# RAMKRISHNA FORGINGS LIMITED v. RAVINDRA LOONKAR, RESOLUTION PROFESSION OF ACIL

- **Citation:** 2023 INSC 1013
- **Court:** Supreme Court of India
- **Decided:** 2023-11-21
- **Case number:** Civil Appeal No.1527 of 2022
- **Bench:** Vikram Nath, Ahsanuddin Amanullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ramkrishna-forgings-limited-v-ravindra-loonkar-resolution-profession-of-acil-36953
- **Pages:** 23

## Headnote

Issue for consideration: The moot question involved is the extent
of the jurisdiction and powers of the Adjudicating Authority to go on the
issue of revaluation in the background of the admitted and undisputed
factual position that no objection was raised by any quarter with regard
to any defi ciency/irregularity, either by the RP or the appellant or the
CoC, in fi nally approving the Resolution Plan which was sent to the
Adjudicating Authority-NCLT for approval.
Insolvency and Bankruptcy Code, 2016 - The Adjudicating
Authority-NCLT by order dated 01.09.2021, the application seeking
approval of a Resolution Plan for ACIL or corporate debtor was kept
in abeyance while directing the offi cial liquidator (OL) to carry out a
re-valuation of the assets of the corporate debtor and provide exact
fi gures/value of the assets and exact value details - NCLAT upheld
the order of the NCLT - Propriety:
Held: If the CoC, including the FC(s) to whom money is due
from the Corporate Debtor, had undertaken repeated negotiations with
1
Cause-title should correctly include 'Resolution Professional' instead of 'Resolution
Profession'
673
the appellant with regard to the Resolution Plan and thereafter, with a
majority of 88.56% votes, approved the fi nal negotiated Resolution Plan
of the appellant, which the RP, in turn, presented to the Adjudicating
Authority-NCLT for approval, unless the same was failing the tests of
the provisions of the Code, especially Sections 30 & 31, no interference
was warranted - It is worthwhile to note that the Adjudicating Authority
has jurisdiction only u/s. 31(2) of the Code, which gives power not to
approve only when the Resolution Plan does not meet the requirement
laid down u/s. 31(1) of the Code, for which a reasoned order is required
to be passed - The NCLT's jurisdiction and powers as the Adjudicating
Authority under the Code, fl ow only from the Code and the Regulations
thereunder - The order dated 01.09.2021 by the NCLT cannot withstand
judicial scrutiny, either on facts or in law - Also, the said order is cryptic
and bereft of details - Accordingly, the order dated 01.09.2021 of the
NCLT and impugned judgment of the NCLAT are set aside. [Paras
27,32,34]
LIST OF CITATIONS AND OTHER REFERENCES
Jaypee Kensington Boulevard Apartments Welfare Association v
NBCC (India) Limited (2022) 1 SCC 401; Pratap Technocrats Private
Limited v Monitoring Committee of Reliance Infratel Limited (2021) 10
SCC 623 - relied on.
Maharashtra Seamless Limited v Padmanabhan Venkatesh [2020]
2 SCR 1157:(2020) 11 SCC 467; M K Rajagopalan v Dr Periasamy
Palani Gounder, 2023 SCC OnLine SC 574; M K Rajagopalan v Dr
Periasamy Palani Gounder 2023 SCC OnLine SC 574; K Sashidhar v
Indian Overseas Bank [2019] 3 SCR 845:(2019) 12 SCC 150; Committee
of Creditors of Essar Steel India Ltd. v Satish Kumar Gupta [2019] 16
SCR 275 : (2020) 8 SCC 531; Ebix Singapore (P) Ltd. v Committee of
Creditors of Educomp Solutions Limited 2021 SCC OnLine SC 707;
Vallal RCK v Siva Industries and Holdings Limited 2022 SCC OnLine
SC 717; Arun Kumar Jagatramka v Jindal Steel and Power Limited
[2021] 3 SCR 114:(2021) 7 SCC 474; Kalpraj Dharamshi v Kotak
Investment Advisors Limited [2021] 2 SCR 677: (2021) 10 SCC 401;
Maneka Gandhi v. Union of India : [1978] 2 SCR 621:(1978) 1 SCC
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.
674
SUPREME COURT REPORTS
[2023] 16 S.C.R.
248; Innoventive Industries Ltd. v ICICI Bank [2017] 8 SCR 33: (2018)
1 SCC 407; Swiss Ribbons Private Limited v Union of India [2019] 3
SCR 535:(2019) 4 SCC 17; Kranti Associates Private Limited v Masood
Ahmed Khan [2010] 10 SCR 1070 : (2010) 9 SCC 496; Manoj Kumar
Khokhar v State of Rajasthan (2022) 3 SCC 501; Embassy Property
Developments Private Limited v State of Karnataka[2019] 17 SCR 559:
(2020) 13 SCC 308; Gujarat Urja Vikas Nigam Limited v Amit Gupta
(2021) 7 SCC 209 - referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES

## Text

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[2023] 16 S.C.R. 672 : 2023 INSC 1013
672
CASE DETAILS
RAMKRISHNA FORGINGS LIMITED
v.
RAVINDRA LOONKAR, RESOLUTION PROFESSION OF ACIL
LIMITED & ANR.1
R1 : Ravindra Loonkar, Resolution Profession(al) of ACIL
Limited
R2 : Committee of Creditors of ACIL Ltd.
(Civil Appeal No.1527 of 2022)
NOVEMBER 21, 2023
[VIKRAM NATH AND AHSANUDDIN AMANULLAH, JJ.]
HEADNOTES
Issue for consideration: The moot question involved is the extent
of the jurisdiction and powers of the Adjudicating Authority to go on the
issue of revaluation in the background of the admitted and undisputed
factual position that no objection was raised by any quarter with regard
to any defi ciency/irregularity, either by the RP or the appellant or the
CoC, in fi nally approving the Resolution Plan which was sent to the
Adjudicating Authority-NCLT for approval.
Insolvency and Bankruptcy Code, 2016 - The Adjudicating
Authority-NCLT by order dated 01.09.2021, the application seeking
approval of a Resolution Plan for ACIL or corporate debtor was kept
in abeyance while directing the offi cial liquidator (OL) to carry out a
re-valuation of the assets of the corporate debtor and provide exact
fi gures/value of the assets and exact value details - NCLAT upheld
the order of the NCLT - Propriety:
Held: If the CoC, including the FC(s) to whom money is due
from the Corporate Debtor, had undertaken repeated negotiations with
1
Cause-title should correctly include 'Resolution Professional' instead of 'Resolution
Profession'
673
the appellant with regard to the Resolution Plan and thereafter, with a
majority of 88.56% votes, approved the fi nal negotiated Resolution Plan
of the appellant, which the RP, in turn, presented to the Adjudicating
Authority-NCLT for approval, unless the same was failing the tests of
the provisions of the Code, especially Sections 30 & 31, no interference
was warranted - It is worthwhile to note that the Adjudicating Authority
has jurisdiction only u/s. 31(2) of the Code, which gives power not to
approve only when the Resolution Plan does not meet the requirement
laid down u/s. 31(1) of the Code, for which a reasoned order is required
to be passed - The NCLT's jurisdiction and powers as the Adjudicating
Authority under the Code, fl ow only from the Code and the Regulations
thereunder - The order dated 01.09.2021 by the NCLT cannot withstand
judicial scrutiny, either on facts or in law - Also, the said order is cryptic
and bereft of details - Accordingly, the order dated 01.09.2021 of the
NCLT and impugned judgment of the NCLAT are set aside. [Paras
27,32,34]
LIST OF CITATIONS AND OTHER REFERENCES
Jaypee Kensington Boulevard Apartments Welfare Association v
NBCC (India) Limited (2022) 1 SCC 401; Pratap Technocrats Private
Limited v Monitoring Committee of Reliance Infratel Limited (2021) 10
SCC 623 - relied on.
Maharashtra Seamless Limited v Padmanabhan Venkatesh [2020]
2 SCR 1157:(2020) 11 SCC 467; M K Rajagopalan v Dr Periasamy
Palani Gounder, 2023 SCC OnLine SC 574; M K Rajagopalan v Dr
Periasamy Palani Gounder 2023 SCC OnLine SC 574; K Sashidhar v
Indian Overseas Bank [2019] 3 SCR 845:(2019) 12 SCC 150; Committee
of Creditors of Essar Steel India Ltd. v Satish Kumar Gupta [2019] 16
SCR 275 : (2020) 8 SCC 531; Ebix Singapore (P) Ltd. v Committee of
Creditors of Educomp Solutions Limited 2021 SCC OnLine SC 707;
Vallal RCK v Siva Industries and Holdings Limited 2022 SCC OnLine
SC 717; Arun Kumar Jagatramka v Jindal Steel and Power Limited
[2021] 3 SCR 114:(2021) 7 SCC 474; Kalpraj Dharamshi v Kotak
Investment Advisors Limited [2021] 2 SCR 677: (2021) 10 SCC 401;
Maneka Gandhi v. Union of India : [1978] 2 SCR 621:(1978) 1 SCC
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.
674
SUPREME COURT REPORTS
[2023] 16 S.C.R.
248; Innoventive Industries Ltd. v ICICI Bank [2017] 8 SCR 33: (2018)
1 SCC 407; Swiss Ribbons Private Limited v Union of India [2019] 3
SCR 535:(2019) 4 SCC 17; Kranti Associates Private Limited v Masood
Ahmed Khan [2010] 10 SCR 1070 : (2010) 9 SCC 496; Manoj Kumar
Khokhar v State of Rajasthan (2022) 3 SCC 501; Embassy Property
Developments Private Limited v State of Karnataka[2019] 17 SCR 559:
(2020) 13 SCC 308; Gujarat Urja Vikas Nigam Limited v Amit Gupta
(2021) 7 SCC 209 - referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION : Civil Appeal No.1527 of 2022.
From the Judgment and Order dated 19.01.2022 of the National
Company Law Appellate Tribunal in Company Appeal (AT) (Ins) No.845
of 2021.
Appearances:
Shyam Divan, Krishnendu Datta, Sr. Advs., Prateek Kumar, Ms.
Raveena Rai, Ms. Saloni Gupta for M/s. Khaitan & Co., Advs. for the
Appellant.
Tushar Mehta, SG, Balbir Singh, ASG, Kanu Agarwal, Naman Tandon,
Samarvir Singh, Aditya Rathore, Ms. Swarupama Chaturvedi, Saurav
Roy, Ms. Chinmayee Chandra, Arvind Kumar Sharma, Sumant Batra,
Gaurav Arora, Ms. Kritya Sinha, Alok Tripathi, Ms. Ruchi Goyal, Rajesh
Kumar Chaurasia, Rajive R Raj, Sujeet Kumar, Shailendra Kumar Nirmal,
Anurag Jain, Onkar Prasad, Mrs. Soni, Mrs. Manjulika Pal, Advs. for the
Respondents.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
AHSANUDDIN AMANULLAH, J.
Heard learned counsel for the parties.
675
2. The present appeal under Section 622 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as the "Code") is directed
against the Judgment dated 19.01.2022 (hereinafter referred to as the
"Impugned Judgment") passed by the National Company Law Appellate
Tribunal (hereinafter referred to as the "NCLAT") in Company Appeal (AT)
(Ins) No.845 of 2021 which has upheld the order passed by the Adjudicating
Authority (National Company Law Tribunal3) [hereinafter referred to as the
"Adjudicating Authority-NCLT" or "Adjudicating Authority" or "NCLT"],
Principal Bench dated 01.09.2021 by which the application seeking approval
of a Resolution Plan for ACIL Limited (hereinafter referred to as either
"ACIL" or the "Corporate Debtor") being I.A. No.1636 of 2019 in CP(IB)
No.170(PB)/2018 (hereinafter referred to as the "Approval Application")
was kept in abeyance while directing the Offi cial Liquidator (hereinafter
referred to as the "OL") to carry out a re-valuation of the assets of the
Corporate Debtor and to provide exact fi gures/value of the assets and exact
valuation details.
BRIEF FACTS:
3. ACIL is a manufacturer of precision engineering and automobile
components, namely crankshafts for tractors, HCVs, LCVs as well as twowheelers, as also connecting rods, steering knuckles and hubs. It was the
subject-matter of a Corporate Insolvency Resolution Process (hereinafter
referred to as "CIRP") which was initiated on an application fi led by IDBI
Bank Ltd. Mr. Ravindra Loonkar was appointed as the Interim Resolution
Professional and subsequently confi rmed as the Resolution Professional
(hereinafter referred to as the "RP") by the NCLT under order dated
16.10.2018. Against the total claim fi led for about Rupees one thousand
2
 '62. Appeal to Supreme Court.-(1) Any person aggrieved by an order of the National
Company Law Appellate Tribunal may fi le an appeal to the Supreme Court on a
question of law arising out of such order under this Code within forty-fi ve days from
the date of receipt of such order.

(2) The Supreme Court may, if it is satisfi ed that a person was prevented by suffi cient
cause from fi ling an appeal within forty-fi ve days, allow the appeal to be fi led within a
further period not exceeding fi fteen days.'
3
The National Company Law Tribunal is a creature of Section 408 of the Companies
Act, 2013. Under Section 60 of the Code, it has been designated as the Adjudicating
Authority for corporate persons.
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.
676
SUPREME COURT REPORTS
[2023] 16 S.C.R.
eight hundred and thirty crores, the amount of admitted claim in the CIRP
was Rupees one thousand seven hundred and eighty-two crores.
4. The RP published Expression of Interest on 15.10.2018 which
was subsequently revised on 31.10.2018, 28.01.2019 and 13.02.2019. The
appellant-Resolution Applicant (hereinafter referred to as the "appellant")
submitted its fi rst Resolution Plan on 11.04.2019 providing to pay Rupees
seventy-four crores to all the stakeholders including Rupees sixty-three and
a half crores to Financial Creditors (hereinafter referred to as the "FC(s)").
After a series of negotiations, the appellant submitted an Addendum to
its Resolution Plan on 21.05.2019 by raising the payment to FC(s) to
Rupees seventy-three crores and eighteen lacs. On and at the request of the
Committee of Creditors (hereinafter referred to as the "CoC"), once again,
the appellant submitted a Revised Plan on 27.05.2019 wherein the total payout was Rupees eighty crores and fi fty-fi ve lacs and the FC(s) were to be paid
Rupees seventy fi ve crores and forty-two lacs. The fi nal Resolution Plan was
submitted on 05.08.2019, in which the fi nancial proposal/total pay-out was
increased to Rupees one hundred twenty-nine and a half crores and FC(s)
were to get upfront payment of Rupees eighty crores and forty-four lacs.
This Resolution Plan further provided that proceeds from the monetization
of the land situated at Manesar will go to the FC(s).
5. This fi nal Resolution Plan submitted by the Appellant-Resolution
Applicant on 05.08.2019 was fi nally approved by the CoC on 14.08.2019 by a
majority of 88.56% votes. In terms of such approval of the Resolution Plan by
the CoC, the RP moved Approval Application under Sections 30(6)4 and 315
4
'30. Submission of resolution plan.-

xxx

(6) The resolution professional shall submit the resolution plan as approved by the
committee of creditors to the Adjudicating Authority.'
5
'31. Approval of resolution plan.-(1) If the Adjudicating Authority is satisfi ed that
the resolution plan as approved by the committee of creditors under sub-section (4)
of Section 30 meets the requirements as referred to in sub-section (2) of Section 30,
it shall by order approve the resolution plan which shall be binding on the corporate
debtor and its employees, members, creditors, including the Central Government, any
State Government or any local authority to whom a debt in respect of the payment of
dues arising under any law for the time being in force, such as authorities to whom
statutory dues are owed, guarantors and other stakeholders involved in the resolution
plan:
677
of the Code seeking approval of the Resolution plan before the Adjudicating
Authority-NCLT on 16.08.2019. In terms of the Resolution Plan, for which
approval was being sought, ACIL would be allowed the benefi t of carrying
forward its losses in terms of Section 796 of the Income Tax Act, 1961.

Provided that the Adjudicating Authority shall, before passing an order for approval of
resolution plan under this sub-section, satisfy that the resolution plan has provisions
for its eff ective implementation.

(2) Where the Adjudicating Authority is satisfi ed that the resolution plan does not
confi rm to the requirements referred to in sub-section (1), it may, by an order, reject
the resolution plan.

(3) After the order of approval under sub-section (1),-

(a) the moratorium order passed by the Adjudicating Authority under Section 14
shall cease to have eff ect; and

(b) the resolution professional shall forward all records relating to the conduct of
the corporate insolvency resolution process and the resolution plan to the Board to
be recorded on its database.

(4) The resolution applicant shall, pursuant to the resolution plan approved under subsection (1), obtain the necessary approval required under any law for the time being
in force within a period of one year from the date of approval of the resolution plan by
the Adjudicating Authority under sub-section (1) or within such period as provided for
in such law, whichever is later:

Provided that where the resolution plan contains a provision for combination, as
referred to in Section 5 of the Competition Act, 2002 (12 of 2003), the resolution
applicant shall obtain the approval of the Competition Commission of India under
that Act prior to the approval of such resolution plan by the committee of creditors.'
6
'79. Carry forward and set off of losses in case of certain companies.-(1)
Notwithstanding anything contained in this Chapter, where a change in shareholding
has taken place during the previous year in the case of a company, not being a
company in which the public are substantially interested, no loss incurred in any year
prior to the previous year shall be carried forward and set off against the income of
the previous year, unless on the last day of the previous year, the shares of the company
carrying not less than fi fty-one per cent. of the voting power were benefi cially held by
persons who benefi cially held shares of the company carrying not less than fi fty-one
per cent. of the voting power on the last day of the year or years in which the loss was
incurred:
Provided that even if the said condition is not satisfi ed in case of an eligible
start up as referred to in Section 80-IAC, the loss incurred in any year prior to the
previous year shall be allowed to be carried forward and set off against the income
of the previous year if all the shareholders of such company who held shares carrying
voting power on the last day of the year or years in which the loss was incurred,
continue to hold those shares on the last day of such previous year and such loss has
been incurred during the period of ten years beginning from the year in which such
company is incorporated.

(2) Nothing contained in sub-section (1) shall apply,-
(a)
to a case where a change in the said voting power and shareholding takes
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.[AHSANUDDIN AMANULLAH, J.]
678
SUPREME COURT REPORTS
[2023] 16 S.C.R.
6. This ultimately resulted in the order dated 01.09.2021, by which
the approval of the Resolution Plan was kept in abeyance and the OL was
place in a previous year consequent upon the death of a shareholder or on
account of transfer of shares by way of gift to any relative of the shareholder
making such gift;
(b)
to any change in the shareholding of an Indian company which is a subsidiary
of a foreign company as a result of amalgamation or demerger of a foreign
company subject to the condition that fi fty-one per cent. shareholders of
amalgamating or demerged foreign company continue to be the shareholders
of the amalgamated or the resulting foreign company;
(c)
to a company where a change in the shareholding takes place in a previous year
pursuant to a resolution plan approved under the Insolvency and Bankruptcy
Code, 2016 (31 of 2016), after aff ording a reasonable opportunity of being
heard to the jurisdictional Principal Commissioner or Commissioner;
(d)
to a company, and its subsidiary and the subsidiary of such subsidiary,
where,-

(i) the Tribunal, on an application moved by the Central Government under
Section 241 of the Companies Act, 2013 (18 of 2013), has suspended the Board
of Directors of such company and has appointed new directors nominated by
the Central Government, under Section 242 of the said Act; and

(ii) a change in shareholding of such company, and its subsidiary and the
subsidiary of such subsidiary, has taken place in a previous year pursuant to a
resolution plan approved by the Tribunal under Section 242 of the Companies
Act, 2013 (18 of 2013) after aff ording a reasonable opportunity of being
heard to the jurisdictional Principal Commissioner or Commissioner.

Explanation.-For the purposes of this section,-
(i) a company shall be a subsidiary of another company, if such other company holds
more than half in nominal value of the equity share capital of the company;
(i-a)"erstwhile public sector company" shall have the same meaning as assigned to
it in clause (ii) of the Explanation to clause (d) of sub-section (1) of Section 72-A;
(i-b) "strategic disinvestment" shall have the same meaning as assigned to it in
clause (iii) of the Explanation to clause (d) of sub-section (1) of Section 72-A;
(ii) "Tribunal" shall have the meaning assigned to it in clause (90) of Section 2 of
the Companies Act, 2013 (18 of 2013).
(e) to a company to the extent that a change in the shareholding has taken place
during the previous year on account of relocation referred to in the Explanation to
clauses (vii-ac) and (vii-ad) of Section 47.
 (f) to an erstwhile public sector company subject to the condition that the ultimate
holding company of such company, immediately after the completion of strategic
disinvestment, continues to hold, directly or through its subsidiary or subsidiaries, at
least fi fty-one per cent. of the voting power of such company in aggregate.

 (3) Notwithstanding anything contained in sub-section (2), if the condition specifi ed
in clause (f) of the said sub-section is not complied with in any previous year after the
completion of strategic disinvestment, the provisions of sub-section (1) shall apply for
such previous year and subsequent previous years.'
679
directed to provide exact fi gures/value of assets. The same was carried in
appeal under Section 617 of the Code by the present appellant before the
NCLAT which passed the Impugned Judgment on 19.01.2022, dismissing
the appeal, thereby upholding the order of the NCLT, which is impugned
herein.
SUBMISSIONS ON BEHALF OF THE APPELLANT:
7. Mr. Shyam Divan, learned senior counsel for the appellant submitted
that the Resolution Plan initially submitted by the appellant was negotiated
further on various dates and, ultimately the fi nal outcome was the Resolution
Plan submitted on 05.08.2019. This was fi nally approved by the CoC through
a majority of 88.56% votes on 14.08.2019, after extensive consideration.
It was submitted that there were 11 revisions in respect of the Resolution
Plan made by the appellant before the fi nal version was approved by the
CoC. It was indicated that the fi nal Resolution Plan was approximately
7
'61. Appeals and Appellate Authority.-(1) Notwithstanding anything to the contrary
contained under the Companies Act, 2013, any person aggrieved by the order of the
Adjudicating Authority under this part may prefer an appeal to the National Company
Law Appellate Tribunal.

(2) Every appeal under sub-section (1) shall be fi led within thirty days before the
National Company Law Appellate Tribunal:

Provided that the National Company Law Appellate Tribunal may allow an appeal to
be fi led after the expiry of the said period of thirty days if it is satisfi ed that there was
suffi cient cause for not fi ling the appeal but such period shall not exceed fi fteen days.

(3) An appeal against an order approving a resolution plan under Section 31 may be
fi led on the following grounds, namely-
(i) the approved resolution plan is in contravention of the provisions of any law for
the time being in force;
(ii) there has been material irregularity in exercise of the powers by the resolution
professional during the corporate insolvency resolution period;
(iii) the debts owed to operational creditors of the corporate debtor have not been
provided for in the resolution plan in the manner specifi ed by the Board;
(iv) the insolvency resolution process costs have not been provided for repayment in
priority to all other debts; or
(v) the resolution plan does not comply with any other criteria specifi ed by the Board.

4) An appeal against a liquidation order passed under Section 33, or sub-section (4) of
Section 54-L, or sub-section (4) of Section 54-N, may be fi led on grounds of material
irregularity or fraud committed in relation to such a liquidation order.

(5) An appeal against an order for initiation of corporate insolvency resolution process
passed under sub-section (2) of Section 54-O, may be fi led on grounds of material
irregularity or fraud committed in relation to such an order.'
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.[AHSANUDDIN AMANULLAH, J.]
680
SUPREME COURT REPORTS
[2023] 16 S.C.R.
48% higher as compared to the pay-out under the initial Resolution Plan
submitted by the appellant. At this juncture, it was also pointed out that the
RP had also got two reports prepared by two approved/registered valuers:
(a) BDO India LLP's Report dated 11.02.2019 with regard to assets of
ACIL which indicated fair market value to be Rupees one hundred thirtyfi ve crores and ten lacs with liquidation value as Rupees one hundred eight
crores and fi fty-seven lacs; whereas the Report of (b) Adroit Technical
Services Limited dated 14.02.2019 indicated fair market value of Rupees
one hundred twenty-fi ve crores and eighty-fi ve lacs and liquidation value
of Rupees ninety-four crores and eighty-seven lacs. Thus, it was submitted
that after taking care of all the statutory procedural requirements and on
the basis of such reports and proper examination of the materials on record
and having exercised its commercial wisdom, the CoC-approved Resolution
Plan was put up before the NCLT for approval, but the NCLT, exceeding its
jurisdiction and without ascertaining any reason for such course of action,
passed the direction for revaluation.
8. Learned senior counsel in this connection submitted that there
was no occasion for the NCLT to embark upon a totally alien procedure
of getting the OL involved in such valuation, for which a mechanism
is already provided under the Code and which, as per him, was strictly
adhered to in the present case. It was contended that the NCLT had limited
power of judicial review given the supremacy of the CoC under the Code.
At best, learned senior counsel contended, that it could have disapproved
the Resolution Plan on cogent ground(s) relevant for doing so after testing
whether it complies with the requirements of Section 30(2) of the Code, but
it could not have acquired jurisdiction, where no such residuary or equity
based jurisdiction is available under the Code by interfering with the CoC's
decision without pointing out any non-conformity with the provisions of
the Code and the Regulations thereunder. For such proposition, he relied
upon the decision of this Court in Pratap Technocrats Private Limited v
Monitoring Committee of Reliance Infratel Limited, (2021) 10 SCC 623,
the relevant being at Paragraphs 25, 26 and 44, where it has been held that
the jurisdiction conferred upon the Adjudicating Authority-NCLT in regard
to the approval of a Resolution Plan is statutorily structured by Sub-Section
1(1) of Section 31 of the Code and such jurisdiction is limited to determine
whether the requirements which are specifi ed in Sub-Section (2) of Section
681
30 of the Code have been fulfi lled. Further, it has been explained that such
jurisdiction which is statutorily defi ned, recognised and conferred, cannot
be equated with the jurisdiction in equity that operates independently of the
provisions of the statute for the reason that the Adjudicating Authority-NCLT,
which is a body owing its existence to the Code, must abide by the nature
and extent of its jurisdiction as defi ned therein. Regarding the appointment
of the OL for getting valuation of the assets, the stand of Mr. Divan was
that it was not in line with the Code and the Regulations made thereunder.
9. It was further canvassed by learned senior counsel that the Code
provides for a mechanism for carrying out valuation of the assets of a
Corporate Debtor in form of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons) Regulations, 2016
(hereinafter referred to as the "CIRP Regulations"), particularly Regulations
278 and 359 thereof, inasmuch as Regulation 27 provides that the RP shall
8
'27. Appointment of Professionals.-(1) The resolution professional shall, within
seven days of his appointment but not later than forty-seventh day from the insolvency
commencement date, appoint two registered valuers to determine the fair value and
the liquidation value of the corporate debtor in accordance with Regulation 35.

(2) The interim resolution professional or the resolution professional, as the case may
be, may appoint any professional, in addition to registered valuers under sub-regulation
(1), to assist him in discharge of his duties in conduct of the corporate insolvency
resolution process, if he is of the opinion that the services of such professional are
required and such services are not available with the corporate debtor.

(3) The interim resolution professional or the resolution professional, as the case
may be, shall appoint a professional under this regulation on an arm's length basis
following an objective and transparent process: Provided that the following persons
shall not be appointed, namely-

(a) a relative of the resolution professional;

(b) a related party of the corporate debtor;

(c) an auditor of the corporate debtor at any time during the period of fi ve years
preceding the insolvency commencement date;

(d) a partner or director of the insolvency professional entity of which the
resolution professional is a partner or director.

(4) The invoice for fee and other expenses incurred by a professional appointed under
this regulation shall be raised in the name of the professional and be paid directly into
the bank account of such professional.'
9
'35. Fair value and Liquidation value.-(1) Fair value and liquidation value shall be
determined in the following manner-
(a) the two registered valuers appointed under Regulation 27 shall submit to the
resolution professional an estimate of the fair value and of the liquidation value
computed in accordance with internationally accepted valuation standards, after
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.[AHSANUDDIN AMANULLAH, J.]
682
SUPREME COURT REPORTS
[2023] 16 S.C.R.
appoint two registered valuers to determine the fair value and liquidation
value of the Corporate Debtor whereas Regulation 35 provides that the
two valuers shall submit the fair value and liquidation value to the RP after
physical verifi cation of the inventory and fi xed assets of the Corporate
Debtor and further provides that if the estimates shown by the two valuers are
signifi cantly diff erent, or upon a proposal from the CoC, the RP may appoint
a third registered valuer for valuation of the assets of the Corporate Debtor.
10. Another aspect which learned senior counsel drew the Court's
attention to was the fact that the NCLT's observations in its order dated
01.09.2021 observing that the amount off ered by the appellant was very
close to the fair value of the assets of the Corporate Debtor was a nonissue and an uncalled for observation since such fair value of the assets of
the Corporate Debtor was never available to the appellant at the time of
submitting its fi rst Resolution Plan. Thus, learned senior counsel submitted
that the premise of the appellant's off ered amount being in close proximity
to the fair value of the assets was inherently erroneous and without basis
physical verifi cation of the inventory and fi xed assets of the corporate debtor;
(b) if the two estimates of a value in an asset class are signifi cantly diff erent, or
on receipt of a proposal to appoint a third registered valuer from the committee of
creditors, the resolution professional may appoint a third registered valuer for an
asset class for submitting an estimate of the value computed in the manner provided
in clause (a).
Explanation.-For the purpose of clause (b),
(i) "asset class" means the defi nition provided under the Companies (Registered
Valuers and Valuation) Rules, 2017;
(ii) "signifi cantly diff erent" means a diff erence of twenty-fi ve per cent in liquidation
value under an asset class and the same shall be calculated as (L1-L2)/L1, where,

L1= higher valuation of liquidation value

L2= lower valuation of liquidation value.

(c) the average of the two closest estimates of a value shall be considered the fair
value or the liquidation value, as the case may be.

(2) After the receipt of resolution plans in accordance with the Code and these
regulations, the resolution professional shall provide the fair value and the liquidation
value to every member of the committee in electronic form, on receiving an undertaking
from the member to the eff ect that such member shall maintain confi dentiality of the
fair value and the liquidation value and shall not use such values to cause an undue
gain or undue loss to itself or any other person and comply with the requirements
under sub-section (2) of Section 29.

(3) The resolution professional and registered valuers shall maintain confi dentiality of
the fair value and the liquidation value.'
683
and the decision to refer it to the OL based on such sole factor is obviously
and equally without any basis and fi t to be set aside.
11. It was submitted that this Court has held, in Maharashtra Seamless
Limited v Padmanabhan Venkatesh, (2020) 11 SCC 467, the relevant being
at Paragraphs 27 to 29, that aspects related to the valuation of the Corporate
Debtor are not open to judicial scrutiny by the NCLT as the object behind
such valuation process is to assist the CoC in taking a proper decision in
respect of a Resolution Plan and the valuation conducted in respect of the
assets of the Corporate Debtor and it has further been indicated that the
Adjudicating Authority-NCLT can approve a Resolution Plan even when it
is below the liquidation value and that there is no provision under the Code
which states that a resolution applicant's bid must match the liquidation value
as the liquidation value is determined merely to assist the CoC in taking a
decision on the Resolution Plan.
12. On the same proposition, learned senior counsel referred to M K
Rajagopalan v Dr Periasamy Palani Gounder, 2023 SCC OnLine SC
574, the relevant being at Paragraphs 167, 168 and 169, holding that when
the CoC was fully satisfi ed with the valuation conducted in respect of the
Corporate Debtor and had endorsed the same, then it was unnecessary and
unjustifi able on the part of the NCLAT to presume irregularities in the
Resolution Plan and interfere therewith.
13. It was submitted that the RP in statutory form had certifi ed that
the Resolution Plan received from the appellant complied with all the
provisions of the Code and the Regulations and did not contravene any
provisions of law.
14. It was contended that the fi nding of the NCLAT that an avoidance
transaction of approximately Rupees one thousand crores had come to
light and the present case justifi es its interference since fi gures of crores
are involved, could not have been an issue as it has no bearing in the
instant case and ought not to have been considered by the NCLAT. It was
submitted that safeguard against avoidance transaction and its impact
upon a Corporate Debtor's CIRP has been provided in the Code and
the Regulations as also expounded in judicial precedents. In this regard,
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.[AHSANUDDIN AMANULLAH, J.]
684
SUPREME COURT REPORTS
[2023] 16 S.C.R.
attention was drawn to Section 2610 of the Code which provides that fi ling
of avoidance application(s) by the RP shall not aff ect the CIRP proceedings.
It was further stated that Regulation 38(2)(d)11, CIRP Regulations has been
recently introduced through the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons) (Second Amendment)
Regulations, 2022 (hereinafter referred to as the "2022 Amendment") with
eff ect from 14.06.2022 which requires, for all Resolution Plans submitted
to the Adjudicating Authority on or after the 2022 Amendment to provide
for treatment of avoidance applications post-approval of a Resolution Plan,
along with the manner in which the proceeds from such proceedings will
be distributed. It was contended that even though in the present case, the
approval application has been fi led by the RP prior to the 2022 Amendment,
the Resolution Plan provides for the treatment of proceeds generated through
avoidance applications and states that all amounts received by ACIL pursuant
to any avoidance transaction shall be payable to the FC(s) and no avoidance
pay-out amounts shall be payable by the Corporate Debtor, which in the
present case would mean that avoidance transaction of approximately
Rupees one thousand crores will not aff ect the ongoing CIRP, in view of the
Resolution Plan providing a clear way for its treatment. In this connection,
learned senior counsel referred to the decision by a Division Bench of the
High Court of Delhi in Tata Steel BSL Limited v Venus Recruiter Pvt. Ltd.,
2023 SCC OnLine Del 155, Paragraph 91 whereof says that when any kind
10 '26. Application for avoidance of transactions not to aff ect proceedings.-The fi ling
of an avoidance application under clause (j) of sub-section (2) of Section 25 by the
resolution professional shall not aff ect the proceedings of the corporate insolvency
resolution process.'
11 '38. Mandatory contents of the resolution plan.-

xxx

(2) A resolution plan shall provide:

xxx

(d) provides for the manner in which proceedings in respect of avoidance transactions,
if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II
of the Code, will be pursued after the approval of the resolution plan and the manner
in which the proceeds, if any, from such proceedings shall be distributed:

Provided that this clause shall not apply to any resolution plan that has been submitted
to the Adjudicating Authority under sub-section (6) of Section 30 on or before the
date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022.'
685
of benefi t is acquired from the adjudication on avoidance application and the
Resolution Plan is silent on the treatment of such applications, such benefi t
must be given to the creditors of the Corporate Debtor.
15. Learned senior counsel submitted that the commercial wisdom
of the CoC has been held to be supreme in K Sashidhar v Indian
Overseas Bank, (2019) 12 SCC 150, the relevant being at Paragraphs
52, 59 & 64 and Committee of Creditors of Essar Steel India Ltd. v
Satish Kumar Gupta (2020) 8 SCC 531. Further, reliance was placed
on the decision in Ebix Singapore (P) Ltd. v Committee of Creditors of
Educomp Solutions Limited, 2021 SCC OnLine SC 707, holding that
the Adjudicating Authority under Section 31(2) of the Code can only
examine the validity of the Resolution Plan on the anvil of the stipulation
in Section 30(2) of the Code and either approve or reject the Resolution
Plan but cannot compel the CoC to negotiate further with a successful
Resolution Applicant and also that the Adjudicating Authority is duty
bound to ensure the completion of CIRP within the prescribed timeline
of 330 days under the Code.
16. As far as the reference in the Impugned Judgment by the NCLAT,
that interference was justifi ed since "fi gures of crores" are involved, learned
senior counsel submitted that it has no basis in the Code or law, as it does
not provide for diff erential treatment to a Resolution Plan, based on the
quantum of the fi gure involved in the Corporate Debtor's insolvency.
17. With regard to the OL being given the chance of coming up with
re-valuation, the stand taken by learned senior counsel was that the OL is
created by the Companies Act, 2013 and is not contemplated under the
Code which provides a specifi c mechanism for valuation to be conducted
in respect of the assets of a Corporate Debtor under the CIRP Regulations,
specifi cally Regulations 27 and 35, as noted hereinabove.
18. Learned senior counsel submitted that even if for the sake of
argument, it may be accepted that the NCLT can exercise discretion in rare
cases and order for re-valuation, in the present case, the same cannot be
justifi ed as absolutely no reason has even been indicated by the NCLT or
the NCLAT for undertaking such exercise in respect of the assets of the
Corporate Debtor, which is arbitrary and unjustifi ed.
RAMKRISHNA FORGINGS LTD v. RAVINDRA LOONKAR,
R. P. OF ACIL LTD.[AHSANUDDIN AMANULLAH, J.]
686
SUPREME COURT REPORTS
[2023] 16 S.C.R.
19. It was submitted that there was no objection from any quarter, much
less any stakeholder, with respect to the valuation of the Corporate Debtor
and also the appellant's Resolution Plan and most importantly, no material
was placed on record before the NCLT or NCLAT to justify interference in
the CoC's commercial wisdom.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS:
20. Learned counsel for the respondents supported the contentions of
the appellant, advanced by Mr. Divan.
ASSISTANCE BY THE SOLICITOR GENERAL AND THE
ADDITIONAL SOLICITOR GENERAL FOR THE UNION OF INDIA:
21. In the present case, although the RP and CoC were arrayed as
respondents but having regard to the issues raised, this Court by order dated
05.05.202212 had requested the learned Solicitor General, Mr. Tushar Mehta
to assist. In terms thereof, he has fi led written submissions. Mr. Balbir Singh,
learned Additional Solicitor General has also assisted this Court.
22. In sum, the written note deals with the legal aspects and the fi nal
stand is that the Adjudicating Authority-NCLT would have no jurisdiction
or power to sit in appeal over the commercial wisdom of the CoC and
interference would be warranted only when the NCLT or the Appellate
Authority (viz. NCLAT) finds the decision of the CoC to be wholly
capricious, arbitrary, irrational and dehors the provisions in the Code or
the Regulations.
23. For such proposition, he relied upon the decision in Vallal RCK
v Siva Industries and Holdings Limited, 2022 SCC OnLine SC 717, the
relevant being at Paragraph 24, with regard to the binding and fi nal nature
of the Resolution plan after due approval by the CoC.
12
 The Order is as below:

'Having regard to the issues involved, we have requested Mr. Tushar Mehta, learned
Solicitor General to assist the Court in this matter. The relevant papers may be
supplied to the offi ce of the learned Solicitor General within two days.

The matter may be listed on the next date while showing name of Mr. Arvind Kumar
Sharma, learned counsel assisting the learned Solicitor General.

List the matter on 18.05.2022.

Short notes on the submissions may be fi led in advance.'
687
24. Mr. Singh also referred to Arun Kumar Jagatramka v Jindal Steel
and Power Limited, (2021) 7 SCC 474, the relevant being Paragraph 95,
holding that the need for judicial intervention or innovation from NCLT
and NCLAT should be kept at its bare minimum and should not disturb
the foundational principle of the Code. He also referred to Committee of
Creditors of Essar Steel India Ltd. (supra), where at Paragraph 69, it has
been observed that a harmonious reading of Sections 31(1) & 60(5) of the
Code would lead to the result that the residual jurisdiction of the NCLT
under Section 60(5)(c) of the Code cannot, in any manner, whittle down
Section 31(1) of the Code, by the investment of some discretionary or equity
jurisdiction in the Adjudicating Authority-NCLT outside Section 30(2) of
the Code, when it comes to a Resolution Plan pending adjudication.
25. However, it was also pointed out that in cases which warrant
interference, to contend that the Adjudicating Authority-NCLT has no
jurisdiction to decide any dispute with respect to valuation and take remedial
steps to correct an erroneous valuation exercise would not be the correct
proposition in view of the powers conferred under Section 60(5) of the Code.
26.