KALPRAJ DHARAMSHI & ANR. versus KOTAK INVESTMENT ADVISORS LTD. & ANR.

[2021] 2 S.C.R. 677

KALPRAJ DHARAMSHI & ANR.

KOTAK INVESTMENT ADVISORS LTD. & ANR.

(Civil Appeal Nos. 2943-2944 of 2020)

MARCH 10, 2021

[A.M. KHANWILKAR, B. R. GAVAI ANDKRISHNA MURARI, JJ.]

Insolvency and Bankruptcy Code, 2016:

ss. 10, 61, 238A – Proceedings or appeals before theadjudicating Authority, appellate tribunal etc – Application ofLimitation Act – On facts, application u/s. 10 by Corporate Debtorfor initiation of Corporate Insolvency Resolution Process –Successively five Form notified – Resolution applicant-KIALsubmitted Resolution Plan (RP) within the stipulated time andresolution applicant-Kalpraj submitted plan after the stipulated time– Objection raised by KIAL – Subsequently on direction byCommittee of Creditors (CoC), submission of revised plan by KIALand Kalpraj – Thereafter, approval of revised plan submitted byKalpraj – KIAL challenged the approval of Kalpraj’s ResolutionPlan before NCLT – Plan of Kalpraj approved by NCLT – Thereafter,KIAL filed Writ Petition before the High Court which was dismissedon the ground of alternate remedy – KIAL then filed appeal beforeNCLAT which was allowed, rejecting Kalpraj submission that appealwere filed beyond the limitation period prescribed in IBC – Onappeal, held: Provisions of s. 14 of the Limitation Act are availableto KIAL – Applying the principles underlying s. 14, KAIL entitled toexclusion of the period during which it was bona fide prosecutinga remedy before the High Court in good faith and with due diligence,thus, the appeals filed before NCLAT within the limitation – Thoughan alternate remedy was available to it, it was approaching theHigh Court since the issue with regard to functioning of NCLT alsofell for consideration – High Court dismissed the writ petitionrelegating KIAL to an alternate remedy available in law – HighCourt could have exercised extra-ordinary jurisdiction u/Art. 226inasmuch as, the grievance was regarding procedure followed byNCLT to be in breach of principles of natural justice – LimitationAct, 1963 – s. 29(2) – Constitution of India – Art. 226.

CDEF

AWaiver and acquiescence – Inference of – Objection by KIALto the acceptance of belated Resolution Plan of Kalpraj – However,when no choice left, KIAL submitted revised Resolution Plan –Conduct of KIAL, if amounts to waiver and acquiescence by KIALso as to estop it from challenging the participation of Kalpraj –Held: KIAL had objected to participation of other applicantBsubmitting plan after the due date as per the last Form and alsoreiterated its objection to the participation of Kalpraj – It cannotbe said that having participated by submitting the revised plans,KIAL is estopped from challenging the decision of ResolutionProfessional (RP) or CoC on the ground of acquiescence and waiverC– Merely because, the revised plans are not submitted with the words“without prejudice”, would not make any difference – KIAL had noother option than to submit its revised plans in view of clause 11.2of the Process Memorandum – Had it not responded, it had to runthe risk of being out of competition – Also it is not established thatKIAL had given up/surrendered its rights to take recourse to theDlegal remedies, and that on account of waiver or acquiescence theparties had altered their position to their detriment.ss. 10, 30, 31 – Submission and approval of Resolution plan– Decision of Committee of Creditors-CoC accepting the resolutionEplan of Resolution applicant-Kalpraj – NCLAT annulled decisionof CoC to accept the Resolution Plan – Interference with the decisionof CoC by NCLAT – Correctness of – Held: Statute has not investedjurisdiction and authority either with NCLT or NCLAT, to reviewthe commercial decision exercised by CoC of approving the resolutionplan or rejecting the same – Commercial wisdom of CoC is not to beFinterfered with, except within the limited scope u/ss. 30 and 31 ofthe Code – Decision of CoC was taken by thumping majority of84.36% – Only creditor voted in favour of KIAL is having votingrights of 0.97% – In view of the paramount importance given to thedecision of CoC, NCLAT not correct in law in interfering with thecommercial decision taken by CoC – Furthermore, for long period,Gthere was no restraint on implementation of the resolution plan ofKalpraj, which was duly approved by NCLT and during the saidperiod, Kalpraj has spend huge amount for implementation ofthe plan – Thus, the decision taken by CoC in accordance with itscommercial wisdom which is duly approved by NCLT, would prevail.H

Corporate Insolvency Resolution Process – Initiation of –Resolution Plan from prospective resolution applicants – Decisionof Committee of Creditors – Justiciability of, in the court of law –Discussed.

Limitation Act, 1963: s. 14 – Proceedings before the quasi-judicial tribunal – Applicability of s. 14 – Held: Though strictly, theprovisions of s. 14 would not be applicable to the proceedings beforea quasi-judicial tribunal, however, the principles underlying thesame would be applicable – Proper approach would be of advancingthe cause of justice, rather than to abort the proceedings – Litigantwould be entitled for exclusion of the period, during which he wasbona fide prosecuting such wrong remedy.

Doctrines/Principles: Principle of waiver and acquiescence– When can be inferred – Held: Waiver is an intentionalrelinquishment of right, advantage, benefit, claim or privilege –For applying the principle of waiver, it has to be established, thatthough party was aware about the relevant facts and the right totake an objection, he has neglected to take such an objection – Ithas to be established that party expressly or by its conduct actedin manner, which is inconsistent with the continuance of its rights– Whereas, acquiescence would be conduct where party is sittingby, when another is invading his rights – Acquiescence must besuch as to lead to the inference of licence sufficient to create anew right in the defendant.

Disposing of the appeals, the Court

HELD: 1.1 Though the provisions of the Limitation Act, asfar as may be, would apply to the proceedings or appeals beforethe Adjudicating Authority, NCLAT, the Debt Recovery Tribunalor the Debt Recovery Appellate Tribunal, where period oflimitation for initiation of proceedings is provided under anyspecial or local law, different from the period prescribed by theSchedule, the provisions of Section 3 shall apply, as if such periodwere the period prescribed by the Schedule. It would furtherreveal, that for the purpose of determining any period of limitationprescribed for any suit, appeal or application by any special orlocal 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

Aexpressly excluded by such special or local law. [Para 37][712-D-G]

1.2 Since under IBC Code there is period different fromthe one which is prescribed by the Schedule to the LimitationAct, the limitation for an appeal would be governed by Section 61Bof the I&B Code, which is special statute. As such, an appealwill have to be preferred within period of thirty days from thedate on which the order was passed by NCLT. However, if NCLATis satisfied, that there was sufficient cause for not filing the appealwithin period of thirty days, it may allow an appeal to be filedwithin further period of fifteen days. As such, the normal periodCof limitation prescribed under the I&B Code is thirty days, witha provision for allowing the filing of an appeal within furtherperiod of fifteen days, if NCLAT is satisfied, that there wasa sufficient cause for not filing the appeal within thirty days.[Para 39][713-A-D]D

1.3 When litigant bona fide under mistake litigates beforea wrong forum, he would be entitled for exclusion of the period,during which he was bona fide prosecuting such wrong remedy.Though strictly, the provisions of Section 14 of the LimitationAct would not be applicable to the proceedings before quasiEjudicial Tribunal, however, the principles underlying the samewould be applicable i.e. the proper approach will have to be ofadvancing the cause of justice, rather than to abort theproceedings. [Para 51][720-D-F]

1.4 The judgment of NCLT is dated 28.11.2019. As such,Fas per Section 61(2) of the I&B Code, the appeal was required tobe filed on or prior to 28.12.2019. The appeal could have beenfiled within further period of fifteen days, if NCLAT was satisfied,that there was sufficient cause for not filing the appeal within aperiod of thirty days. As such, the said period would come to anend on 12.1.2020. The certified copy of the impugned judgmentGof NCLT was made available on 18.12.2019. If the allowance forthe said period is granted, the appeal should have been preferredon or prior to 2.2.2020. However, in the instant case, the appealis filed on 18.2.2020. [Para 40][713-D-F]

1.5 Immediately after NCLT pronounced its judgment on28.11.2019 and even before the certified copy was made availableon 18.12.2019, KIAL had filed writ petition before the DivisionBench of the High Court on 11.12.2019 on the principal ground,that the procedure followed by NCLT was in breach of principlesof natural justice. Such ground could be legitimately pursuedbefore writ court. In that sense, it was not proceeding beforea wrong court, as such. [Para 54][723-B-D]

1.6 It is settled principle of law, that non-exercise ofjurisdiction by the High Court under Article 226 of theConstitution is not hard and fast rule, but rule of self-restraint.When the proceedings invoked before statutory authority arede hors the jurisdiction or when they are in breach of principlesof natural justice, the party would be entitled to invoke thejurisdiction of the High Court under Article 226 of theConstitution. [Paras 59, 61][724-G-H; 725-H; 726-A]

1.7 In the instant case, perusal of the writ petition wouldreveal, that it was the specific case of KIAL, that its application,objecting to the application of RP for approval of the resolutionplan was heard by Member (Judicial), whereas, the final orderswere passed by Bench consisting of Member (Judicial) andMember (Technical). It has specifically averred, that though analternate remedy was available to it, it was invoking thejurisdiction of the High Court since the question involved wasalso with regard to the manner in which the jurisdiction wasexercised by NCLT. It could thus be seen, that KIAL was bonafide prosecuting the proceedings before the High Court in goodfaith. Perusal of the dates would also reveal, that KIAL wasprosecuting the proceedings before the High Court with duediligence. Even before the availability of the certified copy, it hadknocked the doors of the High Court. The matter before theHigh Court was hotly contested and ultimately, the petition wasdismissed by an elaborate judgment relegating KIAL to thealternate remedy available to it in law. As such, the conditionswhich enable party to invoke the provisions of Section 14 of theLimitation Act are very much available to KIAL. If the periodduring which KIAL was bona fide prosecuting the writ petition

ABC

Abefore the High Court and that too with due diligence, is excludedapplying the principles underlying Section 14 of the LimitationAct, the appeals filed before NCLAT would be very much withinthe limitation. KIAL would be entitled to exclusion of the periodduring which it was bona fide prosecuting the remedy before theHigh Court with due diligence. [Para 64][726-E-H; 727-A-C]

1.8 In the instant case, KIAL had approached the High Courtmaking specific grievance, that NCLT had adopted procedurewhich was in breach of the principles of natural justice. It isspecifically mentioned in the writ petition, that though an alternateremedy was available to it, it was approaching the High CourtCsince the issue with regard to functioning of NCLT also fell forconsideration. It is thus apparently clear, that KIAL was bonafide prosecuting remedy before the High Court in good faithand with due diligence. In given case, the High Court couldhave exercised jurisdiction under Article 226 of the ConstitutionDinasmuch as, the grievance was regarding procedure followed byNCLT to be in breach of principles of natural justice. That wouldcome within the limited area earmarked by this Court for exerciseof extraordinary jurisdiction under Article 226 despite availabilityof an alternate remedy. Therefore, KIAL was entitled to extensionof the period during which it was bona fide prosecuting aEremedy before the High Court with due diligence. [Paras 83,85][735-A-D; 736-A]

Consolidated Engineering Enterprises vs. PrincipalSecretary, Irrigation Department and others (2008) 7SCC 169 : [2008] 5 SCR 1108; M.P. Steel CorporationFvs. Commissioner of Central Excise (2015) 7 SCC 58;State of Goa vs. Western Builders (2006) 6 SCC 239 :[2006] 3 Suppl. SCR 288; Embassy PropertyDevelopments Pvt. Ltd. vs. State of Karnataka andOthers 2019 SCC Online 1542 – relied on.

Commissioner of Sales Tax, U.P. vs. Madan Lal Das &Sons, Bareilly (1976) 4 SCC 464 : [1977] 1 SCR 683– per incuriam.

Union of India vs. Popular Construction Co. (2001) 8SCC 470 : [2001] 3 Suppl. SCR 619; Singh

Enterprises vs. Commissioner of Central Excise,Jamshedpur & Ors. (2008) 3 SCC 70 : [2007]13 SCR 952; Chhattisgarh State Electricity Board vs.Central Electricity Regulatory Commission & Ors.(2010) 5 SCC 23 : [2010] 4 SCR 680; Neeraj Jhanjivs. Commissioner of Customs & Central Excise (2015)12 SCC 695; Ketan V. Parekh vs. Special Director,Directorate of Enforcement & Anr. (2011) 15 SCC 30 :[2011] 14 SCR 1204; Commissioner of Customs andCentral Excise vs. Hongo India Private Limited andanother (2009) 5 SCC 791; Bengal Chemists andDruggists Association vs. Kalyan Chowdhury (2018) 3SCC 41 : [2018] 2 SCR 1099 - distinguished.

Commissioner of Sales Tax. U.P., Lucknow vs. ParsonTools and Plants, Kanpur (1975) 4 SCC 22: [1975] 3SCR 743 – held distinguished.

Whirlpool Corporation vs. Registrar of Trade Marks,Mumbai & Ors. (1998) 8 SCC 1 : [1998] 2 Suppl. SCR 359; Babu Ram Prakash Chandra Maheshwari vs.Antarim Zilla Parishad Muzaffar Nagar [1969] 1 SCR518; Nivedita Sharma vs. Cellular Operators Associationof India & Ors. (2011) 14 SCC 337; Bharat Bank Ltd.,Delhi vs. Employees of the Bharat Bank Ltd., Delhi[1950] SCR 459; Town Municipal Council, Athani vs.Presiding Officer, Labour Courts, Hubli and others etc.(1969) 1 SCC 873 : [1970] 1 SCR 51; Nityananda M.Joshi and others vs. Life Insurance Corporation of Indiaand others (1969) 2 SCC 199: 1970 (1) SCR 396;Bhudan Singh and another vs. Nabi Bux and another(1969) 2 SCC 481: [1970] 2 SCR 10; J. KumaradasanNair and another vs. Iric Sohan and others (2009) 12SCC 175: [2009] 3 SCR 238; Kerala State ElectricityBoard, Trivandrum vs. T.P. Kunhaliumma (1976) 4 SCC634 : [1977] 1 SCR 996; Officer on Special Duty (LandAcquisition) and another vs. Shah Manilal Chandulaland others (1996) 9 SCC 414: [1996] 2 SCR 366 -referred to.

A2.1 KIAL had no choice than to accept the terms of thecontract. Paragraph 5(b) of the covering letter for submission ofresolution plan by KIAL is part of covering letter format,which is provided in the Process Memorandum itself. Thecovering letter is in Format I and the party desiring to participatein the Resolution Plan Process has no other option, than to signBthe dotted lines. Hence, the parties cannot be said to have equalbargaining power and the applicants have no other choice than tosign on the documents prescribed in the format. Paragraph 5(b)of the covering letter format, requires party to undertake, thatit will accept all the decisions made by CoC, RP and/or theCAdjudicating Authority and that the decisions taken will be bindingon it. It also requires the applicant, to sign on the documentthereby, providing expressly waiving any and all claims withrespect to the Resolution Plan Process. In turn, it provides for aparty to agree to stipulation, that even if RP or CoC acts in anymanner, which is not permissible in law, still the resolutionDapplicant would be bound by such decision and shall waive anyor all its claims in respect of the Resolution Plan Process.[Para 95][739-H; 740-A-D]

2.2 In the first place, RP and the resolution applicant cannotbe said to be the contracting parties having equal bargainingEpower. Secondly, since RP functions under the I&B Code fordischarging the duties bestowed upon him and assisting theprocess for finalization of resolution plan for survival of theCorporate Debtor, it cannot be said that it is purely commercialtransaction between RP and the resolution applicant. There is no

Freason, as to why the said principle should not be applicable whenRP and CoC are acting under the statutory provisions under theCode. Thus, KIAL cannot be held to be bound by suchunconscionable clause in the letter, which is in prescribed format.[Paras 97, 99, 100][740-E-F; 741-B-D]

GHalsbury’s Laws of England, Vol. 16(2), 4th Edn., Para907, 1471 – referred to

2.3 For considering, as to whether party has waived itsrights or not, it will be relevant to consider the conduct of party.

For establishing waiver, it will have to be established, that partyexpressly or by its conduct acted in manner, which is inconsistentwith the continuance of its rights. However, the mere acts ofindulgence will not amount to waiver. party claiming waiverwould also not be entitled to claim the benefit of waiver, unless ithas altered its position in reliance on the same. For applying theprinciple of waiver, it will have to be established, that though aparty was aware about the relevant facts and the right to take anobjection, he has neglected to take such an objection. [Paras 104,107][742-F-G; 743-E-F]

2.4 For constituting acquiescence or waiver it must beestablished, that though party knows the material facts and isconscious of his legal rights in given matter, but fails to assertits rights at the earliest possible opportunity, it creates an effectivebar of waiver against him. Whereas, acquiescence would be aconduct where party is sitting by, when another is invading hisrights. The acquiescence must be such as to lead to the inferenceof licence sufficient to create new right in the defendant. Waiveris an intentional relinquishment of right. It involves consciousabandonment of an existing legal right, advantage, benefit, claimor privilege. It is an agreement not to assert right. There canbe no waiver unless the person who is said to have waived, isfully informed as to his rights and with full knowledge about thesame, he intentionally abandons them. [Para 112][747-E-G]

2.5 As per the invitation of EOI published on 9.7.2018, thelast date for submission of EOI was 8.8.2018. The first Form Gwas also issued on 9.7.2018, according to which, the last date forsubmission of resolution plan was 21.9.2018. KIAL had submittedits EOI on 7.8.2018. First Process Memorandum was issued on17.8.2018. However, since there was no response, four more FormG were issued on various dates. The last of such Form wasissued on 11.12.2018, according to which the last date forsubmission of resolution plan was 8.1.2019. KIAL submitted itsresolution plan on 8.1.2019. Subsequently, Kalpraj submitted itsresolution plan on 27.1.2019. On KIAL coming to know aboutthe same, on 29.1.2019 itself, it had sent an email protesting toRP against acceptance of belated resolution plan of Kalpraj. [Paras116, 117][748-F-H; 749-A]

DEF

A2.6 It could be seen that immediately within day of thesubmission of the plan by Kalpraj, KIAL objected to theacceptance of its plan after 8.1.2019, when no extension of timefor the same was notified. It is specifically stated, that the saidseverely jeopardized its position and was against the spirit of theCode, especially when KIALs resolution plan was openedBimmediately and discussed at length with various stakeholders.KIAL has therefore requested for sharing the requisiteinformation providing for extension of time for bid submission. Itis further stated, that in the event no such notification was issued,all plans submitted after 8.1.2019 should be held to be invalid.CAfter the said email was addressed by KIAL to RP, it receivedan email from RP on 30.1.2019. It is stated in the said email dated30.1.2019, that subsequent to the resolution plan submitted on8.1.2019, CoCs representative and RP had detailed discussionwith its team on the changes required to be made in the resolutionplan. Vide the said email dated 30.1.2019, KIAL was requestedDto submit the amended resolution plan by 3 p.m. on 1.2.2019. On1.2.2019, left with no choice, KIAL submitted its revisedresolution plan. [Paras 118, 119][749-E-H; 750-A]2.7 On 10.2.2019 KIAL sent another email. It was statedtherein that it has been quite sometime, that it had sought aEresponse from RP on his decision to accept another resolutionplan well after the expiry of the deadline for submission of thesame. It was reiterated, that such an action, after opening of thebids and having detailed discussions on the same was not onlyprejudicial to its interest but against the spirit of the I&B Code.FIt was reiterated, that the I&B Code, provides equal treatmentto all potential resolution applicants within the framework of lawand fixes personal responsibilities upon CoC members and RPsin the event of instances of discrimination or departure from theestablished law. [Para 121][750-D-F]G2.8 Perusal of the record would reveal, that RP had repliedto KIAL by email dated 11.2.2019. It was stated in the said email,that his act of acceptance of resolution plans, submitted after thedue date, was under the overall supervision of CoC and as perthe opinion given by CoCs legal counsel and RPs legal counsel.

It was also submitted, that this was in the spirit of valuemaximisation of assets of the Corporate Debtor. Further, it is indispute, as to whether RP had again directed KIAL and Kalprajvide email dated 11.2.2019 to submit revised plan. It is assertedon behalf of the KIAL, that such email was received by it, whereasit is denied by RP. In any event, it is not in dispute, that bothKIAL and Kalpraj submitted their revised plans on 12.2.2019.[Paras 122 - 123][750-F-H; 751-A]

2.9 On 13/14.2.2019, the resolution plan of Kalpraj wasaccepted by CoC. On 18.2.2019, RP filed M.A. No.691/2019before NCLT for approval of the resolution plan of Kalpraj. KIALfiled its M.A. on 14.3.2019 before the Adjudicating Authorityobjecting to the approval of resolution plan of Kalpraj. It couldthus, be clearly seen, that KIAL had raised its objectionimmediately after the Kalpraj submitted its resolution plan. Notonly that, but, it had also reiterated its objection to theparticipation of Kalpraj. Insofar as, submission of amended plansis concerned, it had no other option than to submit its revisedplan. It is thus clear that, had KIAL not responded to the emailof RP and submitted its revised plan, it had to run the risk ofbeing out of fray. [Paras 124-126][751-A-C, E-F]

2.10 Taking into consideration the fact, that KIAL hadobjected to participation of any other applicant submitting planafter the due date as per the last Form and also reiterated itsobjection, it cannot be held, that having participated by submittingthe revised plans, KIAL is estopped from challenging the processon the ground of acquiescence and waiver. Merely because, therevised plans are not submitted with the words “withoutprejudice”, would not make any difference. [Para 132][753-A-B]

2.11 The conduct of the party is relevant for considering,whether it can be held, that case is made out of waiver oracquiescence. None of the appellants have been in position toestablish, that KIAL had given up/surrendered its rights to takerecourse to the legal remedies. In any case, the appellants hadalso not been in position to establish, that on account of anysuch waiver or acquiescence any of the appellants had altered

ABC

Atheir position to their detriment. As such, it cannot be held, thatKIAL had waived or acquiesced its rights to challenge the decisionof RP or CoC. [Paras 132-134][753-C-E]

Central Inland Water Transport Corporation Limitedand another vs. Brojo Nath Ganguly and another (1986)B3 SCC 156 : [1986] 2 SCR 278; Vodafone InternationalHoldings BV vs. Union of India and another (2012) 6SCC 613: [2012] 1 SCR 573 – relied on.

ITC Ltd. vs. Blue Coast Hotels Limited & Ors. (2018)15 SCC 99 : [2018] 5 SCR 516; Tarapore & CompanyCvs. Cochin Shipyard Ltd., Cochin & Anr. (1984) 2 SCC680: [1984] 3 SCR 118 - Distinguished

Assistant General Manager and others vs. RadheyShyam Pandey (2020) 6 SCC 438; Pioneer Urban Landand Infrastructure Limited vs. Govindan RaghavanD(2019) 5 SCC 725 : [2019] 5 SCR 1169; Manak Lalvs. Dr. Prem Chand 1957 SCR 575 = AIR 1957 SC425; Krishna Bahadur vs. Purna Theatre and others(2004) 8 SCC 229 : [2004] 3 Suppl. SCR 833; Stateof Punjab vs. Davinder Pal Singh Bhullar and others(2011) 14 SCC 770 : [2011] 15 SCR 540; Galada powerEand Telecommunication limited vs. United IndiaInsurance Company Limited and another (2016) 14SCC 161: 2016 (4 ) SCR 69 – referred to.

3.1 For deciding key economic question in the bankruptcyprocess, the only one correct forum for evaluating suchFpossibilities, and making decision was, creditors committee,wherein all financial creditors have votes in proportion to themagnitude of debt that they hold. The Bankruptcy Law ReformsCommittee-BLRC has observed, that laws in India in the pasthave brought arms of the Government (legislature, executive orGjudiciary) into the question of bankruptcy process. This has beenstrictly avoided by the Committee and it has been provided, thatthe decision with regard to appropriate disposition of defaultingfirm, which is business decision, should only be made by thecreditors. It has been observed, that the evaluation of proposals

to keep the entity as going concern, including decisions aboutthe sale of business or units, restructuring of debt, etc., arerequired to be taken by the Committee of the Financial Creditors.It has been provided, that the choice of the solution to keep theentity as going concern will be voted upon by CoC and thereare no constraints on the proposals that the resolution professionalcan present to CoC. The requirements, that the resolutionprofessional needs to confirm to the Adjudicator, are: (i) that thesolution must explicitly require the repayment of any interimfinance and costs of the insolvency resolution process will bepaid in priority to other payments; (ii) that the plan must explicitlyinclude payment to all creditors not on the creditors committee,within reasonable period after the solution is implemented; andlastly (iii) the plan should comply with existing laws governingthe actions of the entity while implementing the solutions.[Para 138][760-B-G]

3.2 There should be freedom permitted to the overallmarket, to propose solutions on keeping the entity as goingconcern. The details as to how the insolvency is to be resolvedor as to how the entity is to be revived, or the debt is to berestructured will not be provided in the I&B Code but such adecision will come from the deliberations of CoC in response tothe solutions proposed by the market. [Para 139][760-G-H;761-A]

3.3 The appeal is creature of statute and that the statutehas not invested jurisdiction and authority either with NCLT orNCLAT, to review the commercial decision exercised by CoC ofapproving the resolution plan or rejecting the same. The limitedjudicial review, which is available, can in no circumstance trespassupon business decision arrived at by the majority of CoC.[Paras 149, 152][766-B-C, G-H]

3.4 The legislative scheme is unambiguous. Thecommercial wisdom of CoC is not to be interfered with, exceptingthe limited scope as provided under Sections 30 and 31 of theI&B Code. [Para 155][768-A-B]

3.5 It was submitted that since there has been materialirregularity in exercise of the powers by RP, NCLAT was justified

Ain view of the provisions of clause (ii) of sub section (3) of Section61 of the I&B Code to interfere with the exercise of power byRP. However, it could be seen, that all actions of RP have theseal of approval of CoC. No doubt, it was possible for RP to haveissued another Form G, in the event he found, that the proposalsreceived by it prior to the date specified in last Form could notBbe accepted. However, it has been the consistent stand of RP aswell as CoC, that all actions of RP, including acceptance ofresolution plans of Kalpraj after the due date, albeit before theexpiry of timeline specified by the Code for completion of theprocess, have been consciously approved by CoC. The decisionCof CoC is taken by thumping majority of 84.36%. The onlycreditor voted in favour of KIAL is Kotak Bank, holding companyof KIAL, having voting rights of 0.97%. In view of the paramountimportance given to the decision of CoC, which is to be taken onthe basis of commercial wisdom, NCLAT was not correct in lawin interfering with the commercial decision taken by CoC by aDthumping majority of 84.36%. [Para 156][768-B-F]

3.6 After the resolution plan of Kalpraj was approved byNCLT on 28.11.2019, Kalpraj had begun implementing theresolution plan. NCLAT had heard the appeals on 27.2.2020 andreserved the same for orders. There was no stay granted byENCLAT, while reserving the matters for orders. After gap offive months, NCLAT passed the final order on 5.8.2020. Thus,for long period, there was no restraint on implementation ofthe resolution plan of Kalpraj, which was duly approved by NCLT.It is the case of Kalpraj, RP, CoC and Deutsche Bank, that during

Fthe said period, various steps have been taken by Kalpraj byspending huge amount for implementation of the plan. No doubt,this is sought to be disputed by KIAL. However, it is notnecessary to go into that aspect of the matter in light of theconclusion, that NCLAT acted in excess of jurisdiction in

interfering with the conscious commercial decision of CoC.G[Para 157][868-F-H; 769-A]

3.7 In pursuance of the order dated 5.8.2020 passed byNCLAT, CoC has approved the resolution plan of KIAL on13.8.2020. However, since the decision of NCLAT dated 5.8.2020

does not stand the scrutiny of law, it must follow, that thesubsequent approval of the resolution plan of KIAL by CoCbecomes non est in law. For, it was only to abide by the directionsof NCLAT. Nothing would turn on it. The decision of CoC dated13/14.2.2019 is decision, which has been taken in exercise ofits commercial wisdom. As such, the decision taken by CoC dated13/14.2.2019, which is taken in accordance with its commercialwisdom and which is duly approved by NCLT, will prevail. Further,NCLAT was not justified in interfering with the stated decisiontaken by CoC. [Para 158][769-B-D]

K. Sashidhar vs. Indian Overseas Bank & Ors. (2019)12 SCC 150: [2019] 3 SCR 845; Committee of Creditorsof Essar Steel India Limited through AuthorisedSignatory vs. Satish Kumar Gupta & Ors. (2019) SCCOnline SC 1478 – relied on.

Maharashtra Seamless Limited vs. PadmanabhanVenkatesh and others (2020) 11 SCC 467; ArcelormittalIndia Private Limited vs. Satish Kumar Gupta and others(2019) 2 SCC 1 : [2018] 12 SCR 362 – referred to

4 The order passed by NCLAT dated 5.8.2020 is quashedand set aside and the orders passed by NCLT dated 28.11.2019are restored and maintained. Insofar as, the Civil Appeals arisingout of D.No. 24125 of 2020 filed by Fourth Dimension SolutionsLimited, since the appeal against the order of NCLT is still pendingbefore NCLAT, NCLAT is directed to decide the appeal asexpeditiously as possible, and in any case, within the stipulatedperiod. [Paras 159-160][769-D-G]

Innoventive Industries Ltd. vs. ICICI Bank & Anr. (2018)1 SCC 407: [2017] 8 SCR 33; Kumar Dutta prop. K.D.Trading vs. Simplex Infrastructure Ltd. 2019 SCCOnline NCLAT 575; Asha Goyal vs. Pharma TradersPvt. Ltd. 2019 SCC Online NCLAT 150; RadhikaMehra vs. Vaayu Infrastructure LLP & Ors. 2020 SCCOnline NCLAT 532; Dhirendra Kumar vs. RandstandIndia Pvt. Ltd. & Anr. 2019 SCC Online NCLAT 444;Neeraj Jhanji vs. Commissioner of Customs & Central

692SUPREME COURT REPORTS

AExcise (2015) 12 SCC 695; G.J. Fernandez vs. State ofKarnataka & Ors. (1990) 2 SCC 488: [1990] 1 SCR 229; NTPC Ltd. (Simhadri Project) vs. RajivChakraborty] Civil Appeal No. 2798 of 2020; Unionof India & Ors. vs. West Coast Paper Mills Ltd. & Anr.(2004) 3 SCC 458: [2004] 2 SCR 642; BinaniBIndustries Limited vs.Bank of Baroda & Anr. 2018 SCCOnline NCLAT 565 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.2943-2944 of 2020.

From the Judgment and Order dated 05.08.2020 of the NationalCompany Law Appellate Tribunal, New Delhi in Company Appeal (AT)(Insolvency) Nos.344-345 of 2020.

WithCivil Appeal Nos.3138-3139 of 2020

Civil Appeal Nos. 2949-2950 of 2020.

Civil Appeal No. ……../2021 (Diary No.24125 of 2020)

AMukul Rohatgi, Dr. Abhishek Manu Singhvi, Pinaki Mishra, C.A.Sundaram, Gopal Sankar Narayanan, P.P. Chaudary, K.V. Viswanathan,Neeraj Kishal Kaul, Shyam Divan, Sr. Advs., Ms. Ruby Singh Ahuja,Ms. Kalpana Unadkat, Prateek Kumar, Ms. Tahira Karanjawala, AnupamPrakash, Nidhiram Sharma, Ms. Raveena Rai, Utkarsh Maria, AnmolJassal, M/s Karanjawala & Co., David Rao, Sanjeet Purohit, M.S. VishnuBSankar, Atul Sharma, Sriram Parakkat, Ms. Athira G. Nair, ShrutanjayaBhardwaj, M/s Lawfic, Dheeraj Nair, Vishrutyi Sahni, Varghese Thomas,Ms. Aditi Deshpande, Fatema Kachwalla, Jash Shah, Dheeraj Nair,Gaurav Agrawal, Ms. Pooja Mahajan, Avinash Amarnath, Ms. MahimaSingh, Ms. Avni Shrivastav, Ritesh Kumar, Advs. for the appearingCparties.

The Judgment of the Court was delivered by

B.R. GAVAI, J.

1. Leave to file Civil Appeal in Diary No. 24125 of 2020 is granted.

2. All these appeals, assail the judgment and order of the NationalDCompany Law Appellate Tribunal, New Delhi (hereinafter referred toas “NCLAT”) dated 5.8.2020, passed in Company Appeal (AT)(Insolvency) Nos. 344-345 of 2020.

3. By the said judgment and order dated 5.8.2020, NCLAT hasallowed the appeals filed by Kotak Investment Advisors Limited(hereinafter referred to as “KIAL”), respondent No.1 herein, aggrievedEby two separate orders dated 28.11.2019 passed by National CompanyLaw Tribunal, Mumbai Bench (hereinafter referred to as “NCLT” or“Adjudicating Authority”) in M.A. No.1039 of 2019 and M.A. No. 691of 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 approvalFto the resolution plan submitted by Kalpraj Dharamshi and RekhaJhunjhunwala, consortium, (hereinafter referred to as “Kalpraj”), whichis appellant in Civil Appeal Nos. 2943-2944 of 2020. NCLT has rejectedthe said M.A. Whereas, M.A. No. 691 of 2019 was filed by the ResolutionProfessional of Ricoh India Limited (hereinafter referred to as “theCorporate Debtor”) for grant of approval to the Resolution Plan submittedGby Kalpraj. NCLT has allowed the said M.A. and approved the resolutionplan submitted by Kalpraj.4. The facts in brief, giving rise to the present appeals are asunder:

The Corporate Debtor filed an application on 29.1.2018 beforeHNCLT under Section 10 of the Insolvency and Bankruptcy Code, 2016

(hereinafter referred to as “I&B Code”) for initiation of CorporateInsolvency Resolution Process (hereinafter referred to as “CIRP”) ofitself vide Company Petition (IB) No. 156/MB/2018. NCLT vide orderdated 14.5.2018, admitted the Petition and directed the moratorium tocommence as prescribed under Section 14 of the I&B Code and directedcertain statutory steps to be taken as consequence thereof. Vide thesaid order dated 14.5.2018, NCLT also appointed Mr. Krishna Chamadiaas Interim Resolution Professional to carry out the functions as prescribedunder the provisions of the I&B Code. The said Mr. Krishna Chamadiawas subsequently confirmed as Resolution Professional (hereinafterreferred to as ‘RP’) by the Committee of Creditors (hereinafter referredto as “CoC”) on 15.6.2018.

RP vide notification dated 9.7.2018 invited expression of interest(hereinafter referred to as “EOI”) to submit resolution plan frominterested resolution applicants, who fulfilled the minimum conditionsstipulated in the said document (EOI). As per the said EOI, if anyproposed applicant had any queries or clarifications, it was required towrite to RP on or before 31.7.2018. The EOI was required to be submittedvia email on the email address of RP or via post at the address mentionedin the said invitation on or before 8.8.2018.

On the said date i.e. 9.7.2018, analogously, the first Form ‘G’ alsocame to be notified. Vide the said Form ‘G’, the last date prescribed forsubmission of Resolution Plan was on or before 21.9.2018. The secondForm ‘G’ came to be issued on 24.8.2018, which required the ResolutionPlans to be submitted on or before 28.9.2018. The third Form ‘G’ cameto be issued on 28.9.2018, which required the Resolution Plans to besubmitted on or before 25.10.2018. The fourth Form ‘G’ came to beissued on 9.11.2018, which required the Resolution Plans to be submittedon or before 13.12.2018. The fifth and the last Form ‘G’ came to beissued on 11.12.2018, which required the Resolution Plans to be submittedon or before 8.1.2019.

KIAL, the appellant before NCLAT (respondent No.1 herein)and one Karvy Data Management Systems Limited submitted theirResolution 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 itsResolution Plan jointly with one Sattva Real Estate Private Limited(hereinafter referred to as “WeP”) on 13.1.2019.

AThe appellant in Civil Appeal Nos. 2943-2944 of 2020 i.e. Kalprajsubmitted its EOI and Resolution Plan to RP on 27.1.2019.

On 29.1.2019, KIAL sent an email to RP, raising its objectionpermitting Kalpraj to submit Resolution Plan, beyond the prescribed timelimit. In the meeting of CoC held on 30.1.2019, the Resolution Plan ofKalpraj was placed before CoC. In the said meeting, CoC resolved toBdirect all the applicants to submit revised plans. Accordingly, an emailwas sent to KIAL directing it to submit its revised plan. Accordingly,KIAL submitted its revised plan on 1.2.2019. By another email dated10.2.2019, KIAL once again objected to consideration of the plansubmitted by Kalpraj.

It is the case of KIAL, that it had received an email on 11.2.2019from RP, justifying the consideration of plan submitted by Kalpraj andasking it to submit second revised plan. However, this is disputed byRP. However, it is not in dispute, that on 12.2.2019, revised plans weresubmitted by KIAL as well as Kalpraj. In the meeting of CoC held onD13/14.2.2019, plan of Kalpraj came to be approved by majority.

After CoC had approved the plan of Kalpraj, RP applied forapproval of the plan before NCLT on 18.2.2019 vide M.A. No. 691 of2019 in Company Petition (IB) No. 156/MB/2018. After coming to knowabout RP applying for approval of the plan of Kalpraj, KIAL filed anapplication on 14.3.2019 being M.A. No.1039 of 2019, objecting to theEplan of Kalpraj. The objection was on the ground, that RP was not justifiedin permitting Kalpraj to submit plan beyond the date prescribed inForm ‘G’ and that the decision of CoC to approve the plan submitted byKalpraj was not in accordance with the I&B Code. Vide order dated28.11.2019, NCLT allowed M.A. No.691 of 2019 and approved theFResolution Plan of Kalpraj and by separate order passed on the sameday, NCLT rejected M.A. No.1039 of 2019, which was filed by KIALobjecting to the decision of CoC approving the plan submitted by Kalpraj.

Contending, that the procedure followed by NCLT was in breachof the principles of natural justice, KIAL filed writ petition before theBombay High Court being Writ Petition (L) No.3621 of 2019, challengingGthe aforesaid two orders passed by NCLT. The High Court dismissedthe Writ Petition (L) No.3621 of 2019 filed by KIAL by judgment andorder dated 28.1.2020, on the ground, that KIAL had an alternate andefficacious remedy of filing an appeal before NCLAT.

KIAL thereafter filed appeals before NCLAT on 18.2.2020. TheHappeals were opposed by Kalpraj and also by RP on the ground, that the

KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.[B.R. GAVAI, J. ]

appeals were filed beyond the limitation period prescribed under theI&B Code and as such, ought not to be entertained. However, videorder dated 5.8.2020, NCLAT did not find favour with the objectionsraised by the respondents before it, with regard to limitation and furtherfound, that the procedure adopted by RP and CoC was in breach of theprovisions of the I&B Code and therefore, allowed the appeals filed byKIAL.

Vide the said order, NCLAT, while setting aside both the ordersdated 28.11.2019, passed by NCLT, also directed CoC to take decisionafresh, in the light of the directions issued in its order, regardingconsideration of the Resolution Plans, which were submitted prior to theprescribed date as per last Form ‘G’. This was directed to be done in aperiod of ten days from the date of the said order. NCLAT furtherdirected, that if no decision was communicated to the AdjudicatingAuthority i.e. NCLT and since the timeline for completion of CIRP hadalready expired, the Adjudicating Authority was to pass an order forliquidation 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 asunder:

A6. We have heard Shri Mukul Rohatgi, Dr. Abhishek Manu Singhviand Shri Pinaki Mishra, learned Senior Counsel appearing for Kalpraj,Shri K.V. Viswanathan, learned Senior Counsel appearing for DeutscheBank A.G. and CoC, Shri C.A. Sundaram, Shri Gopal Sankar Narayananand Shri P.P. Chaudary, learned Senior Counsel appearing for FourthDimension Solutions Limited, Shri Shyam Divan, learned Senior CounselBappearing for RP and Shri Neeraj Kishan Kaul, learned Senior Counselappearing for KIAL.

SUBMISSIONS OF SHRI MUKUL ROHATGI, LEARNEDSENIOR COUNSEL APPEARING ON BEHALF OF KALPRAJ

7. Shri Mukul Rohatgi, learned Senior Counsel submitted, thatCthough four Form ‘G’ were issued by RP inviting the Resolution Plansfrom the prospective resolution applicants, no plans were received fromany of the prospective resolution applicants. He submitted, that inpursuance to the last and fifth Form ‘G’ published on 11.12.2018, onlytwo Resolution Plans were received, that too, on the last date i.e.D8.1.2019. He submitted, that in the meantime, Kalpraj submitted its planon 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 wereasked to submit their revised resolution plans. He submitted, that KIALwithout demur, submitted its revised plans not only once but twice. It istherefore submitted, that having submitted its revised plans twice, KIALEis 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, theplans came to be considered by CoC and CoC by the whopping majorityof 84.36% voting rights approved the plan of Kalpraj. He submitted, thatonly one creditor i.e. Kotak Mahindra Bank Limited (hereinafter referredFto as “Kotak Bank”), which is holding company of KIAL, having votingrights 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 duedeliberation in CoC meeting through voting, which decision is taken asGper the commercial wisdom, is not justiciable before the AdjudicatingAuthority. He also relied on the judgment of this Court in the case ofCommittee of Creditors of Essar Steel India Limited throughAuthorised Signatory vs. Satish Kumar Gupta & Ors.[2]

1 (2019) 12 SCC 150H2 (2019) SCC Online SC 1478

2 (2019) SCC Online SC 1478

9. Shri Rohatgi further submitted, that as held by this Court inInnoventive Industries Ltd. vs. ICICI Bank & Anr.[3], I&B Code is acomplete code in itself. He submitted, that Section 61(2) of the I&BCode provides, that the decision of the Adjudicating Authority (i.e. NCLT)may be challenged before NCLAT within 30 days. He submitted, thatan appeal would be tenable within further period of 15 days, only whenNCLAT comes to satisfaction, that there was sufficient cause fornot filing the appeal within period of 30 days. He submitted, that sincethe I&B Code is complete Code, neither Section 5 nor Section 14 ofthe Limitation Act, 1963 (hereinafter referred to as “the Limitation Act”)would be applicable. He submitted, that the judgment of NCLT wasdelivered on 28.11.2019; certified copies of the same were made availableto KIAL on 18.12.2019; and appeals came to be filed on 18.2.2020. Hesubmitted, even if KIAL was given the benefit of the period of 20 daysfor obtaining the certified copies, still the appeals ought to have beenfiled on 65[th] day from the order of NCLT. It would be somewhere on 1[st]/2[nd] February, 2020. However, the appeals were filed on 18.2.2020. Hesubmitted, that the litigant like KIAL, which has team of legal expertsat its disposal cannot be heard to say, that they were not aware of thealternate remedy and had bona fide filed the writ petition before theHigh Court. He submitted, that KIAL is not entitled to the benefit of theexclusion of period between 11.12.2019 i.e. the date of filing of the writpetition and 28.1.2020 i.e. the date of dismissal of the writ petition by theHigh Court. He submitted, that provisions of Section 14 of the LimitationAct would not at all be applicable and that NCLAT has totally erred inlaw, in entertaining the appeals which were ex facie beyond limitation.10. Shri Rohatgi further submitted, that NCLT has approved theplan on 28.11.2019. He submitted, that though appeals were filed byKIAL, there was no stay on the implementation of the resolution plan byKalpraj till the impugned order was passed by NCLAT on 5.8.2020,whereunder, Kalpraj has taken various steps for implementation of theResolution Plan submitted by it. He submitted, that Kalpraj has expendeda total amount of Rs.300 crore (approx.) in the following manner:

“i.On 02.12.2019, Public Announcement in respect ofdelisting of shares and exit offer to the public shareholdersof the Corporate Debtor.

ABC

700SUPREME COURT REPORTS

[2021] 2 S.C.R.

Aii.On 13.12.2019, Rs.8,87,01,150/- (Rupees Eight CroresEighty-Seven Lakh One Thousand One Hundred and Fiftyonly) was paid to 668 shareholders in exchange of theirshares.

iii.On 14.12.2019, Post-offer public announcement wasBissued by the Appellants recording inter alia that the saidconsideration has been paid to public shareholders.

iv.On 20.12.2019, BSE issued notice in respect ofdiscontinuation of trading and delisting of equity shares ofthe Corporate Debtor.

v.On 23.12.2019, debentures worth Rs.21 crores were issuedby the Corporate Debtor to Appellants.

vi.On 27.12.2019, the share capital of the Company increasedto INR. 100,00,00,000/- (Rupees One Hundred Crores only).

vii.Minosha Digital Solutions Pvt. Ltd. merged with theCorporate Debtor with effect from 28.11.2019.

viii.On 27.12.2019, the Appellants replaced the Bank Guaranteeissued by Deutsche Bank for INR 136,66,71,090/- (RupeesOne Hundred Thirty-Six Crores Sixty-Six Lakh Seventy-One Thousand and Ninety Only).

ix.On 30.12.2019, the CIRP costs amounting toINR.2,65,68,000/- (Rupees Two Crores Sixty-Five LakhSixty-Eight Thousand only) were paid by the Appellants.

x.On 01.01.2020, the Appellants have made payment of INRF19,54,43,411/- (Rupees Nineteen Crores Fifty-Four LakhForty-Three Thousand Four Hundred and Eleven) to non-related party operational creditors of the Corporate Debtor.

xi.From 01.01.2020 to 03.01.2020, the Appellants have madeEquity infusion of INR 3 crores and an Equity infusion ofGINR 29 Crores in Company.

xii.On 23.01.2020, Appellants made payments to RicohCompany Limited and NRG Group Limited (minorityshareholder) for the transfer of shares to Appellants.

xiii.On 31.01.2020, the Board of directors of the CorporateHDebtor was reconstituted and the Appellants became the

KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.[B.R. GAVAI, J. ]

owners and stepped into the management and control ofcorporate debtor. It is no more subsidiary of Ricoh Japan.

xiv.The Appellants are shareholders of the Corporate Debtorwhich is known by its new name Minosha India Limited.

xv.On 03.02.2020, the RP (who was the Monitoring Agent ofBthe Monitoring Committee) issued communicationrecording that the approved Resolution Plan has beenimplemented.

xvi.As on 31.07.2020, total of 21,90,958 no. of shares held by809 shareholders have been tendered pursuant to the exitoffer for sum total of Rs.10,95,47,900/-. The said exitoffer is subsisting till December 2020, in accordance withthe applicable SEBI rules and regulations.

xvii.Registrar of Companies has only noted and issued acertificate of the change in name of the Corporate Debtorfrom 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 naturaljustice on the premise, that the application of KIAL was heard by asingle Member, whereas the decision was signed by two Members. Hesubmitted, 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 theproceedings would itself show, that the said application was listed beforetwo learned Members on various dates along with main application i.e.M.A. No.691 of 2019. He submitted, that the counsels for KIAL haveparticipated in the said proceedings before the Bench of two Memberswithout demur. He submitted, that in any case, both, the application filedby KIAL as well as the main application filed by RP, were required to bedecided together inasmuch as, the issues were interconnected andtherefore, they are rightly decided by the orders passed on the sameday. He therefore submitted, that the finding of NCLAT with regard toviolation of the principles of natural justice is without any merit.

12. Shri Rohatgi therefore submitted, that the appeals deserve tobe allowed, the order of NCLAT be set aside and that of NCLT berestored.

702SUPREME COURT REPORTS

ASUBMISSIONS BY DR. ABHISHEK MANU SINGHVI,LEARNED SENIOR COUNSEL APPEARING FOR KALPRAJ

13. Dr. Abhishek Manu Singhvi, learned Senior Counsel alsoappeared on behalf of Kalpraj, which is also respondent in the otherappeals. Dr. Singhvi submitted, that KIAL, in the covering letter alongBwith its Resolution Plan dated 8.1.2019, has unequivocally undertaken towaive any and all claims in respect of the Resolution Plan Process. Hesubmitted, that the phrase ‘Resolution Plan Process’ is defined in clause1.0 of the Process Memorandum which means, “the process set out inthis Process Memorandum for submission, evaluation and selection ofResolution Plan and activities in relation or incidental thereto.” HeCsubmitted, that in view of unconditional and irrevocable acceptance ofthe terms of the Process Memorandum and having voluntarily andexpressly waived all claims with respect to the Resolution Plan Process,it is not permissible for KIAL to challenge the decision of CoC approvingthe Resolution Plan of Kalpraj. He submitted, that clause 10.4 of theDProcess Memorandum itself provides, that RP was at liberty to receiveany Resolution Plan, at any stage of the Resolution Plan Process andexamine such Resolution Plan with the approval of CoC. Learned SeniorCounsel submitted, that having chosen to revise its Resolution Plan andsubmit the same on 12.2.2019 in competition with Kalpraj, KIAL hasclearly acquiesced to the consideration of the Resolution Plan of KalprajEby RP and CoC, even after the prescribed date of 8.1.2019 and haswaived all objections to the consideration of such Resolution Plan. Hesubmitted, that even the holding company of KIAL i.e. Kotak Bank ofwhich KIAL is 100% subsidiary also agreed with CoC counsel’s view,that the Resolution Plan of Kalpraj can be considered.F14. Dr. Singhvi submitted, that the conduct of KIAL is totallyindefensible. He submitted, that it amounts to taking chances in the processand after having failed there, then to challenge the process. He submitted,that KIAL had submitted its revised plans after knowing, that it wascompeting with Kalpraj, and only after it was not successful in the processGhas chosen to challenge the same. He submitted, that the revisedResolution Plan submitted by KIAL does not state, that it is withoutprejudice to its contention, that the Resolution Plans submitted after8.1.2019 ought not to have been considered by RP and CoC. Hesubmitted, that even if such words were used they would not be significant.He relied on the judgment of this Court in the case ofITC Ltd. Vs.BlueH

Coast Hotels Limited & Ors.4and Tarapore & Company vs. Cochin5Shipyard Ltd., Cochin & Anr., in this regard.

15. Dr. Singhvi further submitted, that Section 238 of the I&BCode provides, that the provisions of the Code shall have effect,notwithstanding anything inconsistent therewith contained in any otherlaw for the time being in force. He therefore submitted, that the provisionsas contained in Section 61(2) of the I&B Code, which provides, that anappeal has to be filed within 30 days with further enhanced period of15 days, when NCLAT is satisfied, that sufficient cause existed fornot filing the appeal within 30 days, has to be strictly construed. Herelied 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 catena ofcases has held, that when under special statutes there is provision forappeal and self-contained provision for limitation, no extension wouldbe possible beyond the period of time so stipulated. He relied on thefollowing 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. CentralElectricity Regulatory Commission & Ors.[10]

17. Dr. Singhvi further submitted, that NCLAT in two cases inRadhika Mehra vs. Vaayu Infrastructure LLP & Ors.[11] andDhirendra Kumar vs. Randstand India Pvt. Ltd. & Anr.[12] has held,that the provisions of Section 14 of the Limitation Act cannot be madeapplicable to the appeal preferred under Section 67 of the I&B Code.

4 (2018) 15 SCC 99

5 (1984) 2 SCC 680 (PARA 33)6 2019 SCC Online NCLAT 5757 2019 SCC Online NCLAT 1508 (2001) 8 SCC 4709 (2008) 3 SCC 7010 (2010) 5 SCC 2311 2020 SCC Online NCLAT 53212 2019 SCC Online NCLAT 444

A18. Dr. Singhvi submitted, that in any case, it cannot be said, thatfiling of the writ petition was bona fide act of KIAL. He submitted,that KIAL, which was armed with battery of legal counsel, was verywell aware, that it had an alternate remedy of filing an appeal beforeNCLAT and therefore, was not entitled to take an umbrella of Section14 of the Limitation Act. In this regard, he relied on the judgment of thisBCourt in the case of Neeraj Jhanji vs. Commissioner of Customs &Central Excise[13].

19. Dr. Singhvi also reiterated the submissions made on behalf ofKalpraj by Shri Mukul Rohatgi, learned Senior Counsel to the effect,that much water has flown after the Resolution Plan was approved byCNCLT and also highlighted the various steps taken by Kalpraj forimplementation of the Resolution Plan.

SUBMISSION OF SHRI K.V. VISWANATHAN, LEARNEDSENIOR COUNSEL APPEARING ON BEHALF OF DEUTSCHEBANK A.G. AND CoC.

20. Shri K.V. Viswanathan, learned Senior Counsel appearing onbehalf of Deutsche Bank, which is appellant in one of the appeals andCoC, which is respondent in some of the appeals submitted, that theorder passed by NCLAT was not sustainable inasmuch as, CoC was notmade party before NCLAT. He submitted, that CoC had acted bonaEfide only with view of achieving maximization, by permitting Kalprajto participate. He submitted, that CoC had approved the Resolution Plansubmitted by Kalpraj by thumping majority of 84.36%. He submitted,that the commercial wisdom of CoC is not open to judicial scrutiny bythe Adjudicating Authority, unless it falls within the statutory parametersand as such, NCLT has rightly rejected the objection of KIAL andFNCLAT has erred in interfering with the same. He submitted, that noprejudice is caused to KIAL on account of deviation of the procedure, ifany. In this regard, he relied on the judgment of this Court in the case ofG.J. Fernandez vs. State of Karnataka & Ors.[14].

SUBMISSION OF SHRI SHYAM DIVAN, LEARNEDGSENIOR COUNSEL APPEARING FOR RP

21. Shri Shyam Divan, learned Senior Counsel appearing on behalfof RP submitted, that RP had acted bona fide in order to fetch themaximum benefit to the Company. He submitted, that even after the

13 (2015) 12 SCC 695H14 (1990) 2 SCC 488

prescribed last date, in view of clause 10.4 of the Process Memorandum,RP was entitled to consider the plans received subsequently with theapproval of CoC. He submitted, that RP therefore had bona fide acceptedthe plan of Kalpraj and not only that but had also given an opportunity toKIAL to submit its revised plans, so as to compete with Kalpraj. ShriDivan also advanced the arguments on similar lines as were advancedby the other counsel on the grounds of limitation, acquiescence, etc.

SUBMISSION OF SHRI C.A. SUNDARAM, LEARNEDSENIOR COUNSEL APPEARING FOR FOURTH DIMENSIONSOLUTIONS LIMITED

22. Shri C.A. Sundaram, learned Senior Counsel appearing forFourth Dimension Solutions Limited, appellant in Civil Appeal D.No.24125of 2020, which claims to have the highest amount recoverable from theCorporate Debtor submitted, that the said appellant is not concernedwith the dispute between the parties, which is the subject matter ofconsideration in the present appeals. It is further contended, that theappellants’ dues are subject matter of pending arbitration proceedingbetween the Corporate Debtor and the appellants and is yet to attainfinality, so as to liquidate the dues. It is aggrieved by the direction givenin paragraph 39 by NCLT in its order dated 28.11.2019 in M.A. No.691of 2019. The learned Senior Counsel submitted, that by the said directionit is directed, that the Resolution Applicant who stepped into the shoes ofCorporate Debtor subsequent to the approval of the Resolution Plan byit, shall not be held responsible for any outstanding statutory dues andother claims for the period before commencement of CIRP. In thesubmission of Shri Sundaram, this direction is prejudicial to the appellant,which is the largest operational creditor entitled to recover an amount of551 crores (approx..) from the Corporate Debtor. It is also contended,that the claim of the appellant – Fourth Dimension, though has beenshown in the information memorandum by RP, it has not been consideredby CoC or any of the applicants in their resolution plan. He relied on thejudgment/order dated 16.11.2020 passed by this Court in Civil AppealNo. 2798 of 2020 [NTPC Ltd. (Simhadri Project) vs. RajivChakraborty]

SUBMISSION OF SHRI NEERAJ KISHAN KAUL,LEARNED SENIOR COUNSEL APPEARING FOR KIAL

23. Shri Neeraj Kishan Kaul, learned Senior Counsel appearingon behalf of KIAL, while replying to the arguments advanced on behalfof the appellants made manifold submissions.

A24. In reply to the submission on behalf of the appellants, that theappeals filed by KIAL before NCLAT being barred by limitation, thelearned Senior Counsel submitted, that the arguments advanced werenot correct in law and NCLAT has rightly held the appeals to be withinlimitation. He submitted, that though non-exercise of jurisdiction by theHigh Court under Article 226 of the Constitution, in case of availabilityBof alternate remedy is the normal practice, the same is rule of self-restraint and not hard and fast rule. It is submitted, that the High Courthas wide jurisdiction under Article 226 of the Constitution and in givencase it can entertain petition under Article 226 in spite of the availabilityof an alternate and efficacious remedy. He submitted, that this CourtCitself in catena of cases has carved out categories wherein, the HighCourt is entitled to exercise its jurisdiction under Article 226 in spite ofthe availability of alternate remedy. He submitted, that one such categoryis where the proceedings challenged before the High Court are proceededin breach of principles of natural justice. The learned Senior Counselhas relied on the following judgments of this Court in support of thisDproposition.

(i)Whirlpool Corporation vs. Registrar of Trade Marks,Mumbai & Ors.[15],

(ii)Babu Ram Prakash Chandra Maheshwari vs. AntarimEZilla Parishad Muzaffar Nagar[16]; and

(iii)Nivedita Sharma vs. Cellular Operators Association ofIndia & Ors.[17]

25. Shri Kaul submitted, that perusal of the record would reveal,that immediately after the filing of application by RP before NCLT forFapproval of Resolution Plans submitted by Kalpraj, KIAL had filed anapplication objecting thereto being M.A. No.1039 of 2019. He submitted,that perusal of the order-sheet of NCLT dated 3.7.2019 would reveal,that the application filed by KIAL and one another application beingM.A. No.2023 of 2019 were heard by the learned single Member andGreserved for orders. He submitted, that insofar as M.A. No.691 of 2019is concerned, the order dated 3.7.2019 would show, that the saidapplication was directed to be kept on 23.7.2019 at 2.30 p.m. along with

15 (1998) 8 SCC 116 (1969) 1 SCR 518H17 (2011) 14 SCC 337

other applications for consideration of resolution plan on its commercialaspect. The other matters were directed to be kept for hearing on15.7.2019. It is further submitted, that when M.A. No.691 of 2019 waslisted 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, beforethe Bench consisting of two Members and on that date the matter cameto be adjourned to 26.8.2019. Again on 26.8.2019, the matter came upbefore the Division Bench and the Division Bench directed the same tobe kept on 6.9.2019. On 6.9.2019, the Division Bench adjourned thematter to 17.9.2019 at 2.30 p.m. Again on 17.9.2019, the matter cameup before the Division Bench which directed it to be adjourned to19.9.2019. Finally, on 19.9.2019, M.A. No.691 of 2019 was heard onResolution Plan and reserved for orders. Learned counsel thereforesubmitted, that it is clear from the record, that M.A. No.1039 of 2019filed by KIAL, was heard on 3.7.2019 by the learned single Memberand reserved for orders. However, M.A. No. 691 of 2019 was heard bythe Division Bench on 19.9.2019. Learned counsel therefore submitted,that the orders in M.A. No. 1039 of 2019 could have been passed onlyby the learned single Member. However, by two orders passed on evendate i.e. 28.11.2019, the Division Bench rejected the application of KIALand allowed the application filed by RP thereby, approving the ResolutionPlan submitted by Kalpraj.26. Learned Senior Counsel submitted, that in this backgroundKIAL was justified in invoking the jurisdiction of the High Court underArticle 226 of the Constitution inasmuch as, the proceedings conductedby NCLT were totally in breach of the principles of natural justice, asthe matter was heard by single Member whereas, the orders werepassed by the Division Bench. Learned counsel submitted, that the HighCourt while dismissing the writ petition and relegating KIAL to alternateremedy available in law has passed an elaborate order. Learned SeniorCounsel therefore submitted, that it does not lie in the mouth of theappellants, that KIAL had not approached the High Court bona fide.Learned Senior Counsel submitted, that in view of various judgmentsdelivered by this Court, the High Court could have entertained petitionunder Article 226, when the proceedings were conducted in breach ofthe principles of natural justice.

27. Shri Kaul, learned Senior Counsel therefore submitted, thatNCLAT was right in law in giving the benefit of the period for which

AKIAL was bona fide prosecuting its writ petition before the BombayHigh Court. Learned Senior Counsel submitted, that if that period isconsidered, the appeals filed by KIAL are very well within the limitation.

28. Learned Senior Counsel submitted, that the purpose behindArticle 14 of the Limitation Act is to advance justice and not to haltBjustice. He submitted, that Section 14 enables party to get the benefitof the period for which it was bona fide prosecuting the remedy beforea wrong forum. Learned counsel submitted, that liberal approach isrequired to be given to the provisions of Article 14. Learned counselrelied on the judgments of this Court in the case of Ketan V. Parekh vs.Special Director, Directorate of Enforcement & Anr.[18], M.P. SteelCCorporation vs. Commissioner of Central Excise[19] 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 toacquiescence and waiver are concerned, learned Senior Counselsubmitted, that, at the earliest opportunity, KIAL has objected to KalprajDsubmitting its Resolution Plan. He submitted, that on KIAL coming toknow, 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. Hesubmitted, that RP had replied to its email on 30.1.2019 and requested tosubmit amended Resolution Plan by 3.00 p.m. on 1.2.2019. He submitted,Ethat in the said email it is also mentioned, that “CoC reserves the rightsto 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 submissionof the revised plan, KIAL did not hear anything from RP and thereforeFvide 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 beconsidered, in the spirit of value maximisation of assets of the corporatedebtor. He submitted, that again vide communication dated 11.2.2019,KIAL was required to submit revised bid, which was submitted by itGon 12.2.2019. Learned counsel therefore submitted, that it is clear fromthe record, that KIAL had objected to the participation of Kalpraj at theearliest possible opportunity i.e. on 29.1.2019. Not only that, thereafter

18 (2011) 15 SCC 3019 (2015) 7 SCC 58H20 (2004) 3 SCC 458

KIAL continued to object to the participation of Kalpraj. Revised planswere submitted by KIAL under compulsion inasmuch as, if it would nothave submitted its revised plans, on that ground alone it had to face therisk of being ousted from consideration. It is therefore submitted, thatthe contention, that KIAL has acquiesced to the participation of Kalprajand was therefore estopped from challenging its participation is withoutany substance. Learned counsel submitted, that the contention, that KIALwas taking chances is also totally incorrect. It had objected to theparticipation of Kalpraj at the very first opportunity and continued toobject till CoC approved its plan and also thereafter, by way of anapplication before NCLT objecting to the approval of the ResolutionPlan of Kalpraj.

31. Learned counsel further submitted, that the contention, thatKIAL is subsidiary of Kotak Bank and that Kotak Bank had also notobjected to Kalpraj submitting its Resolution Plan and therefore the sameamounted to acquiescence is also not correct. He submitted, that firstly,in the reply filed by RP to the application filed by KIAL in NCLT, thereis 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 ofVodafone International Holdings BV vs. Union of India & Anr.[21],both KIAL and Kotak Bank are different corporate entities and any actof Kotak Bank cannot bind KIAL.

32. On merits, Shri Kaul would submit, that the entire processadopted by RP and CoC was contrary to the statutory provisions, fairplay and transparency. He submitted, that perusal of the definition of‘applicant’ in the Process Memorandum in clause 1.0 would show, thatfor being resolution applicant, one has to be an applicant who hasapplied within the prescribed period either under EOI or Form ‘G’. It issubmitted, that since Kalpraj had neither responded within the periodprescribed under EOI or any of the Form ‘G’, it could not have beenconsidered to be resolution applicant. He submitted, that the entireparticipation of Kalpraj is illegal. He submitted, that after the plan wassubmitted by KIAL there was detailed discussion with RP with regardto the plan submitted by it, wherein entire plan was disclosed, after whichKalpraj was permitted to step in. He submitted, that perusal of theResolution Plan of Kalpraj would reveal, that it is identical with the planssubmitted by KIAL, with little variation to the extent, that in the plan of

AKIAL 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 entireconduct of RP as well as CoC would reveal, that they had acted in amanner that smacks of favouritism to Kalpraj and were determined toanyhow approve the plan of Kalpraj. It is submitted, that all these aspectshave been rightly considered by NCLAT and therefore, the appealsBdeserve to be dismissed.

33. With regard to the contention of the appellant/Kalpraj, that ithas taken several steps in pursuance of the Resolution Plan, which wasapproved by NCLT and any interference at this stage would cause greatprejudice to many stakeholders, learned counsel submitted, that not muchChas been done under the Resolution Plan. He submits, in any case,whatever steps have been taken are almost identical with the steps thatKIAL would have taken inasmuch as, the Resolution Plan submitted byKalpraj is almost identical with the Resolution Plan submitted by KIAL.He submitted, that in any case, whatever amount has been spent byKalpraj, the same could be reimbursed by KIAL and further steps beingDcontinued to be taken by KIAL, so as to take the Resolution Plan to thelogical end.34. Insofar as the judgment of NCLAT in the case of BinaniIndustries Limited vs. Bank of Baroda & Anr.[22]is concerned, learnedcounsel submitted, that the said judgment is totally distinguishableEinasmuch as, in the said case both applicants had submitted their plansand revised plans within the stipulated period.

35. In view of the rival submissions, following questions arise forour consideration.

(i)Whether the appeals filed by KIAL before NCLAT wereFwithin limitation?

(ii)Whether there was waiver and acquiescence by KIAL, soas to estop it from challenging the participation of Kalpraj?

(iii)Whether NCLAT was right in law in interfering with thedecision of CoC of accepting the resolution plan of Kalpraj?

G(i) WHETHER THE APPEALS FILED BY KIAL BEFORENCLAT WERE WITHIN LIMITATION?

36. For appreciating the rival contentions in this regard, it wouldbe appropriate to refer to Section 29(2) of the Limitation Act, so also theprovisions of Section 61 and Section 238A of the I&B Code.H22 2018 SCC Online NCLAT 565

Section 29(2) of the Limitation Act.

“29. Savings.—(1) …….

(2) Where any special or local law prescribes for any suit,appeal or application period of limitation different fromthe period prescribed by the Schedule, the provisions of Section3 shall apply as if such period were the period prescribed bythe Schedule and for the purpose of determining any periodof limitation prescribed for any suit, appeal or applicationby any special or local law, the provisions contained inSections 4 to 24 (inclusive) shall apply only insofar as, andto the extent to which, they are not expressly excluded bysuch special or local law.”

Section 61 and 238A of the I&B Code

“61. Appeals and Appellate Authority.—(1) Notwithstandinganything to the contrary contained under the Companies Act,2013, any person aggrieved by the order of the AdjudicatingAuthority under this part may prefer an appeal to the NationalCompany Law Appellate Tribunal.

(2) Every appeal under sub-section (1) shall be filedwithin thirty days before the National Company Law AppellateTribunal:

Provided that the National Company Law AppellateTribunal may allow an appeal to be filed after the expiry ofthe said period of thirty days if it is satisfied that there wassufficient cause for not filing the appeal but such period shallnot exceed fifteen days.

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

(i)the approved resolution plan is in contraventionof the provisions of any law for the time being inforce;

(ii)there has been material irregularity in exerciseof the powers by the resolution professionalduring the corporate insolvency resolutionperiod;H

(iii)the debts owed to operational creditors of thecorporate debtor have not been provided for inthe resolution plan in the manner specified by theBoard;

(iv)the insolvency resolution process costs have notBbeen provided for repayment in priority to allother debts; or

(v)the resolution plan does not comply with any othercriteria specified by the Board.

(4) An appeal against liquidation order passed underCSection 33 may be filed on grounds of material irregularityor fraud committed in relation to such liquidation order.”

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

37. Perusal of the aforesaid would reveal, that though the provisionsof the Limitation Act, as far as may be, would apply to the proceedingsEor appeals before the Adjudicating Authority, NCLAT, the Debt RecoveryTribunal or the Debt Recovery Appellate Tribunal, where period oflimitation for initiation of proceedings is provided under any special orlocal law, different from the period prescribed by the Schedule, theprovisions of Section 3 shall apply, as if such period were the periodFprescribed by the Schedule. It would further reveal, that for the purposeof determining any period of limitation prescribed for any suit, appeal orapplication by any special or local law, the provisions contained in sections4 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)Gof Section 61 of the I&B Code to any person, who is aggrieved by theorder of the Adjudicating Authority. Sub-section (2) of Section 61 of theI&B Code provides, that every appeal under sub-section (1) shall befiled within thirty days before NCLAT. The proviso thereto furtherprovides, that NCLAT may allow an appeal to be filed after the expiryHof 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 exceedfifteen days.

39. Since there is period different from the one which is prescribedby the Schedule to the Limitation Act, the limitation for an appeal wouldbe governed by Section 61 of the I&B Code, which is special statute.As such, an appeal will have to be preferred within period of thirtydays from the date on which the order was passed by NCLT. However,if NCLAT is satisfied, that there was sufficient cause for not filing theappeal within period of thirty days, it may allow an appeal to be filedwithin further period of fifteen days. As such, the normal period oflimitation prescribed under the I&B Code is thirty days, with provisionfor allowing the filing of an appeal within further period of fifteen days,if NCLAT is satisfied, that there was sufficient cause for not filing theappeal within thirty days.

40. In the present case, the dates are not in dispute. The judgmentof NCLT is dated 28.11.2019. As such, as per Section 61(2) of the I&BCode, the appeal was required to be filed on or prior to 28.12.2019. Theappeal could have been filed within further period of fifteen days, ifNCLAT was satisfied, that there was sufficient cause for not filing theappeal within period of thirty days. As such, the said period wouldcome to an end on 12.1.2020. The certified copy of the impugnedjudgment of NCLT was made available on 18.12.2019. If the allowancefor the said period is granted, the appeal should have been preferred onor prior to 2.2.2020. However, in the present case, the appeal is filed on18.2.2020. It is also not in dispute, that immediately after the order waspassed on 28.11.2019 by NCLT, KIAL preferred writ petition beingWrit Petition (L) No. 3621 of 2019 before the Division Bench of theBombay High Court on 11.12.2019. The said writ petition came to bedismissed on 28.1.2020 on the ground, that KIAL had an alternate andefficacious remedy available under Section 61 of the I&B Code and assuch, it was relegated to the alternate remedy available in law.41. It is strenuously urged on behalf of all the appellants exceptFourth Dimension Solutions Ltd., that the I&B Code is complete codein itself, which also provides for period of limitation and as such, Section14 of the Limitation Act would not be available to KIAL.

42. On the contrary, it is urged on behalf of KIAL, that since theorder passed by NCLT was passed in utter breach of the principles ofnatural justice, it had bona fide filed writ petition before the Division

ABench of the Bombay High Court. It is urged, that by an elaborate orderthe writ petition came to be dismissed, on the ground of availability ofalternate remedy. It is therefore urged, that the provisions of Section 14or at least the principles laid down therein, would be available to KIALand 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 theprinciples laid down therein would be available to KIAL for exclusion ofthe period during which it was prosecuting the writ petition before theDivision Bench of the Bombay High Court.

C44. 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 forany suit the time during which the plaintiff has beenprosecuting with due diligence another civil proceeding,Dwhether in court of first instance or of appeal or revision,against the defendant shall be excluded, where the proceedingrelates to the same matter in issue and is prosecuted in goodfaith in court which, from defect of jurisdiction or othercause of like nature, is unable to entertain it.

E(2) In computing the period of limitation for any application,the time during which the applicant has been prosecuting withdue diligence another civil proceeding, whether in court offirst instance or of appeal or revision, against the same partyfor the same relief shall be excluded, where such proceedingis prosecuted in good faith in court which, from defect ofFjurisdiction or other cause of like nature, is unable toentertain it.

(3) Notwithstanding anything contained in Rule 2 of OrderXXIII of the Code of Civil Procedure, 1908 (5 of 1908), theprovisions of sub-section (1) shall apply in relation to freshGsuit instituted on permission granted by the court under Rule1 of that Order, where such permission is granted on theground that the first suit must fail by reason of defect in thejurisdiction of the court or other cause of like nature.

Explanation.—For the purposes of this section,—

KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.[B.R. GAVAI, J. ]

(a)in excluding the time during which former civilAproceeding was pending, the day on which thatproceeding was instituted and the day on which it endedshall both be counted;

(b)a plaintiff or an applicant resisting an appeal shall bedeemed to be prosecuting proceeding;B

(c)misjoinder of parties or of causes of action shall bedeemed to be cause of like nature with defect ofjurisdiction.”

45. The conditions that are required to be fulfilled for invoking theprovisions of Section 14 of the Limitation Act have been succinctly speltout in various judgments of this Court including the one in ConsolidatedEngineering Enterprises vs. Principal Secretary, IrrigationDepartment and others[23], which read thus:

“21. ”Section 14 of the Limitation Act deals with exclusion oftime of proceeding bona fide in court without jurisdiction. Onanalysis of the said section, it becomes evident that the followingconditions must be satisfied before Section 14 can be pressed intoservice:

(1)Both the prior and subsequent proceedings are civilproceedings prosecuted by the same party;

(2)The prior proceeding had been prosecuted with due diligenceand in good faith;

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

(4)The earlier proceeding and the latter proceeding must relateto the same matter in issue; and

(5)Both the proceedings are in 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 theproceedings are in court. The question as to whether the provisions ofSection 14 of the Limitation Act would also be applicable to the quasi-judicial forums as against the court, fell for consideration before thisCourt in the case of M.P. Steel Corporation (supra). This Court after

Aan elaborate survey of the various judgments of this Court, includingjudgment in the cases of Bharat Bank Ltd., Delhi vs. Employees ofthe Bharat Bank Ltd., Delhi[24], Town Municipal Council, Athani vs.Presiding Officer, Labour Courts, Hubli and others etc.[25], NityanandaM. Joshi and others vs. Life Insurance Corporation of India andothers[26], Commissioner of Sales Tax. U.P., Lucknow vs. Parson ToolsBand Plants, Kanpur[27], Kerala State Electricity Board, Trivandrumvs. T.P. Kunhaliumma[28], Officer on Special Duty (Land Acquisition)and another vs. Shah Manilal Chandulal and others[29] andConsolidated Engineering Enterprises (supra) held, that the word“court” in Section 14 takes its colour from the preceding words “civilCproceedings”. It was therefore held, that the Limitation Act includingSection 14 would not apply to appeals filed before quasi-judicialTribunal. It was held, that since the appeal as mentioned in Section 128of the Customs Act is not before Court, the provisions of Section 14would not be applicable.

D47. All the authorities cited above, including ConsolidatedEngineering Enterprises (supra), have been elaborately discussed inthe judgment of this Court in the case of M.P. Steel Corporation (supra)and therefore, we refrain from burdening the present judgment byreproducing the observations made in those judgments.

E48. This Court in M.P. Steel Corporation (supra) further observed,that the judgment of this Court in the case of Commissioner of SalesTax, U.P. vs. Madan Lal Das & Sons, Bareilly[30]had not consideredthe law laid down in Parson Tools and Plants (supra) and the otherjudgments nor the aforesaid decisions were pointed out to the Court andtherefore, the said judgment in the case of Madan Lal Das & SonsF(supra) was not an authority for the proposition, that the Limitation Actwould apply to Tribunals.

49. After having held, that the Limitation Act, including Section 14would not apply to appeals filed before quasi-judicial Tribunal, thisCourt in M.P. Steel Corporation (supra) observed thus:G24 AIR 1950 SC 188 = 1950 SCR 45925 (1969) 1 SCC 87326 (1969) 2 SCC 19927 (1975) 4 SCC 2228 (1976) 4 SCC 63429 (1996) 9 SCC 414H30 (1976) 4 SCC 464

“….However, this does not conclude the issue. There is authorityfor the proposition that even where Section 14 may not apply, theprinciples on which Section 14 is based, being principles whichadvance the cause of justice, would nevertheless apply. We mustnever forget, as stated in Bhudan Singh v. Nabi Bux [(1969) 2SCC 481 : (1970) 2 SCR 10] that justice and reason is at the heartof all legislation by Parliament. This was put in very felicitousterms by Hegde, J. as follows: (SCC p. 485, para 9)

‘9. Before considering the meaning of the word ‘held’ in Section9, it is necessary to mention that it is proper to assume that thelawmakers who are the representatives of the people enactlaws which the society considers as honest, fair and equitable.The object of every legislation is to advance public welfare. Inother words as observed by Crawford in his book on ‘StatutoryConstructions’ that the entire legislative process is influencedby considerations of justice and reason. Justice and reasonconstitute the great general legislative intent in every piece oflegislation. Consequently where the suggested constructionoperates harshly, ridiculously or in any other manner contraryto prevailing conceptions of justice and reason, in most instances,it would seem that the apparent or suggested meaning of thestatute, was not the one intended by the lawmakers. In theabsence of some other indication that the harsh or ridiculouseffect was actually intended by the legislature, there is littlereason to believe that it represents the legislative intent.’

39. This is why the principles of Section 14 were applied in J.Kumaradasan Nair v. Iric Sohan [(2009) 12 SCC 175 : (2009)4 SCC (Civ) 656] to revision application filed before the HighCourt of Kerala. The Court held: (SCC pp. 180-81, paras 16-18)

‘16. The provisions contained in Sections 5 and 14 of theLimitation Act are meant for grant of relief where personhas committed some mistake. The provisions of Sections 5and 14 of the Limitation Act alike should, thus, be applied in abroadbased manner. When sub-section (2) of Section 14 ofthe Limitation Act per se is not applicable, the same would notmean that the principles akin thereto would not be applied.Otherwise, the provisions of Section 5 of the Limitation Actwould apply. There cannot be any doubt whatsoever that thesame would be applicable to case of this nature.

17. There cannot furthermore be any doubt whatsoever thathaving regard to the definition of ‘suit’ as contained in Section2(l) of the Limitation Act, revision application will not answerthe said description. But, although the provisions of Section 14of the Limitation Act per se are not applicable, in our opinion,the principles thereof would be applicable for the purpose ofcondonation of delay in filing an appeal or revision applicationin terms of Section 5 thereof.

18. It is also now well-settled principle of law that mentioningof wrong provision or non-mentioning of any provision oflaw would, by itself, be not sufficient to take away thejurisdiction of court if it is otherwise vested in it in law. Whileexercising its power, the court will merely consider whether ithas the source to exercise such power or not. The court willnot apply the beneficent provisions like Sections 5 and 14 ofthe Limitation Act in pedantic manner. When the provisionsare meant to apply and in fact found to be applicable to thefacts and circumstances of case, in our opinion, there is noreason as to why the court will refuse to apply the same onlybecause wrong provision has been mentioned. In case ofthis nature, sub-section (2) of Section 14 of the Limitation Actper se may not be applicable, but, as indicated hereinbefore,

the principles thereof would be applicable for the purpose ofcondonation of delay in terms of Section 5 thereof.’

40. The Court further quoted from Consolidated Engg.Enterprises [(2008) 7 SCC 169] an instructive passage: (IricSohan case [(2009) 12 SCC 175 : (2009) 4 SCC (Civ) 656], SCCp. 183, para 21)

‘21. In Consolidated Engg. Enterprises v. IrrigationDeptt. [(2008) 7 SCC 169] this Court held: (SCC p. 181, para22)

‘22. The policy of the section is to afford protection to litigantagainst the bar of limitation when he institutes proceedingwhich by reason of some technical defect cannot be decidedon merits and is dismissed. While considering the provisions ofSection 14 of the Limitation Act, proper approach will have tobe adopted and the provisions will have to be interpreted so as

KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.[B.R. GAVAI, J. ]

to advance the cause of justice rather than abort theproceedings. It will be well to bear in mind that an element ofmistake is inherent in the invocation of Section 14. In fact, thesection is intended to provide relief against the bar of limitationin cases of mistaken remedy or selection of wrong forum.On reading Section 14 of the Act it becomes clear that thelegislature has enacted the said section to exempt certainperiod covered by bona fide litigious activity. Upon the wordsused in the section, it is not possible to sustain the interpretationthat the principle underlying the said section, namely, that thebar of limitation should not affect person honestly doing hisbest to get his case tried on merits but failing because thecourt is unable to give him such trial, would not be applicableto an application filed under Section 34 of the 1996 Act. Theprinciple is clearly applicable not only to case in which alitigant brings his application in the court, that is, court havingno jurisdiction to entertain it but also where he brings the suitor the application in the wrong court in consequence of bonafide mistake or (sic of) law or defect of procedure. Havingregard to the intention of the legislature this Court is of thefirm opinion that the equity underlying Section 14 should beapplied to its fullest extent and time taken diligently pursuing aremedy, in 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 casesof Bhudan Singh and another vs. Nabi Bux and another[31], J.Kumaradasan Nair and another vs. Iric Sohan and others[32], andConsolidated Engineering Enterprises (supra) observed, that the objectof enacting the legislation is to advance public welfare. The entirelegislative process is influenced by considerations of justice and reason.Justice and reason constitute the great general legislative intent in everypiece of legislation. It has been held by this Court, that in the absence ofsome other indication that the harsh or ridiculous effect was actuallyintended by the legislature, there is little reason to believe, that it representsthe legislative intent. It is further observed, that the provisions contained

31 (1969) 2 SCC 481

32 (2009) 12 SCC 175

Ain Sections 5 and 14 of the Limitation Act are meant for grant of relief,where person has committed some mistake. In J. Kumaradasan Nair(supra), it has been observed, that when sub-section (2) of Section 14 ofthe Limitation Act per se is not applicable, the same would not mean,that the principles akin thereto would not be applicable.

B51. In Consolidated Engineering Enterprises (supra), it hasbeen observed, that while considering the provisions of Section 14 of theLimitation Act, proper approach will have to be adopted and the provisionswill have to be interpreted, so as to advance the cause of justice, ratherthan abort the proceedings. It has been observed, that an element ofmistake is inherent in the invocation of Section 14. The section, in fact, isCintended to provide relief against the bar of limitation in cases of mistakenremedy or selection of wrong forum. It has been observed, that thelegislature has enacted Section 14 to exempt certain period coveredby bona fide litigious activity. It has been held, that the equity underlyingSection 14 should be applied to its fullest extent and time taken diligentlyDpursuing remedy, in wrong court, should be excluded. It could thusbe seen, that this Court has in unequivocal terms held, that when litigantbona fide under mistake litigates before wrong forum, he would beentitled for exclusion of the period, during which he was bona fideprosecuting such wrong remedy. Though strictly, the provisions ofSection 14 of the Limitation Act would not be applicable to the proceedingsEbefore quasi-judicial Tribunal, however, the principles underlying thesame would be applicable i.e. the proper approach will have to be ofadvancing the cause of justice, rather than to abort the proceedings.

52. An argument similar to the one which is advanced before us,that since the Code is complete Code in itself, the limitation as providedFonly under the Code would govern the field and would exclude theapplication of provisions of Section 14 of the Limitation Act was made inthe case of M.P. Steel Corporation (supra). While considering thisobjection, this Court observed thus:

“42. However, it remains to consider whether Shri Sanghi is rightGin stating that Section 128 is complete code by itself whichnecessarily excludes the application of Section 14 of the LimitationAct. For this proposition he relied strongly on Parson Tools [(1975)4 SCC 22 : 1975 SCC (Tax) 185 : (1975) 3 SCR 743] which hasbeen discussed hereinabove. As has already been stated, ParsonTools [(1975) 4 SCC 22 : 1975 SCC (Tax) 185 : (1975) 3 SCRH

743] was judgment which turned on the three features mentionedin the said case. Unlike the U.P. Sales Tax Act, there is no provisionin the Customs Act which enables party to invoke suo motu theappellate power and grant relief to person who institutes anappeal out of time in an appropriate case. Also, Section 10 of theU.P. Sales Tax Act dealt with the filing of revision petition aftera first appeal had already been rejected, and not to case of afirst appeal as provided under Section 128 of the Customs Act.Another feature, which is of direct relevance in this case, is thatfor revision petitions filed under the U.P. Sales Tax Act sufficientlylong period of 18 months had been given beyond which it was thepolicy of the legislature not to extend limitation any further. Thisaspect 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 aswell as the concurring judgment. In the latter judgment, it hasbeen pointed out that there is vital distinction between extendingtime and condoning delay. Like Section 34 of the Arbitration Act,Section 128 of the Customs Act is section which lays down thatdelay cannot be condoned beyond certain period. Like Section34 of the Arbitration Act, Section 128 of the Customs Act doesnot lay down long period. In these circumstances, to inferexclusion of Section 14 or the principles contained in Section 14would be unduly harsh and would not advance the cause of justice.It must not be forgotten as is pointed out in the concurring judgmentin Consolidated Engg. [(2008) 7 SCC 169] that: (SCC p. 193,para 54)

‘54. … Even when there is cause to apply Section 14, thelimitation period continues to be three months and not more,but in computing the limitation period of three months for theapplication under Section 34(1) of the AC Act, the time duringwhich the applicant was prosecuting such application beforethe wrong court is excluded, provided the proceeding in thewrong court was prosecuted bona fide, with duediligence. Western Builders [State of Goa v. WesternBuilders, (2006) 6 SCC 239] therefore lays down the correctlegal position.’

43. Merely because Parson Tools [(1975) 4 SCC 22 : 1975 SCC(Tax) 185 : (1975) 3 SCR 743] also dealt with provision in tax

ABC

Astatute does not make the ratio of the said decision apply to acompletely differently worded tax statute with much shorterperiod of limitation— Section 128 of the Customs Act. Also, theprinciple of Section 14 would apply not merely in condoning delaywithin the outer period prescribed for condonation but would applydehors such period for the reason pointed out in ConsolidatedBEngg. [(2008) 7 SCC 169] above, being the difference betweenexclusion of certain period altogether under Section 14 principlesand condoning delay. As has been pointed out in the said judgment,when certain period is excluded by applying the principlescontained in Section 14, there is no delay to be attributed to theCappellant and the limitation period provided by the statute concernedcontinues to be the stated period and not more than the statedperiod. We conclude, therefore, that the principle of Section 14which is principle based on advancing the cause of justice wouldcertainly apply to exclude time taken in prosecuting proceedingswhich are bona fide and with due diligence pursued, whichDultimately end without decision on the merits of the case.”53. Perusal of the aforesaid would therefore reveal, that the Courthas clearly rejected the objection raised by the Revenue in M.P. SteelCorporation (supra) which was raised relying on the judgment of thisCourt in the case of Parson Tools and Plants (supra). This CourtEobserved, that the time during which the applicant was prosecuting suchapplication before the wrong court can be excluded, provided theproceeding in the wrong court was prosecuted bona fide, with duediligence. This Court distinguished the judgment in the case of ParsonTools and Plants (supra) on the ground, that the period provided forFfiling revision under the U.P. Sales Tax Act was sufficiently long periodof 18 months, beyond which it was the policy of the legislature not toextend limitation any further. Relying on the Consolidated EngineeringEnterprises (supra), it has been observed, that there is vital distinctionbetween extending time and condoning delay. It was further observed,

that like Section 34 of the Arbitration Act, the period provided in SectionG128 of the Customs Act did not lay down long period for preferring anappeal. As such, it would be unduly harsh to exclude the principlescontained in Section 14 of the Limitation Act. Relying on ConsolidatedEngineering Enterprises (supra) it was observed, that there is adifference between exclusion of certain period altogether underHprinciples of Section 14 and condoning the delay. It has been observed,

that when certain period is excluded by applying the principles containedin Section 14, there is no delay to be attributed to the appellant and thelimitation period provided by the statute concerned, continues to be thestated period and not more than the stated period. It was therefore held,that the principle of section 14, which is principle based on advancingthe cause of justice would certainly apply to exclude time taken inprosecuting proceedings which are bona fide and pursued with duediligence but which end without decision on the merits of the case.

54. Coming to the facts of the present case, immediately afterNCLT pronounced its judgment on 28.11.2019 and even before thecertified copy was made available on 18.12.2019, KIAL had filed writpetition before the Division Bench of the Bombay High Court on11.12.2019 on the principal ground, that the procedure followed by NCLTwas in breach of principles of natural justice. Such ground could belegitimately pursued before writ court. In that sense, it was not aproceeding before wrong court, as such. Perusal of the judgment andorder dated 28.1.2020, passed by the Division Bench of the BombayHigh Court, which dismissed the writ petition on the ground of availabilityof alternate and equally efficacious remedy would reveal, that the saidwrit petition was hotly contested between the parties and by an orderrunning into 32 pages, the Division Bench of the Bombay High Courtdismissed the petition relegating the petitioner therein (i.e. KIAL) toavail of an alternate remedy available in law.

55. Perusal of the memo of the writ petition would reveal, that thepetitioner (i.e. KIAL) has specifically averred thus in the petition:

“2. By way of present Petition seeks to challenge order dated28[th] November 2019 passed by Hon’ble National Company LawTribunal – Bench – II, Mumbai (“NCLT”) on Misc. ApplicationNo.1039 of 2019 filed by the present Petitioner. The NCLT, ingross abuse of process of law and in complete disregard of trueand actual circumstances has proceeded to pass the impugnedorder. The order impugned is passed by bench of two members,Hon’ble M.K. Sharawat (Judicial) and Hon’ble Chandra BhanSingh (Technical) on 28[th] November, 2019. However, the matterwas heard and reserved for orders on 03[rd] July, 2019, by Hon’bleMember, Shri M.K. Sharawat (Judicial). At the relevant point oftime, when the matter was heard and argued, Hon’ble ChandraBhan Singh (Technical) was not even appointed as Member of

ANCLT and never had occasion to hear and adjudicate upon theApplication filed by the Petitioner. It is not just the Applicationfiled by the Petitioner but 3 other Applications which are disposedoff by the common order were not heard by the bench who haspassed the order. This is not just contrary to law but demonstratethat the entire process of passing the orders was in an absoluteBmechanical manner. Annexed hereto and marked as EXHIBIT“A”is the copy of the order dated 28[th] November 2019 passed byNCLT on Miscellaneous Application No. 1039 of 2019.”

56. It could therefore be seen, that the petitioner - KIAL hasspecifically stated, that though the application of the petitioner was heardCby Member (Judicial), the order was passed by Division Benchconsisting of Member (Judicial) as well as Member (Technical). Perusalof the grounds would further reveal, that specific ground has beentaken, that the procedure adopted by NCLT was in breach of principlesof natural justice.D57. It will also be relevant to refer to paragraph 14 of the Memoof the writ petition, which reads thus:

“14. The Petitioner submits that the Petitioner has alternate remedyof filing of Appeal before the Hon’ble NCLAT. However, theissue involved in present Writ Petition is not just about the meritsEof the impugned order, but also in respect of functioning of theTribunal and the manner in which Tribunal deals with the matters.These Tribunals come under supervisory control of jurisdictionalHigh Court i.e. this Hon’ble Court. The issue involved is not inrespect of this matter but also in respect of day to day functioningFof the Tribunal and the manner in which such issues are beingdealt with by the Tribunal. Therefore, Petitioner is exercising WritJurisdiction 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 ofGfiling an appeal before NCLAT, since the petition was not just about themerits of the impugned order, but also in respect of functioning of theTribunal the petitioner was invoking the writ jurisdiction of the Court.

59. By now, it is settled principle of law, that non-exercise ofjurisdiction by the High Court under Article 226 of the Constitution is nota hard and fast rule, but rule of self-restraint. As early as in 1969, inH

the case of Babu Ram Prakash Chandra Maheshwari (supra), thisCourt observed thus:

“It is well-established proposition of law that when an alternativeand equally efficacious remedy is open to litigant he should berequired to pursue that remedy and not to invoke the specialjurisdiction of the High Court to issue prerogative writ. It is truethat the existence of statutory remedy does not affect thejurisdiction of the High Court to issue writ. But, as observed bythis Court in Rashid Ahmed v. The Municipal Board, Kairana[(1950) SCR 566], “the existence of an adequate legal remedy isa thing to be taken into consideration in the matter of grantingwrits” and where such remedy exists it will be sound exerciseof discretion to refuse to interfere in writ petition unless thereare good grounds therefore. But it should be remembered that therule of exhaustion of statutory remedies before writ is grantedis rule of self imposed limitation, rule of policy, and discretionrather than rule of law and the court may therefore in exceptionalcases issue writ such as writ of certiorari notwithstanding thefact that the statutory remedies have not been exhausted.”

60. This Court further laid down two well recognized exceptionsto the doctrine with regard to the exhaustion of statutory remedies, whichreads thus:

“There are at least two well-recognised exceptions to the doctrinewith regard to the exhaustion of statutory remedies. In the firstplace, it is well-settled that where proceedings are taken before aTribunal under provision of law, which is ultra vires, it is open toa party aggrieved thereby to move the High Court under Art.226for issuing appropriate writs for quashing them on the groundthat they are incompetent, without his being obliged to wait untilthose proceedings run their full course.—(See the decisions ofthis 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 StateBihar [(1955) 2 S.C.R. 603]. In the second place, the doctrinehas no application in case where the impugned order has beenmade in violation of the principles of natural justice (See The Stateof Uttar Pradesh v. Mohammad Nooh[(1958) S.C.R. 595].”

61. It has been clearly held, that when the proceedings invokedbefore statutory authority are de hors the jurisdiction or when they are

Ain breach of principles of natural justice, the party would be entitled toinvoke the jurisdiction of the High Court under Article 226 of theConstitution.

62. Referring to earlier judgments, this Court in the case ofWhirlpool Corporation (supra) observed thus:B

“15. Under Article 226 of the Constitution, the High Court, havingregard to the facts of the case, has discretion to entertain or notto entertain writ petition. But the High Court has imposed uponitself certain restrictions one of which is that if an effective andefficacious remedy is available, the High Court would not normallyCexercise its jurisdiction. But the alternative remedy has beenconsistently held by this Court not to operate as bar in at leastthree contingencies, namely, where the writ petition has been filedfor the enforcement of any of the Fundamental Rights or wherethere has been violation of the principle of natural justice orwhere the order or proceedings are wholly without jurisdiction orDthe vires of an Act is challenged. There is plethora of case-lawon this point but to cut down this circle of forensic whirlpool, wewould rely on some old decisions of the evolutionary era of theconstitutional law as they still hold the field.”

63. similar view has been reiterated in the judgment of thisECourt in the case of Nivedita Sharma vs. Cellular OperatorsAssociation 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 tothe application of RP for approval of the resolution plan was heard by aFMember (Judicial), whereas, the final orders were passed by Benchconsisting of Member (Judicial) and Member (Technical). It hasspecifically averred, that though an alternate remedy was available to it,it was invoking the jurisdiction of the High Court since the questioninvolved was also with regard to the manner in which the jurisdictionwas exercised by NCLT. It could thus be seen, that KIAL was bonaGfide prosecuting the proceedings before the High Court in good faith.Perusal of the dates referred to herein above would also reveal, thatKIAL was prosecuting the proceedings before the High Court with duediligence. Even before the availability of the certified copy, it had knockedthe doors of the High Court. The matter before the High Court wasHhotly contested and ultimately, the petition was dismissed by an elaboratejudgment relegating KIAL to the alternate remedy available to it in law.As such, the conditions which enable party to invoke the provisions ofSection 14 of the Limitation Act are very much available to KIAL. If theperiod during which KIAL was bona fide prosecuting the writ petitionbefore the High Court and that too with due diligence, is excluded applyingthe principles underlying Section 14 of the Limitation Act, the appealsfiled before NCLAT would be very much within the limitation. We find,that KIAL would be entitled to exclusion of the period during which itwas bona fide prosecuting the remedy before the High Court with duediligence.

65. That leaves us to consider the judgments referred to by theappellants on the issue of limitation.

66. In the case of Popular Construction Co. (supra) this Courtwas considering the question as to whether the provisions of Section 5of the Limitation Act are applicable to an application challenging an awardunder Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafterreferred to as “the Arbitration Act”). This Court observed thus:

“14. Here the history and scheme of the 1996 Act support theconclusion that the time-limit prescribed under Section 34 tochallenge an award is absolute and unextendible by court underSection 5 of the Limitation Act. The Arbitration and ConciliationBill, 1995 which preceded the 1996 Act stated as one of its mainobjectives the need “to minimise the supervisory role of courts inthe arbitral process” [ Para 4(v) of the Statement of Objects andReasons of the Arbitration and Conciliation Act, 1996]. Thisobjective has found expression in Section 5 of the Act whichprescribes the extent of judicial intervention in no uncertain terms:

‘5. Extent of judicial intervention.—Notwithstandinganything contained in any other law for the time being in force,in matters governed by this Part, no judicial authority shallintervene except where so provided in this Part.’ “

67. It must be noticed, that the judgment in the case of PopularConstruction Co. (supra) was considered by this Court by Benchconsisting of three Judges in the case of Consolidated EngineeringEnterprises (supra) wherein, the question with regard to applicability ofSection 14 of the Limitation Act to an application under Section 34(3) ofthe Arbitration Act fell for consideration. In Consolidated EngineeringEnterprises (supra), the appellant before this Court was an enterprise

Aengaged in civil engineering construction as well as development ofinfrastructure. It entered into an agreement with the respondent forconstruction of earthen bund, head sluices and the draft channel of theY.G. Gudda tank. dispute arose between the parties and therefore, theappellant invoked arbitration Clause 51 of the agreement. The disputewas referred to the sole arbitrator who passed his award in favour ofBthe appellant. Feeling aggrieved by the said award, the respondentspreferred an application to set aside the said award as provided bySection 34 of the Arbitration Act in the Court of the Civil Judge (SeniorDivision), Ramanagaram, Bangalore Rural District, Bangalore. However,it was realised by the respondents, that an application for setting asideCthe award should have been filed before the Principal District Judge,Bangalore District (Rural). As such, an application was preferred by therespondents in the Court of the Civil Judge (Senior Division),Ramanagaram with request to transfer the application made for settingaside the award to the Court of the Principal District Judge (Rural),Bangalore.D68. The Civil Judge (Senior Division), Ramanagaram passed anorder directing return of the suit records for presentation before theproper court. The respondents therefore collected the papers from theCourt of the Civil Judge (Senior Division), Ramanagaram and presentedthe same in the Court of the Principal District Judge, Bangalore (Rural).EThe District Court framed preliminary issue, as to whether the suitwas barred by the limitation under Section 34(3) of the Arbitration Act.The District Judge held, the application for setting aside the award to betime-barred. The respondents invoked the appellate jurisdiction of theHigh Court of Karnataka at Bangalore. The Division Bench of the

FKarnataka High Court held, that the District Judge, Bangalore hadcommitted an error in holding, that Section 14 of the Limitation Act wasnot applicable to an application submitted under Section 34 of the Act. Itwas therefore held, that the time taken during which the respondentshad been prosecuting in the Court of the Civil Judge (Senior Division),Ramanagaram was excludable.G69. Feeling aggrieved, the appellant had approached this Court.Panchal, J. speaking for himself and Balakrishna, C.J. (as their Lordshipsthen were) observed thus:

“27. The contention that in view of the decision of the DivisionBench of this Court in Union of India v. Popular ConstructionH

Co. [(2001) 8 SCC 470] the Court should hold that the provisionsof Section 14 of the Limitation Act would not apply to an applicationfiled under Section 34 of the Act, is devoid of substance. In thesaid decision what is held is that Section 5 of the Limitation Act isnot applicable to an application challenging an award under Section34 of the Act. Section 29(2) of the Limitation Act inter alia providesthat where any special or local law prescribes, for any application,a period of limitation different from the period prescribed by theSchedule, the provisions contained in Sections 4 to 24 shall applyonly insofar as, and to the extent to which, they are not expresslyexcluded by such special or local law. On introspection, the DivisionBench of this Court held that the provisions of Section 5 of theLimitation Act are not applicable to an application challenging anaward. This decision cannot be construed to mean as ruling thatthe provisions of Section 14 of the Limitation Act are also notapplicable to an application challenging an award under Section34 of the Act. As noticed earlier, in the Act of 1996, there is noexpress provision excluding application of the provisions of Section14 of the Limitation Act to an application filed under Section 34 ofthe Act for challenging an award.

28. Further, there is fundamental distinction between the discretionto be exercised under Section 5 of the Limitation Act and exclusionof the time provided in Section 14 of the said Act. The power toexcuse delay and grant an extension of time under Section 5 isdiscretionary whereas under Section 14, exclusion of time ismandatory, if the requisite conditions are satisfied. Section 5 isbroader in its sweep than Section 14 in the sense that number ofwidely different reasons can be advanced and established to showthat there was sufficient cause in not filing the appeal or theapplication within time. The ingredients in respect of Sections 5and 14 are different. The effect of Section 14 is that in order toascertain what is the date of expiration of the “prescribed period”,the days excluded from operating by way of limitation, have to beadded to what is primarily the period of limitation prescribed. Havingregard to all these principles, it is difficult to hold that the decisionin Popular Construction Co. [(2001) 8 SCC 470] rules that theprovisions of Section 14 of the Limitation Act would not apply toan application challenging an award under Section 34 of the Act.”

A70. This Court clearly held, that the decision in the case of thePopular Construction Co. (supra) cannot be construed to mean as aruling, that provisions of Section 14 of the Limitation Act are also notapplicable to an application challenging an award under Section 34 ofthe Act. It has been held, that in the Arbitration Act, there is no expressprovision excluding application of the provisions of Section 14 of theBLimitation Act to an application filed under Section 34 of the ArbitrationAct for challenging the award. It has further been found, that there isfundamental distinction between the discretion to be exercised underSection 5 of the Limitation Act and exclusion of the time provided inSection 14 of the said Act. It was held, that the power to excuse delayCand grant an extension of time under Section 5 is discretionary, whereasunder Section 14, exclusion of time is mandatory, if the requisite conditionsare satisfied. It held, that the effect of Section 14 is that in order toascertain what is the date of expiration of the “prescribed period”, thedays excluded from operating by way of limitation, have to be added towhat is primarily the period of limitation prescribed.D71. Raveendran, J. (as His Lordship then was) in his concurringjudgment observed thus:

“54. On the other hand, Section 14 contained in Part III of theLimitation Act does not relate to extension of the period of limitation,Ebut relates to exclusion of certain period while computing the periodof limitation. Neither sub-section (3) of Section 34 of the AC Actnor any other provision of the AC Act exclude the applicability ofSection 14 of the Limitation Act to applications under Section34(1) of the AC Act. Nor will the proviso to Section 34(3) excludethe application of Section 14, as Section 14 is not provision forFextension of period of limitation, but for exclusion of certain periodwhile computing the period of limitation. Having regard to Section29(2) of the Limitation Act, Section 14 of that Act will be applicableto an application under Section 34(1) of the AC Act. Even whenthere is cause to apply Section 14, the limitation period continuesGto be three months and not more, but in computing the limitationperiod of three months for the application under Section 34(1) ofthe AC Act, the time during which the applicant was prosecutingsuch application before the wrong court is excluded, provided theproceeding in the wrong court was prosecuted bona fide, withdue diligence. Western Builders [(2006) 6 SCC 239] thereforeHlays down the correct legal position.”

72. In paragraph 57, Raveendran, J. also observed, that the decisionin Popular Construction Co. (supra) did not consider the applicabilityof Section 14 of the Limitation Act to an application under Section 34 ofthe Arbitration Act.

73. As such, in view of the judgment of three Judges Bench ofthis Court in the case of Consolidated Engineering Enterprises (supra),the reliance placed by the appellants on the judgment of this Court inPopular Construction Co. (supra) would not be of any assistance.

74. Reliance is also placed on the judgment of this Court in thecase of Singh Enterprises (supra) wherein, the question raised waswith regard to applicability of the provisions of Section 5 of the LimitationAct 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 ofSection 14 of the Limitation Act and therefore would not support thecase of the appellants.

75. Similarly, reliance placed by the learned counsel for theappellants on the judgment of this Court in the case of Commissionerof Customs and Central Excise vs. Hongo India Private Limitedand another[33], would also not help the appellants inasmuch as, thequestion, that fell for consideration there was, with regard to theapplicability of Section 5 of the Limitation Act to reference applicationprovided under Section 35-H(1) of the unamended Central Excise Act,1944.

76. For the same reasons, the judgment of this Court in the caseof Chhattisgarh State Electricity Board (supra) would also not takethe case of the appellants any further inasmuch as, again the question,that fell for consideration was, with regard to applicability of Section 5of the Limitation Act to an appeal under Section 125 of the ElectricityAct, 2003.

77. For the same reasons, we find, that the judgment relied on bythe appellants in the case of Bengal Chemists and DruggistsAssociation vs. Kalyan Chowdhury[34] would also not be applicable tothe facts of the present case inasmuch as, the said judgment alsoconsidered the applicability of Section 5 of the Limitation Act to an appealto the Appellate Tribunal provided under Section 421(3) and 433 of theCompanies Act, 2013.

33 (2009) 5 SCC 79134 (2018) 3 SCC 41

DEF

A78. The judgment of this Court in the case of Neeraj Jhanji(supra) would not be applicable to the facts of the present case. In thesaid case, the petitioner had initially filed writ petition before the DelhiHigh Court against the order-in-original passed by the Commissioner ofCustoms, Kanpur. Delhi High Court converted the writ petition into astatutory appeal under the Customs Act, 1962 by order dated 9-11-2009.BOn 9-9-2010 the Revenue raised an objection about the territorialjurisdiction of that Court. On 5-1-2012 the petitioner withdrew the appealwith liberty to approach the jurisdictional High Court and then filed astatutory appeal before the Allahabad High Court after delay of 697days. It will be relevant to refer to the following observations in NeerajCJhanji (supra):

“3. The very filing of writ petition by the petitioner in the DelhiHigh Court against the order-in-original passed by theCommissioner of Customs, Kanpur indicates that the petitionertook chance in approaching the High Court at Delhi which hadDno territorial jurisdiction in the matter. We are satisfied that filingof the writ petition or for that matter, appeal before the DelhiHigh Court was not at all bona fide. We are in agreement with theobservations made by the Allahabad High Court in the impugnedorder [Neeraj Jhanji v. CCE & Customs, Custom AppealDefective 16 of 2012, order dated 6-8-2012 (All)]. The AllahabadEHigh Court has rightly dismissed the petitioner’s application ofcondonation of delay and consequently the appeal as time barred.”

79. It is thus clear, that this Court found, that the petitioner thereinhad adopted tactics of taking chances by approaching High Court ofDelhi, which had no territorial jurisdiction. As such, it was found, thatFneither the writ petition nor the appeal before the Delhi High Court couldbe construed to be bona fide. It was further noticed, that there wasan inordinate delay of 697 days. It is thus apparent, that the petitionertherein had not satisfied the necessary conditions for applicability ofSection 14.G80. In the present case, as already discussed herein above, thepetitioner was bona fide prosecuting his remedy before the High Courtand that too with due diligence. As such, the said judgment also wouldbe of no avail to the case of the appellants.

81. The judgment of this Court in the case of Ketan V. ParekhH(supra) is relied upon by both the parties. The question, that arose for

consideration in the said case was with regard to applicability of Section14 of the Limitation Act to an Appeal from Order of an Appellate Tribunalas provided under Section 35 of the Foreign Exchange ManagementAct, 1999. This Court relying on the earlier judgment in the case ofConsolidated Engineering Enterprises (supra) and State ofGoa vs. Western Builders[35]held, that Section 14 can be invoked in anappropriate case for exclusion of the time, during which the aggrievedperson may have prosecuted with due diligence remedy before wrongforum. However, on facts and on the averments made in the pleadings,this Court came to the conclusion, that there was not even whisper inthe applications filed by the appellants, that they had been prosecutingremedy before wrong forum i.e. the Delhi High Court with due diligenceand in good faith. It will be relevant to refer to the following paragraphsof the said judgment.

“32. There is another reason why the benefit of Section 14 of theLimitation Act cannot be extended to the appellants. All of themare well conversant with various statutory provisions includingFEMA. One of them was declared notified person under Section3(2) of the Special Court (Trial of Offences Relating toTransactions in Securities) Act, 1992 and several civil and criminalcases are pending against him. The very fact that they had engageda group of eminent advocates to present their cause before theDelhi and the Bombay High Courts shows that they have theassistance of legal experts and this seems to be the reason whythey invoked the jurisdiction of the Delhi High Court and not ofthe Bombay High Court despite the fact that they are residents ofBombay and have been contesting other matters including theproceedings pending before the Special Court at Bombay. It alsoappears that the appellants were sure that keeping in view theirpast conduct, the Bombay High Court may not interfere with theorder of the Appellate Tribunal. Therefore, they took chancebefore the Delhi High Court and succeeded in persuading thelearned Single Judge of the Court to entertain their prayer forstay of further proceedings before the Appellate Tribunal. Thepromptness with which the learned Senior Counsel appearing forthe appellant, Kartik K. Parekh made statement before the DelhiHigh Court on 7-11-2007 that the writ petition may be convertedinto an appeal and considered on merits is clear indication of the

appellant’s unwillingness to avail remedy before the High Courti.e. the Bombay High Court which had the exclusive jurisdictionto entertain an appeal under Section 35 of the Act.

33. It is not possible to believe that as on 7-11-2007, the appellantsand their advocates were not aware of the judgment of this CourtBin Ambica Industries v. CCE [(2007) 6 SCC 769] wherebydismissal of the writ petition by the Delhi High Court on the groundof lack of territorial jurisdiction was confirmed and it was observedthat the parties cannot be allowed to indulge in forum shopping. Ithas not at all surprised us that after having made prayer that thewrit petitions filed by them be treated as appeals under SectionC35, two of the appellants filed applications for recall of that order.No doubt, the learned Single Judge accepted their prayer and theDivision Bench confirmed the order of the learned Single Judgebut the manner in which the appellants prosecuted the writ petitionsbefore the Delhi High Court leaves no room for doubt that theyDhad done so with the sole object of delaying compliance with thedirection given by the Appellate Tribunal and by no stretch ofimagination it can be said that they were bona fide prosecutingremedy before wrong forum. Rather, there was total absenceof good faith, which is sine qua non for invoking Section 14 of theLimitation Act.”

82. It is thus clear, that the appellants therein were indulging intoa practice of taking chances. They had approached Delhi High Court,which totally lacked territorial jurisdiction and had not approached BombayHigh Court though they were residents of Bombay and had beencontesting other matters including the proceedings pending before theFSpecial Court at Bombay. It has been observed, that keeping in viewtheir past conduct, Bombay High Court might not have interfered withthe order of the Appellate Tribunal. Therefore, they took chance beforeDelhi High Court and succeeded in persuading the learned Single Judgeof that Court to entertain their prayer for stay of further proceedingsGbefore the Appellate Tribunal. This Court further observed, that thepromptness with which the statement was made on behalf of theappellants, that the writ petition may be converted into an appeal was aclear indication of the appellant’s unwillingness to avail remedy beforethe High Court of Bombay which had the exclusive jurisdiction to entertainan appeal under Section 35 of the Act.H

83. In the present case, the facts are totally contrary. KIAL hadapproached the High Court of Bombay making specific grievance,that NCLT had adopted procedure which was in breach of the principlesof natural justice. It is specifically mentioned in the writ petition, thatthough an alternate remedy was available to it, it was approaching theHigh Court since the issue with regard to functioning of NCLT also fellfor consideration. The proceedings before the High Court were hotlycontested and by an elaborate judgment, the High Court dismissed thewrit petition relegating the petitioner therein i.e. KIAL to an alternateremedy available in law. It is thus apparently clear, that KIAL was bonafide prosecuting remedy before the High Court in good faith and withdue diligence. In given case, the High Court could have exercisedjurisdiction under Article 226 of the Constitution inasmuch as, thegrievance was regarding procedure followed by NCLT to be in breachof principles of natural justice. That would come within the limited areaearmarked by this Court for exercise of extraordinary jurisdiction underArticle 226 despite availability of an alternate remedy.

84. This Court recently in the judgment of Embassy PropertyDevelopments Pvt. Ltd. vs. State of Karnataka and Others[36]had anoccasion to consider similar issue. We find it apposite to refer to thequestion 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 NationalCompany Law Tribunal in proceeding under the Insolvency andBankruptcy Code, 2016, ignoring the availability of statutoryremedy of appeal to the National Company Law Appellate Tribunaland if so, under what circumstances.”

85. It will also be apposite to reproduce the answer given by thisCourt.

“47. Therefore, in fine, our answer to the first question would bethat NCLT did not have jurisdiction to entertain an applicationagainst the Government of Karnataka for direction to executeSupplemental Lease Deeds for the extension of the mining lease.Since NCLT chose to exercise jurisdiction not vested in it inlaw, the High Court of Karnataka was justified in entertaining thewrit petition, on the basis that NCLT was coram non judice.”

AWe therefore have no hesitation to hold, that KIAL was entitledto extension of the period during which it was bona fide prosecuting aremedy before the High Court with due diligence.

(ii) WHETHER THERE WAS WAIVER ANDACQUIESCENCE BY KIAL SO AS TO ESTOP IT FROMBCHALLENGING THE PARTICIPATION OF KALPRAJ?

86. It is strenuously urged on behalf of the appellants, that underclause 10.4 of the Process Memorandum, if any Resolution Plan isreceived by RP from any eligible applicant(s) at any stage of the ResolutionPlan Process, RP is free to examine any resolution plan with the approvalCof CoC and the applicant will not have any right to object to the submissionor consideration of such plan. It is further submitted, that even underclause 11.2 of the Process Memorandum, RP or CoC, at their solediscretion, may request for additional information/documents and/or seekclarification from the resolution applicant after the due date for submissionof the plan. It is further submitted, that delay in submission of additionalDinformation and/or documents sought by RP, CoC or the Process Managerwould entitle RP, CoC or the Process Manager to reject the resolutionplan.

87. It was further submitted by the appellants, that KIAL, in aletter submitted along with the resolution plan to RP, had expressly waivedEany and all claims with respect to the Resolution Plan Process. Not onlythat, but KIAL had submitted its revised plans twice after Kalpraj waspermitted to participate in the proceedings. It is therefore submitted, thatsince KIAL had expressly waived all its claims and had also submittedits revised plans, after Kalpraj entered into the fray, it was not entitled toFraise any grievance. It is submitted, that the principles of waiver andacquiescence are squarely applicable in the present case. It was alsosubmitted on behalf of the appellants, that the revised plans, submittedby KIAL, were submitted without mentioning, that it was without prejudiceand as such, it was not entitled to make any grievance on that count.G88. It is submitted, that the approach adopted by KIAL amountedto taking chances, as after having failed in the process, challenging thesame would not be permissible in law. It is also contended that duringthe 12[th] meeting of CoC, Kotak Bank, of which KIAL is 100%subsidiary, also agreed with CoC counsel’s view, that Kalpraj’s resolutionplan can be considered.H

89. It could thus be seen, that the main thrust of the argumentsadvanced on behalf of the appellants with regard to waiver andacquiescence is on two grounds, viz., (i) clause 10.4 of the ProcessMemorandum read with paragraph 5(b) of the covering letter forsubmission of resolution plan by KIAL, and (ii) participation of KIAL inthe process after Kalpraj was permitted to participate in the process.

90. We may refer to clause 10.4 of the Process Memorandumand paragraph 5(b) of the covering letter for submission of resolutionplan by KIAL, which read thus:

Clause 10.4 of the Process Memorandum

“if any Resolution Plan is received by the Resolution professionalfrom any eligible Applicant(s) at any stage of the Resolution PlanProcess, the Resolution professional shall be free to examine suchResolution Plan with the approval of the Committee of Creditorsand the Applicant(s) will not have any right to object to submissionor consideration of such plan.”

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

“5. We further represent and confirm as follows:

(a) …..

(b) Acceptance

We hereby unconditionally and irrevocably agree and accept theterms of the Process Memorandum and that the decision madeby the CoC, Resolution professional and/or the AdjudicatingAuthority in respect of any matter with respect to, or arising outof, the Process Memorandum and the Resolution Plan Processshall be binding on us. We hereby expressly waive any and allclaims in respect of the Resolution Plan Process.”

91. On the basis of clause 10.4, it is sought to be urged, that evenif the Resolution Plan is received by RP from any eligible applicant(s) atany stage of the Resolution Plan Process, RP was free to examine suchResolution Plan with the approval of CoC and the applicant(s) will nothave any right to object to submission or consideration of such plan.

92. On the basis of paragraph 5(b) of the covering letter forsubmission of resolution plan by KIAL, it is sought to be urged, that

AKIAL had unconditionally and irrevocably agreed and accepted the termsof the Process Memorandum and the decision made by CoC, RP and/orthe Adjudicating Authority in respect of any matter with respect to, orarising out of, the Process Memorandum and the Resolution PlanProcess. It is further sought to be urged, that KIAL had agreed tosurrender all and any of its claim in respect of the Resolution Plan Process.BIt is sought to be urged, that this stipulation amounts to concludedcontract between the parties and having waived its all claims, KIAL isnot permitted in law to challenge the participation of Kalpraj in respectof Resolution Plan Process.

93. In this respect, it will be relevant to refer to paragraphs 89 andC90 of the judgment of this Court in the case of Central Inland WaterTransport Corporation Limited and another vs. Brojo Nath Gangulyand another[37].

“89. Should then our courts not advance with the times? Shouldthey still continue to cling to outmoded concepts and outwornDideologies? Should we not adjust our thinking caps to match thefashion of the day? Should all jurisprudential development pass usby, 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? ShouldEthe courts sit back and watch supinely while the strong trampleunderfoot the rights of the weak? We have Constitution for ourcountry. Our judges are bound by their oath to “uphold theConstitution and the laws”. The Constitution was enacted to secureto all the citizens of this country social and economic justice. Article14 of the Constitution guarantees to all persons equality beforeFthe law and the equal protection of the laws. The principlededucible from the above discussions on this part of the case is inconsonance with right and reason, intended to secure social andeconomic justice and conforms to the mandate of the great equalityclause in Article 14. This principle is that the courts will not enforceGand will, when called upon to do so, strike down an unfair andunreasonable contract, or an unfair and unreasonable clause in acontract, entered into between parties who are not equal inbargaining power. It is difficult to give an exhaustive list of allbargains of this type. No court can visualize the different situationswhich can arise in the affairs of men. One can only attempt togive some illustrations. For instance, the above principle will applywhere the inequality of bargaining power is the result of the greatdisparity in the economic strength of the contracting parties. Itwill apply where the inequality is the result of circumstances,whether of the creation of the parties or not. It will apply tosituations in which the weaker party is in position in which hecan obtain goods or services or means of livelihood only upon theterms imposed by the stronger party or go without them. It willalso apply where man has no choice, or rather nomeaningful choice, but to give his assent to contract or tosign on the dotted line in prescribed or standard form or toaccept set of rules as part of the contract, however unfair,unreasonable and unconscionable clause in that contractor form or rules may be. This principle, however, will not applywhere the bargaining power of the contracting parties is equal oralmost equal. This principle may not apply where both parties arebusinessmen and the contract is commercial transaction. Intoday’s complex world of giant corporations with their vastinfrastructural organizations and with the State through itsinstrumentalities and agencies entering into almost every branchof industry and commerce, there can be myriad situations whichresult in unfair and unreasonable bargains between partiespossessing wholly disproportionate and unequal bargaining power.These cases can neither be enumerated nor fully illustrated. Thecourt 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 unreasonablecontract, or an unfair and unreasonable clause in contract, entered intobetween parties who are not equal in bargaining power. It has been held,that this principle will apply where man has no choice, or rather nomeaningful choice, but to give his assent to contract or to sign on thedotted line in prescribed or standard form or to accept set of rules aspart of the contract, however unfair, unreasonable and unconscionable aclause 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

ABC

A5(b) of the letter is part of covering letter format, which is providedin the Process Memorandum itself. The covering letter is in Format Iand the party desiring to participate in the Resolution Plan Process hasno other option, than to sign the dotted lines. Hence, the parties cannotbe said to have equal bargaining power and the applicants have no otherchoice than to sign on the documents prescribed in the format. ParagraphB5(b) of the covering letter format, requires party to undertake, that itwill accept all the decisions made by CoC, RP and/or the AdjudicatingAuthority and that the decisions taken will be binding on it. It also requiresthe applicant, to sign on the document thereby, providing expresslywaiving any and all claims with respect to the Resolution Plan Process.CIn turn, it provides for party to agree to stipulation, that even if RP orCoC acts in any manner, which is not permissible in law, still the resolutionapplicant would be bound by such decision and shall waive any or allits claims in respect of the Resolution Plan Process.

96. The said principle of law has been subsequently followed inDvarious judgments of this Court including the one in the case of Assistant

General Manager and others vs. Radhey Shyam Pandey[38].

97. No doubt, that this Court in Central Inland Water TransportCorporation Limited (supra) has observed, that the principle laid downtherein may not apply where both parties are businessmen and theEcontract is commercial transaction. In the first place, RP and theresolution applicant cannot be said to be the contracting parties havingequal bargaining power. Secondly, since RP functions under the I&BCode for discharging the duties bestowed upon him and assisting theprocess for finalization of resolution plan for survival of the CorporateDebtor, it cannot be said that it is purely commercial transaction betweenFRP and the resolution applicant.

98. It may be argued, that the judgment in the case of CentralInland Water Transport Corporation Limited (supra) arose from acase involving statutory corporation, which was an instrumentality ofState within the meaning of Article 12 of the Constitution. However,Grecently, this Court in the case of Pioneer Urban Land andInfrastructure Limited vs. Govindan Raghavan[39]while construingthe term of contract between builder and flat purchaser observedthus:38 (2020) 6 SCC 438H39 (2019) 5 SCC 725

“6.8. term of contract will not be final and binding if it isshown that the flat purchasers had no option but to sign on thedotted line, on contract framed by the builder. The contractualterms of the agreement dated 8-5-2012 are ex facie one-sided,unfair and unreasonable. The incorporation of such one-sidedclauses in an agreement constitutes an unfair trade practice asper Section 2(1)(r) of the Consumer Protection Act, 1986 since itadopts unfair methods or practices for the purpose of selling theflats by the builder.”

99. We see no reason, as to why the said principle should not beapplicable when RP and CoC are acting under the statutory provisionsunder the Code.

100. We are therefore of the view, in light of the law laid down inCentral Inland Water Transport Corporation Limited (supra), KIALcannot be held to be bound by such unconscionable clause in the letter,which is in prescribed format.

101. The second ground raised, with regard to waiver andacquiescence, is based upon the participation of KIAL in the ResolutionPlan Process after Kalpraj was permitted to participate in the proceedings.

102. The word ‘waiver’ has been described in Halsbury’s Lawsof England, 4[th] Edn., Para 1471, which reads thus:

“1471. Waiver.—Waiver is the abandonment of right in such away that the other party is entitled to plead the abandonment byway of confession and avoidance if the right is thereafter asserted,and is either express or implied from conduct. … person who isentitled to rely on stipulation, existing for his benefit alone, in acontract or of statutory provision, may waive it, and allow thecontract or transaction to proceed as though the stipulation orprovision did not exist. Waiver of this kind depends upon consent,and the fact that the other party has acted on it is sufficientconsideration. …

It seems that, in general, where one party has, by his words orconduct, made to the other promise or assurance which wasintended to affect the legal relations between them and to be actedon accordingly, then, once the other party has taken him at hisword and acted on it, so as to alter his position, the party whogave the promise or assurance cannot afterwards be allowed to

Arevert to the previous legal relationship as if no such promise orassurance had been made by him, but he must accept their legalrelations subject to the qualification which he has himself sointroduced, even though it is not supported in point of law by anyconsideration.’

B(See Halsbury’s Laws of England, 4th Edn., Para 1471.)”103. In Halsbury’s Laws of England, Vol. 16(2), 4th Edn., Para907, it is stated:

“The expression ‘waiver’ may, in law, bear different meanings.The primary meaning has been said to be the abandonment of aCright in such way that the other party is entitled to plead theabandonment by way of confession and avoidance if the right isthereafter asserted, and is either express or implied from conduct.It may arise from party making an election, for example whetheror not to exercise contractual right… Waiver may also be byDvirtue of equitable or promissory estoppel; unlike waiver arisingfrom an election, no question arises of any particular knowledgeon the part of the person making the representation, and theestoppel may be suspensory only… Where the waiver is notexpress, it may be implied from conduct which is inconsistentwith the continuance of the right, without the need for writing orEfor consideration moving from, or detriment to, the party whobenefits by the waiver, but mere acts of indulgence will not amountto waiver; nor may party benefit from the waiver unless he hasaltered his position in reliance on it.”

104. For considering, as to whether party has waived its rightsFor not, it will be relevant to consider the conduct of party. For establishingwaiver, it will have to be established, that party expressly or by itsconduct acted in manner, which is inconsistent with the continuance ofits rights. However, the mere acts of indulgence will not amount to waiver.A party claiming waiver would also not be entitled to claim the benefit ofGwaiver, 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. PremChand[40] an advocate was held guilty for professional misconduct by aTribunal of Three Members. The matter was argued before the HighCourt. An objection was taken before the High Court, that one of the

members had appeared on behalf of the complainant and therefore, hewas disqualified from acting as member of the Tribunal. questionarose before this Court, that since such an objection was not taken beforethe Tribunal, whether it amounted to waiver. This Court observed thus:

“It is true that waiver cannot always and in every case be inferredmerely from the failure of the party to take the objection. Waivercan be inferred only if and after it is shown that the party knewabout the relevant facts and was aware of his right to take theobjection in question. As Sir John Romilly, M.R., has observedin Vyvyan v. Vyvyan [(1861) 30 Beav 65, 74 : 54 ER 813, 817]“waiver or acquiescence, like election, presupposes that the personto be bound is fully cognizant of his rights, and, that being so, heneglects 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 waiver cannot always and in everycase 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 knewabout the relevant facts and was aware of his right to take the objectionin question. The waiver or acquiescence, like election, presupposes, thatthe 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 tobe established, that though party was aware about the relevant factsand the right to take an objection, he has neglected to take such anobjection.

108. In the case of Krishna Bahadur vs. Purna Theatre andothers[41], the appellant was appointed in the post of messenger-cum-bearer in the establishment of the respondent. disciplinary proceedingwas initiated against him wherein, he was found guilty and he wasdismissed from service. The Industrial Tribunal set aside the dismissalwith full back wages and compensation. The appellant was permitted tojoin his duties but back wages were not paid. He was again retrenchedfrom services and sum of Rs.9,030/- was paid as retrenchmentcompensation, which the appellant was said to have received underprotest. trade union took the cause of the appellant, inter alia, on theground of contravention of Section 25-G of the Industrial Disputes Act,

A1947, so also on the ground of insufficiency of the amount of compensationpaid to the appellant in terms of Section 25-F(b) thereof. An industrialdispute was raised before the Assistant Labour Commissioner, whichfailed, whereupon the Industrial Tribunal was approached by theappellant. In the meantime, the appellant had also initiated proceedingunder Section 33-C(2) of the Industrial Disputes Act, 1947 which endedBin an amicable settlement, according to which, the appellant agreed toreceive sum of Rs.39,000/- as full and final settlement.

109. However, in the proceedings initiated by the trade union, theretrenchment was held to be illegal and he was directed to be deemed tobe in continuous service with all benefits. writ petition was filed by theCrespondent before the High Court. The said writ petition was dismissedby the single judge of the High Court, upholding the findings of the Tribunal.In an appeal before the Division bench, plea was taken for the firsttime, that the workman had accepted the amount paid by the employerand as such, it amounted to waiver by the workman. The Division BenchDallowed the appeal and set aside the award passed by the Tribunal andthe judgment and order passed by the single judge. Setting aside thejudgment of the Division Bench, this Court observed thus:

“9. The principle of waiver although is akin to the principle ofestoppel; the difference between the two, however, is that whereasEestoppel is not cause of action; it is rule of evidence; waiver iscontractual and may constitute cause of action; it is an agreementbetween the parties and party fully knowing of its rights hasagreed not to assert right for consideration.

10. right can be waived by the party for whose benefit certainFrequirements or conditions had been provided for by statutesubject to the condition that no public interest is involved therein.Whenever waiver is pleaded it is for the party pleading the sameto show that an agreement waiving the right in consideration ofsome compromise came into being. Statutory right, however, mayalso be waived by his conduct.”G

110. This Court has thus held, that the principle of waiver althoughis akin to the principle of estoppel; estoppel is not cause of action andis rule of evidence, whereas waiver is contractual and may constitutea cause of action. It is an agreement between the parties and partyfully knowing of its rights has agreed not to assert right for aH

consideration. It is further held, that whenever waiver is pleaded, it is forthe party pleading the same to show that an agreement waiving the rightin consideration of some compromise came into being.

111. This Court in the case of State of Punjab vs. Davinder PalSingh Bhullar and others[42]had an occasion to consider an issue, as towhen 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 itamount to waiver or not. This Court while considering the earlierjudgments observed thus:

“II. Doctrine of waiver

37. In Manak Lal [AIR 1957 SC 425] this Court held thatalleged bias of Judge/official/Tribunal does not render theproceedings invalid if it is shown that the objection in that regardand particularly against the presence of the said official in question,had not been taken by the party even though the party knew aboutthe circumstances giving rise to the allegations about the allegedbias and was aware of its right to challenge the presence of suchofficial. The Court further observed that: (SCC p. 431, para 8)

“8. … waiver cannot always and in every case beinferred merely from the failure of the party to take theobjection. Waiver can be inferred only if and after it is shownthat the party knew about the relevant facts and was aware ofhis right to take the objection in question.”

38. Thus, in given case if party knows the materialfacts and is conscious of his legal rights in that matter, but fails totake the plea of bias at the earlier stage of the proceedings, itcreates an effective bar of waiver against him. In such facts andcircumstances, it would be clear that the party wanted to take achance to secure favourable order from the official/court andwhen he found that he was confronted with an unfavourable order,he adopted the device of raising the issue of bias. The issue ofbias must be raised by the party at the earliest. (See PannalalBinjraj v. Union of India [AIR 1957 SC 397] and P.D.Dinakaran (1) v. Judges Enquiry Committee [(2011) 8 SCC380].)

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 invadingthe rights…. It is course of conduct inconsistent with theclaim…. It implies positive acts; not merely silence or inactionsuch as involved in laches. … The acquiescence must be suchas to lead to the inference of licence sufficient to create anew right in the defendant….”

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

41. Waiver is an intentional relinquishment of right. Itinvolves conscious abandonment of an existing legal right,advantage, benefit, claim or privilege, which except for such awaiver, party could have enjoyed. In fact, it is an agreement notto assert right. There can be no waiver unless the person who issaid to have waived, is fully informed as to his rights and with fullknowledge about the same, he intentionally abandons them.(Vide Dawsons Bank Ltd. v. Nippon Menkwa KabushikiKaisha [(1934-35) 62 IA 100 : AIR 1935 PC 79], BashesharNath v. CIT [AIR 1959 SC 149], Mademsetty Satyanarayanav. G. Yelloji Rao [AIR 1965 SC 1405], Associated Hotels ofIndia Ltd. v. S.B. Sardar Ranjit Singh [AIR 1968 SC933], Jaswantsingh Mathurasingh v. Ahmedabad MunicipalCorpn. [1992 Supp (1) SCC 5], Sikkim Subba Associates v. Stateof Sikkim [(2001) 5 SCC 629 : AIR 2001 SC 2062] and KrishnaBahadur v. Purna Theatre [(2004) 8 SCC 229 : 2004 SCC (L&S)1086 : AIR 2004 SC 4282].)

42. This Court in Municipal Corpn. of GreaterBombay v. Dr Hakimwadi Tenants’ Assn. [1988 Supp SCC 55 :AIR 1988 SC 233] considered the issue of waiver/acquiescenceby the non-parties to the proceedings and held: (SCC p. 65, paras14-15)

“14. In order to constitute waiver, there must bevoluntary and intentional relinquishment of right. The essenceof waiver is an estoppel and where there is no estoppel,there is no waiver. Estoppel and waiver are questions of conductand must necessarily be determined on the facts of each case.

15. There is no question of estoppel, waiver orabandonment. There is no specific plea of waiver, acquiescenceor estoppel, much less plea of abandonment of right. Thatapart, the question of waiver really does not arise in the case.Admittedly, the tenants were not parties to the earlierproceedings. There is, therefore, no question of waiver of rightsby Respondents 4-7 nor would this disentitle the tenants frommaintaining the writ petition.”

43. Thus, from the above, it is apparent that the issue ofbias should be raised by the party at the earliest, if it is aware of itand knows its right to raise the issue at the earliest, otherwise itwould be deemed to have been waived. However, it is to be keptin mind that acquiescence, being principle of equity must bemade applicable where party knowing all the facts of bias, etc.surrenders to the authority of the Court/Tribunal without raisingany objection. Acquiescence, in fact, is sitting by, when another isinvading the rights. The acquiescence must be such as to lead tothe inference of licence sufficient to create rights in other party.”

112. Thus, for constituting acquiescence or waiver it must beestablished, that though party knows the material facts and is consciousof his legal rights in given matter, but fails to assert its rights at theearliest possible opportunity, it creates an effective bar of waiver againsthim. Whereas, acquiescence would be conduct where party is sittingby, when another is invading his rights. The acquiescence must be suchas to lead to the inference of licence sufficient to create new right inthe defendant. Waiver is an intentional relinquishment of right. It involvesconscious abandonment of an existing legal right, advantage, benefit,claim or privilege. It is an agreement not to assert right. There can beno waiver unless the person who is said to have waived, is fully informedas to his rights and with full knowledge about the same, he intentionallyabandons them.

A113. In the case of Galada power and Telecommunicationlimited vs. United India Insurance Company Limited and another[43],this Court had an occasion to consider the question, as to whether theinsurer has waived its right on the basis of claim hit by clause relating toduration.B114. On the facts, holding, that the case was case of waiver, thisCourt 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 muchaware about the stipulation made in Clauses 5(3) to 5(5), but despiteCthe stipulations therein, it appointed surveyor. Additionally, ashas been stated earlier, in the letter of repudiation, it only statedthat the claim lodged by the insured was not falling under thepurview of transit loss. Thus, by positive action, the insurer haswaived its right to advance the plea that the claim was notentertainable because conditions enumerated in duration clauseDwere not satisfied. In our considered opinion, the NationalCommission could not have placed reliance on the said terms tocome to the conclusion that there was no policy cover in existenceand that the risks stood not covered after delivery of goods to theconsignee.”

E115. In the background of this legal position, we will have toexamine, as to whether the conduct of KIAL can be said to be of sucha nature, which would amount to acquiescence or waiver.

116. The dates are not in dispute. As per the invitation of EOIpublished on 9.7.2018, the last date for submission of EOI was 8.8.2018.FThe first Form ‘G’ was also issued on 9.7.2018, according to which, thelast date for submission of resolution plan was 21.9.2018. KIAL hadsubmitted its EOI on 7.8.2018. First Process Memorandum was issuedon 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 issuedGon 11.12.2018, according to which the last date for submission ofresolution plan was 8.1.2019. KIAL submitted its resolution plan on8.1.2019. Subsequently, Kalpraj submitted its resolution plan on 27.1.2019.117. On KIAL coming to know about the same, on 29.1.2019itself, it had sent an email protesting to RP against acceptance of belatedH43 (2016) 14 SCC 161

KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.[B.R. GAVAI, J. ]

resolution plan of Kalpraj. The said email dated 29.1.2019 sent by KIALto RP reads thus:

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

This severely jeopardises our position and is against the spirit ofthe code, especially when our Resolution Plan was openedimmediately (along with the commercials) and subsequently, evendiscussed at length in the meeting of 15[th] January, 2019, whichwas attended by various stakeholders.

In this light, we would request you to share with us the requisitenotification (Form G) towards extension of time for bid submissionat the earliest. However, in the event, such notification has notbeen made, it would only be logical that all plans submitted after8[th] January, 2019 should be held invalid, more so when our planhas now been opened.

We look forward to your confirmation on the above.”

118. It could therefore be seen, that immediately within day ofthe submission of the plan by Kalpraj, KIAL objected to the acceptanceof its plan after 8.1.2019, when no extension of time for the same wasnotified. It is specifically stated, that the said severely jeopardized itsposition and was against the spirit of the Code, especially when KIAL’sresolution plan was opened immediately and discussed at length withvarious stakeholders. KIAL has therefore requested for sharing therequisite information providing for extension of time for bid submission.It is further stated, that in the event no such notification was issued, allplans submitted after 8.1.2019 should be held to be invalid.

119. After the said email was addressed by KIAL to RP, it receivedan email from RP on 30.1.2019. It is stated in the said email dated30.1.2019, that subsequent to the resolution plan submitted on 8.1.2019,CoC’s representative and RP had detailed discussion with its team onthe changes required to be made in the resolution plan. Vide the saidemail dated 30.1.2019, KIAL was requested to submit the amended

[2021] 2 S.C.R.

Aresolution 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 yourBdecision to accept another resolution plan well after the expiry ofthe deadline for submission of the same.

As pointed out earlier, such an action, after opening of our bid andhaving detailed discussions on the same is not only prejudicial toour interests but also against the spirit of the IBC code.C

The code provides equal treatment to all potential resolutionapplicants within the framework of law and fixes personalresponsibilities upon COC members and RPs in the event instancesof discrimination or departure from the established law are found.

We would request quick response to our query from you on thesubject.”

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 response from RPon his decision to accept another resolution plan well after the expiry ofthe deadline for submission of the same. It was reiterated, that such anEaction, after opening of the bids and having detailed discussions on thesame was not only prejudicial to its interest but against the spirit of theI&B Code. It was reiterated, that the I&B Code, provides equal treatmentto all potential resolution applicants within the framework of law andfixes personal responsibilities upon CoC members and RPs in the eventFof instances of discrimination or departure from the established law.

122. Perusal of the record would reveal, that RP had replied toKIAL by email dated 11.2.2019. It was stated in the said email, that hisact of acceptance of resolution plans, submitted after the due date, wasunder the overall supervision of CoC and as per the opinion given byGCoC’s legal counsel and RP’s legal counsel. It was also submitted, thatthis was in the spirit of value maximisation of assets of the CorporateDebtor.

123. It is in dispute, as to whether RP had again directed KIALand Kalpraj vide email dated 11.2.2019 to submit revised plan. It is assertedHon 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 andKalpraj submitted their revised plans on 12.2.2019.

124. On 13/14.2.2019, the resolution plan of Kalpraj was acceptedby CoC. On 18.2.2019, RP filed M.A. No.691 of 2019 before NCLT forapproval of the resolution plan of Kalpraj. KIAL filed its M.A. No. 1039of 2019 on 14.3.2019 before the Adjudicating Authority objecting to theapproval of resolution plan of Kalpraj.

125. It could thus be clearly seen, that KIAL had raised its objectionimmediately 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 otheroption than to submit its revised plan. This is specifically so in view ofclause 11.2, which reads thus:

“11.2 No change or supplemental information to the ResolutionPlan shall be accepted after the Resolution Plan Due Date, unlessagreed otherwise by the Resolution Professional (in consultationwith the Committee of Creditors). The Resolution Professional orthe CoC may, at their sole discretion, request for additionalinformation/document and/or seek clarifications from ResolutionApplicant after the Resolution Plan Due Date. Delay in submissionof additional information and/or documents sought by theResolution Professional, the CoC or the Process Manager shallmake the Resolution Plan liable for rejection.”

126. It is thus clear that, had KIAL not responded to the email ofRP and submitted its revised plan, it had to run the risk of being out offray.

127. Dr. Singhvi, learned Senior Counsel appearing on behalf ofKalpraj relied on the judgment of this Court in the case of ITC Limitedvs. Blue Coast Hotels Limited and others (supra), wherein it is held,that even if debtor has used the word “without prejudice” it has nosignificance. However, in the said case, the debtor had acknowledgedthe debt even after action was initiated under the Act and even afterpayment of smaller sum. In this background, it was held, that the words“without prejudice” would have no significance. As such, the said casewould not be applicable to the facts of the present case.

128. Reliance placed on the judgment of this Court in the case ofTarapore and Company (supra) would also not be of any assistance to

Athe case of the appellants. It will be relevant to refer to the followingobservations of this Court in the said case.

“Apart from the technical meaning which the expression “withoutprejudice” carries depending upon the context in which it is used,in the present case on proper reading of the correspondenceBand in the setting in which the term is used, it only means that therespondent reserved to itself the right to contend before thearbitrator that dispute raised or the claim made by the contractorwas not covered by the arbitration clause. No other meaning canbe assigned to it. An action taken without prejudice to one’s rightcannot necessarily mean that the entire action can be ignored byCthe party taking the same.”

129. That leaves us with the last submission in this regard madeon behalf of the appellants. It is submitted, that Kotak Bank hadparticipated in the 12[th] meeting of CoC dated 13.1.2019 and agreed toconsider resolution plan of Kalpraj in view of clause 10.4 of the ProcessDMemorandum. It is submitted, that KIAL was 100% subsidiary ofKotak Bank and as such, its agreement to consider the resolution plan ofKalpraj would amount to waiver and acquiescence by KIAL.

130. This question has been squarely answered by this Court inthe case of Vodafone International Holdings BV vs. Union of IndiaEand another[44]. It will be apposite to refer to the following observationof this Court:

“257. The legal relationship between holding company and WOSis that they are two distinct legal persons and the holding companydoes not own the assets of the subsidiary and, in law, theFmanagement of the business of the subsidiary also vests in itsBoard of Directors. In Bacha F. Guzdar v. CIT [AIR 1955 SC74], this Court held that shareholders’ only right is to get dividendif and when the company declares it, to participate in the liquidationproceeds and to vote at the shareholders’ meeting. Refer alsoGto 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 thisregard deserves to be rejected.H44 (2012) 6 SCC 613

132. Taking into consideration the fact, that KIAL had objected toparticipation of any other applicant submitting plan after the due date asper the last Form ‘G’ and also reiterated its objection, we are of theconsidered view, that it cannot be held, that having participated bysubmitting the revised plans, KIAL is estopped from challenging theprocess 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 discussedhereinabove, KIAL had no other option than to submit its revised plansin view of clause 11.2 of the Process Memorandum. Inasmuch as, had itnot responded, it had to run the risk of being out of fray. As alreadydiscussed hereinabove, the conduct of the party is relevant forconsidering, whether it can be held, that case is made out of waiver oracquiescence.133. None of the appellants have been in position to establish,that KIAL had given up/surrendered its rights to take recourse to thelegal remedies. In any case, the appellants had also not been in positionto establish, that on account of any such waiver or acquiescence any ofthe appellants had altered their position to their detriment.

134. As such, it cannot be held, that KIAL had waived oracquiesced its rights to challenge the decision of RP or CoC.

(iii) WHETHER NCLAT WAS RIGHT IN LAW ININTERFERING WITH THE DECISION OF COC OF ACCEPTINGTHE RESOLUTION PLAN OF KALPRAJ?

135. For deciding the said issue, it will be apposite to refer toSection 30 and 31 of the I&B Code, which read thus:

“30. Submission of resolution plan.—(1) resolutionapplicant may submit resolution plan along with an affidavitstating that he is eligible under Section 29-A to the resolutionprofessional prepared on the basis of the information memorandum.

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

(a)provides for the payment of insolvency resolution processcosts in manner specified by the Board in priority tothe payment of other debts of the corporate debtor;

(b)provides for the payment of debts of operational creditorsin such manner as may be specified by the Board whichshall not be less than—

(i)the amount to be paid to such creditors in the eventof liquidation of the corporate debtor under Section53; or

(ii)the amount that would have been paid to suchcreditors, if the amount to be distributed under theresolution plan had been distributed in accordancewith the order of priority in sub-section (1) of Section53,

whichever is higher, and provides for the payment ofdebts of financial creditors, who do not vote in favour ofthe resolution plan, in such manner as may be specified bythe Board, which shall not be less than the amount to bepaid to such creditors in accordance with sub-section (1)of Section 53 in the event of liquidation of the corporatedebtor.

Explanation 1.—For the removal of doubts, it ishereby clarified that distribution in accordance with theprovisions of this clause shall be fair and equitable to suchcreditors.

Explanation 2.—For the purposes of this clause, itis hereby declared that on and from the date ofcommencement of the Insolvency and Bankruptcy Code(Amendment) Act, 2019, the provisions of this clause shallFalso apply to the corporate insolvency resolution process ofa corporate debtor—

(i)where resolution plan has not been approved orrejected by the Adjudicating Authority;

(ii)where an appeal has been preferred under Section61 or Section 62 or such an appeal is not time barredunder any provision of law for the time being in force;or

(iii)where legal proceeding has been initiated in anycourt against the decision of the AdjudicatingAuthority in respect of resolution plan;]

KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.[B.R. GAVAI, J. ]

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

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

(e)does not contravene any of the provisions of the law forthe time being in force;

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

Explanation.—For the purposes of clause (e), if anyapproval of shareholders is required under the Companies Act,2013 (18 of 2013) or any other law for the time being in force forthe implementation of actions under the resolution plan, suchapproval shall be deemed to have been given and it shall not be acontravention of that Act or law.

(3) The resolution professional shall present to the committeeof creditors for its approval such resolution plans which confirmthe conditions referred to in sub-section (2).

(4) The committee of creditors may approve resolutionplan by vote of not less than sixty-six per cent of voting share ofthe financial creditors, after considering its feasibility andviability, the manner of distribution proposed, which may take intoaccount the order of priority amongst creditors as laid down insub-section (1) of Section 53, including the priority and value ofthe security interest of secured creditor] and such otherrequirements as may be specified by the Board:

Provided that the committee of creditors shall not approvea resolution plan, submitted before the commencement of theInsolvency and Bankruptcy Code (Amendment) Ordinance, 2017,where the resolution applicant is ineligible under Section 29-Aand may require the resolution professional to invite freshresolution plan where no other resolution plan is available with it:

Provided further that where the resolution applicant referredto in the first proviso is ineligible under clause (c) of Section 29-A,the resolution applicant shall be allowed by the committee ofcreditors such period, not exceeding thirty days, to make paymentof overdue amounts in accordance with the proviso to clause (c)of Section 29-A:

Provided also that nothing in the second proviso shall beconstrued as extension of period for the purposes of the provisoto sub-section (3) of Section 12, and the corporate insolvencyresolution process shall be completed within the period specifiedin that sub-section.]

Provided also that the eligibility criteria in Section 29-A asamended by the Insolvency and Bankruptcy Code (Amendment)Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolutionapplicant who has not submitted resolution plan as on the date ofcommencement of the Insolvency and Bankruptcy Code(Amendment) Ordinance, 2018.

(5) The resolution applicant may attend the meeting of thecommittee of creditors in which the resolution plan of the applicantis considered:

Provided that the resolution applicant shall not have rightto vote at the meeting of the committee of creditors unless suchresolution applicant is also financial creditor.

(6) The resolution professional shall submit the resolutionplan as approved by the committee of creditors to the AdjudicatingAuthority.

31. Approval of resolution plan.—(1) If the AdjudicatingAuthority is satisfied that the resolution plan as approved by thecommittee of creditors under sub-section (4) of Section 30 meetsthe requirements as referred to in sub-section (2) of Section 30, itshall by order approve the resolution plan which shall be bindingon the corporate debtor and its employees, members,creditors, including the Central Government, any State Governmentor any local authority to whom debt in respect of the payment ofdues arising under any law for the time being in force, such asauthorities to whom statutory dues are owed, guarantors and otherstakeholders involved in the resolution plan:

Provided that the Adjudicating Authority shall, before passingan order for approval of resolution plan under this sub-section,satisfy that the resolution plan has provisions for its effectiveimplementation.

(2) Where the Adjudicating Authority is satisfied that theresolution plan does not confirm to the requirements referred to insub-section (1), it may, by an order, reject the resolution plan.

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

(a)the moratorium order passed by the Adjudicating Authorityunder Section 14 shall cease to have effect; and

(b)the resolution professional shall forward all records relatingto the conduct of the corporate insolvency resolution processand the resolution plan to the Board to be recorded on itsBdatabase.

(4) The resolution applicant shall, pursuant to the resolutionplan approved under sub-section (1), obtain the necessary approvalrequired under any law for the time being in force within periodof one year from the date of approval of the resolution plan by theAdjudicating Authority under sub-section (1) or within such periodas provided for in such law, whichever is later:

Provided that where the resolution plan contains provisionfor combination, as referred to in Section 5 of the CompetitionAct, 2002 (12 of 2003), the resolution applicant shall obtain theapproval of the Competition Commission of India under that Actprior to the approval of such resolution plan by the committee ofcreditors.”

136. The aforesaid provisions have been recently considered inthree 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 aparty, and two other judgments, delivered by three Judges Bench of thisCourt, in the cases of Committee of Creditors of Essar Steel IndiaLimited through Authorised Signatory (supra) and MaharashtraSeamless Limited vs. Padmanabhan Venkatesh and others[45].

137. This Court in the case of Committee of Creditors of EssarSteel India Limited through Authorised Signatory (supra) has set outthe relevant 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 extractsfrom the aforementioned Report:

“2. Executive Summary * * *

The key economic question in the bankruptcy process***

The Committee believes that there is only one correct forumfor evaluating such possibilities, and making decision:a creditors committee, where all financial creditors havevotes 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 hasbeen strictly avoided by the Committee. The appropriatedisposition of defaulting firm is business decision, andonly the creditors should make it.

5. Process for legal entities * * *

Business decisions by creditor committee

All decisions on matters of business will be taken by committeeof the financial creditors. This includes evaluating proposals tokeep the entity as going concern, including decisions aboutthe sale of business or units, retiring or restructuring debt. Thedebtor will be non-voting member on the creditors committee,and will be invited to all meetings. The voting of the creditorscommittee will be by majority, where the majority requires morethan 75 per cent of the vote by weight.

No prescriptions on solutions to resolve the insolvencyThe choice of the solution to keep the entity as goingconcern will be voted on by the creditors committee. Thereare no constraints on the proposals that the resolutionprofessional can present to the creditors committee. Otherthan the majority vote of the creditors committee, the resolutionprofessional needs to confirm to the Adjudicator that the finalsolution complies with three additional requirements. The firstis that the solution must explicitly require the repayment of anyinterim finance and costs of the insolvency resolution processwill be paid in priority to other payments. Secondly, the planmust explicitly include payment to all creditors not on thecreditors committee, within reasonable period after thesolution is implemented. Lastly, the plan should comply withexisting laws governing the actions of the entity whileimplementing the solutions.

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 thefinal solution by majority vote in the negotiations. The majorityvote requires more than or equal to 75 per cent of the creditorscommittee by weight of the total financial liabilities. Themajority vote will also involve cram down option on anydissenting creditors once the majority vote is obtained. …

The Committee deliberated on who should be on the creditorscommittee, given the power of the creditors committee toultimately keep the entity as going concern or liquidate it. TheCommittee reasoned that members of the creditors committeehave to be creditors both with the capability to assessviability, as well as to be willing to modify terms of existingliabilities in negotiations. Typically, operational creditorsare neither able to decide on matters regarding theinsolvency of the entity, nor willing to take the risk ofpostponing payments for better future prospects for theentity. The Committee concluded that, for the process to berapid and efficient, the Code will provide that the creditorscommittee should be restricted to only the financialcreditors.

5.3.3. Obtaining the resolution to insolvency in the IRP

The Committee is of the opinion that there should be freedompermitted to the overall market to propose solutions onkeeping the entity as going concern. Since the mannerand the type of possible solutions are specific to the time andenvironment in which the insolvency becomes visible, it isexpected to evolve over time, and with the development of themarket. The Code will be open to all forms of solutions forkeeping the entity going without prejudice, within the rest ofthe constraints of the IRP. Therefore, how the insolvency isto be resolved will not be prescribed in the Code. Therewill be no restriction in the Code on possible ways in which thebusiness model of the entity, or its financial model, or both,can be changed so as to keep the entity as going concern. The

ACode will not state that the entity is to be revived, or thedebt is to be restructured, or the entity is to be liquidated.This decision will come from the deliberations of thecreditors committee in response to the solutions proposedby the market.”

B138. It is thus clear, that the Committee was of the view, that fordeciding key economic question in the bankruptcy process, the only onecorrect forum for evaluating such possibilities, and making decisionwas, creditors committee, wherein all financial creditors have votes inproportion to the magnitude of debt that they hold. The BLRC hasobserved, that laws in India in the past have brought arms of theCGovernment (legislature, executive or judiciary) into the question ofbankruptcy process. This has been strictly avoided by the Committeeand it has been provided, that the decision with regard to appropriatedisposition of defaulting firm, which is business decision, should onlybe made by the creditors. It has been observed, that the evaluation ofDproposals to keep the entity as going concern, including decisions aboutthe sale of business or units, restructuring of debt, etc., are required tobe taken by the Committee of the Financial Creditors. It has beenprovided, that the choice of the solution to keep the entity as goingconcern will be voted upon by CoC and there are no constraints on theproposals that the resolution professional can present to CoC. TheErequirements, that the resolution professional needs to confirm to theAdjudicator, are:

(i)that the solution must explicitly require the repayment of anyinterim finance and costs of the insolvency resolution processwill be paid in priority to other payments;

(ii)that the plan must explicitly include payment to all creditorsnot on the creditors committee, within reasonable periodafter the solution is implemented; and lastly

(iii)the plan should comply with existing laws governing theGactions of the entity while implementing the solutions.

139. The Committee also expressed the opinion, that there shouldbe freedom permitted to the overall market, to propose solutions onkeeping the entity as going concern. The Committee opined, that thedetails as to how the insolvency is to be resolved or as to how the entityis to be revived, or the debt is to be restructured will not be provided inH

the I&B Code but such decision will come from the deliberations ofCoC in response to the solutions proposed by the market.

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

“32. Having heard the learned counsel for the parties, the mootquestion is about the sequel of the approval of the resolution planby CoC of the respective corporate debtor, namely, KS&PIPLand IIL, by vote of less than seventy-five per cent of votingshare of the financial creditors; and about the correctness of theview taken by Nclat that the percentage of voting share of thefinancial creditors specified in Section 30(4) of the I&B Code ismandatory. Further, is it open to the adjudicating authority/appellate authority to reckon any other factor other thanspecified in Sections 30(2) or 61(3) of the I&B Code as thecase may be which, according to the resolution applicant andthe stakeholders supporting the resolution plan, may berelevant?”

(emphasis supplied)

141. After considering the judgment of this Court in the case ofArcelormittal India Private Limited vs. Satish Kumar Gupta andothers[46] and the relevant provisions of the I&B Code, this court furtherobserved in K. Sashidhar (supra) thus:

“52. As aforesaid, upon receipt of “rejected” resolution planthe adjudicating authority (NCLT) is not expected to do anythingmore; but is obligated to initiate liquidation process under Section33(1) of the I&B Code. The legislature has not endowed theadjudicating authority (NCLT) with the jurisdiction or authority toanalyse or evaluate the commercial decision of CoC much less toenquire into the justness of the rejection of the resolution plan bythe dissenting financial creditors. From the legislative history andthe background in which the I&B Code has been enacted, it isnoticed that completely new approach has been adopted forspeeding up the recovery of the debt due from the defaultingcompanies. In the new approach, there is calm period followedby swift resolution process to be completed within 270 days(outer limit) failing which, initiation of liquidation process has been

Amade inevitable and mandatory. In the earlier regime, the corporatedebtor could indefinitely continue to enjoy the protection givenunder Section 22 of the Sick Industrial Companies Act, 1985 orunder other such enactments which has now been forsaken.Besides, the commercial wisdom of CoC has been givenparamount status without any judicial intervention, forBensuring completion of the stated processes within the timelinesprescribed by the I&B Code. There is an intrinsic assumptionthat financial creditors are fully informed about the viabilityof the corporate debtor and feasibility of the proposedresolution plan. They act on the basis of thorough examinationCof the proposed resolution plan and assessment made by theirteam of experts. The opinion on the subject-matter expressedby them after due deliberations in CoC meetings throughvoting, as per voting shares, is collective business decision.The legislature, consciously, has not provided any ground tochallenge the “commercial wisdom” of the individual financialDcreditors or their collective decision before the adjudicatingauthority. That is made non-justiciable.”

(emphasis supplied)

142. This Court has held, that it is not open to the AdjudicatingAuthority or Appellate Authority to reckon any other factor other thanEspecified in Sections 30(2) or 61(3) of the I&B Code. It has furtherbeen held, that the commercial wisdom of CoC has been given paramountstatus without any judicial intervention for ensuring completion of thestated processes within the timelines prescribed by the I&B Code. ThisCourt thus, in unequivocal terms, held, that there is an intrinsic assumption,Fthat financial creditors are fully informed about the viability of the corporatedebtor and feasibility of the proposed resolution plan. They act on thebasis of thorough examination of the proposed resolution plan andassessment made by their team of experts. It has been held, that theopinion expressed by CoC after due deliberations in the meetings through

voting, as per voting shares, is collective business decision. It has beenGheld, that the legislature has consciously not provided any ground tochallenge the “commercial wisdom” of the individual financial creditorsor their collective decision before the Adjudicating Authority and thatthe decision of CoC’s ‘commercial wisdom’ is made non-justiciable.

143. This Court in Committee of Creditors of Essar Steel IndiaHLimited through Authorised Signatory (supra) after referring to the

KALPRAJ DHARAMSHI v. KOTAK INVESTMENT ADVISORS LTD.[B.R. GAVAI, J. ]

judgment of this Court in the case of K. Sashidhar (supra) observedthus:

“64. Thus, what is left to the majority decision of the Committeeof Creditors is the “feasibility and viability” of resolution plan,which obviously takes into account all aspects of the plan, includingthe manner of distribution of funds among the various classes ofcreditors. As an example, take the case of resolution plan whichdoes not provide for payment of electricity dues. It is certainlyopen to the Committee of Creditors to suggest modification tothe prospective resolution applicant to the effect that such duesought to be paid in full, so that the carrying on of the business ofthe corporate debtor does not become impossible for want of amost basic and essential element for the carrying on of suchbusiness, namely, electricity. This may, in turn, be accepted by theresolution applicant with consequent modification as todistribution of funds, payment being provided to certain type ofoperational creditor, namely, the electricity distribution company,out of upfront payment offered by the proposed resolution applicantwhich may also result in consequent reduction of amountspayable to other financial and operational creditors. What isimportant is that it is the commercial wisdom of this majority

of creditors which is to determine, through negotiation withthe prospective resolution applicant, as to how and in whatmanner the corporate resolution process is to take place.”

(emphasis supplied)

144. This Court held, that what is left to the majority decision ofCoC is the “feasibility and viability” of resolution plan, which is requiredto take into account all aspects of the plan, including the manner ofdistribution of funds among the various classes of creditors. It has furtherbeen held, that CoC is entitled to suggest modification to the prospectiveresolution applicant, so that carrying on the business of the CorporateDebtor does not become impossible, which suggestion may, in turn, beaccepted by the resolution applicant with consequent modification asto 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 howand in what manner the corporate resolution process is to take place.

145. The view taken in the case of K. Sashidhar (supra) andCommittee of Creditors of Essar Steel India Limited through

AAuthorised Signatory (supra) has been reiterated by another threeJudges Bench of this Court in the case of Maharashtra SeamlessLimited (supra).

146. In all the aforesaid three judgments of this Court, the scopeof jurisdiction of the Adjudicating Authority (NCLT) and the AppellateBAuthority (NCLAT) has also been elaborately considered. It will berelevant to refer to paragraph 55 of the judgment in the case of K.Sashidhar (supra), which reads thus:

“55. Whereas, the discretion of the adjudicating authority (NCLT)is circumscribed by Section 31 limited to scrutiny of the resolutionCplan “as approved” by the requisite per cent of voting share offinancial creditors. Even in that enquiry, the grounds on which theadjudicating authority can reject the resolution plan is in referenceto matters specified in Section 30(2), when the resolution plandoes not conform to the stated requirements. Reverting to Section30(2), the enquiry to be done is in respect of whether the resolutionDplan provides: (i) the payment of insolvency resolution processcosts in specified manner in priority to the repayment of otherdebts of the corporate debtor, (ii) the repayment of the debts ofoperational creditors in prescribed manner, (iii) the managementof the affairs of the corporate debtor, (iv) the implementation andEsupervision of the resolution plan, (v) does not contravene any ofthe provisions of the law for the time being in force, (vi) conformsto such other requirements as may be specified by the Board.The Board referred to is established under Section 188 of theI&B Code. The powers and functions of the Board have beendelineated in Section 196 of the I&B Code. None of the specifiedFfunctions of the Board, directly or indirectly, pertain to regulatingthe manner in which the financial creditors ought to or ought notto exercise their commercial wisdom during the voting on theresolution plan under Section 30(4) of the I&B Code. Thesubjective satisfaction of the financial creditors at the time of votingGis bound to be mixed baggage of variety of factors. To wit, thefeasibility and viability of the proposed resolution plan and includingtheir perceptions about the general capability of the resolutionapplicant to translate the projected plan into reality. The resolutionapplicant may have given projections backed by normative databut still in the opinion of the dissenting financial creditors, it would

not be free from being speculative. These aspects are completelywithin the domain of the financial creditors who are called uponto vote on the resolution plan under Section 30(4) of the I&BCode.”

147. It has been held, that in an enquiry under Section 31, thelimited enquiry that the Adjudicating Authority is permitted is, as towhether the resolution plan provides:

(i)the payment of insolvency resolution process costs in aspecified manner in priority to the repayment of other debtsof the corporate debtor,

(ii)the repayment of the debts of operational creditors inprescribed 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 thelaw for the time being in force,

(vi)conforms to such other requirements as may be specifiedby the Board.

148. It will be further relevant to refer to the following observationsof this Court in K. Sashidhar (supra):

57. …Indubitably, the remedy of appeal including the width ofjurisdiction of the appellate authority and the grounds of appeal, isa creature of statute. The provisions investing jurisdiction andauthority in NCLT or Nclat as noticed earlier, have not madethe commercial decision exercised by CoC of not approvingthe resolution plan or rejecting the same, justiciable. Thisposition is reinforced from the limited grounds specified forinstituting an appeal that too against an order “approving aresolution plan” under Section 31. First, that the approvedresolution plan is in contravention of the provisions of any law forthe time being in force. Second, there has been material irregularityin exercise of powers “by the resolution professional” during thecorporate insolvency resolution period. Third, the debts owed tooperational creditors have not been provided for in the resolutionplan in the prescribed manner. Fourth, the insolvency resolutionplan costs have not been provided for repayment in priority to allother debts. Fifth, the resolution plan does not comply with any

Aother criteria specified by the Board. Significantly, the matters orgrounds—be it under Section 30(2) or under Section 61(3) of theI&B Code—are regarding testing the validity of the “approved”resolution plan by CoC; and not for approving the resolution planwhich has been disapproved or deemed to have been rejected byCoC in exercise of its business decision.”B

[emphasis supplied]

149. It will therefore be clear, that this Court, in unequivocal terms,held, that the appeal is creature of statute and that the statute has notinvested jurisdiction and authority either with NCLT or NCLAT, to reviewCthe commercial decision exercised by CoC of approving the resolutionplan or rejecting the same.

150. The position is clarified by the following observations inparagraph 59 of the judgment in the case of K. Sashidhar (supra), whichreads thus:D“59.

“59. In our view, neither the adjudicating authority (NCLT) northe appellate authority (NCLAT) has been endowed with thejurisdiction to reverse the commercial wisdom of the dissentingfinancial creditors and that too on the specious ground that it isonly an opinion of the minority financial creditors…..”

E151. This Court in Committee of Creditors of Essar Steel IndiaLimited through Authorised Signatory (supra) after reproducing certainparagraphs in K. Sashidhar (supra) observed thus:

“Thus, it is clear that the limited judicial review available, whichcan in no circumstance trespass upon business decision of theFmajority of the Committee of Creditors, has to be within the fourcorners of Section 30(2) of the Code, insofar as the AdjudicatingAuthority is concerned, and Section 32 read with Section 61(3) ofthe Code, insofar as the Appellate Tribunal is concerned, theparameters of such review having been clearly laid down in K.Sashidhar”G152. It can thus be seen, that this Court has clarified, that thelimited judicial review, which is available, can in no circumstance trespassupon business decision arrived at by the majority of CoC.

153. In the case of Maharashtra Seamless Limited (supra),HNCLT had approved the plan of appellant therein with regard to CIRP

of United Seamless Tubulaar (P) Ltd. In appeal, NCLAT directed, thatthe appellant therein should increase upfront payment to Rs.597.54 croreto the “financial creditors”, “operational creditors” and other creditorsby paying an additional amount of Rs.120.54 crore. NCLAT furtherdirected, that in the event the “resolution applicant” failed to undertakethe payment of additional amount of Rs.120.54 crore in addition to Rs.477crore and deposit the said amount in escrow account within 30 days, theorder of approval of the ‘resolution plan’ was to be treated to be setaside. While allowing the appeal and setting aside the directions ofNCLAT, this Court observed thus:

“30. The appellate authority has, in our opinion, proceeded onequitable perception rather than commercial wisdom. On the faceof it, release of assets at value 20% below its liquidation valuearrived at by the valuers seems inequitable. Here, we feel theCourt ought to cede ground to the commercial wisdom of thecreditors rather than assess the resolution plan on the basis ofquantitative analysis. Such is the scheme of the Code. Section31(1) of the Code lays down in clear terms that for final approvalof resolution plan, the adjudicating authority has to be satisfiedthat the requirement of sub-section (2) of Section 30 of the Codehas been complied with. The proviso to Section 31(1) of the Codestipulates the other point on which an adjudicating authority has tobe satisfied. That factor is that the resolution plan has provisionsfor its implementation. The scope of interference by theadjudicating authority in limited judicial review has been laid downin Essar Steel [Essar Steel India Ltd. Committee ofCreditors v. Satish Kumar Gupta, (2020) 8 SCC 531], the relevantpassage (para 54) of which we have reproduced in earlier part ofthis judgment. The case of MSL in their appeal is that they wantto run the company and infuse more funds. In such circumstances,we do not think the appellate authority ought to have interferedwith the order of the adjudicating authority in directing thesuccessful resolution applicant to enhance their fund inflowupfront.”

154. This Court observed, that the Court ought to cede ground tothe commercial wisdom of the creditors rather than assess the resolutionplan on the basis of quantitative analysis. This Court clearly held, thatthe appellate authority ought not to have interfered with the order of the

Aadjudicating authority by directing the successful resolution applicant toenhance their fund inflow upfront.

155. It would thus be clear, that the legislative scheme, asinterpreted by various decisions of this Court, is unambiguous. Thecommercial wisdom of CoC is not to be interfered with, excepting theBlimited 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 beena material irregularity in exercise of the powers by RP, NCLAT wasjustified in view of the provisions of clause (ii) of sub-section (3) ofSection 61 of the I&B Code to interfere with the exercise of power byCRP. However, it could be seen, that all actions of RP have the seal ofapproval of CoC. No doubt, it was possible for RP to have issued anotherForm ‘G’, in the event he found, that the proposals received by it prior tothe date specified in last Form ‘G’ could not be accepted. However, ithas been the consistent stand of RP as well as CoC, that all actions ofRP, including acceptance of resolution plans of Kalpraj after the dueDdate, albeit before the expiry of timeline specified by the I&B Code forcompletion of the process, have been consciously approved by CoC. Itis to be noted, that the decision of CoC is taken by thumping majorityof 84.36%. The only creditor voted in favour of KIAL is Kotak Bank,which is holding company of KIAL, having voting rights of 0.97%. WeEare of the considered view, that in view of the paramount importancegiven to the decision of CoC, which is to be taken on the basis of‘commercial wisdom’, NCLAT was not correct in law in interferingwith the commercial decision taken by CoC by thumping majority of84.36%.F157. It is further to be noted, that after the resolution plan ofKalpraj was approved by NCLT on 28.11.2019, Kalpraj had begunimplementing the resolution plan. NCLAT had heard the appeals on27.2.2020 and reserved the same for orders. It is not in dispute, thatthere was no stay granted by NCLAT, while reserving the matters fororders. After gap of five months and eight days, NCLAT passed theGfinal order on 5.8.2020. It could thus be seen, that for 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, CoCand Deutsche Bank, that during the said period, various steps have beentaken by Kalpraj by spending huge amount for implementation of theHplan. 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 ourconclusion, that NCLAT acted in excess of jurisdiction in interferingwith the conscious commercial decision of CoC.

158. It is also pointed out, that in pursuance of the order dated5.8.2020 passed by NCLAT, CoC has approved the resolution plan ofKIAL on 13.8.2020. However, since we have already held, that thedecision of NCLAT dated 5.8.2020 does not stand the scrutiny of law, itmust follow, that the subsequent approval of the resolution plan of KIALby CoC becomes non-est in law. For, it was only to abide by the directionsof NCLAT. We are of the view that nothing would turn on it. The decisionof CoC dated 13/14.2.2019 is decision, which has been taken in exerciseof its ‘commercial wisdom’. As such, we hold, that the decision taken byCoC 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 decisiontaken by CoC.

159. In that view of the matter, we find, that Civil Appeal Nos.2943-2944 of 2020 filed by Kalpraj; Civil Appeal Nos. 2949-2950 of2020 filed by RP and Civil Appeal Nos. 3138-3139 of 2020 filed byDeutsche Bank deserve to be allowed. It is ordered accordingly. Theorder passed by NCLAT dated 5.8.2020 is quashed and set aside andthe orders passed by NCLT dated 28.11.2019 are restored andmaintained.

160. Insofar as, the Civil Appeals arising out of D.No. 24125 of2020 filed by Fourth Dimension Solutions Limited are concerned, it issubmitted, that the appeal preferred by it against the order of NCLT isstill pending before NCLAT. Without going into the merits of the rivalcontentions of the parties, we direct NCLAT to decide the appeal ofFourth Dimension Solutions Limited in accordance with law, asexpeditiously as possible, and in any case, within period of two monthsfrom today.

161. As such, all appeals are disposed of in view of the above andpending applications, if any, shall stand disposed of.

Nidhi Jain

Appeals disposed of.