeditiously as possible, which is also the spirit of the Code.

17. There shall be no order as to costs.

………………………………....J. [PAMIDIGHANTAM SRI NARASIMHA]

………………………………....J. [MANOJ MISRA]

NEW DELHI;

JANUARY 03, 2025 10