Kalpraj Dharamshi Successful … vs Kotak Investment Advisors … on 10 March, 2021


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Supreme Court of India

Kalpraj Dharamshi Successful … vs Kotak Investment Advisors … on 10 March, 2021

Author: B.R. Gavai

Bench: Rohinton Fali Nariman, B.R. Gavai, Hrishikesh Roy

                                                     1


                                                                    REPORTABLE



                                    IN THE SUPREME COURT OF INDIA
                                    CIVIL APPELLATE JURISDICTION

                                 CIVIL APPEAL NOS.2943­2944 OF 2020


                         KALPRAJ DHARAMSHI & ANR.            ...APPELLANT(S)

                                                 VERSUS


                         KOTAK INVESTMENT ADVISORS LTD.
                         & ANR.                     .... RESPONDENT(S)

                                                   WITH

                                  CIVIL APPEAL NOS.3138­3139 OF 2020

                                  CIVIL APPEAL NO. 2949­2950 OF 2020

                                     CIVIL APPEAL NO. 847­848 /2021
                                                     [D.NO.24125 OF 2020]



                                             JUDGMENT

B.R. GAVAI, J.

Signature Not Verified

Digitally signed by
Jayant Kumar Arora
Date: 2021.03.10

1. Leave to file Civil Appeal in Diary No. 24125 of
17:08:36 IST
Reason:

2020 is granted.

2

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. 344­345 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. 2943­2944 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”)
3

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 (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
4

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. The second Form ‘G’ came

to be issued on 24.8.2018, which required the Resolution

Plans to be submitted on or before 28.9.2018. The third

Form ‘G’ came to be issued on 28.9.2018, which required

the Resolution Plans to be submitted on or before

25.10.2018. The fourth Form ‘G’ came to be issued on
5

9.11.2018, which required the Resolution Plans to be

submitted on or before 13.12.2018. The fifth and the last

Form ‘G’ came to be issued on 11.12.2018, which required

the Resolution Plans to be submitted on or before 8.1.2019.

KIAL, the appellant before NCLAT (respondent

No.1 herein) and one Karvy Data Management Systems

Limited submitted their Resolution Plans on the last date as

stipulated in the last and fifth Form ‘G’ i.e. on 8.1.2019.

One another applicant i.e. WeP Solutions Ltd.

submitted its Resolution Plan jointly with one Sattva Real

Estate Private Limited (hereinafter referred to as “WeP”) on

13.1.2019.

The appellant in Civil Appeal Nos. 2943­2944 of

2020 i.e. Kalpraj submitted its EOI and Resolution Plan to

RP on 27.1.2019.

On 29.1.2019, KIAL sent an email to RP, raising

its objection permitting Kalpraj to submit Resolution Plan,

beyond the prescribed time limit. In the meeting of CoC

held on 30.1.2019, the Resolution Plan of Kalpraj was

placed before CoC. In the said meeting, CoC resolved to

direct all the applicants to submit revised plans.

Accordingly, an email was sent to KIAL directing it to submit
6

its revised plan. Accordingly, KIAL submitted its revised

plan on 1.2.2019. By another email dated 10.2.2019, KIAL

once again objected to consideration of the plan submitted

by Kalpraj.

It is the case of KIAL, that it had received an

email on 11.2.2019 from RP, justifying the consideration of

plan submitted by Kalpraj and asking it to submit a second

revised plan. However, this is disputed by RP. However, it

is not in dispute, that on 12.2.2019, revised plans were

submitted by KIAL as well as Kalpraj. In the meeting of CoC

held on 13/14.2.2019, plan of Kalpraj came to be approved

by a majority.

After CoC had approved the plan of Kalpraj, RP

applied for approval of the plan before NCLT on 18.2.2019

vide M.A. No. 691 of 2019 in Company Petition (IB) No.

156/MB/2018. After coming to know about RP applying for

approval of the plan of Kalpraj, KIAL filed an application on

14.3.2019 being M.A. No.1039 of 2019, objecting to the plan

of Kalpraj. The objection was on the ground, that RP was

not justified in permitting Kalpraj to submit a plan beyond

the date prescribed in Form ‘G’ and that the decision of CoC
7

to approve the plan submitted by Kalpraj was not in

accordance with the I&B Code. Vide order dated

28.11.2019, NCLT allowed M.A. No.691 of 2019 and

approved the Resolution Plan of Kalpraj and by a separate

order passed on the same day, NCLT rejected M.A. No.1039

of 2019, which was filed by KIAL objecting to the decision of

CoC approving the plan submitted by Kalpraj.

Contending, that the procedure followed by NCLT

was in breach of the principles of natural justice, KIAL filed

a writ petition before the Bombay High Court being Writ

Petition (L) No.3621 of 2019, challenging the aforesaid two

orders passed by NCLT. The High Court dismissed the Writ

Petition (L) No.3621 of 2019 filed by KIAL by judgment and

order dated 28.1.2020, on the ground, that KIAL had an

alternate and efficacious remedy of filing an appeal before

NCLAT.

KIAL thereafter filed appeals before NCLAT on

18.2.2020. The appeals were opposed by Kalpraj and also

by RP on the ground, that the appeals were filed beyond the

limitation period prescribed under the I&B Code and as

such, ought not to be entertained. However, vide order
8

dated 5.8.2020, NCLAT did not find favour with the

objections raised by the respondents before it, with regard

to limitation and further found, that the procedure adopted

by RP and CoC was in breach of the provisions of the I&B

Code and therefore, allowed the appeals filed by KIAL.

Vide the said order, NCLAT, while setting aside

both the orders dated 28.11.2019, passed by NCLT, also

directed CoC to take a decision afresh, in the light of the

directions issued in its order, regarding consideration of the

Resolution Plans, which were submitted prior to the

prescribed date as per last Form ‘G’. This was directed to be

done in a period of ten days from the date of the said order.

NCLAT further directed, that if no decision was

communicated to the Adjudicating Authority i.e. NCLT and

since the timeline for completion of CIRP had already

expired, the Adjudicating Authority was to pass an order for

liquidation of the corporate debtor.

5. Being aggrieved by the aforesaid order passed by

NCLAT, four appeals have been filed before this Court, the

details thereof are as under:

Case No. &         Cause title                Particulars of
                                 9


Cause title                                         the appellant

C.A. No.2943­        Kalpraj Dharamshi &            Successful
2944/2020            anr. Vs.                       Resolution
                     Kotak Investment               Applicant
                     Advisors Ltd. & Anr.

C.A. No.3138­        Deutsche Bank AG vs.           Financial
3139 of 2020         Kotak Investment               Creditor
                     Advisors Ltd. & Ors.

C.A. No.2949­        Krishna Chamadia               Erstwhile
2950 of 2020         (Erstwhile Resolution          resolution
                     Profession of Ricoh            professional
                     India Ltd.)
                     Vs.
                     Kotak Investment
                     Advisors Ltd. & Ors.

C.A.                 Fourth Dimension               Claiming to be
D.No.24125 of        Solutions Ltd.                 Largest
2020                 Vs.                            operational
                     Krishna Chamadia &             creditors
                     Ors.



6. We have heard Shri Mukul Rohatgi, Dr. Abhishek

Manu Singhvi and Shri Pinaki Mishra, learned Senior

Counsel appearing for Kalpraj, Shri K.V. Viswanathan,

learned Senior Counsel appearing for Deutsche Bank A.G.

and CoC, Shri C.A. Sundaram, Shri Gopal Sankar

Narayanan and Shri P.P. Chaudary, learned Senior Counsel
10

appearing for Fourth Dimension Solutions Limited, Shri

Shyam Divan, learned Senior Counsel appearing for RP and

Shri Neeraj Kishan Kaul, learned Senior Counsel appearing

for KIAL.

SUBMISSIONS OF SHRI MUKUL ROHATGI, LEARNED

SENIOR COUNSEL APPEARING ON BEHALF OF KALPRAJ

7. Shri Mukul Rohatgi, learned Senior Counsel

submitted, that though four Form ‘G’ were issued by RP

inviting the Resolution Plans from the prospective resolution

applicants, no plans were received from any of the

prospective resolution applicants. He submitted, that in

pursuance to the last and fifth Form ‘G’ published on

11.12.2018, only two Resolution Plans were received, that

too, on the last date i.e. 8.1.2019. He submitted, that in the

meantime, Kalpraj submitted its plan on 27.1.2019. He

submitted, that in the meeting of CoC held on 30.1.2019, in

order to achieve the object of maximization, all the

applicants were asked to submit their revised resolution

plans. He submitted, that KIAL without demur, submitted
11

its revised plans not only once but twice. It is therefore

submitted, that having submitted its revised plans twice,

KIAL is now estopped from challenging the acceptance of

the plan of Kalpraj. It is submitted, that in the meeting of

CoC held on 13/14.2.2019, the plans came to be considered

by CoC and CoC by the whopping majority of 84.36% voting

rights approved the plan of Kalpraj. He submitted, that only

one creditor i.e. Kotak Mahindra Bank Limited (hereinafter

referred to as “Kotak Bank”), which is a holding company of

KIAL, having voting rights of 0.97%, voted in favour of KIAL.

8. Relying on the judgment of this Court in the case

of K. Sashidhar vs. Indian Overseas Bank & Ors.1 , Shri

Rohatgi submitted, the opinion on the subject matter

expressed by the creditors after due deliberation in CoC

meeting through voting, which decision is taken as per the

commercial wisdom, is not justiciable before the

Adjudicating Authority. He also relied on the judgment of

this Court in the case of Committee of Creditors of Essar

1 (2019) 12 SCC 150
12

Steel India Limited through Authorised Signatory vs.

Satish Kumar Gupta & Ors.2

9. Shri Rohatgi further submitted, that as held by

this Court in Innoventive Industries Ltd. vs. ICICI Bank

& Anr.3, I&B Code is a complete code in itself. He

submitted, that Section 61(2) of the I&B Code provides, that

the decision of the Adjudicating Authority (i.e. NCLT) may be

challenged before NCLAT within 30 days. He submitted,

that an appeal would be tenable within a further period of

15 days, only when NCLAT comes to a satisfaction, that

there was a sufficient cause for not filing the appeal within a

period of 30 days. He submitted, that since the I&B Code is

a complete Code, neither Section 5 nor Section 14 of the

Limitation Act, 1963 (hereinafter referred to as “the

Limitation Act”) would be applicable. He submitted, that

the judgment of NCLT was delivered on 28.11.2019; certified

copies of the same were made available to KIAL on

18.12.2019; and appeals came to be filed on 18.2.2020. He

submitted, even if KIAL was given the benefit of the period
2 (2019) SCC Online SC 1478
3 (2018) 1 SCC 407
13

of 20 days for obtaining the certified copies, still the appeals

ought to have been filed on 65 th day from the order of NCLT.

It would be somewhere on 1st/2nd February, 2020. However,

the appeals were filed on 18.2.2020. He submitted, that the

litigant like KIAL, which has a team of legal experts at its

disposal cannot be heard to say, that they were not aware of

the alternate remedy and had bona fide filed the writ

petition before the High Court. He submitted, that KIAL is

not entitled to the benefit of the exclusion of period between

11.12.2019 i.e. the date of filing of the writ petition and

28.1.2020 i.e. the date of dismissal of the writ petition by

the High Court. He submitted, that provisions of Section 14

of the Limitation Act would not at all be applicable and that

NCLAT has totally erred in law, in entertaining the appeals

which were ex facie beyond limitation.

10. Shri Rohatgi further submitted, that NCLT has

approved the plan on 28.11.2019. He submitted, that

though appeals were filed by KIAL, there was no stay on the

implementation of the resolution plan by Kalpraj till the

impugned order was passed by NCLAT on 5.8.2020,
14

whereunder, Kalpraj has taken various steps for

implementation of the Resolution Plan submitted by it. He

submitted, that Kalpraj has expended a total amount of

Rs.300 crore (approx.) in the following manner:

“i. On 02.12.2019, a Public Announcement

in respect of delisting of shares and exit

offer to the public shareholders of the

Corporate Debtor.

ii. On 13.12.2019, Rs.8,87,01,150/­

(Rupees Eight Crores Eighty­Seven Lakh

One Thousand One Hundred and Fifty

only) was paid to 668 shareholders in

exchange of their shares.

          iii.   On   14.12.2019,          a    Post­offer    public

                 announcement            was     issued      by   the

Appellants recording inter alia that the

said consideration has been paid to

public shareholders.

iv. On 20.12.2019, BSE issued a notice in

respect of discontinuation of trading
15

and delisting of equity shares of the

Corporate Debtor.

v. On 23.12.2019, debentures worth Rs.21

crores were issued by the Corporate

Debtor to Appellants.

vi.    On 27.12.2019, the share capital of the

       Company          increased            to      INR.

100,00,00,000/­ (Rupees One Hundred

Crores only).

vii. Minosha Digital Solutions Pvt. Ltd.

merged with the Corporate Debtor with

effect from 28.11.2019.

viii. On 27.12.2019, the Appellants replaced

the Bank Guarantee issued by Deutsche

Bank for INR 136,66,71,090/­ (Rupees

One Hundred Thirty­Six Crores Sixty­

Six Lakh Seventy­One Thousand and

Ninety Only).

ix.    On    30.12.2019,          the   CIRP         costs

       amounting            to     INR.2,65,68,000/­
                      16


(Rupees Two Crores Sixty­Five Lakh

Sixty­Eight Thousand only) were paid

by the Appellants.

x. On 01.01.2020, the Appellants have

made payment of INR 19,54,43,411/­

(Rupees Nineteen Crores Fifty­Four

Lakh Forty­Three Thousand Four

Hundred and Eleven) to non­related

party operational creditors of the

Corporate Debtor.

xi. From 01.01.2020 to 03.01.2020, the

Appellants have made Equity infusion of

INR 3 crores and an Equity infusion of

INR 29 Crores in Company.

xii.   On      23.01.2020,     Appellants         made

       payments to Ricoh Company Limited

       and     NRG   Group     Limited      (minority

shareholder) for the transfer of shares to

Appellants.

17

xiii. On 31.01.2020, the Board of directors

of the Corporate Debtor was

reconstituted and the Appellants

became the owners and stepped into the

management and control of corporate

debtor. It is no more a subsidiary of

Ricoh Japan.

xiv. The Appellants are shareholders of the

Corporate Debtor which is known by its

new name Minosha India Limited.

xv. On 03.02.2020, the RP (who was the

Monitoring Agent of the Monitoring

Committee) issued a communication

recording that the approved Resolution

Plan has been implemented.

xvi. As on 31.07.2020, a total of 21,90,958

no. of shares held by 809 shareholders

have been tendered pursuant to the exit

offer for a sum total of

Rs.10,95,47,900/­. The said exit offer
18

is subsisting till December 2020, in

accordance with the applicable SEBI

rules and regulations.

xvii. Registrar of Companies has only noted

and issued a certificate of the change in

name of the Corporate Debtor from

Ricoh India Limited to Minosha India

Limited.”

11. Shri Rohatgi submitted, that NCLAT has grossly

erred in holding, that the order passed by NCLT was in

breach of the principles of natural justice on the premise,

that the application of KIAL was heard by a single Member,

whereas the decision was signed by two Members. He

submitted, that perusal of the record would reveal, that

though M.A. No.1039 of 2019 i.e. objection of KIAL to the

approval of plan of Kalpraj, was initially listed before the

learned single Member, thereafter the proceedings would

itself show, that the said application was listed before two

learned Members on various dates along with main

application i.e. M.A. No.691 of 2019. He submitted, that the
19

counsels for KIAL have participated in the said proceedings

before the Bench of two Members without demur. He

submitted, that in any case, both, the application filed by

KIAL as well as the main application filed by RP, were

required to be decided together inasmuch as, the issues

were interconnected and therefore, they are rightly decided

by the orders passed on the same day. He therefore

submitted, that the finding of NCLAT with regard to

violation of the principles of natural justice is without any

merit.

12. Shri Rohatgi therefore submitted, that the

appeals deserve to be allowed, the order of NCLAT be set

aside and that of NCLT be restored.

SUBMISSIONS BY DR. ABHISHEK MANU SINGHVI,

LEARNED SENIOR COUNSEL APPEARING FOR KALPRAJ

13. Dr. Abhishek Manu Singhvi, learned Senior

Counsel also appeared on behalf of Kalpraj, which is also

respondent in the other appeals. Dr. Singhvi submitted,

that KIAL, in the covering letter along with its Resolution

Plan dated 8.1.2019, has unequivocally undertaken to waive
20

any and all claims in respect of the Resolution Plan Process.

He submitted, that the phrase ‘Resolution Plan Process’ is

defined in clause 1.0 of the Process Memorandum which

means, “the process set out in this Process Memorandum

for submission, evaluation and selection of Resolution Plan

and activities in relation or incidental thereto.” He

submitted, that in view of unconditional and irrevocable

acceptance of the terms of the Process Memorandum and

having voluntarily and expressly waived all claims with

respect to the Resolution Plan Process, it is not permissible

for KIAL to challenge the decision of CoC approving the

Resolution Plan of Kalpraj. He submitted, that clause 10.4

of the Process Memorandum itself provides, that RP was at

liberty to receive any Resolution Plan, at any stage of the

Resolution Plan Process and examine such Resolution Plan

with the approval of CoC. Learned Senior Counsel

submitted, that having chosen to revise its Resolution Plan

and submit the same on 12.2.2019 in competition with

Kalpraj, KIAL has clearly acquiesced to the consideration of

the Resolution Plan of Kalpraj by RP and CoC, even after the
21

prescribed date of 8.1.2019 and has waived all objections to

the consideration of such Resolution Plan. He submitted,

that even the holding company of KIAL i.e. Kotak Bank of

which KIAL is a 100% subsidiary also agreed with CoC

counsel’s view, that the Resolution Plan of Kalpraj can be

considered.

14. Dr. Singhvi submitted, that the conduct of KIAL

is totally indefensible. He submitted, that it amounts to

taking chances in the process and after having failed there,

then to challenge the process. He submitted, that KIAL had

submitted its revised plans after knowing, that it was

competing with Kalpraj, and only after it was not successful

in the process has chosen to challenge the same. He

submitted, that the revised Resolution Plan submitted by

KIAL does not state, that it is without prejudice to its

contention, that the Resolution Plans submitted after

8.1.2019 ought not to have been considered by RP and CoC.

He submitted, that even if such words were used they would

not be significant. He relied on the judgment of this Court

in the case of ITC Ltd. Vs. Blue Coast Hotels Limited &
22

Ors.4 and Tarapore & Company vs. Cochin Shipyard

Ltd., Cochin & Anr.5, in this regard.

15. Dr. Singhvi further submitted, that Section 238 of

the I&B Code provides, that the provisions of the Code shall

have effect, notwithstanding anything inconsistent

therewith contained in any other law for the time being in

force. He therefore submitted, that the provisions as

contained in Section 61(2) of the I&B Code, which provides,

that an appeal has to be filed within 30 days with a further

enhanced period of 15 days, when NCLAT is satisfied, that a

sufficient cause existed for not filing the appeal within 30

days, has to be strictly construed. He relied on the

judgment of NCLAT in the case of Kumar Dutta prop. K.D.

Trading vs. Simplex Infrastructure Ltd.6 and Asha

Goyal vs. Pharma Traders Pvt. Ltd.7 in that regard.

16. Dr. Singhvi further submitted, that this Court in

a catena of cases has held, that when under special statutes

there is a provision for appeal and a self­contained provision

for limitation, no extension would be possible beyond the

4 (2018) 15 SCC 99
5 (1984) 2 SCC 680 (PARA 33)
6 2019 SCC Online NCLAT 575
7 2019 SCC Online NCLAT 150
23

period of time so stipulated. He relied on the following

judgments of this Court in this regard.

(i) Union of India vs. Popular Construction Co.8,

(ii) Singh Enterprises vs. Commissioner of

Central Excise, Jamshedpur & Ors.9, and

(iii) Chhattisgarh State Electricity Board vs.

Central Electricity Regulatory Commission &

Ors.10

17. Dr. Singhvi further submitted, that NCLAT in two

cases in Radhika Mehra vs. Vaayu Infrastructure LLP &

Ors.11 and Dhirendra Kumar vs. Randstand India Pvt.

Ltd. & Anr.12 has held, that the provisions of Section 14 of

the Limitation Act cannot be made applicable to the appeal

preferred under Section 67 of the I&B Code.

18. Dr. Singhvi submitted, that in any case, it cannot

be said, that filing of the writ petition was a bona fide act of

KIAL. He submitted, that KIAL, which was armed with a

battery of legal counsel, was very well aware, that it had an

alternate remedy of filing an appeal before NCLAT and

therefore, was not entitled to take an umbrella of Section 14
8 (2001) 8 SCC 470
9 (2008) 3 SCC 70
10 (2010) 5 SCC 23
11 2020 SCC Online NCLAT 532
12 2019 SCC Online NCLAT 444
24

of the Limitation Act. In this regard, he relied on the

judgment of this Court in the case of Neeraj Jhanji vs.

Commissioner of Customs & Central Excise13.

19. Dr. Singhvi also reiterated the submissions made

on behalf of Kalpraj by Shri Mukul Rohatgi, learned Senior

Counsel to the effect, that much water has flown after the

Resolution Plan was approved by NCLT and also highlighted

the various steps taken by Kalpraj for implementation of the

Resolution Plan.

SUBMISSION OF SHRI K.V. VISWANATHAN, LEARNED

SENIOR COUNSEL APPEARING ON BEHALF OF

DEUTSCHE BANK A.G. AND CoC.

20. Shri K.V. Viswanathan, learned Senior Counsel

appearing on behalf of Deutsche Bank, which is appellant in

one of the appeals and CoC, which is respondent in some of

the appeals submitted, that the order passed by NCLAT was

not sustainable inasmuch as, CoC was not made a party

before NCLAT. He submitted, that CoC had acted bona fide

only with a view of achieving maximization, by permitting

13(2015) 12 SCC 695
25

Kalpraj to participate. He submitted, that CoC had

approved the Resolution Plan submitted by Kalpraj by a

thumping majority of 84.36%. He submitted, that the

commercial wisdom of CoC is not open to judicial scrutiny

by the Adjudicating Authority, unless it falls within the

statutory parameters and as such, NCLT has rightly rejected

the objection of KIAL and NCLAT has erred in interfering

with the same. He submitted, that no prejudice is caused to

KIAL on account of deviation of the procedure, if any. In

this regard, he relied on the judgment of this Court in the

case of G.J. Fernandez vs. State of Karnataka & Ors.14.

SUBMISSION OF SHRI SHYAM DIVAN, LEARNED SENIOR

COUNSEL APPEARING FOR RP

21. Shri Shyam Divan, learned Senior Counsel

appearing on behalf of RP submitted, that RP had acted

bona fide in order to fetch the maximum benefit to the

Company. He submitted, that even after the prescribed last

date, in view of clause 10.4 of the Process Memorandum, RP

was entitled to consider the plans received subsequently
14 (1990) 2 SCC 488
26

with the approval of CoC. He submitted, that RP therefore

had bona fide accepted the plan of Kalpraj and not only that

but had also given an opportunity to KIAL to submit its

revised plans, so as to compete with Kalpraj. Shri Divan

also advanced the arguments on similar lines as were

advanced by the other counsel on the grounds of limitation,

acquiescence, etc.

SUBMISSION OF SHRI C.A. SUNDARAM, LEARNED

SENIOR COUNSEL APPEARING FOR FOURTH

DIMENSION SOLUTIONS LIMITED

22. Shri C.A. Sundaram, learned Senior Counsel

appearing for Fourth Dimension Solutions Limited,

appellant in Civil Appeal D.No.24125 of 2020, which claims

to have the highest amount recoverable from the Corporate

Debtor submitted, that the said appellant is not concerned

with the dispute between the parties, which is the subject

matter of consideration in the present appeals. It is further

contended, that the appellants’ dues are subject matter of

pending arbitration proceeding between the Corporate
27

Debtor and the appellants and is yet to attain finality, so as

to liquidate the dues. It is aggrieved by the direction given

in paragraph 39 by NCLT in its order dated 28.11.2019 in

M.A. No.691 of 2019. The learned Senior Counsel

submitted, that by the said direction it is directed, that the

Resolution Applicant who stepped into the shoes of

Corporate Debtor subsequent to the approval of the

Resolution Plan by it, shall not be held responsible for any

outstanding statutory dues and other claims for the period

before commencement of CIRP. In the submission of Shri

Sundaram, this direction is prejudicial to the appellant,

which is the largest operational creditor entitled to recover

an amount of 551 crores (approx..) from the Corporate

Debtor. It is also contended, that the claim of the appellant

– Fourth Dimension, though has been shown in the

information memorandum by RP, it has not been considered

by CoC or any of the applicants in their resolution plan. He

relied on the judgment/order dated 16.11.2020 passed by

this Court in Civil Appeal No. 2798 of 2020 [NTPC Ltd.

(Simhadri Project) vs. Rajiv Chakraborty]
28

SUBMISSION OF SHRI NEERAJ KISHAN KAUL,

LEARNED SENIOR COUNSEL APPEARING FOR KIAL

23. Shri Neeraj Kishan Kaul, learned Senior Counsel

appearing on behalf of KIAL, while replying to the

arguments advanced on behalf of the appellants made

manifold submissions.

24. In reply to the submission on behalf of the

appellants, that the appeals filed by KIAL before NCLAT

being barred by limitation, the learned Senior Counsel

submitted, that the arguments advanced were not correct in

law and NCLAT has rightly held the appeals to be within

limitation. He submitted, that though non­exercise of

jurisdiction by the High Court under Article 226 of the

Constitution, in case of availability of alternate remedy is

the normal practice, the same is a rule of self­restraint and

not hard and fast rule. It is submitted, that the High Court

has wide jurisdiction under Article 226 of the Constitution

and in a given case it can entertain a petition under Article

226 in spite of the availability of an alternate and efficacious

remedy. He submitted, that this Court itself in a catena of
29

cases has carved out categories wherein, the High Court is

entitled to exercise its jurisdiction under Article 226 in spite

of the availability of alternate remedy. He submitted, that

one such category is where the proceedings challenged

before the High Court are proceeded in breach of principles

of natural justice. The learned Senior Counsel has relied on

the following judgments of this Court in support of this

proposition.

(i) Whirlpool Corporation vs. Registrar of Trade

Marks, Mumbai & Ors.15,

(ii) Babu Ram Prakash Chandra Maheshwari vs.

Antarim Zilla Parishad Muzaffar Nagar16; and

(iii) Nivedita Sharma vs. Cellular Operators

Association of India & Ors.17

25. Shri Kaul submitted, that perusal of the record

would reveal, that immediately after the filing of application

by RP before NCLT for approval of Resolution Plans

submitted by Kalpraj, KIAL had filed an application

objecting thereto being M.A. No.1039 of 2019. He

submitted, that perusal of the order­sheet of NCLT dated

15 (1998) 8 SCC 1
16 (1969) 1 SCR 518
17 (2011) 14 SCC 337
30

3.7.2019 would reveal, that the application filed by KIAL

and one another application being M.A. No.2023 of 2019

were heard by the learned single Member and reserved for

orders. He submitted, that insofar as M.A. No.691 of 2019

is concerned, the order dated 3.7.2019 would show, that the

said application was directed to be kept on 23.7.2019 at

2.30 p.m. along with other applications for consideration of

resolution plan on its commercial aspect. The other matters

were directed to be kept for hearing on 15.7.2019. It is

further submitted, that when M.A. No.691 of 2019 was

listed on 23.7.2019, it was directed to be heard on 7.8.2019

at 2.30 p.m. On 7.8.2019, M.A. No. 691 of 2019 was listed,

for the first time, before the Bench consisting of two

Members and on that date the matter came to be adjourned

to 26.8.2019. Again on 26.8.2019, the matter came up

before the Division Bench and the Division Bench directed

the same to be kept on 6.9.2019. On 6.9.2019, the Division

Bench adjourned the matter to 17.9.2019 at 2.30 p.m.

Again on 17.9.2019, the matter came up before the Division

Bench which directed it to be adjourned to 19.9.2019.
31

Finally, on 19.9.2019, M.A. No.691 of 2019 was heard on

Resolution Plan and reserved for orders. Learned counsel

therefore submitted, that it is clear from the record, that

M.A. No.1039 of 2019 filed by KIAL, was heard on 3.7.2019

by the learned single Member and reserved for orders.

However, M.A. No. 691 of 2019 was heard by the Division

Bench on 19.9.2019. Learned counsel therefore submitted,

that the orders in M.A. No. 1039 of 2019 could have been

passed only by the learned single Member. However, by two

orders passed on even date i.e. 28.11.2019, the Division

Bench rejected the application of KIAL and allowed the

application filed by RP thereby, approving the Resolution

Plan submitted by Kalpraj.

26. Learned Senior Counsel submitted, that in this

background KIAL was justified in invoking the jurisdiction

of the High Court under Article 226 of the Constitution

inasmuch as, the proceedings conducted by NCLT were

totally in breach of the principles of natural justice, as the

matter was heard by a single Member whereas, the orders

were passed by the Division Bench. Learned counsel
32

submitted, that the High Court while dismissing the writ

petition and relegating KIAL to alternate remedy available in

law has passed an elaborate order. Learned Senior Counsel

therefore submitted, that it does not lie in the mouth of the

appellants, that KIAL had not approached the High Court

bona fide. Learned Senior Counsel submitted, that in view of

various judgments delivered by this Court, the High Court

could have entertained a petition under Article 226, when

the proceedings were conducted in breach of the principles

of natural justice.

27. Shri Kaul, learned Senior Counsel therefore

submitted, that NCLAT was right in law in giving the benefit

of the period for which KIAL was bona fide prosecuting its

writ petition before the Bombay High Court. Learned Senior

Counsel submitted, that if that period is considered, the

appeals filed by KIAL are very well within the limitation.

28. Learned Senior Counsel submitted, that the

purpose behind Article 14 of the Limitation Act is to

advance justice and not to halt justice. He submitted, that

Section 14 enables a party to get the benefit of the period for

which it was bona fide prosecuting the remedy before a
33

wrong forum. Learned counsel submitted, that a liberal

approach is required to be given to the provisions of Article

14. Learned counsel relied on the judgments of this Court

in the case of Ketan V. Parekh vs. Special Director,

Directorate of Enforcement & Anr.18, M.P. Steel

Corporation vs. Commissioner of Central Excise19 and

Union of India & Ors. vs. West Coast Paper Mills Ltd. &

Anr.20 in this regard.

29. Insofar as the arguments of the appellants with

regard to acquiescence and waiver are concerned, learned

Senior Counsel submitted, that, at the earliest opportunity,

KIAL has objected to Kalpraj submitting its Resolution Plan.

He submitted, that on KIAL coming to know, that the

Resolution Plan of Kalpraj was accepted beyond 8.1.2019,

KIAL objected to it vide email dated 29.1.2019 addressed to

RP. He submitted, that RP had replied to its email on

30.1.2019 and requested to submit amended Resolution

Plan by 3.00 p.m. on 1.2.2019. He submitted, that in the

said email it is also mentioned, that “CoC reserves the rights
18 (2011) 15 SCC 30
19 (2015) 7 SCC 58
20 (2004) 3 SCC 458
34

to not consider your plan, if received after the said timeline”.

He submitted, that accordingly, KIAL had no other option

but to submit its revised plan.

30. Learned Senior Counsel submitted, that even

after submission of the revised plan, KIAL did not hear

anything from RP and therefore vide email dated 10.2.2019,

addressed to RP, it again raised its objection. The said

email was replied to by RP on 11.2.2019 wherein, RP stated,

that the resolution plans submitted after the due date also

could be considered, in the spirit of value maximisation of

assets of the corporate debtor. He submitted, that again

vide communication dated 11.2.2019, KIAL was required to

submit a revised bid, which was submitted by it on

12.2.2019. Learned counsel therefore submitted, that it is

clear from the record, that KIAL had objected to the

participation of Kalpraj at the earliest possible opportunity

i.e. on 29.1.2019. Not only that, thereafter KIAL continued

to object to the participation of Kalpraj. Revised plans were

submitted by KIAL under compulsion inasmuch as, if it

would not have submitted its revised plans, on that ground
35

alone it had to face the risk of being ousted from

consideration. It is therefore submitted, that the

contention, that KIAL has acquiesced to the participation of

Kalpraj and was therefore estopped from challenging its

participation is without any substance. Learned counsel

submitted, that the contention, that KIAL was taking

chances is also totally incorrect. It had objected to the

participation of Kalpraj at the very first opportunity and

continued to object till CoC approved its plan and also

thereafter, by way of an application before NCLT objecting to

the approval of the Resolution Plan of Kalpraj.

31. Learned counsel further submitted, that the

contention, that KIAL is a subsidiary of Kotak Bank and

that Kotak Bank had also not objected to Kalpraj submitting

its Resolution Plan and therefore the same amounted to

acquiescence is also not correct. He submitted, that firstly,

in the reply filed by RP to the application filed by KIAL in

NCLT, there is no plea regarding the Kotak Bank’s

consensus. He however submitted, that in any case in view

of the judgment of this Court in the case of Vodafone
36

International Holdings BV vs. Union of India & Anr.21,

both KIAL and Kotak Bank are different corporate entities

and any act of Kotak Bank cannot bind KIAL.

32. On merits, Shri Kaul would submit, that the

entire process adopted by RP and CoC was contrary to the

statutory provisions, fair play and transparency. He

submitted, that perusal of the definition of ‘applicant’ in the

Process Memorandum in clause 1.0 would show, that for

being a resolution applicant, one has to be an applicant who

has applied within the prescribed period either under EOI or

Form ‘G’. It is submitted, that since Kalpraj had neither

responded within the period prescribed under EOI or any of

the Form ‘G’, it could not have been considered to be a

resolution applicant. He submitted, that the entire

participation of Kalpraj is illegal. He submitted, that after

the plan was submitted by KIAL there was a detailed

discussion with RP with regard to the plan submitted by it,

wherein entire plan was disclosed, after which Kalpraj was

permitted to step in. He submitted, that perusal of the

Resolution Plan of Kalpraj would reveal, that it is identical

21 (2012) 6 SCC 613
37

with the plans submitted by KIAL, with a little variation to

the extent, that in the plan of KIAL the provision made for

minority shareholder is Rs.1 crore whereas, in the plan of

Kalpraj it is Rs. 50 crore. He submitted, that the entire

conduct of RP as well as CoC would reveal, that they had

acted in a manner that smacks of favouritism to Kalpraj and

were determined to anyhow approve the plan of Kalpraj. It

is submitted, that all these aspects have been rightly

considered by NCLAT and therefore, the appeals deserve to

be dismissed.

33. With regard to the contention of the

appellant/Kalpraj, that it has taken several steps in

pursuance of the Resolution Plan, which was approved by

NCLT and any interference at this stage would cause great

prejudice to many stakeholders, learned counsel submitted,

that not much has been done under the Resolution Plan.

He submits, in any case, whatever steps have been taken

are almost identical with the steps that KIAL would have

taken inasmuch as, the Resolution Plan submitted by

Kalpraj is almost identical with the Resolution Plan
38

submitted by KIAL. He submitted, that in any case,

whatever amount has been spent by Kalpraj, the same

could be reimbursed by KIAL and further steps being

continued to be taken by KIAL, so as to take the Resolution

Plan to the logical end.

34. Insofar as the judgment of NCLAT in the case of

Binani Industries Limited vs. Bank of Baroda & Anr.22

is concerned, learned counsel submitted, that the said

judgment is totally distinguishable inasmuch as, in the said

case both applicants had submitted their plans and revised

plans within the stipulated period.

35. In view of the rival submissions, following

questions arise for our consideration.

(i) Whether the appeals filed by KIAL before

NCLAT were within limitation?

(ii) Whether there was waiver and acquiescence

by KIAL, so as to estop it from challenging

the participation of Kalpraj?

(iii) Whether NCLAT was right in law in

interfering with the decision of CoC of

accepting the resolution plan of Kalpraj?

22 2018 SCC Online NCLAT 565
39

(i) WHETHER THE APPEALS FILED BY KIAL BEFORE

NCLAT WERE WITHIN LIMITATION?

36. For appreciating the rival contentions in this

regard, it would be appropriate to refer to Section 29(2) of

the Limitation Act, so also the provisions of Section 61 and

Section 238A of the I&B Code.

Section 29(2) of the Limitation Act.

“29. Savings.—(1) …….

(2) Where any special or local law
prescribes for any suit, appeal or
application a period of limitation
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 and 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 insofar as, and to the
extent to which, they are not
expressly excluded by such special
or local law.”
Section 61 and 238A of the I&B Code
“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
40

Adjudicating Authority under this
part may prefer an appeal to the
National Company Law Appellate
Tribunal.

(2) Every appeal under sub­section
(1) shall be filed within thirty days
before the National Company Law
Appellate Tribunal:

Provided that the National
Company Law Appellate Tribunal
may allow an appeal to be filed after
the expiry of the said period of thirty
days if it is satisfied that there was
sufficient cause for not filing the
appeal but such period shall not
exceed fifteen days.

(3) An appeal against an order
approving a resolution plan under
Section 31 may be filed on the
following grounds, namely—

(i) the approved resolution plan
is in contravention of the pro­
visions of any law for the
time being in force;

(ii) there has been material ir­
regularity in exercise of the
powers by the resolution pro­
fessional during the corpo­
rate insolvency resolution pe­
riod;

(iii) the debts owed to opera­
tional creditors of the corpo­
rate debtor have not been
provided for in the resolution
plan in the manner specified
by the Board;

41

(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 crite­
ria specified by the Board.

(4) An appeal against a liquidation
order passed under Section 33 may
be filed on grounds of material
irregularity or fraud committed in
relation to such a liquidation order.”

“238­A. Limitation.—The provisions
of the Limitation Act, 1963 (36 of
1963) shall, as far as may be, apply
to the proceedings or appeals before
the Adjudicating Authority, the
National Company Law Appellate
Tribunal, the Debt Recovery Tribunal
or the Debt Recovery Appellate
Tribunal, as the case may be.”

37. Perusal of the aforesaid would reveal, that 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
42

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 expressly

excluded by such special or local law.

38. An appeal is provided before NCLAT under sub­

section (1) of Section 61 of the I&B Code to any person,

who is aggrieved by the order of the Adjudicating Authority.

Sub­section (2) of Section 61 of the I&B Code provides, that

every appeal under sub­section (1) shall be filed within

thirty days before NCLAT. The proviso thereto further

provides, that NCLAT may allow an appeal to be filed after

the expiry of the said period of thirty days if it is satisfied,

that there was sufficient cause for not filing the appeal.

However, such period shall not exceed fifteen days.

39. Since 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
43

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.

40. In the present case, the dates are not in dispute.

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
44

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 present case, the appeal is

filed on 18.2.2020. It is also not in dispute, that

immediately after the order was passed on 28.11.2019 by

NCLT, KIAL preferred a writ petition being Writ Petition (L)

No. 3621 of 2019 before the Division Bench of the Bombay

High Court on 11.12.2019. The said writ petition came to be

dismissed on 28.1.2020 on the ground, that KIAL had an

alternate and efficacious remedy available under Section 61

of the I&B Code and as such, it was relegated to the

alternate remedy available in law.

41. It is strenuously urged on behalf of all the

appellants except Fourth Dimension Solutions Ltd., that the

I&B Code is a complete code in itself, which also provides

for a period of limitation and as such, Section 14 of the

Limitation Act would not be available to KIAL.

42. On the contrary, it is urged on behalf of KIAL,

that since the order passed by NCLT was passed in utter

breach of the principles of natural justice, it had bona fide

filed a writ petition before the Division Bench of the Bombay
45

High Court. It is urged, that by an elaborate order the writ

petition came to be dismissed, on the ground of availability

of alternate remedy. It is therefore urged, that the

provisions of Section 14 or at least the principles laid down

therein, would be available to KIAL and as such, the

appeals, as filed will have to be held to be within limitation.

43. Therefore, the crucial question, that arises for

consideration, is as to whether the provisions of Section 14

of the Limitation Act or the principles laid down therein

would be available to KIAL for exclusion of the period during

which it was prosecuting the writ petition before the

Division Bench of the Bombay High Court.

44. It will be relevant to refer to Section 14 of the

Limitation Act.

“14. Exclusion of time of proceeding
bona fide in court without
jurisdiction.—(1) In computing the period
of limitation for any suit the time during
which the plaintiff has been prosecuting
with due diligence another civil
proceeding, whether in a court of first
instance or of appeal or revision, against
the defendant shall be excluded, where
the proceeding relates to the same matter
in issue and is prosecuted in good faith in
46

a court which, from defect of jurisdiction or
other cause of a like nature, is unable to
entertain it.

(2) In computing the period of limitation for
any application, the time during which the
applicant has been prosecuting with due
diligence another civil proceeding, whether
in a court of first instance or of appeal or
revision, against the same party for the
same relief shall be excluded, where such
proceeding is prosecuted in good faith in a
court which, from defect of jurisdiction or
other cause of a like nature, is unable to
entertain it.

(3) Notwithstanding anything contained in
Rule 2 of Order XXIII of the Code of Civil
Procedure, 1908 (5 of 1908), the provisions
of sub­section (1) shall apply in relation to
a fresh suit instituted on permission
granted by the court under Rule 1 of that
Order, where such permission is granted
on the ground that the first suit must fail
by reason of a defect in the jurisdiction of
the court or other cause of a like nature.
Explanation.—For the purposes of this
section,—

(a) in excluding the time during
which a former civil proceeding
was pending, the day on which
that proceeding was instituted
and the day on which it ended
shall both be counted;

(b) a plaintiff or an applicant re­
sisting an appeal shall be deemed
to be prosecuting a proceeding;

47

(c) misjoinder of parties or of
causes of action shall be deemed
to be a cause of a like nature with
defect of jurisdiction.”

45. The conditions that are required to be fulfilled for

invoking the provisions of Section 14 of the Limitation Act

have been succinctly spelt out in various judgments of this

Court including the one in Consolidated Engineering

Enterprises vs. Principal Secretary, Irrigation

Department and others23, which read thus:

“21. “Section 14 of the Limitation Act
deals with exclusion of time of proceeding
bona fide in a court without jurisdiction. On
analysis of the said section, it becomes
evident that the following conditions must
be satisfied before Section 14 can be
pressed into service:

(1) Both the prior and subsequent
proceedings are civil proceedings
prosecuted by the same party;
(2) The prior proceeding had been
prosecuted with due diligence and in
good faith;

(3) The failure of the prior
proceeding was due to defect of
jurisdiction or other cause of like
nature;

23 (2008) 7 SCC 169
48

(4) The earlier proceeding and the
latter proceeding must relate to the
same matter in issue; and
(5) Both the proceedings are in a
court.”

46. Perusal of the aforesaid conditions would make it

amply clear, that one of the conditions that is required to be

fulfilled is that both the proceedings are in a court. The

question as to whether the provisions of Section 14 of the

Limitation Act would also be applicable to the quasi­judicial

forums as against the court, fell for consideration before

this Court in the case of M.P. Steel Corporation (supra).

This Court after an elaborate survey of the various

judgments of this Court, including judgment in the cases of

Bharat Bank Ltd., Delhi vs. Employees of the Bharat

Bank Ltd., Delhi24, Town Municipal Council, Athani vs.

Presiding Officer, Labour Courts, Hubli and others

etc.25, Nityananda M. Joshi and others vs. Life

Insurance Corporation of India and others26,

Commissioner of Sales Tax. U.P., Lucknow vs. Parson
24 AIR 1950 SC 188 = 1950 SCR 459
25 (1969) 1 SCC 873
26 (1969) 2 SCC 199
49

Tools and Plants, Kanpur27, Kerala State Electricity

Board, Trivandrum vs. T.P. Kunhaliumma28, Officer on

Special Duty (Land Acquisition) and another vs. Shah

Manilal Chandulal and others29 and Consolidated

Engineering Enterprises (supra) held, that the word

“court” in Section 14 takes its colour from the preceding

words “civil proceedings”. It was therefore held, that the

Limitation Act including Section 14 would not apply to

appeals filed before a quasi­judicial Tribunal. It was held,

that since the appeal as mentioned in Section 128 of the

Customs Act is not before a Court, the provisions of Section

14 would not be applicable.

47. All the authorities cited above, including

Consolidated Engineering Enterprises (supra), have been

elaborately discussed in the judgment of this Court in the

case of M.P. Steel Corporation (supra) and therefore, we

refrain from burdening the present judgment by

reproducing the observations made in those judgments.

27 (1975) 4 SCC 22
28 (1976) 4 SCC 634
29 (1996) 9 SCC 414
50

48. This Court in M.P. Steel Corporation (supra)

further observed, that the judgment of this Court in the

case of Commissioner of Sales Tax, U.P. vs. Madan Lal

Das & Sons, Bareilly30 had not considered the law laid

down in Parson Tools and Plants (supra) and the other

judgments nor the aforesaid decisions were pointed out to

the Court and therefore, the said judgment in the case of

Madan Lal Das & Sons (supra) was not an authority for

the proposition, that the Limitation Act would apply to

Tribunals.

49. After having held, that the Limitation Act,

including Section 14 would not apply to appeals filed before

a quasi­judicial Tribunal, this Court in M.P. Steel

Corporation (supra) observed thus:

“….However, this does not conclude the
issue. There is authority for the
proposition that even where Section 14
may not apply, the principles on which
Section 14 is based, being principles
which advance the cause of justice,
would nevertheless apply. We must never
forget, as stated in Bhudan Singh v. Nabi
Bux
[(1969) 2 SCC 481 : (1970) 2 SCR 10]
30 (1976) 4 SCC 464
51

that justice and reason is at the heart of
all legislation by Parliament. This was put
in very felicitous terms by Hegde, J. as
follows: (SCC p. 485, para 9)
‘9. Before considering the meaning
of the word ‘held’ in Section 9, it is
necessary to mention that it is proper
to assume that the lawmakers who are
the representatives of the people enact
laws which the society considers as
honest, fair and equitable. The object
of every legislation is to advance public
welfare. In other words as observed by
Crawford in his book on ‘Statutory
Constructions’ that the entire legislative
process is influenced by considerations
of justice and reason. Justice and
reason constitute the great general
legislative intent in every piece of
legislation. Consequently where the
suggested construction operates
harshly, ridiculously or in any other
manner contrary to prevailing
conceptions of justice and reason, in
most instances, it would seem that the
apparent or suggested meaning of the
statute, was not the one intended by
the lawmakers. In the absence of some
other indication that the harsh or
ridiculous effect was actually intended
by the legislature, there is little reason
to believe that it represents the
legislative intent.’

39. This is why the principles of Section
14
were applied in J. Kumaradasan
52

Nair v. Iric Sohan [(2009) 12 SCC 175 :
(2009) 4 SCC (Civ) 656] to a revision
application filed before the High Court of
Kerala. The Court held: (SCC pp. 180­81,
paras 16­18)
‘16. The provisions contained in
Sections 5 and 14 of the Limitation Act
are meant for grant of relief where a
person has committed some mistake.

The provisions of Sections 5 and 14 of
the Limitation Act alike should, thus,
be applied in a broadbased manner.

When sub­section (2) of Section 14 of
the Limitation Act per se is not
applicable, the same would not mean
that the principles akin thereto would
not be applied. Otherwise, the
provisions of Section 5 of the
Limitation Act would apply. There
cannot be any doubt whatsoever that
the same would be applicable to a case
of this nature.

17. There cannot furthermore be
any doubt whatsoever that having
regard to the definition of ‘suit’ as
contained in Section 2(l) of the
Limitation Act, a revision application
will not answer the said description.
But, although the provisions of Section
14
of the Limitation Act per se are not
applicable, in our opinion, the
principles thereof would be applicable
for the purpose of condonation of delay
in filing an appeal or a revision
application in terms of Section 5
thereof.

53

18. It is also now a well­settled
principle of law that mentioning of a
wrong provision or non­mentioning of
any provision of law would, by itself, be
not sufficient to take away the
jurisdiction of a court if it is otherwise
vested in it in law. While exercising its
power, the court will merely consider
whether it has the source to exercise
such power or not. The court will not
apply the beneficent provisions like
Sections 5 and 14 of the Limitation Act
in a pedantic manner. When the
provisions are meant to apply and in
fact found to be applicable to the facts
and circumstances of a case, in our
opinion, there is no reason as to why
the court will refuse to apply the same
only because a wrong provision has
been mentioned. In a case of this
nature, sub­section (2) of Section 14 of
the Limitation Act per se may not be
applicable, but, as indicated
hereinbefore, the principles thereof
would be applicable for the purpose of
condonation of delay in terms of
Section 5 thereof.’

40. The Court further quoted
from Consolidated Engg.

Enterprises [(2008) 7 SCC 169] an
instructive passage: (Iric Sohan
case [(2009) 12 SCC 175 : (2009) 4 SCC
(Civ) 656] , SCC p. 183, para 21)
‘21. In Consolidated Engg.

Enterprises v. Irrigation Deptt. [(2008) 7
54

SCC 169] this Court held: (SCC p. 181,
para 22)
‘22. The policy of the section is to
afford protection to a litigant against
the bar of limitation when he
institutes a proceeding which by
reason of some technical defect
cannot be decided on merits and is
dismissed. While considering the
provisions of Section 14 of the
Limitation Act, proper approach will
have to be adopted and the
provisions will have to be
interpreted so as to advance the
cause of justice rather than abort
the proceedings. It will be well to
bear in mind that an element of
mistake is inherent in the invocation
of Section 14. In fact, the section is
intended to provide relief against the
bar of limitation in cases of
mistaken remedy or selection of a
wrong forum. On reading Section 14
of the Act it becomes clear that the
legislature has enacted the said
section to exempt a certain period
covered by a bona fide litigious
activity. Upon the words used in the
section, it is not possible to sustain
the interpretation that the principle
underlying the said section, namely,
that the bar of limitation should not
affect a person honestly doing his
best to get his case tried on merits
but failing because the court is
unable to give him such a trial,
would not be applicable to an
55

application filed under Section 34 of
the 1996 Act. The principle is clearly
applicable not only to a case in
which a litigant brings his
application in the court, that is, a
court having no jurisdiction to
entertain it but also where he brings
the suit or the application in the
wrong court in consequence of bona
fide mistake or (sic of) law or defect
of procedure. Having regard to the
intention of the legislature this
Court is of the firm opinion that the
equity underlying Section 14 should
be applied to its fullest extent and
time taken diligently pursuing a
remedy, in a wrong court, should be
excluded.’
See Shakti Tubes Ltd. v. State of
Bihar
[(2009) 1 SCC 786 : (2009) 1
SCC (Civ) 370] .’ ”

50. Thus, this Court relying on the earlier judgments

in the cases of Bhudan Singh and another vs. Nabi Bux

and another31, J. Kumaradasan Nair and another vs.

Iric Sohan and others32, and Consolidated Engineering

Enterprises (supra) observed, that the object of enacting

the legislation is to advance public welfare. The entire

legislative process is influenced by considerations of justice
31 (1969) 2 SCC 481
32 (2009) 12 SCC 175
56

and reason. Justice and reason constitute the great general

legislative intent in every piece of legislation. It has been

held by this Court, that in the absence of some other

indication that the harsh or ridiculous effect was actually

intended by the legislature, there is little reason to believe,

that it represents the legislative intent. It is further

observed, that the provisions contained in Sections 5 and

14 of the Limitation Act are meant for grant of relief, where

a person has committed some mistake. In J.

Kumaradasan Nair (supra), it has been observed, that

when sub­section (2) of Section 14 of the Limitation Act per

se is not applicable, the same would not mean, that the

principles akin thereto would not be applicable.

51. In Consolidated Engineering Enterprises

(supra), it has been observed, that while considering the

provisions of Section 14 of the Limitation Act, proper

approach will have to be adopted and the provisions will

have to be interpreted, so as to advance the cause of justice,

rather than abort the proceedings. It has been observed,

that an element of mistake is inherent in the invocation of
57

Section 14. The section, in fact, is intended to provide a

relief against the bar of limitation in cases of mistaken

remedy or selection of a wrong forum. It has been observed,

that the legislature has enacted Section 14 to exempt a

certain period covered by a bona fide litigious activity. It

has been held, that the equity underlying Section 14 should

be applied to its fullest extent and time taken diligently

pursuing a remedy, in a wrong court, should be excluded.

It could thus be seen, that this Court has in unequivocal

terms held, that 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 quasi­judicial

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.

58

52. An argument similar to the one which is

advanced before us, that since the Code is a complete Code

in itself, the limitation as provided only under the Code

would govern the field and would exclude the application of

provisions of Section 14 of the Limitation Act was made in

the case of M.P. Steel Corporation (supra). While

considering this objection, this Court observed thus:

“42. However, it remains to consider
whether Shri Sanghi is right in stating
that Section 128 is a complete code by
itself which necessarily excludes the
application of Section 14 of the Limitation
Act. For this proposition he relied
strongly on Parson Tools [(1975) 4 SCC
22 : 1975 SCC (Tax) 185 : (1975) 3 SCR
743] which has been discussed
hereinabove. As has already been
stated, Parson Tools [(1975) 4 SCC 22 :
1975 SCC (Tax) 185 : (1975) 3 SCR 743]
was a judgment which turned on the
three features mentioned in the said case.

Unlike the U.P. Sales Tax Act, there is no
provision in the Customs Act which
enables a party to invoke suo motu the
appellate power and grant relief to a
person who institutes an appeal out of
time in an appropriate case. Also, Section
10 of the U.P. Sales Tax Act dealt with
the filing of a revision petition after a first
appeal had already been rejected, and not
59

to a case of a first appeal as provided
under Section 128 of the Customs Act.
Another feature, which is of direct
relevance in this case, is that for revision
petitions filed under the U.P. Sales Tax
Act a sufficiently long period of 18
months had been given beyond which it
was the policy of the legislature not to
extend limitation any further. This aspect
of Parson Tools [(1975) 4 SCC 22 : 1975
SCC (Tax) 185 : (1975) 3 SCR 743] has
been explained in Consolidated Engg.
[(2008) 7 SCC 169] in some detail by both
the main judgment as well as the
concurring judgment. In the latter
judgment, it has been pointed out that
there is a vital distinction between
extending time and condoning delay. Like
Section 34 of the Arbitration Act, Section
128
of the Customs Act is a section which
lays down that delay cannot be condoned
beyond a certain period. Like Section 34
of the Arbitration Act, Section 128 of the
Customs Act does not lay down a long
period. In these circumstances, to infer
exclusion of Section 14 or the principles
contained in Section 14 would be unduly
harsh and would not advance the cause
of justice. It must not be forgotten as is
pointed out in the concurring judgment
in Consolidated Engg. [(2008) 7 SCC 169]
that: (SCC p. 193, para 54)
‘54. … Even when there is cause to
apply Section 14, the limitation period
continues to be three months and not
more, but in computing the limitation
period of three months for the
60

application under Section 34(1) of the
AC Act, the time during which the
applicant was prosecuting such
application before the wrong court is
excluded, provided the proceeding in
the wrong court was prosecuted bona
fide, with due diligence. Western
Builders [State of Goa v. Western
Builders
, (2006) 6 SCC 239] therefore
lays down the correct legal position.’

43. Merely because Parson Tools [(1975)
4 SCC 22 : 1975 SCC (Tax) 185 : (1975) 3
SCR 743] also dealt with a provision in a
tax statute does not make the ratio of the
said decision apply to a completely
differently worded tax statute with a
much shorter period of limitation—
Section 128 of the Customs Act. Also, the
principle of Section 14 would apply not
merely in condoning delay within the
outer period prescribed for condonation
but would apply dehors such period for
the reason pointed out in Consolidated
Engg. [(2008) 7 SCC 169] above, being
the difference between exclusion of a
certain period altogether under Section
14
principles and condoning delay. As
has been pointed out in the said
judgment, when a certain period is
excluded by applying the principles
contained in Section 14, there is no delay
to be attributed to the appellant and the
limitation period provided by the statute
concerned continues to be the stated
period and not more than the stated
period. We conclude, therefore, that the
61

principle of Section 14 which is a
principle based on advancing the cause of
justice would certainly apply to exclude
time taken in prosecuting proceedings
which are bona fide and with due
diligence pursued, which ultimately end
without a decision on the merits of the
case.”

53. Perusal of the aforesaid would therefore reveal,

that the Court has clearly rejected the objection raised by

the Revenue in M.P. Steel Corporation (supra) which was

raised relying on the judgment of this Court in the case of

Parson Tools and Plants (supra). This Court observed,

that the time during which the applicant was prosecuting

such application before the wrong court can be excluded,

provided the proceeding in the wrong court was prosecuted

bona fide, with due diligence. This Court distinguished the

judgment in the case of Parson Tools and Plants (supra)

on the ground, that the period provided for filing a revision

under the U.P. Sales Tax Act was sufficiently long period of

18 months, beyond which it was the policy of the legislature

not to extend limitation any further. Relying on the
62

Consolidated Engineering Enterprises (supra), it has

been observed, that there is a vital distinction between

extending time and condoning delay. It was further

observed, that like Section 34 of the Arbitration Act, the

period provided in Section 128 of the Customs Act did not

lay down a long period for preferring an appeal. As such, it

would be unduly harsh to exclude the principles contained

in Section 14 of the Limitation Act. Relying on

Consolidated Engineering Enterprises (supra) it was

observed, that there is a difference between exclusion of a

certain period altogether under principles of Section 14 and

condoning the delay. It has been observed, that when a

certain period is excluded by applying the principles

contained in Section 14, there is no delay to be attributed to

the appellant and the limitation period provided by the

statute concerned, continues to be the stated period and not

more than the stated period. It was therefore held, that the

principle of section 14, which is a principle based on

advancing the cause of justice would certainly apply to

exclude time taken in prosecuting proceedings which are
63

bona fide and pursued with due diligence but which end

without a decision on the merits of the case.

54. Coming to the facts of the present case,

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 Bombay 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. Perusal of the judgment and order

dated 28.1.2020, passed by the Division Bench of the

Bombay High Court, which dismissed the writ petition on

the ground of availability of alternate and equally efficacious

remedy would reveal, that the said writ petition was hotly

contested between the parties and by an order running into

32 pages, the Division Bench of the Bombay High Court

dismissed the petition relegating the petitioner therein (i.e.

KIAL) to avail of an alternate remedy available in law.
64

55. Perusal of the memo of the writ petition would

reveal, that the petitioner (i.e. KIAL) has specifically averred

thus in the petition:

“2. By way of present Petition seeks to
challenge order dated 28th November
2019 passed by Hon’ble National
Company Law Tribunal – Bench – II,
Mumbai (“NCLT”) on Misc. Application
No.1039 of 2019 filed by the present
Petitioner. The NCLT, in gross abuse of
process of law and in complete disregard
of true and actual circumstances has
proceeded to pass the impugned order.
The order impugned is passed by bench
of two members, Hon’ble M.K. Sharawat
(Judicial) and Hon’ble Chandra Bhan
Singh (Technical) on 28th November,
2019. However, the matter was heard
and reserved for orders on 03 rd July,
2019, by Hon’ble Member, Shri M.K.
Sharawat (Judicial). At the relevant point
of time, when the matter was heard and
argued, Hon’ble Chandra Bhan Singh
(Technical) was not even appointed as
Member of NCLT and never had occasion
to hear and adjudicate upon the
Application filed by the Petitioner. It is
not just the Application filed by the
Petitioner but 3 other Applications which
are disposed off by the common order
were not heard by the bench who has
passed the order. This is not just
contrary to law but demonstrate that the
entire process of passing the orders was
in an absolute mechanical manner.
Annexed hereto and marked as EXHIBIT
65

“A” is the copy of the order dated 28 th
November 2019 passed by NCLT on
Miscellaneous Application No. 1039 of
2019.”

56. It could therefore be seen, that the petitioner ­

KIAL has specifically stated, that though the application of

the petitioner was heard by a Member (Judicial), the order

was passed by a Division Bench consisting of Member

(Judicial) as well as Member (Technical). Perusal of the

grounds would further reveal, that a specific ground has

been taken, that the procedure adopted by NCLT was in

breach of principles of natural justice.

57. It will also be relevant to refer to paragraph 14 of

the Memo of the writ petition, which reads thus:

“14. The Petitioner submits that the
Petitioner has alternate remedy of
filing of Appeal before the Hon’ble
NCLAT. However, the issue involved
in present Writ Petition is not just
about the merits of the impugned
order, but also in respect of
functioning of the Tribunal and the
manner in which Tribunal deals
with the matters. These Tribunals
come under supervisory control of
jurisdictional High Court i.e. this
Hon’ble Court. The issue involved is
not in respect of this matter but also
in respect of day to day functioning
66

of the Tribunal and the manner in
which such issues are being dealt
with by the Tribunal. Therefore,
Petitioner is exercising Writ
Jurisdiction of this Hon’ble Court.”

58. It could thus clearly be seen, that the petitioner

therein i.e. KIAL has specifically stated, that though it had

an alternate remedy of filing an appeal before NCLAT, since

the petition was not just about the merits of the impugned

order, but also in respect of functioning of the Tribunal the

petitioner was invoking the writ jurisdiction of the Court.

59. By now, 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

self­restraint. As early as in 1969, in the case of Babu Ram

Prakash Chandra Maheshwari (supra), this Court

observed thus:

“It is a well­established proposition of law
that when an alternative and equally effi­
cacious remedy is open to a litigant he
should be required to pursue that remedy
and not to invoke the special jurisdiction
of the High Court to issue a prerogative
writ. It is true that the existence of a
statutory remedy does not affect the ju­
67

risdiction of the High Court to issue a
writ. But, as observed by this Court
in Rashid Ahmed v. The Municipal Board,
Kairana
[(1950) SCR 566], “the existence
of an adequate legal remedy is a thing to
be taken into consideration in the matter
of granting writs” and where such a rem­
edy exists it will be a sound exercise of
discretion to refuse to interfere in a writ
petition unless there are good grounds
therefore. But it should be remembered
that the rule of exhaustion of statutory
remedies before a writ is granted is a rule
of self imposed limitation, a rule of policy,
and discretion rather than a rule of law
and the court may therefore in excep­
tional cases issue a writ such as a writ of
certiorari notwithstanding the fact that
the statutory remedies have not been ex­
hausted.”

60. This Court further laid down two well recognized

exceptions to the doctrine with regard to the exhaustion of

statutory remedies, which reads thus:

“There are at least two well­recognised
exceptions to .the doctrine with regard to
the exhaustion of statutory remedies. In
the first place, it is well­settled that
where proceedings are taken before a Tri­
bunal under a provision of law, which is
ultra vires, it is open to a party aggrieved
thereby to move the High Court un­
der Art. 226 for issuing appropriate writs
for quashing them on the ground that
68

they are incompetent, without his being
obliged to wait until those proceedings
run their full course.­­(See the decisions
of this Court in Carl Still G.m.b.H. v. The
State of Bihar
[A.I.R. 1961 S.C. 1615]
and The Bengal Immunity Co. Ltd. v. The
State Bihar
[(1955) 2 S.C.R. 603]. In the
second place, the doctrine has no appli­
cation in a case where the impugned or­
der has been made in violation of the
principles of natural justice (See The
State of Uttar Pradesh v. Mohammad
Nooh
[(1958) S.C.R. 595].”

61. It has been clearly held, that 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.

62. Referring to earlier judgments, this Court in the

case of Whirlpool Corporation (supra) observed thus:

“15. Under Article 226 of the
Constitution, the High Court, having
regard to the facts of the case, has a
discretion to entertain or not to entertain
a writ petition. But the High Court has
imposed upon itself certain restrictions
one of which is that if an effective and
efficacious remedy is available, the High
Court would not normally exercise its
jurisdiction. But the alternative remedy
69

has been consistently held by this Court
not to operate as a bar in at least three
contingencies, namely, where the writ
petition has been filed for the
enforcement of any of the Fundamental
Rights or where there has been a
violation of the principle of natural justice
or where the order or proceedings are
wholly without jurisdiction or the vires of
an Act is challenged. There is a plethora
of case­law on this point but to cut down
this circle of forensic whirlpool, we would
rely on some old decisions of the
evolutionary era of the constitutional law
as they still hold the field.”

63. A similar view has been reiterated in the

judgment of this Court in the case of Nivedita Sharma vs.

Cellular Operators Association of India (supra).

64. In the present 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
70

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 referred to herein above 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 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. We find,

that KIAL would be entitled to exclusion of the period during
71

which it was bona fide prosecuting the remedy before the

High Court with due diligence.

65. That leaves us to consider the judgments referred

to by the appellants on the issue of limitation.

66. In the case of Popular Construction Co. (supra)

this Court was considering the question as to whether the

provisions of Section 5 of the Limitation Act are applicable

to an application challenging an award under Section 34 of

the Arbitration and Conciliation Act, 1996 (hereinafter

referred to as “the Arbitration Act”). This Court observed

thus:

“14. Here the history and scheme of the
1996 Act support the conclusion that the
time­limit prescribed under Section 34 to
challenge an award is absolute and unex­
tendible by court under Section 5 of the
Limitation Act. The Arbitration and Con­
ciliation Bill, 1995 which preceded the
1996 Act stated as one of its main objec­
tives the need “to minimise the supervi­
sory role of courts in the arbitral process”
[ Para 4(v) of the Statement of Objects
and Reasons of the Arbitration and Con­
ciliation Act, 1996] . This objective has
found expression in Section 5 of the Act
which prescribes the extent of judicial in­
tervention in no uncertain terms:

‘5. Extent of judicial intervention.—
Notwithstanding anything contained in
any other law for the time being in
72

force, in matters governed by this Part,
no judicial authority shall intervene
except where so provided in this Part.’

67. It must be noticed, that the judgment in the case

of Popular Construction Co. (supra) was considered by

this Court by a Bench consisting of three Judges in the case

of Consolidated Engineering Enterprises (supra) wherein,

the question with regard to applicability of Section 14 of the

Limitation Act to an application under Section 34(3) of the

Arbitration Act fell for consideration. In Consolidated

Engineering Enterprises (supra), the appellant before this

Court was an enterprise engaged in civil engineering

construction as well as development of infrastructure. It

entered into an agreement with the respondent for

construction of earthen bund, head sluices and the draft

channel of the Y.G. Gudda tank. A dispute arose between

the parties and therefore, the appellant invoked arbitration

Clause 51 of the agreement. The dispute was referred to the

sole arbitrator who passed his award in favour of the

appellant. Feeling aggrieved by the said award, the
73

respondents preferred an application to set aside the said

award as provided by Section 34 of the Arbitration Act in

the Court of the Civil Judge (Senior Division),

Ramanagaram, Bangalore Rural District, Bangalore.

However, it was realised by the respondents, that an

application for setting aside the award should have been

filed before the Principal District Judge, Bangalore District

(Rural). As such, an application was preferred by the

respondents in the Court of the Civil Judge (Senior

Division), Ramanagaram with a request to transfer the

application made for setting aside the award to the Court of

the Principal District Judge (Rural), Bangalore.

68. The Civil Judge (Senior Division), Ramanagaram

passed an order directing return of the suit records for

presentation before the proper court. The respondents

therefore collected the papers from the Court of the Civil

Judge (Senior Division), Ramanagaram and presented the

same in the Court of the Principal District Judge, Bangalore

(Rural). The District Court framed a preliminary issue, as to

whether the suit was barred by the limitation under Section
74

34(3) of the Arbitration Act. The District Judge held, the

application for setting aside the award to be time­barred.

The respondents invoked the appellate jurisdiction of the

High Court of Karnataka at Bangalore. The Division Bench

of the Karnataka High Court held, that the District Judge,

Bangalore had committed an error in holding, that Section

14 of the Limitation Act was not applicable to an application

submitted under Section 34 of the Act. It was therefore

held, that the time taken during which the respondents had

been prosecuting in the Court of the Civil Judge (Senior

Division), Ramanagaram was excludable.

69. Feeling aggrieved, the appellant had approached

this Court. Panchal, J. speaking for himself and

Balakrishna, C.J. (as their Lordships then were) observed

thus:

“27. The contention that in view of
the decision of the Division Bench of
this Court in Union of India v. Popular
Construction Co
. [(2001) 8 SCC 470] the
Court should hold that the provisions
of Section 14 of the Limitation Act
would not apply to an application filed
under Section 34 of the Act, is devoid
75

of substance. In the said decision what
is held is that Section 5 of the
Limitation Act is not applicable to an
application challenging an award
under Section 34 of the Act. Section
29(2)
of the Limitation Act inter alia
provides that where any special or local
law prescribes, for any application, a
period of limitation different from the
period prescribed by the Schedule, the
provisions contained in Sections 4 to
24 shall apply only insofar as, and to
the extent to which, they are not
expressly excluded by such special or
local law. On introspection, the
Division Bench of this Court held that
the provisions of Section 5 of the
Limitation Act are not applicable to an
application challenging an award. This
decision cannot be construed to mean
as ruling that the provisions of Section
14
of the Limitation Act are also not
applicable to an application
challenging an award under Section 34
of the Act. As noticed earlier, in the Act
of 1996, there is no express provision
excluding application of the provisions
of Section 14 of the Limitation Act to
an application filed under Section 34 of
the Act for challenging an award.

28. Further, there is fundamental
distinction between the discretion to be
exercised under Section 5 of the
Limitation Act and exclusion of the
time provided in Section 14 of the said
Act. The power to excuse delay and
76

grant an extension of time under
Section 5 is discretionary whereas
under Section 14, exclusion of time is
mandatory, if the requisite conditions
are satisfied. Section 5 is broader in its
sweep than Section 14 in the sense
that a number of widely different
reasons can be advanced and
established to show that there was
sufficient cause in not filing the appeal
or the application within time. The
ingredients in respect of Sections 5 and
14 are different. The effect of Section
14
is that in order to ascertain what is
the date of expiration of the “prescribed
period”, the days excluded from
operating by way of limitation, have to
be added to what is primarily the
period of limitation prescribed. Having
regard to all these principles, it is
difficult to hold that the decision
in Popular Construction Co. [(2001) 8
SCC 470] rules that the provisions of
Section 14 of the Limitation Act would
not apply to an application challenging
an award under Section 34 of the Act.”

70. This Court clearly held, that the decision in the

case of the Popular Construction Co. (supra) cannot be

construed to mean as a ruling, that provisions of Section 14

of the Limitation Act are also not applicable to an

application challenging an award under Section 34 of the
77

Act. It has been held, that in the Arbitration Act, there is no

express provision excluding application of the provisions of

Section 14 of the Limitation Act to an application filed under

Section 34 of the Arbitration Act for challenging the award.

It has further been found, that there is fundamental

distinction between the discretion to be exercised under

Section 5 of the Limitation Act and exclusion of the time

provided in Section 14 of the said Act. It was held, that the

power to excuse delay and grant an extension of time under

Section 5 is discretionary, whereas under Section 14,

exclusion of time is mandatory, if the requisite conditions

are satisfied. It held, that the effect of Section 14 is that in

order to ascertain what is the date of expiration of the

“prescribed period”, the days excluded from operating by

way of limitation, have to be added to what is primarily the

period of limitation prescribed.

71. Raveendran, J. (as His Lordship then was) in his

concurring judgment observed thus:

“54. On the other hand, Section 14
contained in Part III of the Limitation Act
does not relate to extension of the period
of limitation, but relates to exclusion of
78

certain period while computing the
period of limitation. Neither sub­section
(3) of Section 34 of the AC Act nor any
other provision of the AC Act exclude the
applicability of Section 14 of the
Limitation Act to applications under
Section 34(1) of the AC Act. Nor will the
proviso to Section 34(3) exclude the
application of Section 14, as Section 14
is not a provision for extension of period
of limitation, but for exclusion of certain
period while computing the period of
limitation. Having regard to Section 29(2)
of the Limitation Act, Section 14 of that
Act will be applicable to an application
under Section 34(1) of the AC Act. Even
when there is cause to apply Section 14,
the limitation period continues to be
three months and not more, but in
computing the limitation period of three
months for the application under Section
34(1) of the AC Act, the time during
which the applicant was prosecuting
such application before the wrong court
is excluded, provided the proceeding in
the wrong court was prosecuted bona
fide, with due diligence. Western
Builders [(2006) 6 SCC 239] therefore
lays down the correct legal position.”

72. In paragraph 57, Raveendran, J. also observed,

that the decision in Popular Construction Co. (supra) did

not consider the applicability of Section 14 of the Limitation

Act to an application under Section 34 of the Arbitration

Act.

79

73. As such, in view of the judgment of three Judges

Bench of this Court in the case of Consolidated

Engineering Enterprises (supra), the reliance placed by

the appellants on the judgment of this Court in Popular

Construction Co. (supra) would not be of any assistance.

74. Reliance is also placed on the judgment of this

Court in the case of Singh Enterprises (supra) wherein, the

question raised was with regard to applicability of the

provisions of Section 5 of the Limitation Act to an appeal

filed under Section 35 of the Central Excise Act, 1944.

Again, the said judgment deals with applicability of Section

5 and not of Section 14 of the Limitation Act and therefore

would not support the case of the appellants.

75. Similarly, reliance placed by the learned counsel

for the appellants on the judgment of this Court in the case

of Commissioner of Customs and Central Excise vs.

Hongo India Private Limited and another33, would also

not help the appellants inasmuch as, the question, that fell

for consideration there was, with regard to the applicability

of Section 5 of the Limitation Act to a reference application
33 (2009) 5 SCC 791
80

provided under Section 35­H(1) of the unamended Central

Excise Act, 1944.

76. For the same reasons, the judgment of this Court

in the case of Chhattisgarh State Electricity Board

(supra) would also not take the case of the appellants any

further inasmuch as, again the question, that fell for

consideration was, with regard to applicability of Section 5

of the Limitation Act to an appeal under Section 125 of the

Electricity Act, 2003.

77. For the same reasons, we find, that the judgment

relied on by the appellants in the case of Bengal Chemists

and Druggists Association vs. Kalyan Chowdhury34

would also not be applicable to the facts of the present case

inasmuch as, the said judgment also considered the

applicability of Section 5 of the Limitation Act to an appeal

to the Appellate Tribunal provided under Section 421(3) and

433 of the Companies Act, 2013.

78. The judgment of this Court in the case of Neeraj

Jhanji (supra) would not be applicable to the facts of the

present case. In the said case, the petitioner had initially

34 (2018) 3 SCC 41
81

filed a writ petition before the Delhi High Court against the

order­in­original passed by the Commissioner of Customs,

Kanpur. Delhi High Court converted the writ petition into a

statutory appeal under the Customs Act, 1962 by order

dated 9­11­2009. On 9­9­2010 the Revenue raised an

objection about the territorial jurisdiction of that Court. On

5­1­2012 the petitioner withdrew the appeal with liberty to

approach the jurisdictional High Court and then filed a

statutory appeal before the Allahabad High Court after a

delay of 697 days. It will be relevant to refer to the following

observations in Neeraj Jhanji (supra):

“3. The very filing of writ petition by the
petitioner in the Delhi High Court against
the order­in­original passed by the Com­
missioner of Customs, Kanpur indicates
that the petitioner took a chance in ap­
proaching the High Court at Delhi which
had no territorial jurisdiction in the mat­
ter. We are satisfied that filing of the writ
petition or for that matter, appeal before
the Delhi High Court was not at all bona
fide. We are in agreement with the obser­
vations made by the Allahabad High
Court in the impugned order [Neeraj
Jhanji v. CCE & Customs, Custom Appeal
Defective
16 of 2012, order dated 6­8­
2012 (All)] . The Allahabad High Court
has rightly dismissed the petitioner’s ap­
82

plication of condonation of delay and con­
sequently the appeal as time barred.”

79. It is thus clear, that this Court found, that the

petitioner therein had adopted tactics of taking chances by

approaching High Court of Delhi, which had no territorial

jurisdiction. As such, it was found, that neither the writ

petition nor the appeal before the Delhi High Court could be

construed to be a bona fide. It was further noticed, that

there was an inordinate delay of 697 days. It is thus

apparent, that the petitioner therein had not satisfied the

necessary conditions for applicability of Section 14.

80. In the present case, as already discussed herein

above, the petitioner was bona fide prosecuting his remedy

before the High Court and that too with due diligence. As

such, the said judgment also would be of no avail to the

case of the appellants.

81. The judgment of this Court in the case of Ketan

V. Parekh (supra) is relied upon by both the parties. The

question, that arose for consideration in the said case was

with regard to applicability of Section 14 of the Limitation

Act to an Appeal from Order of an Appellate Tribunal as
83

provided under Section 35 of the Foreign Exchange

Management Act, 1999. This Court relying on the earlier

judgment in the case of Consolidated Engineering

Enterprises (supra) and State of Goa vs. Western

Builders35 held, that Section 14 can be invoked in an

appropriate case for exclusion of the time, during which the

aggrieved person may have prosecuted with due diligence a

remedy before a wrong forum. However, on facts and on the

averments made in the pleadings, this Court came to the

conclusion, that there was not even a whisper in the

applications filed by the appellants, that they had been

prosecuting remedy before a wrong forum i.e. the Delhi High

Court with due diligence and in good faith. It will be

relevant to refer to the following paragraphs of the said

judgment.

“32. There is another reason why the
benefit of Section 14 of the Limitation Act
cannot be extended to the appellants. All
of them are well conversant with various
statutory provisions including FEMA.
One of them was declared a notified
person under Section 3(2) of the Special
35 (2006) 6 SCC 239
84

Court (Trial of Offences Relating to
Transactions in Securities) Act, 1992 and
several civil and criminal cases are
pending against him. The very fact that
they had engaged a group of eminent
advocates to present their cause before
the Delhi and the Bombay High Courts
shows that they have the assistance of
legal experts and this seems to be the
reason why they invoked the jurisdiction
of the Delhi High Court and not of the
Bombay High Court despite the fact that
they are residents of Bombay and have
been contesting other matters including
the proceedings pending before the
Special Court at Bombay. It also appears
that the appellants were sure that
keeping in view their past conduct, the
Bombay High Court may not interfere
with the order of the Appellate Tribunal.
Therefore, they took a chance before the
Delhi High Court and succeeded in
persuading the learned Single Judge of
the Court to entertain their prayer for
stay of further proceedings before the
Appellate Tribunal. The promptness with
which the learned Senior Counsel
appearing for the appellant, Kartik K.
Parekh made a statement before the
Delhi High Court on 7­11­2007 that the
writ petition may be converted into an
appeal and considered on merits is a
clear indication of the appellant’s
unwillingness to avail remedy before the
High Court i.e. the Bombay High Court
which had the exclusive jurisdiction to
85

entertain an appeal under Section 35 of
the Act.

33. It is not possible to believe that as on
7­11­2007, the appellants and their
advocates were not aware of the judgment
of this Court in Ambica
Industries v. CCE
[(2007) 6 SCC 769]
whereby dismissal of the writ petition by
the Delhi High Court on the ground of
lack of territorial jurisdiction was
confirmed and it was observed that the
parties cannot be allowed to indulge in
forum shopping. It has not at all
surprised us that after having made a
prayer that the writ petitions filed by
them be treated as appeals under Section
35
, two of the appellants filed
applications for recall of that order. No
doubt, the learned Single Judge accepted
their prayer and the Division Bench
confirmed the order of the learned Single
Judge but the manner in which the
appellants prosecuted the writ petitions
before the Delhi High Court leaves no
room for doubt that they had done so
with the sole object of delaying
compliance with the direction given by
the Appellate Tribunal and by no stretch
of imagination it can be said that they
were bona fide prosecuting remedy before
a wrong forum. Rather, there was total
absence of good faith, which is sine qua
non for invoking Section 14 of the
Limitation Act.”
86

82. It is thus clear, that the appellants therein were

indulging into a practice of taking chances. They had

approached Delhi High Court, which totally lacked

territorial jurisdiction and had not approached Bombay

High Court though they were residents of Bombay and had

been contesting other matters including the proceedings

pending before the Special Court at Bombay. It has been

observed, that keeping in view their past conduct, Bombay

High Court might not have interfered with the order of the

Appellate Tribunal. Therefore, they took a chance before

Delhi High Court and succeeded in persuading the learned

Single Judge of that Court to entertain their prayer for stay

of further proceedings before the Appellate Tribunal. This

Court further observed, that the promptness with which the

statement was made on behalf of the appellants, that the

writ petition may be converted into an appeal was a clear

indication of the appellant’s unwillingness to avail remedy

before the High Court of Bombay which had the exclusive

jurisdiction to entertain an appeal under Section 35 of the

Act.

87

83. In the present case, the facts are totally contrary.

KIAL had approached the High Court of Bombay 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. The proceedings before

the High Court were hotly contested and by an elaborate

judgment, the High Court dismissed the writ petition

relegating the petitioner therein i.e. KIAL to an alternate

remedy available in law. 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
88

extraordinary jurisdiction under Article 226 despite

availability of an alternate remedy.

84. This Court recently in the judgment of Embassy

Property Developments Pvt. Ltd. vs. State of Karnataka

and Others36 had an occasion to consider a similar issue.

We find it apposite to refer to the question framed by this

Court, which reads thus:

“i) Whether the High Court ought to
interfere, under Article 226/227 of the
Constitution, with an order passed by the
National Company Law Tribunal in a
proceeding under the Insolvency and
Bankruptcy Code, 2016, ignoring the
availability of a statutory remedy of
appeal to the National Company Law
Appellate Tribunal and if so, under what
circumstances.”

85. It will also be apposite to reproduce the answer

given by this Court.

“47. Therefore, in fine, our answer to the
first question would be that NCLT did not
have jurisdiction to entertain an
application against the Government of
Karnataka for a direction to execute
Supplemental Lease Deeds for the
extension of the mining lease. Since
NCLT chose to exercise a jurisdiction not
vested in it in law, the High Court of
36 2019 SCC Online 1542
89

Karnataka was justified in entertaining
the writ petition, on the basis that NCLT
was coram non judice.”

We therefore have no hesitation to hold, that KIAL

was entitled to extension of the period during which it was

bona fide prosecuting a remedy before the High Court with

due diligence.

(ii) WHETHER THERE WAS WAIVER AND

ACQUIESCENCE BY KIAL SO AS TO ESTOP IT FROM

CHALLENGING THE PARTICIPATION OF KALPRAJ?

86. It is strenuously urged on behalf of the

appellants, that under clause 10.4 of the Process

Memorandum, if any Resolution Plan is received by RP from

any eligible applicant(s) at any stage of the Resolution Plan

Process, RP is free to examine any resolution plan with the

approval of CoC and the applicant will not have any right to

object to the submission or consideration of such plan. It is

further submitted, that even under clause 11.2 of the

Process Memorandum, RP or CoC, at their sole discretion,

may request for additional information/documents and/or

seek clarification from the resolution applicant after the due
90

date for submission of the plan. It is further submitted,

that delay in submission of additional information and/or

documents sought by RP, CoC or the Process Manager

would entitle RP, CoC or the Process Manager to reject the

resolution plan.

87. It was further submitted by the appellants, that

KIAL, in a letter submitted along with the resolution plan to

RP, had expressly waived any and all claims with respect to

the Resolution Plan Process. Not only that, but KIAL had

submitted its revised plans twice after Kalpraj was

permitted to participate in the proceedings. It is therefore

submitted, that since KIAL had expressly waived all its

claims and had also submitted its revised plans, after

Kalpraj entered into the fray, it was not entitled to raise any

grievance. It is submitted, that the principles of waiver and

acquiescence are squarely applicable in the present case.

It was also submitted on behalf of the appellants, that the

revised plans, submitted by KIAL, were submitted without

mentioning, that it was without prejudice and as such, it

was not entitled to make any grievance on that count.
91

88. It is submitted, that the approach adopted by

KIAL amounted to taking chances, as after having failed in

the process, challenging the same would not be permissible

in law. It is also contended that during the 12 th meeting of

CoC, Kotak Bank, of which KIAL is a 100% subsidiary, also

agreed with CoC counsel’s view, that Kalpraj’s resolution

plan can be considered.

89. It could thus be seen, that the main thrust of the

arguments advanced on behalf of the appellants with regard

to waiver and acquiescence is on two grounds, viz., (i) clause

10.4 of the Process Memorandum read with paragraph 5(b)

of the covering letter for submission of resolution plan by

KIAL, and (ii) participation of KIAL in the process after

Kalpraj was permitted to participate in the process.

90. We may refer to clause 10.4 of the Process

Memorandum and paragraph 5(b) of the covering letter for

submission of resolution plan by KIAL, which read thus:

Clause 10.4 of the Process Memorandum

“if any Resolution Plan is received by
the Resolution professional from any
eligible Applicant(s) at any stage of the
Resolution Plan Process, the
Resolution professional shall be free to
92

examine such Resolution Plan with the
approval of the Committee of Creditors
and the Applicant(s) will not have any
right to object to submission or
consideration of such plan.”

Paragraph 5(b) of the covering letter for submission of
resolution plan by KIAL.

“5. We further represent and confirm
as follows:

(a) …..

(b) Acceptance
We hereby unconditionally and
irrevocably agree and accept the terms
of the Process Memorandum and that
the decision made by the CoC,
Resolution professional and/or the
Adjudicating Authority in respect of
any matter with respect to, or arising
out of, the Process Memorandum and
the Resolution Plan Process shall be
binding on us. We hereby expressly
waive any and all claims in respect of
the Resolution Plan Process.”

91. On the basis of clause 10.4, it is sought to be

urged, that even if the Resolution Plan is received by RP

from any eligible applicant(s) at any stage of the Resolution

Plan Process, RP was free to examine such Resolution Plan

with the approval of CoC and the applicant(s) will not have
93

any right to object to submission or consideration of such

plan.

92. On the basis of paragraph 5(b) of the covering

letter for submission of resolution plan by KIAL, it is sought

to be urged, that KIAL had unconditionally and irrevocably

agreed and accepted the terms of the Process Memorandum

and the decision made by CoC, RP and/or the Adjudicating

Authority in respect of any matter with respect to, or arising

out of, the Process Memorandum and the Resolution Plan

Process. It is further sought to be urged, that KIAL had

agreed to surrender all and any of its claim in respect of the

Resolution Plan Process. It is sought to be urged, that this

stipulation amounts to a concluded contract between the

parties and having waived its all claims, KIAL is not

permitted in law to challenge the participation of Kalpraj in

respect of Resolution Plan Process.

93. In this respect, it will be relevant to refer to

paragraphs 89 and 90 of the judgment of this Court in the

case of Central Inland Water Transport Corporation
94

Limited and another vs. Brojo Nath Ganguly and

another37.

“89. Should then our courts not
advance with the times? Should they
still continue to cling to outmoded
concepts and outworn ideologies?

Should we not adjust our thinking
caps to match the fashion of the day?

Should all jurisprudential development
pass us by, leaving us floundering in
the sloughs of 19th century theories?
Should the strong be permitted to push
the weak to the wall? Should they be
allowed to ride roughshod over the
weak? Should the courts sit back and
watch supinely while the strong
trample underfoot the rights of the
weak? We have a Constitution for our
country. Our judges are bound by their
oath to “uphold the Constitution and
the laws”. The Constitution was
enacted to secure to all the citizens of
this country social and economic
justice. Article 14 of the Constitution
guarantees to all persons equality
before the law and the equal protection
of the laws. The principle deducible
from the above discussions on this part
of the case is in consonance with right
and reason, intended to secure social
and economic justice and conforms to
the mandate of the great equality
clause in Article 14. This principle is

37 (1986) 3 SCC 156
95

that the courts will not enforce and
will, when called upon to do so, strike
down an unfair and unreasonable
contract, or an unfair and
unreasonable clause in a contract,
entered into between parties who are
not equal in bargaining power. It is
difficult to give an exhaustive list of all
bargains of this type. No court can
visualize the different situations which
can arise in the affairs of men. One can
only attempt to give some illustrations.
For instance, the above principle will
apply where the inequality of
bargaining power is the result of the
great disparity in the economic
strength of the contracting parties. It
will apply where the inequality is the
result of circumstances, whether of the
creation of the parties or not. It will
apply to situations in which the weaker
party is in a position in which he can
obtain goods or services or means of
livelihood only upon the terms imposed
by the stronger party or go without
them. It will also apply where a
man has no choice, or rather no
meaningful choice, but to give his
assent to a contract or to sign on
the dotted line in a prescribed or
standard form or to accept a set of
rules as part of the contract,
however unfair, unreasonable and
unconscionable a clause in that
contract or form or rules may be.

This principle, however, will not apply
where the bargaining power of the
96

contracting parties is equal or almost
equal. This principle may not apply
where both parties are businessmen
and the contract is a commercial
transaction. In today’s complex world
of giant corporations with their vast
infrastructural organizations and with
the State through its instrumentalities
and agencies entering into almost every
branch of industry and commerce,
there can be myriad situations which
result in unfair and unreasonable
bargains between parties possessing
wholly disproportionate and unequal
bargaining power. These cases can
neither be enumerated nor fully
illustrated. The court must judge each
case on its own facts and
circumstances.”
[emphasis supplied]

94. This Court has held, that the courts will not

enforce and will, when called upon to do so, strike down an

unfair and unreasonable contract, or an unfair and

unreasonable clause in a contract, entered into between

parties who are not equal in bargaining power. It has been

held, that this principle will apply where a man has no

choice, or rather no meaningful choice, but to give his

assent to a contract or to sign on the dotted line in a
97

prescribed or standard form or to accept a set of rules as

part of the contract, however unfair, unreasonable and

unconscionable a clause in that contract or form or rules

may be.

95. Applying the said principles to the facts of the

present case, KIAL had no choice than to accept the terms

of the contract. Paragraph 5(b) of the letter 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
98

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.

96. The said principle of law has been subsequently

followed in various judgments of this Court including the

one in the case of Assistant General Manager and others

vs. Radhey Shyam Pandey38.

97. No doubt, that this Court in Central Inland

Water Transport Corporation Limited (supra) has

observed, that the principle laid down therein may not apply

where both parties are businessmen and the contract is a

commercial transaction. 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

38 (2020) 6 SCC 438
99

Debtor, it cannot be said that it is a purely commercial

transaction between RP and the resolution applicant.

98. It may be argued, that the judgment in the case

of Central Inland Water Transport Corporation Limited

(supra) arose from a case involving a statutory corporation,

which was an instrumentality of State within the meaning of

Article 12 of the Constitution. However, recently, this Court

in the case of Pioneer Urban Land and Infrastructure

Limited vs. Govindan Raghavan39 while construing the

term of contract between a builder and a flat purchaser

observed thus:

“6.8. A term of a contract will not be
final and binding if it is shown that the
flat purchasers had no option but to
sign on the dotted line, on a contract
framed by the builder. The contractual
terms of the agreement dated 8­5­2012
are ex facie one­sided, unfair and
unreasonable. The incorporation of
such one­sided clauses in an
agreement constitutes an unfair trade
practice as per Section 2(1)(r) of the
Consumer Protection Act, 1986 since it
adopts unfair methods or practices for
the purpose of selling the flats by the
builder.”

39 (2019) 5 SCC 725
100

99. We see 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.

100. We are therefore of the view, in light of the law

laid down in Central Inland Water Transport

Corporation Limited (supra), KIAL cannot be held to be

bound by such unconscionable clause in the letter, which is

in a prescribed format.

101. The second ground raised, with regard to waiver

and acquiescence, is based upon the participation of KIAL

in the Resolution Plan Process after Kalpraj was permitted

to participate in the proceedings.

102. The word ‘waiver’ has been described in

Halsbury’s Laws of England, 4th Edn., Para 1471, which

reads thus:

“1471. Waiver.—Waiver is the
abandonment of a right in such a
way that the other party is entitled
to plead the abandonment by way of
confession and avoidance if the right
is thereafter asserted, and is either
express or implied from conduct. …
A person who is entitled to rely on a
stipulation, existing for his benefit
101

alone, in a contract or of a statutory
provision, may waive it, and allow
the contract or transaction to
proceed as though the stipulation or
provision did not exist. Waiver of
this kind depends upon consent,
and the fact that the other party has
acted on it is sufficient
consideration. …
It seems that, in general, where
one party has, by his words or
conduct, made to the other a
promise or assurance which was
intended to affect the legal relations
between them and to be acted on
accordingly, then, once the other
party has taken him at his word and
acted on it, so as to alter his
position, the party who gave the
promise or assurance cannot
afterwards be allowed to revert to
the previous legal relationship as if
no such promise or assurance had
been made by him, but he must
accept their legal relations subject to
the qualification which he has
himself so introduced, even though
it is not supported in point of law by
any consideration.’
(See Halsbury’s Laws of England,
4th Edn., Para 1471.)”

103. In Halsbury’s Laws of England, Vol. 16(2), 4th

Edn., Para 907, it is stated:

“The expression ‘waiver’ may, in law,
bear different meanings. The primary
102

meaning has been said to be the
abandonment of a right in such a way
that the other party is entitled to plead
the abandonment by way of confession
and avoidance if the right is thereafter
asserted, and is either express or
implied from conduct. It may arise
from a party making an election, for
example whether or not to exercise a
contractual right… Waiver may also be
by virtue of equitable or promissory
estoppel; unlike waiver arising from an
election, no question arises of any
particular knowledge on the part of the
person making the representation, and
the estoppel may be suspensory only…
Where the waiver is not express, it may
be implied from conduct which is
inconsistent with the continuance of
the right, without the need for writing
or for consideration moving from, or
detriment to, the party who benefits by
the waiver, but mere acts of indulgence
will not amount to waiver; nor may a
party benefit from the waiver unless he
has altered his position in reliance on
it.”

104. For considering, as to whether a party has waived

its rights or not, it will be relevant to consider the conduct

of a party. 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
103

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.

105. As early as in 1957 in the case of Manak Lal vs.

Dr. Prem Chand40 an advocate was held guilty for

professional misconduct by a Tribunal of Three Members.

The matter was argued before the High Court. An objection

was taken before the High Court, that one of the members

had appeared on behalf of the complainant and therefore,

he was disqualified from acting as a member of the

Tribunal. A question arose before this Court, that since

such an objection was not taken before the Tribunal,

whether it amounted to waiver. This Court observed thus:

“It is true that waiver cannot
always and in every case be
inferred merely from the failure of
the party to take the objection.

Waiver can be inferred only if and
after it is shown that the party
knew about the relevant facts and
was aware of his right to take the
objection in question. As Sir John
Romilly, M.R., has observed
in Vyvyan v. Vyvyan [(1861) 30
Beav 65, 74 : 54 ER 813, 817]
40 1957 SCR 575 = AIR 1957 SC 425
104

“waiver or acquiescence, like
election, presupposes that the
person to be bound is fully
cognizant of his rights, and, that
being so, he neglects to enforce
them, or chooses one benefit
instead of another, either, but not
both, of which he might claim”.

106. It has been held, that a waiver cannot always and

in every case be inferred merely from the failure of the party

to take the objection. Waiver can be inferred, only if and

after it is shown that the party knew about the relevant

facts and was aware of his right to take the objection in

question. The waiver or acquiescence, like election,

presupposes, that the person to be bound is fully cognizant

of his rights, and that being so, he neglects to enforce them,

or chooses one benefit instead of another.

107. As such, 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.

108. In the case of Krishna Bahadur vs. Purna

Theatre and others41, the appellant was appointed in the

post of messenger­cum­bearer in the establishment of the
41 (2004) 8 SCC 229
105

respondent. A disciplinary proceeding was initiated against

him wherein, he was found guilty and he was dismissed

from service. The Industrial Tribunal set aside the

dismissal with full back wages and compensation. The

appellant was permitted to join his duties but back wages

were not paid. He was again retrenched from services and a

sum of Rs.9,030/­ was paid as retrenchment compensation,

which the appellant was said to have received under

protest. A trade union took the cause of the appellant, inter

alia, on the ground of contravention of Section 25­G of the

Industrial Disputes Act, 1947, so also on the ground of

insufficiency of the amount of compensation paid to the

appellant in terms of Section 25­F(b) thereof. An industrial

dispute was raised before the Assistant Labour

Commissioner, which failed, whereupon the Industrial

Tribunal was approached by the appellant. In the

meantime, the appellant had also initiated a proceeding

under Section 33­C(2) of the Industrial Disputes Act, 1947

which ended in an amicable settlement, according to which,
106

the appellant agreed to receive a sum of Rs.39,000/­ as full

and final settlement.

109. However, in the proceedings initiated by the trade

union, the retrenchment was held to be illegal and he was

directed to be deemed to be in continuous service with all

benefits. A writ petition was filed by the respondent before

the High Court. The said writ petition was dismissed by the

single judge of the High Court, upholding the findings of the

Tribunal. In an appeal before the Division bench, a plea

was taken for the first time, that the workman had accepted

the amount paid by the employer and as such, it amounted

to waiver by the workman. The Division Bench allowed the

appeal and set aside the award passed by the Tribunal and

the judgment and order passed by the single judge. Setting

aside the judgment of the Division Bench, this Court

observed thus:

“9. The principle of waiver although is
akin to the principle of estoppel; the
difference between the two, however, is
that whereas estoppel is not a cause of
action; it is a rule of evidence; waiver is
contractual and may constitute a
107

cause of action; it is an agreement
between the parties and a party fully
knowing of its rights has agreed not to
assert a right for a consideration.

10. A right can be waived by the party
for whose benefit certain requirements
or conditions had been provided for by
a statute subject to the condition that
no public interest is involved therein.
Whenever waiver is pleaded it is for the
party pleading the same to show that
an agreement waiving the right in
consideration of some compromise
came into being. Statutory right,
however, may also be waived by his
conduct.”

110. This Court has thus held, that the principle of

waiver although is akin to the principle of estoppel; estoppel

is not a cause of action and is a rule of evidence, whereas

waiver is contractual and may constitute a cause of action.

It is an agreement between the parties and a party fully

knowing of its rights has agreed not to assert a right for a

consideration. It is further held, that whenever waiver is

pleaded, it is for the party pleading the same to show that

an agreement waiving the right in consideration of some

compromise came into being.

108

111. This Court in the case of State of Punjab vs.

Davinder Pal Singh Bhullar and others 42 had an

occasion to consider an issue, as to when an issue of bias

was not raised by the party at the earliest possible, if it is

aware of it and knows its right to raise the said issue, would

it amount to waiver or not. This Court while considering the

earlier judgments observed thus:

“II. Doctrine of waiver

37. In Manak Lal [AIR 1957 SC 425]
this Court held that alleged bias of a
Judge/official/Tribunal does not
render the proceedings invalid if it is
shown that the objection in that regard
and particularly against the presence
of the said official in question, had not
been taken by the party even though
the party knew about the
circumstances giving rise to the
allegations about the alleged bias and
was aware of its right to challenge the
presence of such official. The Court
further observed that: (SCC p. 431,
para 8)
“8. … waiver cannot always and
in every case be inferred merely from
the failure of the party to take the
objection. Waiver can be inferred
only if and after it is shown that the
party knew about the relevant facts
42 (2011) 14 SCC 770
109

and was aware of his right to take
the objection in question.”

38. Thus, in a given case if a party
knows the material facts and is
conscious of his legal rights in that
matter, but fails to take the plea of bias
at the earlier stage of the proceedings,
it creates an effective bar of waiver
against him. In such facts and
circumstances, it would be clear that
the party wanted to take a chance to
secure a favourable order from the
official/court and when he found that
he was confronted with an
unfavourable order, he adopted the
device of raising the issue of bias. The
issue of bias must be raised by the
party at the earliest. (See Pannalal
Binjraj v. Union of India
[AIR 1957 SC
397] and P.D. Dinakaran (1) v. Judges
Enquiry Committee [(2011) 8 SCC
380] .)

39. In Power Control
Appliances v. Sumeet Machines (P)
Ltd
. [(1994) 2 SCC 448] this Court held
as under: (SCC p. 457, para 26)
“26. Acquiescence is sitting by,
when another is invading the
rights…. It is a course of conduct
inconsistent with the claim…. It
implies positive acts; not merely
silence or inaction such as involved
in laches. … The acquiescence must
be such as to lead to the inference of
110

a licence sufficient to create a new
right in the defendant….”

40. Inaction in every case does not
lead to an inference of implied consent
or acquiescence as has been held by
this Court in P. John Chandy & Co. (P)
Ltd. v. John P. Thomas
[(2002) 5 SCC
90] . Thus, the Court has to examine
the facts and circumstances in an
individual case.

41. Waiver is an intentional
relinquishment of a right. It involves
conscious abandonment of an existing
legal right, advantage, benefit, claim or
privilege, which except for such a
waiver, a party could have enjoyed. In
fact, 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.

(Vide Dawsons Bank Ltd. v. Nippon
Menkwa Kabushiki Kaisha
[(1934­35)
62 IA 100 : AIR 1935 PC
79] , Basheshar Nath v. CIT [AIR 1959
SC 149] , Mademsetty
Satyanarayana v. G. Yelloji Rao
[AIR
1965 SC 1405] , Associated Hotels of
India Ltd. v. S.B. Sardar Ranjit
Singh
[AIR 1968 SC
933] , Jaswantsingh
Mathurasingh v. Ahmedabad Municipal
Corpn. [1992 Supp (1) SCC 5] , Sikkim
111

Subba Associates v. State of
Sikkim
[(2001) 5 SCC 629 : AIR 2001
SC 2062] and Krishna
Bahadur v. Purna Theatre
[(2004) 8
SCC 229 : 2004 SCC (L&S) 1086 : AIR
2004 SC 4282] .)

42. This Court in Municipal Corpn.

of Greater Bombay v. Dr Hakimwadi
Tenants’ Assn
. [1988 Supp SCC 55 :

AIR 1988 SC 233] considered the issue
of waiver/acquiescence by the non­
parties to the proceedings and held:
(SCC p. 65, paras 14­15)
“14. In order to constitute waiver,
there must be voluntary and
intentional relinquishment of a
right. The essence of a waiver is an
estoppel and where there is no
estoppel, there is no waiver.

Estoppel and waiver are questions of
conduct and must necessarily be
determined on the facts of each
case. …

15. There is no question of
estoppel, waiver or abandonment.

There is no specific plea of waiver,
acquiescence or estoppel, much less
a plea of abandonment of right. That
apart, the question of waiver really
does not arise in the case.

Admittedly, the tenants were not
parties to the earlier proceedings.
There is, therefore, no question of
waiver of rights by Respondents 4­7
112

nor would this disentitle the tenants
from maintaining the writ petition.”

43. Thus, from the above, it is
apparent that the issue of bias should
be raised by the party at the earliest, if
it is aware of it and knows its right to
raise the issue at the earliest,
otherwise it would be deemed to have
been waived. However, it is to be kept
in mind that acquiescence, being a
principle of equity must be made
applicable where a party knowing all
the facts of bias, etc. surrenders to the
authority of the Court/Tribunal
without raising any objection.

Acquiescence, in fact, is sitting by,
when another is invading the rights.
The acquiescence must be such as to
lead to the inference of a licence
sufficient to create rights in other
party.”

112. Thus, 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
113

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.

113. In the case of Galada power and

Telecommunication limited vs. United India Insurance

Company Limited and another43, this Court had an

occasion to consider the question, as to whether the insurer

has waived its right on the basis of claim hit by clause

relating to duration.

114. On the facts, holding, that the case was a case of

waiver, this Court observed thus:

“18. In the instant case, the insurer
was in custody of the policy. It had
prescribed the clause relating to
duration. It was very much aware

43 (2016) 14 SCC 161
114

about the stipulation made in Clauses
5(3) to 5(5), but despite the
stipulations therein, it appointed a
surveyor. Additionally, as has been
stated earlier, in the letter of
repudiation, it only stated that the
claim lodged by the insured was not
falling under the purview of transit
loss. Thus, by positive action, the
insurer has waived its right to advance
the plea that the claim was not
entertainable because conditions
enumerated in duration clause were
not satisfied. In our considered
opinion, the National Commission
could not have placed reliance on the
said terms to come to the conclusion
that there was no policy cover in
existence and that the risks stood not
covered after delivery of goods to the
consignee.”

115. In the background of this legal position, we will

have to examine, as to whether the conduct of KIAL can be

said to be of such a nature, which would amount to

acquiescence or waiver.

116. The dates are not in dispute. 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
115

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.

117. 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.

The said email dated 29.1.2019 sent by KIAL to RP reads

thus:

“As you are aware, that the last date
for submission of the bids for Ricoh
India Limited, under the CIRP was 8 th
January, 2019. Consequently, we duly
submitted our bid (along with the
requisite Bid Bond Guarantee) within
the said time. However, we are given
to understand that you have been
receiving and accepting the bids even
after the said date, when no extension
of time (filing of Form ‘G’) was notified.

This severely jeopardises our position
and is against the spirit of the code,
116

especially when our Resolution Plan
was opened immediately (along with
the commercials) and subsequently,
even discussed at length in the meeting
of 15th January, 2019, which was
attended by various stakeholders.

In this light, we would request you to
share with us the requisite notification
(Form G) towards extension of time for
bid submission at the earliest.
However, in the event, such a
notification has not been made, it
would only be logical that all plans
submitted after 8th January, 2019
should be held invalid, more so when
our plan has now been opened.

We look forward to your confirmation
on the above.”

118. It could therefore 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 KIAL’s resolution plan was opened immediately and

discussed at length with various stakeholders. KIAL has

therefore requested for sharing the requisite information
117

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.

119. 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, CoC’s 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.

120. On 10.2.2019, KIAL sent another email to RP,

which reads thus:

“It has been quite sometime, since we
sought from you on your decision to
accept another resolution plan well
after the expiry of the deadline for
submission of the same.

As pointed out earlier, such an action,
after opening of our bid and having
detailed discussions on the same is not
118

only prejudicial to our interests but
also against the spirit of the IBC code.

The 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
instances of discrimination or
departure from the established law are
found.

We would request a quick response to
our query from you on the subject.”

121. In the said email dated 10.2.2019 sent by KIAL, it

was stated, 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
119

and RPs in the event of instances of discrimination or

departure from the established law.

122. 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 CoC’s

legal counsel and RP’s legal counsel. It was also submitted,

that this was in the spirit of value maximisation of assets of

the Corporate Debtor.

123. 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.

124. On 13/14.2.2019, the resolution plan of Kalpraj

was accepted by CoC. On 18.2.2019, RP filed M.A. No.691

of 2019 before NCLT for approval of the resolution plan of

Kalpraj. KIAL filed its M.A. No. 1039 of 2019 on 14.3.2019
120

before the Adjudicating Authority objecting to the approval

of resolution plan of Kalpraj.

125. 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. This is specifically

so in view of clause 11.2, which reads thus:

“11.2 No change or supplemental
information to the
Resolution Plan shall be
accepted after the
Resolution Plan Due Date,
unless agreed otherwise by
the Resolution Professional
(in consultation with the
Committee of Creditors).

The Resolution Professional
or the CoC may, at their sole
discretion, request for
additional
information/document
and/or seek clarifications
from a Resolution Applicant
after the Resolution Plan
Due Date. Delay in
submission of additional
information and/or
documents sought by the
Resolution Professional, the
121

CoC or the Process Manager
shall make the Resolution
Plan liable for rejection.”

126. 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.

127. Dr. Singhvi, learned Senior Counsel appearing on

behalf of Kalpraj relied on the judgment of this Court in the

case of ITC Limited vs. Blue Coast Hotels Limited and

others (supra), wherein it is held, that even if a debtor has

used the word “without prejudice” it has no significance.

However, in the said case, the debtor had acknowledged the

debt even after action was initiated under the Act and even

after payment of a smaller sum. In this background, it was

held, that the words “without prejudice” would have no

significance. As such, the said case would not be applicable

to the facts of the present case.

128. Reliance placed on the judgment of this Court in

the case of Tarapore and Company (supra) would also not

be of any assistance to the case of the appellants. It will be
122

relevant to refer to the following observations of this Court

in the said case.

“Apart from the technical meaning
which the expression “without
prejudice” carries depending upon the
context in which it is used, in the
present case on a proper reading of the
correspondence and in the setting in
which the term is used, it only means
that the respondent reserved to itself
the right to contend before the
arbitrator that a dispute raised or the
claim made by the contractor was not
covered by the arbitration clause. No
other meaning can be assigned to it.

An action taken without prejudice to
one’s right cannot necessarily mean
that the entire action can be ignored by
the party taking the same.”

129. That leaves us with the last submission in this

regard made on behalf of the appellants. It is submitted,

that Kotak Bank had participated in the 12 th meeting of CoC

dated 13.1.2019 and agreed to consider resolution plan of

Kalpraj in view of clause 10.4 of the Process Memorandum.

It is submitted, that KIAL was a 100% subsidiary of Kotak

Bank and as such, its agreement to consider the resolution

plan of Kalpraj would amount to waiver and acquiescence

by KIAL.

123

130. This question has been squarely answered by this

Court in the case of Vodafone International Holdings BV

vs. Union of India and another44. It will be apposite to

refer to the following observation of this Court:

“257. The legal relationship between
a holding company and WOS is that
they are two distinct legal persons and
the holding company does not own the
assets of the subsidiary and, in law,
the management of the business of the
subsidiary also vests in its Board of
Directors. In Bacha F.

Guzdar v. CIT [AIR 1955 SC 74] , this
Court held that shareholders’ only
right is to get dividend if and when the
company declares it, to participate in
the liquidation proceeds and to vote at
the shareholders’ meeting. Refer also
to Carew and Co. Ltd. v. Union of
India
[(1975) 2 SCC 791] and Carrasco
Investments Ltd. v. Directorate of
Enforcement
[(1994) 79 Comp Cas 631
(Del)] .”

131. In view of the aforesaid observation, the objection

in this regard deserves to be rejected.

132. 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

44 (2012) 6 SCC 613
124

reiterated its objection, we are of the considered view, that 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”, in our view, would not make any difference. As

already discussed hereinabove, KIAL had no other option

than to submit its revised plans in view of clause 11.2 of the

Process Memorandum. Inasmuch as, had it not responded,

it had to run the risk of being out of fray. As already

discussed hereinabove, the conduct of the party is relevant

for considering, whether it can be held, that a case is made

out of waiver or acquiescence.

133. 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 their position to their detriment.
125

134. As such, it cannot be held, that KIAL had waived

or acquiesced its rights to challenge the decision of RP or

CoC.

(iii) WHETHER NCLAT WAS RIGHT IN LAW IN

INTERFERING WITH THE DECISION OF COC OF

ACCEPTING THE RESOLUTION PLAN OF KALPRAJ?

135. For deciding the said issue, it will be apposite to

refer to Section 30 and 31 of the I&B Code, which read

thus:

“30. Submission of resolution plan.—(1) A
resolution applicant may submit a resolution
plan along with an affidavit stating that he is
eligible under Section 29­A to the resolution
professional prepared on the basis of the in­
formation memorandum.

(2) The resolution professional shall exam­
ine each resolution plan received by him to
confirm that each resolution plan—

(a) provides for the payment of insol­
vency resolution process costs in a
manner specified by the Board in
priority to the payment of other
debts of the corporate debtor;

(b) provides for the payment of debts of
operational creditors in such manner
as may be specified by the Board
which shall not be less than—
126

(i) the amount to be paid to such
creditors in the event of a liquida­
tion of the corporate debtor under
Section 53; or

(ii) the amount that would have been
paid to such creditors, if the
amount to be distributed under
the resolution plan had been dis­
tributed in accordance with the
order of priority in sub­section (1)
of Section 53,
whichever is higher, and provides for
the payment of debts of financial
creditors, who do not vote in favour
of the resolution plan, in such man­
ner as may be specified by the
Board, which shall not be less than
the amount to be paid to such credi­
tors in accordance with sub­section
(1) of Section 53 in the event of a liq­
uidation of the corporate debtor.

Explanation 1.—For the removal of
doubts, it is hereby clarified that a
distribution in accordance with the
provisions of this clause shall be fair
and equitable to such creditors.

Explanation 2.—For the purposes
of this clause, it is hereby declared
that on and from the date of com­
mencement of the Insolvency and
Bankruptcy Code (Amendment) Act,
2019, the provisions of this clause
shall also apply to the corporate in­
solvency resolution process of a cor­
porate debtor—
127

(i) where a resolution plan has not
been approved or rejected by the
Adjudicating Authority;

(ii) where an appeal has been pre­
ferred under Section 61 or Section
62 or such an appeal is not time
barred under any provision of law
for the time being in force; or

(iii) where a legal proceeding has
been initiated in any court against
the decision of the Adjudicating
Authority in respect of a resolu­
tion plan;]

(c) provides for the management of the
affairs of the corporate debtor after
approval of the resolution plan;

(d) the implementation and supervision
of the resolution plan;

(e) does not contravene any of the pro­
visions of the law for the time being
in force;

(f) conforms to such other requirements
as may be specified by the Board.

Explanation.—For the purposes of clause

(e), if any approval of shareholders is re­
quired under the Companies Act, 2013 (18 of
2013) or any other law for the time being in
force for the implementation of actions under
the resolution plan, such approval shall be
deemed to have been given and it shall not
be a contravention of that Act or law.
(3) The resolution professional shall
present to the committee of creditors for its
approval such resolution plans which con­
128

firm the conditions referred to in sub­section
(2).

(4) The committee of creditors may ap­
prove a resolution plan by a vote of not less
than sixty­six per cent of voting share of the
financial creditors, after considering its feasi­
bility and viability, the manner of distribu­
tion proposed, which may take into account
the order of priority amongst creditors as
laid down in sub­section (1) of Section 53,
including the priority and value of the secu­
rity interest of a secured creditor] and such
other requirements as may be specified by
the Board:

Provided that the committee of creditors
shall not approve a resolution plan, submit­
ted before the commencement of the Insol­
vency and Bankruptcy Code (Amendment)
Ordinance, 2017, where the resolution appli­
cant is ineligible under Section 29­A and
may require the resolution professional to in­
vite a fresh resolution plan where no other
resolution plan is available with it:
Provided further that where the resolution
applicant referred to in the first proviso is in­
eligible under clause (c) of Section 29­A, the
resolution applicant shall be allowed by the
committee of creditors such period, not ex­
ceeding thirty days, to make payment of
overdue amounts in accordance with the
proviso to clause (c) of Section 29­A:
Provided also that nothing in the second
proviso shall be construed as extension of
period for the purposes of the proviso to sub­
section (3) of Section 12, and the corporate
insolvency resolution process shall be com­
129

pleted within the period specified in that
sub­section.]
Provided also that the eligibility criteria in
Section 29­A as amended by the Insolvency
and Bankruptcy Code (Amendment) Ordi­
nance, 2018 (Ord. 6 of 2018) shall apply to
the resolution applicant who has not submit­
ted resolution plan as on the date of com­
mencement of the Insolvency and Bank­
ruptcy Code (Amendment) Ordinance, 2018.
(5) The resolution applicant may attend
the meeting of the committee of creditors in
which the resolution plan of the applicant is
considered:

Provided that the resolution applicant
shall not have a right to vote at the meeting
of the committee of creditors unless such
resolution applicant is also a financial credi­
tor.

(6) The resolution professional shall sub­
mit the resolution plan as approved by the
committee of creditors to the Adjudicating
Authority.

31. Approval of resolution plan.—(1) If
the Adjudicating Authority is satisfied that
the resolution plan as approved by the com­
mittee of creditors under sub­section (4) of
Section 30 meets the requirements as re­
ferred to in sub­section (2) of Section 30, it
shall by order approve the resolution plan
which shall be binding on the corporate
debtor and its employees, members, credi­
tors, including the Central Government, any
State Government or any local authority to
130

whom a debt in respect of the payment of
dues arising under any law for the time be­
ing in force, such as authorities to whom
statutory dues are owed, guarantors and
other stakeholders involved in the resolution
plan:

Provided that the Adjudicating Authority
shall, before passing an order for approval of
resolution plan under this sub­section, sat­
isfy that the resolution plan has provisions
for its effective implementation.

(2) Where the Adjudicating Authority is
satisfied that the resolution plan does not
confirm to the requirements referred to in
sub­section (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 effect; and

(b) the resolution professional shall for­
ward all records relating to the con­
duct of the corporate insolvency res­
olution process and the resolution
plan to the Board to be recorded on
its database.

(4) The resolution applicant shall, pur­
suant to the resolution plan approved under
sub­section (1), obtain the necessary ap­
proval 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
131

sub­section (1) or within such period as pro­
vided for in such law, whichever is later:
Provided that where the resolution plan
contains a provision for combination, as re­
ferred 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.”

136. The aforesaid provisions have been recently

considered in three judgments of this Court. The first one,

being in the case of K. Sashidhar (supra), to which one of

us (A.M. Khanwilkar, J.) was a party, and two other

judgments, delivered by three Judges Bench of this Court,

in the cases of Committee of Creditors of Essar Steel

India Limited through Authorised Signatory (supra) and

Maharashtra Seamless Limited vs. Padmanabhan

Venkatesh and others45.

137. This Court in the case of Committee of

Creditors of Essar Steel India Limited through

Authorised Signatory (supra) has set out the relevant

45 (2020) 11 SCC 467
132

extracts from the Bankruptcy Law Reforms Committee

(BLRC) Report of 2015, which read thus:

“56. At this juncture, it is important to set
out the relevant extracts from the aforemen­
tioned Report:

“2. Executive Summary * * *
The key economic question in the bank­
ruptcy process
***
The Committee believes that there is
only one correct forum for evaluating such
possibilities, and making a decision: a
creditors committee, where all financial
creditors have votes in proportion to the
magnitude of debt that they hold. In the
past, laws in India have brought arms of
the Government (legislature, executive or
judiciary) into this question. This has
been strictly avoided by the Commit­
tee. The appropriate disposition of a de­
faulting firm is a business decision, and
only the creditors should make it.

***

5. Process for legal entities * * *
Business decisions by a creditor committee
All decisions on matters of business will
be taken by a committee of the financial
creditors. This includes evaluating pro­
posals to keep the entity as a going con­
cern, including decisions about the sale of
business or units, retiring or restructuring
debt. The debtor will be a non­voting
member on the creditors committee, and
133

will be invited to all meetings. The voting
of the creditors committee will be by ma­
jority, where the majority requires more
than 75 per cent of the vote by weight.

***
No prescriptions on solutions to resolve the
insolvency
The choice of the solution to keep the en­
tity as a going concern will be voted on by
the creditors committee. There are no con­
straints on the proposals that the resolu­
tion professional can present to the credi­
tors committee. Other than the majority
vote of the creditors committee, the reso­
lution professional needs to confirm to the
Adjudicator that the final solution com­
plies with three additional requirements.
The first is that the solution must explic­
itly require the repayment of any interim
finance and costs of the insolvency resolu­
tion process will be paid in priority to
other payments. Secondly, the plan must
explicitly include payment to all creditors
not on the creditors committee, within a
reasonable period after the solution is im­
plemented. Lastly, the plan should comply
with existing laws governing the actions of
the entity while implementing the solu­
tions.

***
5.3.1. Steps at the start of the IRP
***

4. Creation of the creditors committee
The creditors committee will have the
power to decide the final solution by ma­
134

jority vote in the negotiations. The major­
ity vote requires more than or equal to 75
per cent of the creditors committee by
weight of the total financial liabilities. The
majority vote will also involve a cram down
option on any dissenting creditors once the
majority vote is obtained. …
The Committee deliberated on who
should be on the creditors committee,
given the power of the creditors committee
to ultimately keep the entity as a going
concern or liquidate it. The Committee rea­
soned that members of the creditors com­
mittee have to be creditors both with the
capability to assess viability, as well as to
be willing to modify terms of existing liabil­
ities in negotiations. Typically, operational
creditors are neither able to decide on mat­
ters regarding the insolvency of the entity,
nor willing to take the risk of postponing
payments for better future prospects for
the entity. The Committee concluded that,
for the process to be rapid and efficient,
the Code will provide that the creditors
committee should be restricted to only the
financial creditors.

5.3.3. Obtaining the resolution to insol­
vency in the IRP
The Committee is of the opinion that
there should be freedom permitted to the
overall market to propose solutions on
keeping the entity as a going concern.
Since the manner and the type of possible
solutions are specific to the time and envi­
ronment in which the insolvency becomes
visible, it is expected to evolve over time,
135

and with the development of the market.
The Code will be open to all forms of solu­
tions for keeping the entity going without
prejudice, within the rest of the con­
straints of the IRP. Therefore, how the in­
solvency is to be resolved will not be pre­
scribed in the Code. There will be no re­
striction in the Code on possible ways in
which the business model of the entity, or
its financial model, or both, can be
changed so as to keep the entity as a go­
ing concern. The Code will not state that
the entity is to be revived, or the debt is to
be restructured, or the entity is to be liqui­
dated. This decision will come from the de­
liberations of the creditors committee in re­
sponse to the solutions proposed by the
market.”

138. It is thus clear, that the Committee was of the

view, that 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 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
136

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 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
137

(iii) the plan should comply with existing laws

governing the actions of the entity while

implementing the solutions.

139. The Committee also expressed the opinion, that

there should be freedom permitted to the overall market, to

propose solutions on keeping the entity as a going concern.

The Committee opined, that 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.

140. This Court in the case of K. Sashidhar (supra)

observed thus:

“32. Having heard the learned counsel for
the parties, the moot question is about the
sequel of the approval of the resolution plan
by CoC of the respective corporate debtor,
namely, KS&PIPL and IIL, by a vote of less
than seventy­five per cent of voting share of
the financial creditors; and about the cor­
rectness of the view taken by NCLAT that the
percentage of voting share of the financial
creditors specified in Section 30(4) of the I&B
Code is mandatory. Further, is it open to
the adjudicating authority/appellate au­
138

thority to reckon any other factor other
than specified in Sections 30(2) or 61(3)
of the I&B Code as the case may be
which, according to the resolution appli­
cant and the stakeholders supporting
the resolution plan, may be relevant?”
(emphasis supplied)

141. After considering the judgment of this Court in

the case of Arcelormittal India Private

Limited vs. Satish Kumar Gupta and others46 and the

relevant provisions of the I&B Code, this court further

observed in K. Sashidhar (supra) thus:

“52. As aforesaid, upon receipt of a “re­
jected” resolution plan the adjudicating au­
thority (NCLT) is not expected to do anything
more; but is obligated to initiate liquidation
process under Section 33(1) of the I&B Code.

The legislature has not endowed the adjudi­
cating authority (NCLT) with the jurisdiction
or authority to analyse or evaluate the com­
mercial decision of CoC much less to enquire
into the justness of the rejection of the reso­
lution plan by the dissenting financial credi­
tors. From the legislative history and the
background in which the I&B Code has been
enacted, it is noticed that a completely new
approach has been adopted for speeding up
the recovery of the debt due from the de­
faulting companies. In the new approach,
there is a calm period followed by a swift res­
46 (2019) 2 SCC 1
139

olution process to be completed within 270
days (outer limit) failing which, initiation of
liquidation process has been made inevitable
and mandatory. In the earlier regime, the
corporate debtor could indefinitely continue
to enjoy the protection given under Section
22
of the Sick Industrial Companies Act,
1985 or under other such enactments which
has now been forsaken. Besides, the com­
mercial wisdom of CoC has been given
paramount status without any judicial
intervention, for ensuring completion of
the stated processes within the timelines
prescribed by the I&B Code. There is an
intrinsic assumption that financial cred­
itors are fully informed about the viabil­
ity of the corporate debtor and feasibility
of the proposed resolution plan. They act
on the basis of thorough examination of
the proposed resolution plan and assess­
ment made by their team of experts. The
opinion on the subject­matter expressed
by them after due deliberations in CoC
meetings through voting, as per voting
shares, is a collective business decision.
The legislature, consciously, has not pro­
vided any ground to challenge the “com­
mercial wisdom” of the individual finan­
cial creditors or their collective decision
before the adjudicating authority. That
is made non­justiciable.”
(emphasis supplied)

142. This Court has held, that it is not open to the

Adjudicating Authority or Appellate Authority to reckon any
140

other factor other than specified in Sections 30(2) or 61(3)

of the I&B Code. It has further been held, that the

commercial wisdom of CoC has been given paramount

status without any judicial intervention for ensuring

completion of the stated processes within the timelines

prescribed by the I&B Code. This Court thus, in

unequivocal terms, held, that there is an intrinsic

assumption, that financial creditors are fully informed

about the viability of the corporate debtor and feasibility of

the proposed resolution plan. They act on the basis of

thorough examination of the proposed resolution plan and

assessment made by their team of experts. It has been

held, that the opinion expressed by CoC after due

deliberations in the meetings through voting, as per voting

shares, is a collective business decision. It has been held,

that the legislature has consciously not provided any

ground to challenge the “commercial wisdom” of the

individual financial creditors or their collective decision

before the Adjudicating Authority and that the decision of

CoC’s ‘commercial wisdom’ is made non­justiciable.
141

143. This Court in Committee of Creditors of Essar

Steel India Limited through Authorised Signatory

(supra) after referring to the judgment of this Court in the

case of K. Sashidhar (supra) observed thus:

“64. Thus, what is left to the majority deci­
sion of the Committee of Creditors is the
“feasibility and viability” of a resolution plan,
which obviously takes into account all as­
pects of the plan, including the manner of
distribution of funds among the various
classes of creditors. As an example, take the
case of a resolution plan which does not pro­
vide for payment of electricity dues. It is cer­
tainly open to the Committee of Creditors to
suggest a modification to the prospective res­
olution applicant to the effect that such dues
ought to be paid in full, so that the carrying
on of the business of the corporate debtor
does not become impossible for want of a
most basic and essential element for the car­
rying on of such business, namely, electric­
ity. This may, in turn, be accepted by the
resolution applicant with a consequent mod­
ification as to distribution of funds, payment
being provided to a certain type of opera­
tional creditor, namely, the electricity distri­
bution company, out of upfront payment of­
fered by the proposed resolution applicant
which may also result in a consequent re­
duction of amounts payable to other finan­
cial and operational creditors. What is im­
portant is that it is the commercial wis­
dom of this majority of creditors which
is to determine, through negotiation with
142

the prospective resolution applicant, as
to how and in what manner the corpo­
rate resolution process is to take place.”
(emphasis supplied)

144. This Court held, that what is left to the majority

decision of CoC is the “feasibility and viability” of a

resolution plan, which is required to take into account all

aspects of the plan, including the manner of distribution of

funds among the various classes of creditors. It has further

been held, that CoC is entitled to suggest a modification to

the prospective resolution applicant, so that carrying on the

business of the Corporate Debtor does not become

impossible, which suggestion may, in turn, be accepted by

the resolution applicant with a consequent modification as

to distribution of funds, etc. It has been held, that what is

important is, the commercial wisdom of the majority of

creditors, which is to determine, through negotiation with

the prospective resolution applicant, as to how and in what

manner the corporate resolution process is to take place.

145. The view taken in the case of K. Sashidhar

(supra) and Committee of Creditors of Essar Steel India
143

Limited through Authorised Signatory (supra) has been

reiterated by another three Judges Bench of this Court in

the case of Maharashtra Seamless Limited (supra).

146. In all the aforesaid three judgments of this Court,

the scope of jurisdiction of the Adjudicating Authority

(NCLT) and the Appellate Authority (NCLAT) has also been

elaborately considered. It will be relevant to refer to

paragraph 55 of the judgment in the case of K. Sashidhar

(supra), which reads thus:

“55. Whereas, the discretion of the adjudi­
cating authority (NCLT) is circumscribed by
Section 31 limited to scrutiny of the resolu­
tion plan “as approved” by the requisite per
cent of voting share of financial creditors.
Even in that enquiry, the grounds on which
the adjudicating authority can reject the res­
olution plan is in reference to matters speci­
fied in Section 30(2), when the resolution
plan does not conform to the stated require­
ments. Reverting to Section 30(2), the en­
quiry to be done is in respect of whether the
resolution plan provides: (i) the payment of
insolvency resolution process costs in a
specified manner in priority to the repay­
ment of other debts of the corporate debtor,

(ii) the repayment of the debts of operational
creditors in prescribed manner, (iii) the man­
agement of the affairs of the corporate
debtor, (iv) the implementation and supervi­
sion of the resolution plan, (v) does not con­
144

travene any of the provisions of the law for
the time being in force, (vi) conforms to such
other requirements as may be specified by
the Board. The Board referred to is estab­
lished under Section 188 of the I&B Code.
The powers and functions of the Board have
been delineated in Section 196 of the I&B
Code. None of the specified functions of the
Board, directly or indirectly, pertain to regu­
lating the manner in which the financial
creditors ought to or ought not to exercise
their commercial wisdom during the voting
on the resolution plan under Section 30(4) of
the I&B Code. The subjective satisfaction of
the financial creditors at the time of voting is
bound to be a mixed baggage of variety of
factors. To wit, the feasibility and viability of
the proposed resolution plan and including
their perceptions about the general capabil­
ity of the resolution applicant to translate
the projected plan into a reality. The resolu­
tion applicant may have given projections
backed by normative data but still in the
opinion of the dissenting financial creditors,
it would not be free from being speculative.
These aspects are completely within the do­
main of the financial creditors who are called
upon to vote on the resolution plan under
Section 30(4) of the I&B Code.”

147. It has been held, that in an enquiry under

Section 31, the limited enquiry that the Adjudicating

Authority is permitted is, as to whether the resolution plan

provides:

145

(i) the payment of insolvency resolution process costs

in a specified manner in priority to the repayment of

other debts of the corporate debtor,

(ii) the repayment of the debts of operational creditors

in prescribed manner,

(iii) the management of the affairs of the corporate

debtor,

(iv) the implementation and supervision of the

resolution plan,

(v) the plan does not contravene any of the provisions

of the law for the time being in force,

(vi) conforms to such other requirements as may be

specified by the Board.

148. It will be further relevant to refer to the following

observations of this Court in K. Sashidhar (supra):

57. …Indubitably, the remedy of appeal
including the width of jurisdiction of the ap­
pellate authority and the grounds of appeal,
is a creature of statute. The provisions in­
vesting jurisdiction and authority in
NCLT or NCLAT as noticed earlier, have
not made the commercial decision exer­
cised by CoC of not approving the resolu­
tion plan or rejecting the same, justicia­
ble. This position is reinforced from the
limited grounds specified for instituting
an appeal that too against an order “ap­
proving a resolution plan” under Section
146

31. First, that the approved resolution plan
is in contravention of the provisions of any
law for the time being in force. Second, there
has been material irregularity in exercise of
powers “by the resolution professional” dur­
ing the corporate insolvency resolution pe­
riod. Third, the debts owed to operational
creditors have not been provided for in the
resolution plan in the prescribed manner.
Fourth, the insolvency resolution plan costs
have not been provided for repayment in pri­
ority to all other debts. Fifth, the resolution
plan does not comply with any other criteria
specified by the Board. Significantly, the
matters or grounds—be it under Section
30(2)
or under Section 61(3) of the I&B Code
—are regarding testing the validity of the
“approved” resolution plan by CoC; and not
for approving the resolution plan which has
been disapproved or deemed to have been re­
jected by CoC in exercise of its business de­
cision.”
[emphasis supplied]

149. It will therefore be clear, that this Court, in

unequivocal terms, held, that 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.
147

150. The position is clarified by the following

observations in paragraph 59 of the judgment in the case of

K. Sashidhar (supra), which reads thus:

“59. In our view, neither the adjudicating
authority (NCLT) nor the appellate authority
(NCLAT) has been endowed with the jurisdic­
tion to reverse the commercial wisdom of
the dissenting financial creditors and that
too on the specious ground that it is only an
opinion of the minority financial
creditors…..”

151. This Court in Committee of Creditors of Essar

Steel India Limited through Authorised Signatory

(supra) after reproducing certain paragraphs in K.

Sashidhar (supra) observed thus:

“Thus, it is clear that the limited
judicial review available, which can in
no circumstance trespass upon a
business decision of the majority of the
Committee of Creditors, has to be
within the four corners of Section 30(2)
of the Code, insofar as the Adjudicating
Authority is concerned, and Section 32
read with Section 61(3) of the Code,
insofar as the Appellate Tribunal is
concerned, the parameters of such
review having been clearly laid down
in K. Sashidhar”
148

152. It can thus be seen, that this Court has clarified,

that the limited judicial review, which is available, can in no

circumstance trespass upon a business decision arrived at

by the majority of CoC.

153. In the case of Maharashtra Seamless Limited

(supra), NCLT had approved the plan of appellant therein

with regard to CIRP of United Seamless Tubulaar (P) Ltd. In

appeal, NCLAT directed, that the appellant therein should

increase upfront payment to Rs.597.54 crore to the

“financial creditors”, “operational creditors” and other

creditors by paying an additional amount of Rs.120.54

crore. NCLAT further directed, that in the event the

“resolution applicant” failed to undertake the payment of

additional amount of Rs.120.54 crore in addition to Rs.477

crore and deposit the said amount in escrow account within

30 days, the order of approval of the ‘resolution plan’ was to

be treated to be set aside. While allowing the appeal and

setting aside the directions of NCLAT, this Court observed

thus:

“30. The appellate authority has, in our
opinion, proceeded on equitable perception
149

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, we feel the Court
ought to cede ground to the commercial wis­
dom 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 sub­section
(2) of Section 30 of the Code has been com­
plied 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 scope
of interference by the adjudicating authority
in limited judicial review has been laid down
in Essar Steel [Essar Steel India Ltd. Commit­
tee of Creditors v. Satish Kumar Gupta,
(2020) 8 SCC 531] , the relevant passage
(para 54) of which we have reproduced in
earlier part of this judgment. The case of
MSL in their appeal is that they want to run
the company and infuse more funds. In such
circumstances, we do not think the appellate
authority ought to have interfered with the
order of the adjudicating authority in direct­
ing the successful resolution applicant to en­
hance their fund inflow upfront.”

154. This Court observed, that the Court ought to cede

ground to the commercial wisdom of the creditors rather

than assess the resolution plan on the basis of quantitative
150

analysis. This Court clearly held, that the appellate

authority ought not to have interfered with the order of the

adjudicating authority by directing the successful resolution

applicant to enhance their fund inflow upfront.

155. It would thus be clear, that the legislative

scheme, as interpreted by various decisions of this Court, 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.

156. No doubt, it is sought to be urged, that since

there has been a material irregularity in exercise of the

powers by RP, NCLAT was justified in view of the provisions

of clause (ii) of sub­section (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,
151

including acceptance of resolution plans of Kalpraj after the

due date, albeit before the expiry of timeline specified by the

I&B Code for completion of the process, have been

consciously approved by CoC. It is to be noted, that the

decision of CoC is taken by a thumping majority of 84.36%.

The only creditor voted in favour of KIAL is Kotak Bank,

which is a holding company of KIAL, having voting rights of

0.97%. We are of the considered view, that 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%.

157. It is further to be noted, that 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. It is not in dispute, that there was no

stay granted by NCLAT, while reserving the matters for

orders. After a gap of five months and eight days, NCLAT

passed the final order on 5.8.2020. It could thus be seen,
152

that 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, we do not find it

necessary to go into that aspect of the matter in light of our

conclusion, that NCLAT acted in excess of jurisdiction in

interfering with the conscious commercial decision of CoC.

158. It is also pointed out, that 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

we have already held, that the decision of NCLAT dated

5.8.2020 does not stand the scrutiny of law, it must follow,

that the subsequent approval of the resolution plan of KIAL

by CoC becomes non­est in law. For, it was only to abide by

the directions of NCLAT. We are of the view that 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
153

‘commercial wisdom’. As such, we hold, that 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.

159. In that view of the matter, we find, that Civil

Appeal Nos. 2943­2944 of 2020 filed by Kalpraj; Civil Appeal

Nos. 2949­2950 of 2020 filed by RP and Civil Appeal Nos.

3138­3139 of 2020 filed by Deutsche Bank deserve to be

allowed. It is ordered accordingly. 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.

160. Insofar as, the Civil Appeals arising out of D.No.

24125 of 2020 filed by Fourth Dimension Solutions Limited

are concerned, it is submitted, that the appeal preferred by

it against the order of NCLT is still pending before NCLAT.

Without going into the merits of the rival contentions of the

parties, we direct NCLAT to decide the appeal of Fourth
154

Dimension Solutions Limited in accordance with law, as

expeditiously as possible, and in any case, within a period

of two months from today.

161. As such, all appeals are disposed of in view of the

above and pending applications, if any, shall stand disposed

of.

…….……………………, J.

[A.M. KHANWILKAR]

…….……………………, J.

[B.R. GAVAI]

…….……………………, J.

[KRISHNA MURARI]

NEW DELHI;

MARCH 10, 2021



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