THE KARAD URBAN COOPERATIVE BANK LTD. versus SWWAPNIL BHINGARDEVAY & ORS.

Citation: [2020] 13 S.C.R. 465 · Decided: 04-09-2020 · Supreme Court of India · Bench: S.A. BOBDE · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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   [2020] 13 S.C.R. 465
465
THE KARAD URBAN COOPERATIVE BANK LTD.
V.
SWWAPNIL BHINGARDEVAY & ORS.
(Civil Appeal No. 2955 of 2020)
SEPTEMBER 04, 2020
[S. A. BOBDE, CJI, A. S. BOPANNA AND
V. RAMASUBRAMANIAN, JJ.]
Insolvency and Bankruptcy Code, 2016: Appellant financial
creditor filed s.7 application before NCLT against corporate debtor
– Committee of Creditors (CoC) resolved to approve the Resolution
Plan submitted by one M/s Sai Agro – On the basis of approval of
Resolution Plan,  Resolution Professional moved an application
before NCLT – At this stage, the Director/Promoter of corporate
debtor also came up with an application seeking permission to file
Resolution Plan – NCLT rejected the application of corporate debtor
and approved Resolution Plan submitted by M/s Sai Agro – Thus,
M/s Sai Agro became Successful Resolution Applicant (SRA) –
Director/Promoter of corporate debtor filed appeal before NCLAT
against the approval of the Resolution Plan of SRA – NCLAT allowed
the appeal and remanded the matter back to NCLT with direction to
send back the Resolution Plan to the CoC – Order of NCLT was
challenged on the ground inter alia that the Resolution Plan suffered
from issues of viability and feasibility and that the Resolution Plan
did not take note of important fact that the ethanol plant and
machinery shown as part of the assets of the corporate debtor,
actually belonged to another company by name, Sarvadnya
Industries Private Ltd. (SIPL) and that a bank by name, Janata
Sahkari Bank Ltd. had taken possession of the same under the
SARFAESI Act – Financial creditor and Resolution Professional both
filed separate appeals respectively – Held: It is not the case of
corporate debtor or its promoter/Director or anyone else that some
of the factors which were crucial for taking a decision regarding
viability and feasibility were not placed before the CoC or the
Resolution Professional – The only basis for the corporate debtor
to raise the issue of viability and feasibility was that the ownership
and possession of the ethanol plant and machinery was the subject
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SUPREME COURT REPORTS
[2020] 13 S.C.R.
matter of another dispute and that the Resolution Plan did not take
care of the contingency where the said plant and machinery may
not eventually be available to SRA – However, records very clearly
show that SRA, Resolution Professional and financial creditor were
fully aware of the said issue – The order passed by the NCLAT
showed that the possession of the ethanol plant and machinery was
restored to SIPL, in the appeal to which SRA was also a party – SRA
also appeared to have offered to Janata Sahkari Bank to purchase
the said plant and machinery – In the appeal before the NCLAT out
of which these appeals arose, SIPL which claimed ownership of the
ethanol plant and machinery, was also a party – In any case, the
Resolution Professional took a specific plea in his grounds of appeal
before this Court, that SRA was itself into the ethanol manufacturing
business and that they had sufficient ethanol production capacity
required to fulfil their Resolution Plan – Therefore, the fact that
there was an issue with regard to the ethanol plant and machinery,
had been taken note of by Resolution Professional, CoC and SRA –
Since all these three parties took note of the said fact and took a
conscious decision to go ahead with the Resolution Plan, it cannot
be stated that the question of viability and feasibility was not
examined in the proper perspective – Therefore, the main ground
on which NCLAT interfered with the decision of the NCLT to approve
the Resolution Plan, was wholly untenable, misconceived and
unjustified.
Allowing the appeals, the Court
HELD: 1.1  If all the factors that need to be taken into
account for determining whether or not the corporate debtor can
be kept running as a going concern have been placed before the
Committee of Creditors and the CoC has taken a conscious
decision to approve the resolution plan, then the adjudicating
authority will have to switch over to the hands off mode. It is not
the case of the corporate debtor or its promoter/Director or
anyone else that some of the factors which are crucial for taking
a decision regarding the viability and feasibility, were not placed
before the CoC or the Resolution Professional. The only basis
for the corporate debtor to raise the issue of viability and
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feasibility is that the ownership and possession of the 

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