MAHARASHTRA SEAMLESS LIMITED versus PADMANABHAN VENKATESH & ORS.

Citation: [2020] 2 S.C.R. 1157 · Decided: 22-01-2020 · Supreme Court of India · Bench: R.F. NARIMAN, ANIRUDDHA BOSE, V. RAMASUBRAMANIAN · Disposal: Appeal(s) allowed

Cited by 8 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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MAHARASHTRA SEAMLESS LIMITED
v.
PADMANABHAN VENKATESH & ORS.
(Civil Appeal No. 4242 of 2019 Etc.)
JANUARY 22, 2020
[ROHINTON FALI NARIMAN, ANIRUDDHA BOSE
AND V. RAMASUBRAMANIAN, JJ.]
Insolvency and Bankruptcy Code, 2016:
s. 31 – Corporate Insolvency Resolution Process (CIRP) –
Resolution plan which provided upfront payment of Rs. 477 crores
was approved by the Adjudicating Authority – Appellate Tribunal
directed the successful resolution applicant to increase the upfront
payment amount of Rs. 477 crores to Rs. 597.54 crores i.e. equal to
average liquidation value – Appeal to Supreme Court – Held: There
is no provision in the Code or the Regulations which requires that
bid of a resolution applicant has to match liquidation value – The
Adjudicating Authority has not committed breach of provisions u/s.
31 – Appellate Authority ought not to have interfered with the order
of the Adjudicating Authority in directing the successful resolution
application to enhance their fund inflow upfront.
s. 12-A – Applicability of – Held: The exit route prescribed
u/s. 12-A is not applicable to resolution applicant – The procedure
envisaged therein only applies to applicants invoking ss. 7, 9 and
10 of the Code.
Allowing the appeals, the Court
HELD: 1.1 No provision in the Insolvency and Bankruptcy
Code, 2016 or Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons)
Regulations, 2016 has been brought to the notice of the Court
under which the bid of any Resolution Applicant has to match
liquidation value arrived at in the manner provided in Clause 35
of the Regulations. [Para 26][1179 F-G]
1.2 The object behind prescribing such valuation process
is to assist the Committee of Creditors (CoC) to take decision
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 [2020] 2 S.C.R. 1157
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SUPREME COURT REPORTS
[2020] 2 S.C.R.
on a resolution plan properly. Once, a resolution plan is approved
by the CoC, the statutory mandate on the Adjudicating Authority
under Section 31(1) of the Code is to ascertain that a resolution
plan meets the requirement of sub-sections (2) and (4) of Section
30 thereof. Thus, there is no breach of the said provisions in the
order of the Adjudicating Authority in approving the resolution
plan. [Para 27][1179 G-H; 1180 A-B]
1.3 The Appellate Authority has proceeded on equitable
perception rather than commercial wisdom. On the face of it,
release of assets at a value 20% below its liquidation value arrived
at by the valuers seems inequitable. Here, the Court ought to
cede ground to the commercial wisdom of the creditors rather
than assess the resolution plan on the basis of quantitative
analysis. Such is the scheme of the Code. Section 31(1) of the
Code lays down in clear terms that for final approval of a resolution
plan, the Adjudicating Authority has to be satisfied that the
requirement of sub-section (2) of Section 30 of the Code has been
complied with. The proviso to Section 31(1) of the Code stipulates
the other point on which an Adjudicating Authority has to be
satisfied. That factor is that the resolution plan has provisions
for its implementation. The Appellate Authority ought not to have
interfered with the order of the Adjudicating Authority in directing
the successful Resolution Applicant to enhance their fund inflow
upfront. [Para 28][1180 B-F]
2. So far as the IA taken out by the MSL is concerned, they
cannot withdraw from the proceeding in the manner they have
approached this Court. The exit route prescribed in Section 12-
A is not applicable to a Resolution Applicant. The procedure
envisaged in the said provision only applies to applicants invoking
Sections 7, 9 and 10 of the Code. In the present case, having
appealed against the NCLAT order with the object of
implementing the resolution plan, MSL cannot be permitted to
take a contrary stand in an application filed in connection with
the very same appeal. Moreover, MSL has raised the funds upon
mortgaging the assets of the corporate debtor only. In such
circumstances, the Court is not engaging in the judicial exercise
of determining the question as to whether after having been
successful in a CIRP, an applicant altogether forfeits their right
to withdraw from such process or not. [Para 29][1180 F-H]
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3. The Resolution Professional is directed to take physical
possession of the assets of the corporate debtor and hand it over
to the resolution applicant within a period of four weeks. The
police and adminis

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