# KALPRAJ DHARAMSHI & ANR v. KOTAK INVESTMENT ADVISORS LTD. & ANR

- **Citation:** [2021] 2 S.C.R. 677
- **Court:** Supreme Court of India
- **Decided:** 2021-03-10
- **Case number:** Civil Appeal Nos. 2943-2944 of 2020
- **Bench:** A.M. Khanwilkar, B. R. Gavai, Krishna Murari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kalpraj-dharamshi-anr-v-kotak-investment-advisors-ltd-anr-34934
- **Pages:** 93

## Headnote

Insolvency and Bankruptcy Code, 2016:
ss. 10, 61, 238A - Proceedings or appeals before the
adjudicating Authority, appellate tribunal etc - Application of
Limitation Act - On facts, application u/s. 10 by Corporate Debtor
for initiation of Corporate Insolvency Resolution Process -
Successively five Form G notified - Resolution applicant-KIAL
submitted Resolution Plan (RP) within the stipulated time and
resolution applicant-Kalpraj submitted plan after the stipulated time
- Objection raised by KIAL - Subsequently on direction by
Committee of Creditors (CoC), submission of revised plan by KIAL
and Kalpraj - Thereafter, approval of revised plan submitted by
Kalpraj - KIAL challenged the approval of Kalpraj's Resolution
Plan before NCLT - Plan of Kalpraj approved by NCLT - Thereafter,
KIAL filed Writ Petition before the High Court which was dismissed
on the ground of alternate remedy - KIAL then filed appeal before
NCLAT which was allowed, rejecting Kalpraj submission that appeal
were filed beyond the limitation period prescribed in IBC - On
appeal, held: Provisions of s. 14 of the Limitation Act are available
to KIAL - Applying the principles underlying s. 14, KAIL entitled to
exclusion of the period during which it was bona fide prosecuting
a remedy before the High Court in good faith and with due diligence,
thus, the appeals filed before NCLAT within the limitation - Though
an alternate remedy was available to it, it was approaching the
High Court since the issue with regard to functioning of NCLT also
fell for consideration - High Court dismissed the writ petition
relegating KIAL to an alternate remedy available in law - High
Court could have exercised extra-ordinary jurisdiction u/Art. 226
inasmuch as, the grievance was regarding procedure followed by
NCLT to be in breach of principles of natural justice - Limitation
Act, 1963 - s. 29(2) - Constitution of India - Art. 226.
[2021] 2 S.C.R. 677
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Waiver and acquiescence - Inference of - Objection by KIAL
to the acceptance of belated Resolution Plan of Kalpraj - However,
when no choice left, KIAL submitted revised Resolution Plan -
Conduct of KIAL, if amounts to waiver and acquiescence by KIAL
so as to estop it from challenging the participation of Kalpraj -
Held: KIAL had objected to participation of other applicant
submitting plan after the due date as per the last Form G and also
reiterated its objection to the participation of Kalpraj - It cannot
be said that having participated by submitting the revised plans,
KIAL is estopped from challenging the decision of Resolution
Professional (RP) or CoC on the ground of acquiescence and waiver
- Merely because, the revised plans are not submitted with the words
"without prejudice", would not make any difference - KIAL had no
other option than to submit its revised plans in view of clause 11.2
of the Process Memorandum - Had it not responded, it had to run
the risk of being out of competition - Also it is not established that
KIAL had given up/surrendered its rights to take recourse to the
legal remedies, and that on account of waiver or acquiescence the
parties had altered their position to their detriment.
ss. 10, 30, 31 - Submission and approval of Resolution plan
- Decision of Committee of Creditors-CoC accepting the resolution
plan of Resolution applicant-Kalpraj - NCLAT annulled decision
of CoC to accept the Resolution Plan - Interference with the decision
of CoC by NCLAT - Correctness of - Held: Statute has not invested
jurisdiction and authority either with NCLT or NCLAT, to review
the commercial decision exercised by CoC of approving the resolution
plan or rejecting the same - Commercial wisdom of CoC is not to be
interfered with, except within the limited scope u/ss. 30 and 31 of
the Code - Decision of CoC was taken by a thumping majority of
84.36% - Only creditor voted in favour of KIAL is having voting
rights of 0.97% - In view of the paramount importance given

## Text

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KALPRAJ DHARAMSHI & ANR.
v.
KOTAK INVESTMENT ADVISORS LTD. & ANR.
(Civil Appeal Nos. 2943-2944 of 2020)
MARCH 10, 2021
[A.M. KHANWILKAR, B. R. GAVAI AND
KRISHNA MURARI, JJ.]
Insolvency and Bankruptcy Code, 2016:
ss. 10, 61, 238A - Proceedings or appeals before the
adjudicating Authority, appellate tribunal etc - Application of
Limitation Act - On facts, application u/s. 10 by Corporate Debtor
for initiation of Corporate Insolvency Resolution Process -
Successively five Form G notified - Resolution applicant-KIAL
submitted Resolution Plan (RP) within the stipulated time and
resolution applicant-Kalpraj submitted plan after the stipulated time
- Objection raised by KIAL - Subsequently on direction by
Committee of Creditors (CoC), submission of revised plan by KIAL
and Kalpraj - Thereafter, approval of revised plan submitted by
Kalpraj - KIAL challenged the approval of Kalpraj's Resolution
Plan before NCLT - Plan of Kalpraj approved by NCLT - Thereafter,
KIAL filed Writ Petition before the High Court which was dismissed
on the ground of alternate remedy - KIAL then filed appeal before
NCLAT which was allowed, rejecting Kalpraj submission that appeal
were filed beyond the limitation period prescribed in IBC - On
appeal, held: Provisions of s. 14 of the Limitation Act are available
to KIAL - Applying the principles underlying s. 14, KAIL entitled to
exclusion of the period during which it was bona fide prosecuting
a remedy before the High Court in good faith and with due diligence,
thus, the appeals filed before NCLAT within the limitation - Though
an alternate remedy was available to it, it was approaching the
High Court since the issue with regard to functioning of NCLT also
fell for consideration - High Court dismissed the writ petition
relegating KIAL to an alternate remedy available in law - High
Court could have exercised extra-ordinary jurisdiction u/Art. 226
inasmuch as, the grievance was regarding procedure followed by
NCLT to be in breach of principles of natural justice - Limitation
Act, 1963 - s. 29(2) - Constitution of India - Art. 226.
[2021] 2 S.C.R. 677
677
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Waiver and acquiescence - Inference of - Objection by KIAL
to the acceptance of belated Resolution Plan of Kalpraj - However,
when no choice left, KIAL submitted revised Resolution Plan -
Conduct of KIAL, if amounts to waiver and acquiescence by KIAL
so as to estop it from challenging the participation of Kalpraj -
Held: KIAL had objected to participation of other applicant
submitting plan after the due date as per the last Form G and also
reiterated its objection to the participation of Kalpraj - It cannot
be said that having participated by submitting the revised plans,
KIAL is estopped from challenging the decision of Resolution
Professional (RP) or CoC on the ground of acquiescence and waiver
- Merely because, the revised plans are not submitted with the words
"without prejudice", would not make any difference - KIAL had no
other option than to submit its revised plans in view of clause 11.2
of the Process Memorandum - Had it not responded, it had to run
the risk of being out of competition - Also it is not established that
KIAL had given up/surrendered its rights to take recourse to the
legal remedies, and that on account of waiver or acquiescence the
parties had altered their position to their detriment.
ss. 10, 30, 31 - Submission and approval of Resolution plan
- Decision of Committee of Creditors-CoC accepting the resolution
plan of Resolution applicant-Kalpraj - NCLAT annulled decision
of CoC to accept the Resolution Plan - Interference with the decision
of CoC by NCLAT - Correctness of - Held: Statute has not invested
jurisdiction and authority either with NCLT or NCLAT, to review
the commercial decision exercised by CoC of approving the resolution
plan or rejecting the same - Commercial wisdom of CoC is not to be
interfered with, except within the limited scope u/ss. 30 and 31 of
the Code - Decision of CoC was taken by a thumping majority of
84.36% - Only creditor voted in favour of KIAL is having voting
rights of 0.97% - In view of the paramount importance given to the
decision of CoC, NCLAT not correct in law in interfering with the
commercial decision taken by CoC - Furthermore, for a long period,
there was no restraint on implementation of the resolution plan of
Kalpraj, which was duly approved by NCLT and during the said
period, Kalpraj has spend a huge amount for implementation of
the plan - Thus, the decision taken by CoC in accordance with its
commercial wisdom which is duly approved by NCLT, would prevail.
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Corporate Insolvency Resolution Process - Initiation of -
Resolution Plan from prospective resolution applicants - Decision
of Committee of Creditors - Justiciability of, in the court of law -
Discussed.
Limitation Act, 1963: s. 14 - Proceedings before the quasijudicial tribunal - Applicability of s. 14 - Held: Though strictly, the
provisions of s. 14 would not be applicable to the proceedings before
a quasi-judicial tribunal, however, the principles underlying the
same would be applicable - Proper approach would be of advancing
the cause of justice, rather than to abort the proceedings - Litigant
would be entitled for exclusion of the period, during which he was
bona fide prosecuting such a wrong remedy.
Doctrines/Principles: Principle of waiver and acquiescence
- When can be inferred - Held: Waiver is an intentional
relinquishment of a right, advantage, benefit, claim or privilege -
For applying the principle of waiver, it has to be established, that
though a party was aware about the relevant facts and the right to
take an objection, he has neglected to take such an objection - It
has to be established that a party expressly or by its conduct acted
in a manner, which is inconsistent with the continuance of its rights
- Whereas, acquiescence would be a conduct where a party is sitting
by, when another is invading his rights - Acquiescence must be
such as to lead to the inference of a licence sufficient to create a
new right in the defendant.
Disposing of the appeals, the Court
HELD: 1.1 Though the provisions of the Limitation Act, as
far as may be, would apply to the proceedings or appeals before
the Adjudicating Authority, NCLAT, the Debt Recovery Tribunal
or the Debt Recovery Appellate Tribunal, where a period of
limitation for initiation of proceedings is provided under any
special or local law, different from the period prescribed by the
Schedule, the provisions of Section 3 shall apply, as if such period
were the period prescribed by the Schedule. It would further
reveal, that for the purpose of determining any period of limitation
prescribed for any suit, appeal or application by any special or
local law, the provisions contained in sections 4 to 24 (inclusive),
shall apply only in so far, and to the extent to which, they are not
KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.
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expressly excluded by such special or local law. [Para 37]
[712-D-G]
1.2 Since under IBC Code there is a period different from
the one which is prescribed by the Schedule to the Limitation
Act, the limitation for an appeal would be governed by Section 61
of the I&B Code, which is a special statute. As such, an appeal
will have to be preferred within a period of thirty days from the
date on which the order was passed by NCLT. However, if NCLAT
is satisfied, that there was sufficient cause for not filing the appeal
within a period of thirty days, it may allow an appeal to be filed
within a further period of fifteen days. As such, the normal period
of limitation prescribed under the I&B Code is thirty days, with
a provision for allowing the filing of an appeal within a further
period of fifteen days, if NCLAT is satisfied, that there was
a sufficient cause for not filing the appeal within thirty days.
[Para 39][713-A-D]
1.3 When a litigant bona fide under a mistake litigates before
a wrong forum, he would be entitled for exclusion of the period,
during which he was bona fide prosecuting such a wrong remedy.
Though strictly, the provisions of Section 14 of the Limitation
Act would not be applicable to the proceedings before a quasi
judicial Tribunal, however, the principles underlying the same
would be applicable i.e. the proper approach will have to be of
advancing the cause of justice, rather than to abort the
proceedings. [Para 51][720-D-F]
1.4 The judgment of NCLT is dated 28.11.2019. As such,
as per Section 61(2) of the I&B Code, the appeal was required to
be filed on or prior to 28.12.2019. The appeal could have been
filed within a further period of fifteen days, if NCLAT was satisfied,
that there was sufficient cause for not filing the appeal within a
period of thirty days. As such, the said period would come to an
end on 12.1.2020. The certified copy of the impugned judgment
of NCLT was made available on 18.12.2019. If the allowance for
the said period is granted, the appeal should have been preferred
on or prior to 2.2.2020. However, in the instant case, the appeal
is filed on 18.2.2020. [Para 40][713-D-F]
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1.5 Immediately after NCLT pronounced its judgment on
28.11.2019 and even before the certified copy was made available
on 18.12.2019, KIAL had filed writ petition before the Division
Bench of the High Court on 11.12.2019 on the principal ground,
that the procedure followed by NCLT was in breach of principles
of natural justice. Such a ground could be legitimately pursued
before a writ court. In that sense, it was not a proceeding before
a wrong court, as such. [Para 54][723-B-D]
1.6 It is a settled principle of law, that non-exercise of
jurisdiction by the High Court under Article 226 of the
Constitution is not a hard and fast rule, but a rule of self-restraint.
When the proceedings invoked before a statutory authority are
de hors the jurisdiction or when they are in breach of principles
of natural justice, the party would be entitled to invoke the
jurisdiction of the High Court under Article 226 of the
Constitution. [Paras 59, 61][724-G-H; 725-H; 726-A]
1.7 In the instant case, perusal of the writ petition would
reveal, that it was the specific case of KIAL, that its application,
objecting to the application of RP for approval of the resolution
plan was heard by a Member (Judicial), whereas, the final orders
were passed by a Bench consisting of Member (Judicial) and
Member (Technical). It has specifically averred, that though an
alternate remedy was available to it, it was invoking the
jurisdiction of the High Court since the question involved was
also with regard to the manner in which the jurisdiction was
exercised by NCLT. It could thus be seen, that KIAL was bona
fide prosecuting the proceedings before the High Court in good
faith. Perusal of the dates would also reveal, that KIAL was
prosecuting the proceedings before the High Court with due
diligence. Even before the availability of the certified copy, it had
knocked the doors of the High Court. The matter before the
High Court was hotly contested and ultimately, the petition was
dismissed by an elaborate judgment relegating KIAL to the
alternate remedy available to it in law. As such, the conditions
which enable a party to invoke the provisions of Section 14 of the
Limitation Act are very much available to KIAL. If the period
during which KIAL was bona fide prosecuting the writ petition
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before the High Court and that too with due diligence, is excluded
applying the principles underlying Section 14 of the Limitation
Act, the appeals filed before NCLAT would be very much within
the limitation. KIAL would be entitled to exclusion of the period
during which it was bona fide prosecuting the remedy before the
High Court with due diligence. [Para 64][726-E-H; 727-A-C]
1.8 In the instant case, KIAL had approached the High Court
making a specific grievance, that NCLT had adopted a procedure
which was in breach of the principles of natural justice. It is
specifically mentioned in the writ petition, that though an alternate
remedy was available to it, it was approaching the High Court
since the issue with regard to functioning of NCLT also fell for
consideration. It is thus apparently clear, that KIAL was bona
fide prosecuting a remedy before the High Court in good faith
and with due diligence. In a given case, the High Court could
have exercised jurisdiction under Article 226 of the Constitution
inasmuch as, the grievance was regarding procedure followed by
NCLT to be in breach of principles of natural justice. That would
come within the limited area earmarked by this Court for exercise
of extraordinary jurisdiction under Article 226 despite availability
of an alternate remedy. Therefore, KIAL was entitled to extension
of the period during which it was bona fide prosecuting a
remedy before the High Court with due diligence. [Paras 83,
85][735-A-D; 736-A]
Consolidated Engineering Enterprises vs. Principal
Secretary, Irrigation Department and others (2008) 7
SCC 169 : [2008] 5 SCR 1108; M.P. Steel Corporation
vs. Commissioner of Central Excise (2015) 7 SCC 58;
State of Goa vs. Western Builders (2006) 6 SCC 239 :
[2006] 3 Suppl. SCR 288; Embassy Property
Developments Pvt. Ltd. vs. State of Karnataka and
Others 2019 SCC Online 1542 - relied on.
Commissioner of Sales Tax, U.P. vs. Madan Lal Das &
Sons, Bareilly (1976) 4 SCC 464 : [1977] 1 SCR 683
- per incuriam.
Union of India vs. Popular Construction Co. (2001) 8
SCC 470 : [2001] 3 Suppl. SCR 619; Singh
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Enterprises vs. Commissioner of Central Excise,
Jamshedpur & Ors. (2008) 3 SCC 70 : [2007]
13 SCR 952; Chhattisgarh State Electricity Board vs.
Central Electricity Regulatory Commission & Ors.
(2010) 5 SCC 23 : [2010] 4 SCR 680; Neeraj Jhanji
vs. Commissioner of Customs & Central Excise (2015)
12 SCC 695; Ketan V. Parekh vs. Special Director,
Directorate of Enforcement & Anr. (2011) 15 SCC 30 :
[2011] 14 SCR 1204; Commissioner of Customs and
Central Excise vs. Hongo India Private Limited and
another (2009) 5 SCC 791; Bengal Chemists and
Druggists Association vs. Kalyan Chowdhury (2018) 3
SCC 41 : [2018] 2 SCR 1099 - distinguished.
Commissioner of Sales Tax. U.P., Lucknow vs. Parson
Tools and Plants, Kanpur (1975) 4 SCC 22: [1975] 3
SCR 743 - held distinguished.
Whirlpool Corporation vs. Registrar of Trade Marks,
Mumbai & Ors. (1998) 8 SCC 1 : [1998] 2 Suppl. SCR
359; Babu Ram Prakash Chandra Maheshwari vs.
Antarim Zilla Parishad Muzaffar Nagar [1969] 1 SCR
518; Nivedita Sharma vs. Cellular Operators Association
of India & Ors. (2011) 14 SCC 337; Bharat Bank Ltd.,
Delhi vs. Employees of the Bharat Bank Ltd., Delhi
[1950] SCR 459; Town Municipal Council, Athani vs.
Presiding Officer, Labour Courts, Hubli and others etc.
(1969) 1 SCC 873 : [1970] 1 SCR 51; Nityananda M.
Joshi and others vs. Life Insurance Corporation of India
and others (1969) 2 SCC 199: 1970 (1) SCR 396;
Bhudan Singh and another vs. Nabi Bux and another
(1969) 2 SCC 481: [1970] 2 SCR 10; J. Kumaradasan
Nair and another vs. Iric Sohan and others (2009) 12
SCC 175: [2009] 3 SCR 238; Kerala State Electricity
Board, Trivandrum vs. T.P. Kunhaliumma (1976) 4 SCC
634 : [1977] 1 SCR 996; Officer on Special Duty (Land
Acquisition) and another vs. Shah Manilal Chandulal
and others (1996) 9 SCC 414: [1996] 2 SCR 366 -
referred to.
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2.1 KIAL had no choice than to accept the terms of the
contract. Paragraph 5(b) of the covering letter for submission of
resolution plan by KIAL is a part of a covering letter format,
which is provided in the Process Memorandum itself. The
covering letter is in Format I and the party desiring to participate
in the Resolution Plan Process has no other option, than to sign
the dotted lines. Hence, the parties cannot be said to have equal
bargaining power and the applicants have no other choice than to
sign on the documents prescribed in the format. Paragraph 5(b)
of the covering letter format, requires a party to undertake, that
it will accept all the decisions made by CoC, RP and/or the
Adjudicating Authority and that the decisions taken will be binding
on it. It also requires the applicant, to sign on the document
thereby, providing expressly waiving any and all claims with
respect to the Resolution Plan Process. In turn, it provides for a
party to agree to a stipulation, that even if RP or CoC acts in any
manner, which is not permissible in law, still the resolution
applicant would be bound by such a decision and shall waive any
or all its claims in respect of the Resolution Plan Process.
[Para 95][739-H; 740-A-D]
2.2 In the first place, RP and the resolution applicant cannot
be said to be the contracting parties having equal bargaining
power. Secondly, since RP functions under the I&B Code for
discharging the duties bestowed upon him and assisting the
process for finalization of resolution plan for survival of the
Corporate Debtor, it cannot be said that it is a purely commercial
transaction between RP and the resolution applicant. There is no
reason, as to why the said principle should not be applicable when
RP and CoC are acting under the statutory provisions under the
Code. Thus, KIAL cannot be held to be bound by such
unconscionable clause in the letter, which is in a prescribed format.
[Paras 97, 99, 100][740-E-F; 741-B-D]
Halsbury's Laws of England, Vol. 16(2), 4th Edn., Para
907, 1471 - referred to
2.3 For considering, as to whether a party has waived its
rights or not, it will be relevant to consider the conduct of a party.
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For establishing waiver, it will have to be established, that a party
expressly or by its conduct acted in a manner, which is inconsistent
with the continuance of its rights. However, the mere acts of
indulgence will not amount to waiver. A party claiming waiver
would also not be entitled to claim the benefit of waiver, unless it
has altered its position in reliance on the same. For applying the
principle of waiver, it will have to be established, that though a
party was aware about the relevant facts and the right to take an
objection, he has neglected to take such an objection. [Paras 104,
107][742-F-G; 743-E-F]
2.4 For constituting acquiescence or waiver it must be
established, that though a party knows the material facts and is
conscious of his legal rights in a given matter, but fails to assert
its rights at the earliest possible opportunity, it creates an effective
bar of waiver against him. Whereas, acquiescence would be a
conduct where a party is sitting by, when another is invading his
rights. The acquiescence must be such as to lead to the inference
of a licence sufficient to create a new right in the defendant. Waiver
is an intentional relinquishment of a right. It involves conscious
abandonment of an existing legal right, advantage, benefit, claim
or privilege. It is an agreement not to assert a right. There can
be no waiver unless the person who is said to have waived, is
fully informed as to his rights and with full knowledge about the
same, he intentionally abandons them. [Para 112][747-E-G]
2.5 As per the invitation of EOI published on 9.7.2018, the
last date for submission of EOI was 8.8.2018. The first Form G
was also issued on 9.7.2018, according to which, the last date for
submission of resolution plan was 21.9.2018. KIAL had submitted
its EOI on 7.8.2018. First Process Memorandum was issued on
17.8.2018. However, since there was no response, four more Form
G were issued on various dates. The last of such Form G was
issued on 11.12.2018, according to which the last date for
submission of resolution plan was 8.1.2019. KIAL submitted its
resolution plan on 8.1.2019. Subsequently, Kalpraj submitted its
resolution plan on 27.1.2019. On KIAL coming to know about
the same, on 29.1.2019 itself, it had sent an email protesting to
RP against acceptance of belated resolution plan of Kalpraj. [Paras
116, 117][748-F-H; 749-A]
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2.6 It could be seen that immediately within a day of the
submission of the plan by Kalpraj, KIAL objected to the
acceptance of its plan after 8.1.2019, when no extension of time
for the same was notified. It is specifically stated, that the said
severely jeopardized its position and was against the spirit of the
Code, especially when KIALs resolution plan was opened
immediately and discussed at length with various stakeholders.
KIAL has therefore requested for sharing the requisite
information providing for extension of time for bid submission. It
is further stated, that in the event no such notification was issued,
all plans submitted after 8.1.2019 should be held to be invalid.
After the said email was addressed by KIAL to RP, it received
an email from RP on 30.1.2019. It is stated in the said email dated
30.1.2019, that subsequent to the resolution plan submitted on
8.1.2019, CoCs representative and RP had a detailed discussion
with its team on the changes required to be made in the resolution
plan. Vide the said email dated 30.1.2019, KIAL was requested
to submit the amended resolution plan by 3 p.m. on 1.2.2019. On
1.2.2019, left with no choice, KIAL submitted its revised
resolution plan. [Paras 118, 119][749-E-H; 750-A]
2.7 On 10.2.2019 KIAL sent another email. It was stated
therein that it has been quite sometime, that it had sought a
response from RP on his decision to accept another resolution
plan well after the expiry of the deadline for submission of the
same. It was reiterated, that such an action, after opening of the
bids and having detailed discussions on the same was not only
prejudicial to its interest but against the spirit of the I&B Code.
It was reiterated, that the I&B Code, provides equal treatment
to all potential resolution applicants within the framework of law
and fixes personal responsibilities upon CoC members and RPs
in the event of instances of discrimination or departure from the
established law. [Para 121][750-D-F]
2.8 Perusal of the record would reveal, that RP had replied
to KIAL by email dated 11.2.2019. It was stated in the said email,
that his act of acceptance of resolution plans, submitted after the
due date, was under the overall supervision of CoC and as per
the opinion given by CoCs legal counsel and RPs legal counsel.
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It was also submitted, that this was in the spirit of value
maximisation of assets of the Corporate Debtor. Further, it is in
dispute, as to whether RP had again directed KIAL and Kalpraj
vide email dated 11.2.2019 to submit revised plan. It is asserted
on behalf of the KIAL, that such email was received by it, whereas
it is denied by RP. In any event, it is not in dispute, that both
KIAL and Kalpraj submitted their revised plans on 12.2.2019.
[Paras 122 - 123][750-F-H; 751-A]
2.9 On 13/14.2.2019, the resolution plan of Kalpraj was
accepted by CoC. On 18.2.2019, RP filed M.A. No.691/2019
before NCLT for approval of the resolution plan of Kalpraj. KIAL
filed its M.A. on 14.3.2019 before the Adjudicating Authority
objecting to the approval of resolution plan of Kalpraj. It could
thus, be clearly seen, that KIAL had raised its objection
immediately after the Kalpraj submitted its resolution plan. Not
only that, but, it had also reiterated its objection to the
participation of Kalpraj. Insofar as, submission of amended plans
is concerned, it had no other option than to submit its revised
plan. It is thus clear that, had KIAL not responded to the email
of RP and submitted its revised plan, it had to run the risk of
being out of fray. [Paras 124-126][751-A-C, E-F]
2.10 Taking into consideration the fact, that KIAL had
objected to participation of any other applicant submitting plan
after the due date as per the last Form G and also reiterated its
objection, it cannot be held, that having participated by submitting
the revised plans, KIAL is estopped from challenging the process
on the ground of acquiescence and waiver. Merely because, the
revised plans are not submitted with the words "without
prejudice", would not make any difference. [Para 132][753-A-B]
2.11 The conduct of the party is relevant for considering,
whether it can be held, that a case is made out of waiver or
acquiescence. None of the appellants have been in a position to
establish, that KIAL had given up/surrendered its rights to take
recourse to the legal remedies. In any case, the appellants had
also not been in a position to establish, that on account of any
such waiver or acquiescence any of the appellants had altered
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their position to their detriment. As such, it cannot be held, that
KIAL had waived or acquiesced its rights to challenge the decision
of RP or CoC. [Paras 132-134][753-C-E]
Central Inland Water Transport Corporation Limited
and another vs. Brojo Nath Ganguly and another (1986)
3 SCC 156 : [1986] 2 SCR 278; Vodafone International
Holdings BV vs. Union of India and another (2012) 6
SCC 613: [2012] 1 SCR 573 - relied on.
ITC Ltd. vs. Blue Coast Hotels Limited & Ors. (2018)
15 SCC 99 : [2018] 5 SCR 516; Tarapore & Company
vs. Cochin Shipyard Ltd., Cochin & Anr. (1984) 2 SCC
680: [1984] 3 SCR 118 - Distinguished
Assistant General Manager and others vs. Radhey
Shyam Pandey (2020) 6 SCC 438; Pioneer Urban Land
and Infrastructure Limited vs. Govindan Raghavan
(2019) 5 SCC 725 : [2019] 5 SCR 1169; Manak Lal
vs. Dr. Prem Chand 1957 SCR 575 = AIR 1957 SC
425; Krishna Bahadur vs. Purna Theatre and others
(2004) 8 SCC 229 : [2004] 3 Suppl. SCR 833; State
of Punjab vs. Davinder Pal Singh Bhullar and others
(2011) 14 SCC 770 : [2011] 15 SCR 540; Galada power
and Telecommunication limited vs. United India
Insurance Company Limited and another (2016) 14
SCC 161: 2016 (4 ) SCR 69 - referred to.
3.1 For deciding key economic question in the bankruptcy
process, the only one correct forum for evaluating such
possibilities, and making a decision was, a creditors committee,
wherein all financial creditors have votes in proportion to the
magnitude of debt that they hold. The Bankruptcy Law Reforms
Committee-BLRC has observed, that laws in India in the past
have brought arms of the Government (legislature, executive or
judiciary) into the question of bankruptcy process. This has been
strictly avoided by the Committee and it has been provided, that
the decision with regard to appropriate disposition of a defaulting
firm, which is a business decision, should only be made by the
creditors. It has been observed, that the evaluation of proposals
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to keep the entity as a going concern, including decisions about
the sale of business or units, restructuring of debt, etc., are
required to be taken by the Committee of the Financial Creditors.
It has been provided, that the choice of the solution to keep the
entity as a going concern will be voted upon by CoC and there
are no constraints on the proposals that the resolution professional
can present to CoC. The requirements, that the resolution
professional needs to confirm to the Adjudicator, are: (i) that the
solution must explicitly require the repayment of any interim
finance and costs of the insolvency resolution process will be
paid in priority to other payments; (ii) that the plan must explicitly
include payment to all creditors not on the creditors committee,
within a reasonable period after the solution is implemented; and
lastly (iii) the plan should comply with existing laws governing
the actions of the entity while implementing the solutions.
[Para 138][760-B-G]
3.2 There should be freedom permitted to the overall
market, to propose solutions on keeping the entity as a going
concern. The details as to how the insolvency is to be resolved
or as to how the entity is to be revived, or the debt is to be
restructured will not be provided in the I&B Code but such a
decision will come from the deliberations of CoC in response to
the solutions proposed by the market. [Para 139][760-G-H;
761-A]
3.3 The appeal is a creature of statute and that the statute
has not invested jurisdiction and authority either with NCLT or
NCLAT, to review the commercial decision exercised by CoC of
approving the resolution plan or rejecting the same. The limited
judicial review, which is available, can in no circumstance trespass
upon a business decision arrived at by the majority of CoC.
[Paras 149, 152][766-B-C, G-H]
3.4 The legislative scheme is unambiguous. The
commercial wisdom of CoC is not to be interfered with, excepting
the limited scope as provided under Sections 30 and 31 of the
I&B Code. [Para 155][768-A-B]
3.5 It was submitted that since there has been a material
irregularity in exercise of the powers by RP, NCLAT was justified
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in view of the provisions of clause (ii) of sub section (3) of Section
61 of the I&B Code to interfere with the exercise of power by
RP. However, it could be seen, that all actions of RP have the
seal of approval of CoC. No doubt, it was possible for RP to have
issued another Form G, in the event he found, that the proposals
received by it prior to the date specified in last Form G could not
be accepted. However, it has been the consistent stand of RP as
well as CoC, that all actions of RP, including acceptance of
resolution plans of Kalpraj after the due date, albeit before the
expiry of timeline specified by the Code for completion of the
process, have been consciously approved by CoC. The decision
of CoC is taken by a thumping majority of 84.36%. The only
creditor voted in favour of KIAL is Kotak Bank, holding company
of KIAL, having voting rights of 0.97%. In view of the paramount
importance given to the decision of CoC, which is to be taken on
the basis of commercial wisdom, NCLAT was not correct in law
in interfering with the commercial decision taken by CoC by a
thumping majority of 84.36%. [Para 156][768-B-F]
3.6 After the resolution plan of Kalpraj was approved by
NCLT on 28.11.2019, Kalpraj had begun implementing the
resolution plan. NCLAT had heard the appeals on 27.2.2020 and
reserved the same for orders. There was no stay granted by
NCLAT, while reserving the matters for orders. After a gap of
five months, NCLAT passed the final order on 5.8.2020. Thus,
for a long period, there was no restraint on implementation of
the resolution plan of Kalpraj, which was duly approved by NCLT.
It is the case of Kalpraj, RP, CoC and Deutsche Bank, that during
the said period, various steps have been taken by Kalpraj by
spending a huge amount for implementation of the plan. No doubt,
this is sought to be disputed by KIAL. However, it is not
necessary to go into that aspect of the matter in light of the
conclusion, that NCLAT acted in excess of jurisdiction in
interfering with the conscious commercial decision of CoC.
[Para 157][868-F-H; 769-A]
3.7 In pursuance of the order dated 5.8.2020 passed by
NCLAT, CoC has approved the resolution plan of KIAL on
13.8.2020. However, since the decision of NCLAT dated 5.8.2020
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does not stand the scrutiny of law, it must follow, that the
subsequent approval of the resolution plan of KIAL by CoC
becomes non est in law. For, it was only to abide by the directions
of NCLAT. Nothing would turn on it. The decision of CoC dated
13/14.2.2019 is a decision, which has been taken in exercise of
its commercial wisdom. As such, the decision taken by CoC dated
13/14.2.2019, which is taken in accordance with its commercial
wisdom and which is duly approved by NCLT, will prevail. Further,
NCLAT was not justified in interfering with the stated decision
taken by CoC. [Para 158][769-B-D]
K. Sashidhar vs. Indian Overseas Bank & Ors. (2019)
12 SCC 150: [2019] 3 SCR 845; Committee of Creditors
of Essar Steel India Limited through Authorised
Signatory vs. Satish Kumar Gupta & Ors. (2019) SCC
Online SC 1478 - relied on.
Maharashtra Seamless Limited vs. Padmanabhan
Venkatesh and others (2020) 11 SCC 467; Arcelormittal
India Private Limited vs. Satish Kumar Gupta and others
(2019) 2 SCC 1 : [2018] 12 SCR 362 - referred to
4 The order passed by NCLAT dated 5.8.2020 is quashed
and set aside and the orders passed by NCLT dated 28.11.2019
are restored and maintained. Insofar as, the Civil Appeals arising
out of D.No. 24125 of 2020 filed by Fourth Dimension Solutions
Limited, since the appeal against the order of NCLT is still pending
before NCLAT, NCLAT is directed to decide the appeal as
expeditiously as possible, and in any case, within the stipulated
period. [Paras 159-160][769-D-G]
Innoventive Industries Ltd. vs. ICICI Bank & Anr. (2018)
1 SCC 407: [2017] 8 SCR 33; Kumar Dutta prop. K.D.
Trading vs. Simplex Infrastructure Ltd. 2019 SCC
Online NCLAT 575; Asha Goyal vs. Pharma Traders
Pvt. Ltd. 2019 SCC Online NCLAT 150; Radhika
Mehra vs. Vaayu Infrastructure LLP & Ors. 2020 SCC
Online NCLAT 532; Dhirendra Kumar vs. Randstand
India Pvt. Ltd. & Anr. 2019 SCC Online NCLAT 444;
Neeraj Jhanji vs. Commissioner of Customs & Central
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Excise (2015) 12 SCC 695; G.J. Fernandez vs. State of
Karnataka & Ors. (1990) 2 SCC 488: [1990] 1 SCR
229; NTPC Ltd. (Simhadri Project) vs. Rajiv
Chakraborty] Civil Appeal No. 2798 of 2020; Union
of India & Ors. vs. West Coast Paper Mills Ltd. & Anr.
(2004) 3 SCC 458: [2004] 2 SCR 642; Binani
Industries Limited vs.Bank of Baroda & Anr. 2018 SCC
Online NCLAT 565 - referred to.
Case law reference
[2017] 8 SCR 33
referred to
Para 9
[1990] 1 SCR 229
referred to
Para 20
[2004] 2 SCR 642
referred to
Para 28
(2015) 7 SCC 58
relied on
Para 46
[1950] SCR 459
referred to
Para 46
[1970] 1 SCR 51
referred to
Para 46
[1970] 1 SCR 396
referred to
Para 46
[1977] 1 SCR 996
referred to
Para 46
[1996] 2 SCR 366
referred to
Para 46
[2008] 5 SCR 1108
relied on
Para 46, 51
[1977] 1 SCR 683
per incuriam
Para 48
[1970] 2 SCR 10
referred to
Para 50
[2009] 3 SCR 238
referred to
Para 50
[1975] 3 SCR 743
held distinguished
Para 53
[1969] 1 SCR 518
referred to
Para 59
[1998] 2 Suppl. SCR 359 referred to
Para 62
(2011) 14 SCC 337
referred to
Para 63
[2001] 3 Suppl. SCR 619
distinguished
Para 66, 73
[2007] 13 SCR 952
distinguished
Para 74
(2009) 5 SCC 791
distinguished
Para 75
[2010] 4 SCR 680
distinguished
Para 76
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D
E
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[2018] 2 SCR 1099
distinguished
Para 77
(2015) 12 SCC 695
distinguished
Para 78
[2011] 14 SCR 1204
distinguished
Para 81
[2006] 3 Suppl. SCR 288
relied on
Para 81
[1986] 2 SCR 278
relied on
Para 95, 97,
100
(2020) 6 SCC 438
referred to
Para 96
[2019] 5 SCR 1169
referred to
Para 98
1957 SCR 575
referred to
Para 105
[2004] 3 Suppl. SCR 833
referred to
Para 108
[2011] 15 SCR 540
referred to
Para 111
[2016] 4 SCR 69
referred to
Para 113
[2018] 5 SCR 516
distinguished
Para 127
[1984] 3 SCR 118
distinguished
Para 128
[2012] 1 SCR 573
relied on
Para 130
[2019 ] 3 SCR 845
relied on
Para 136,
140, 145,
146, 148,
150
(2020) 11 SCC 467
referred to
Para 136,
153
[2018] 12 SCR 362
referred to
Para 141
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.29432944 of 2020.
From the Judgment and Order dated 05.08.2020 of the National
Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)
(Insolvency) Nos.344-345 of 2020.
With
Civil Appeal Nos.3138-3139 of 2020
Civil Appeal Nos. 2949-2950 of 2020.
Civil Appeal No. ......../2021 (Diary No.24125 of 2020)
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Mukul Rohatgi, Dr. Abhishek Manu Singhvi, Pinaki Mishra, C.A.
Sundaram, Gopal Sankar Narayanan, P.P. Chaudary, K.V. Viswanathan,
Neeraj Kishal Kaul, Shyam Divan, Sr. Advs., Ms. Ruby Singh Ahuja,
Ms. Kalpana Unadkat, Prateek Kumar, Ms. Tahira Karanjawala, Anupam
Prakash, Nidhiram Sharma, Ms. Raveena Rai, Utkarsh Maria, Anmol
Jassal, M/s Karanjawala & Co., David Rao, Sanjeet Purohit, M.S. Vishnu
Sankar, Atul Sharma, Sriram Parakkat, Ms. Athira G. Nair, Shrutanjaya
Bhardwaj, M/s Lawfic, Dheeraj Nair, Vishrutyi Sahni, Varghese Thomas,
Ms. Aditi Deshpande, Fatema Kachwalla, Jash Shah, Dheeraj Nair,
Gaurav Agrawal, Ms. Pooja Mahajan, Avinash Amarnath, Ms. Mahima
Singh, Ms. Avni Shrivastav, Ritesh Kumar, Advs. for the appearing
parties.
The Judgment of the Court was delivered by
B.R. GAVAI, J.
1. Leave to file Civil Appeal in Diary No. 24125 of 2020 is granted.
2. All these appeals, assail the judgment and order of the National
Company Law Appellate Tribunal, New Delhi (hereinafter referred to
as "NCLAT") dated 5.8.2020, passed in Company Appeal (AT)
(Insolvency) Nos. 344-345 of 2020.
3. By the said judgment and order dated 5.8.2020, NCLAT has
allowed the appeals filed by Kotak Investment Advisors Limited
(hereinafter referred to as "KIAL"), respondent No.1 herein, aggrieved
by two separate orders dated 28.11.2019 passed by National Company
Law Tribunal, Mumbai Bench (hereinafter referred to as "NCLT" or
"Adjudicating Authority") in M.A. No.1039 of 2019 and M.A. No. 691
of 2019. NCLAT has set aside the said orders passed in the said M.As.
M.A. No.1039 of 2019 was filed by KIAL objecting to grant of approval
to the resolution plan submitted by Kalpraj Dharamshi and Rekha
Jhunjhunwala, a consortium, (hereinafter referred to as "Kalpraj"), which
is appellant in Civil Appeal Nos. 2943-2944 of 2020. NCLT has rejected
the said M.A. Whereas, M.A. No. 691 of 2019 was filed by the Resolution
Professional of Ricoh India Limited (hereinafter referred to as "the
Corporate Debtor") for grant of approval to the Resolution Plan submitted
by Kalpraj. NCLT has allowed the said M.A. and approved the resolution
plan submitted by Kalpraj.
4. The facts in brief, giving rise to the present appeals are as
under:
The Corporate Debtor filed an application on 29.1.2018 before
NCLT under Section 10 of the Insolvency and Bankruptcy Code, 2016
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(hereinafter referred to as "I&B Code") for initiation of Corporate
Insolvency Resolution Process (hereinafter referred to as "CIRP") of
itself vide Company Petition (IB) No. 156/MB/2018. NCLT vide order
dated 14.5.2018, admitted the Petition and directed the moratorium to
commence as prescribed under Section 14 of the I&B Code and directed
certain statutory steps to be taken as a consequence thereof. Vide the
said order dated 14.5.2018, NCLT also appointed Mr. Krishna Chamadia
as Interim Resolution Professional to carry out the functions as prescribed
under the provisions of the I&B Code. The said Mr. Krishna Chamadia
was subsequently confirmed as Resolution Professional (hereinafter
referred to as 'RP') by the Committee of Creditors (hereinafter referred
to as "CoC") on 15.6.2018.
RP vide notification dated 9.7.2018 invited expression of interest
(hereinafter referred to as "EOI") to submit a resolution plan from
interested resolution applicants, who fulfilled the minimum conditions
stipulated in the said document (EOI). As per the said EOI, if any
proposed applicant had any queries or clarifications, it was required to
write to RP on or before 31.7.2018. The EOI was required to be submitted
via email on the email address of RP or via post at the address mentioned
in the said invitation on or before 8.8.2018.
On the said date i.e. 9.7.2018, analogously, the first Form 'G' also
came to be notified. Vide the said Form 'G', the last date prescribed for
submission of Resolution Plan was on or before 21.9.2018.