IBC as a Complete Code
The Supreme Court, on January 2, disapproved of the Karnataka High Court’s intervention in the Corporate Insolvency Resolution Process (CIRP), emphasizing that the Insolvency and Bankruptcy Code (IBC) is a complete code in itself with adequate checks and balances. The bench of Justices PS Narasimha and Manoj Misra stated that supervisory and judicial review powers under Article 226 demand rigorous scrutiny and careful application, especially in matters governed by the IBC.
High Court’s Error in Entertaining the Writ Petition
The Court observed that the High Court erred in entertaining the writ petition due to undue delay by the respondent. CIRP proceedings against Associate Decor Ltd. commenced in October 2018, and the resolution plan was approved in 2020. Despite this, the respondent approached the High Court in January 2023, almost three years after the alleged violation of natural justice occurred in February 2020. The Supreme Court noted this delay and ruled that the High Court should have directed the respondent to exhaust the remedies available under the IBC.
Principles of Natural Justice and CIRP
The High Court had quashed the resolution plan on the ground of a 24-hour notice violation for a CoC meeting. However, the Supreme Court held that procedural lapses do not justify setting aside a resolution plan approved under the IBC unless substantial injustice is demonstrated.
Reiterating Judicial Discipline in CIRP Matters
The Court relied on its earlier decision in Committee of Creditors of KSK Mahanadi Power Company Ltd. v. Uttar Pradesh Power Corporation Ltd., where it emphasized the importance of concluding CIRP proceedings without unnecessary deferrals by High Courts under Article 226.
Supreme Court’s Direction
The bench directed the Adjudicating Authority to resume the CIRP proceedings from where they were halted by the High Court and to conclude them expeditiously. It underscored the importance of adhering to IBC protocols to preserve legal discipline and balance justice with order.
Conclusion
The Supreme Court set aside the High Court’s decision, reiterating that the IBC is a comprehensive framework, and High Courts must exercise extreme caution before interfering in CIRP proceedings.
Case Details
Case Title: Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan & Ors., Civil Appeal No. 48/2025
Bench: Justices PS Narasimha and Manoj Misra
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