VALLAL RCKversusM/S SIVA INDUSTRIES AND HOLDINGS LIMITED AND OTHERS

                        [2022] 7 S.C.R. 577                              577


                           VALLAL RCK                                    A
                                  v.
             M/S SIVA INDUSTRIES AND HOLDINGS
                   LIMITED AND OTHERS
               (Civil Appeal Nos. 1811-1812 of 2022)                     B
                           JUNE 03, 2022
             [B. R. GAVAI AND HIMA KOHLI, JJ.]
       Insolvency and Bankruptcy Code, 2016: s. 12A – Withdrawal
of application admitted u/s. 7 – On facts, application u/s. 12A r/w
                                                                         C
Regulation 30A for withdrawal of application filed u/s. 7, in view
of settlement plan submitted by the promoter of the Corporate Debtor,
being approved by 94.23% of the voting shares of the Committee of
Creditors – NCLT and NCLAT rejected the application – On appeal,
held: When 90% and more of the creditors, in their wisdom after
due deliberations, find that it would be in the interest of all the      D
stake-holders to permit settlement and withdraw CIRP, the
adjudicating authority or the appellate authority cannot sit in an
appeal over the commercial wisdom of CoC – Interference would
be warranted only when the adjudicating authority or the appellate
authority finds the decision of the CoC to be wholly capricious,
                                                                         E
arbitrary, irrational and de hors the provisions of the statute or the
Rules – In the instant case, the decision of the COC was taken after
due deliberations of pros and cons of the settlement plan and took
the decision exercising their commercial wisdom – Thus, interference
of the NCLT and the NCLAT not justified – Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for             F
Corporate Persons) Regulations, 2016 – Regulation 30A.
      Allowing the appeals, the Court
      HELD: 1.1 Section 12A of the IBC was brought in the
statute book vide Insolvency and Bankruptcy Code (Second
Amendment) Act, 2018 (Act No. 26 of 2018). The Statement of              G
Objects and Reasons of the Act No. 26 of 2018 would reveal that
after the IBC was enacted in 2016, it had emerged that further
fine tuning of the IBC would be required. The Government
therefore constituted an Insolvency Law Committee to review
the functioning and implementation of the IBC. The SOR would             H
                              577
578           SUPREME COURT REPORTS                     [2022] 7 S.C.R.


A     further reveal that the recommendations of the said Committee
      were examined by the Government and it was accordingly decided
      to amend the IBC. One of the amendments proposed was for
      making a provision for withdrawal of application for initiation of
      CIRP admitted by Adjudicating Authority. It was recommended
      that such an exit should be allowed provided the CoC approves
B
      such action by 90% voting share. [Para 12][584-C-F]
            1.2 Section 12A of the IBC was brought in the statute book
      on the basis of the said Committee’s Report. Though by the
      Amendment Act No. 26 of 2018, the voting share of 75% of CoC
      for approval of the Resolution Plan was brought down to 66%,
C     Section 12A of the IBC which was brought in the statute book by
      the same amendment, requires the voting share of 90% of CoC
      for approval of withdrawal of CIRP. It could thus clearly be seen
      that a more stringent provision has been made insofar as
      withdrawal of CIRP is concerned. [Para 16][586-E-F]
D            1.3 A perusal of the Regulation 30A would reveal that where
      an application for withdrawal under Section 12A of the IBC is
      made after the constitution of the Committee, the same has to be
      made through the interim resolution professional or the resolution
      professional, as the case may be. The application has to be made
E     in Form-FA. It further provides that when an application is made
      after the issue of invitation for expression of interest under
      Regulation 36A, the applicant is required to state the reasons
      justifying withdrawal of the same. The RP is required to place
      such an application for consideration before the Committee. Only
      after such an application is approved by the Committee with 90%
F     voting share, the RP shall submit the same along with the approval
      of the Committee to the adjudicating authority. It could thus be
      seen that a detailed procedure is prescribed under Regulation
      30A of the 2016 Regulations as well. [Para 18][588-C-D]
            1.4 If the CoC arbitrarily rejects a just settlement and/or
G     withdrawal claim, the NCLT and thereafter the NCLAT can always
      set aside such decision under the provisions of the IBC. [Para
      20][589-C]



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  VALLAL RCK v. M/S SIVA INDUSTRIES AND HOLDINGS                        579
                LIMITED AND OTHERS

      1.5 The commercial wisdom of the CoC has been given               A
paramount status without any judicial intervention for ensuring
completion of the stated processes within the timelines prescribed
by the IBC. There is an intrinsic assumption, that financial
creditors are fully informed about the viability of the corporate
debtor and feasibility of the proposed resolution plan. They act
                                                                        B
on the basis of thorough examination of the proposed resolution
plan and assessment made by their team of experts. [Para 21][589-
D-E]
     1.6 The provisions under Section 12A of the IBC have been
made more stringent as compared to Section 30(4) of the IBC.
Whereas under Section 30(4) of the IBC, the voting share of             C
CoC for approving the Resolution Plan is 66%, the requirement
under Section 12A of the IBC for withdrawal of CIRP is 90%.
[Para 23][590-A]
      1.7 When 90% and more of the creditors, in their wisdom
after due deliberations, find that it would be in the interest of all   D
the stake-holders to permit settlement and withdraw CIRP, the
adjudicating authority or the appellate authority cannot sit in an
appeal over the commercial wisdom of CoC. The interference
would be warranted only when the adjudicating authority or the
appellate authority finds the decision of the CoC to be wholly          E
capricious, arbitrary, irrational and de hors the provisions of the
statute or the Rules. [Para 24][590-B-C]
       1.8 In the instant case, the proceedings of the 13th, 14th
and 15th meetings of CoC would clearly show that there were
wide deliberations amongst the members of the CoC while                 F
considering the Settlement Plan as submitted by the appellant.
Not only that, the proceedings would also reveal that after
suggestions were made by some of the members of the CoC,
suitable amendments were carried out in the Settlement Plan by
the appellant. One of the members of the CoC having voting
share of 23.60%, though initially opposed the Settlement Plant,         G
subsequently decided to support the same. Accordingly, the NCLT
itself directed the RP to reconvene the CoC meeting. As per the
directions of the NCLT, the 17th meeting of the CoC was
reconvened, wherein the Settlement Plan was approved by
94.23% votes. [Para 25][590-D-E]                                        H
580           SUPREME COURT REPORTS                    [2022] 7 S.C.R.


A           1.9 The decision of the CoC was taken after the members
      of the CoC, had due deliberation to consider the pros and cons of
      the Settlement Plan and took a decision exercising their
      commercial wisdom. Therefore, neither the NCLT nor the
      NCLAT were justified in not giving due weightage to the
      commercial wisdom of CoC. The impugned judgment delivered
B
      by the NCLAT and the orders passed by the NCLT are quashed
      and set aside; and the application filed by the Resolution
      Professional before the NCLT for withdrawal of CIRP is allowed.
      [Paras 26, 28][590-F; 591-D-E]
           Swiss Ribbons Privated Limited and Another v. Union
C          of India and Others (2019) 4 SCC 17 : [2019] 3 SCR
           535; K. Sashidhar v. Indian Overseas Bank and Others
           (2019) 12 SCC 150 : [2019] 3 SCR 845; Committee of
           Creditors of Essar Steel India Limited through
           Authorised Signatory v. Satish Kumar Gupta and Others
D          (2020) 8 SCC 531 : [2019] 16 SCR 275; Maharashtra
           Seamless Limited v. Padmanabhan Venkatesh and Others
           (2020) 11 SCC 467 : [2020] 2 SCR 1157; Kalpraj
           Dharamshi and Another v. Kotak Investment Advisors
           Limited and Another (2021) 10 SCC 401; Jaypee
           Kensington Boulevard Apartments Welfare Association
E          and Others v. NBCC (India) Limited and Others (2022)
           1 SCC 401; Arun Kumar Jagatramka v. Jindal Steel
           and Power Limited and Another (2021) 7 SCC 474 –
           referred to.
                           Case Law Reference
F
      [2019] 3 SCR 535             referred to            Para 19
      [2019] 3 SCR 845              referred to           Para 21
      [2019] 16 SCR 275             referred to           Para 21
      [2020] 2 SCR 1157             referred to           Para 21
G
      (2021) 10 SCC 401             referred to           Para 21
      (2022) 1 SCC 401             referred to            Para 21
      (2021) 7 SCC 474             referred to            Para 27

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   VALLAL RCK v. M/S SIVA INDUSTRIES AND HOLDINGS                               581
                 LIMITED AND OTHERS

      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1811-                     A
1812 of 2022.
     From the Judgment and Order dated 28.01.2022 of the National
Company Law Appellate Tribunal, Chennai Bench, Chennai in Company
Appeal (AT) (CH) (Ins) Nos. 211 and 212 of 2021.
      Dr. Abhishek Manu Singhvi, P. H. Arvind Pandian, Sr. Advs.,               B
Ankur Kashyap, Ajith S. Ranganathan, Aavishkar Singhvi, Rohit Rajershi,
Avinash Krishnan Ravi, Aman Bajaj, Aadarsh Prakash, Navid Ahmed,
Advs. for the Appellant.
     Anish R. Shah, K. R. Samratt, Abhishek Swaroop, Shashank
Manish, Palash Agarwal, Advs. for the Respondents.                              C

       The Judgment of the Court was delivered by
       B. R. GAVAI, J.
       1. These appeals challenge the common judgment dated
28 th January 2022 passed by the learned National Company Law                   D
Appellate Tribunal, Chennai Bench, Chennai (hereinafter referred to as
the “NCLAT”) in Company Appeal (AT)(CH)(Insolvency) Nos. 211
and 212 of 2021, thereby dismissing the appeals filed by the present
appellant, which were in turn filed, challenging the two orders dated
12th August 2021 passed by the learned National Company Law Tribunal,
                                                                                E
Division Bench-II, Chennai (hereinafter referred to as the “NCLT”),
thereby rejecting the application filed by the Resolution Professional
(“RP” for short) under Section 12A of the Insolvency and Bankruptcy
Code, 2016 (“IBC” for short) read with Regulation 30A of the Insolvency
and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016 (hereinafter referred to as the            F
“2016 Regulations”), for withdrawal of the application filed under Section
7 of the IBC in view of the Settlement Plan submitted by the appellant.
The appellant has also challenged the order passed by the learned NCLAT
of the even date vide which the appeal filed by the present appellant
against the order passed by the learned NCLT directing initiation of
                                                                                G
liquidation proceedings in respect of M/s Siva Industries and Holdings
Limited-respondent No.1 herein (hereinafter referred to as the “Corporate
Debtor”), was dismissed.
       2. A short question that falls for consideration in the present appeal
is as to whether the adjudicating authority (NCLT) or the appellate
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582              SUPREME COURT REPORTS                        [2022] 7 S.C.R.


A     authority (NCLAT) can sit in an appeal over the commercial wisdom of
      the Committee of Creditors (hereinafter referred to as the “CoC”) or
      not.
               3. The facts in brief giving rise to the present appeals are as
      under:
B            IDBI Bank Limited had filed an application under Section 7 of the
      IBC for initiation of Corporate Insolvency Resolution Process (hereinafter
      referred to as the “CIRP”) in respect of the Corporate Debtor. The
      learned NCLT, vide its order dated 4th July 2019, admitted the said
      application. As a result of which, CIRP in respect of the Corporate
C     Debtor was initiated. The RP had presented a Resolution Plan before
      the CoC, submitted by one M/s Royal Partners Investment Fund Limited.
      However, since the said Plan received only 60.90% votes of the CoC
      and could not meet the requirement of receiving 66% votes, the said
      Plan could not be approved.

D            4. The RP, on 8th May 2020, filed an application being IA/837/IB/
      2020 under Section 33(1)(a) of the IBC seeking initiation of liquidation
      process of the Corporate Debtor. The appellant, who is the promoter of
      the Corporate Debtor, filed a settlement application being IA/647/IB/
      2020 before the NCLT under Section 60(5) of the IBC, showing his
      willingness to offer one-time settlement plan. The appellant sought
E     necessary directions to the CoC to consider the terms of Settlement
      Plan as proposed by him. From the month of October to December
      2020, the 13th, 14th and 15th meetings of the CoC were held to consider
      the Settlement Plan as submitted by the appellant. Deliberations took
      place in the said meetings with regard to the said Settlement Plan and
F     the final settlement proposal which was submitted by the appellant came
      to be considered by the CoC in its 16th meeting held on 18th January
      2021. Initially, the said Settlement Plan received only 70.63% votes.
      However subsequently, one of the Financial Creditors viz. International
      Assets Reconstruction Co. Ltd. (hereinafter referred to as “IARCL”)
      having voting share of 23.60%, decided to approve the said Settlement
G     Plan and intimated the RP about the same.
            5. Since the said Settlement Plan stood approved by more than
      90% voting share, the RP filed an application before the learned NCLT
      seeking necessary directions based on the request of IARCL. Vide its
      order dated 29th March 2021, the learned NCLT ordered the RP to
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   VALLAL RCK v. M/S SIVA INDUSTRIES AND HOLDINGS                              583
         LIMITED AND OTHERS [B. R. GAVAI, J.]

reconvene a meeting of CoC and place the e-mail of IARCL before it.            A
Accordingly, the 17th CoC meeting was convened on 1st April 2021,
wherein the said Settlement Plan was approved with a voting majority
of 94.23%. Accordingly, the RP filed an application being MA/43/CHE/
2021 in IBA/453/2019 before the learned NCLT seeking withdrawal of
CIRP initiated against the Corporate Debtor in view of the approval of
                                                                               B
the said Settlement Plan by CoC.
       6. The learned NCLT, vide its order dated 12th August 2021, while
holding that the said Settlement Plan was not a settlement simpliciter
under Section 12A of the IBC but a “Business Restructuring Plan”,
rejected the application for withdrawal of CIRP and approval of the
Settlement Plan. Vide another order of even date, the learned NCLT             C
initiated liquidation process of the Corporate Debtor in IA/837/IB/2020
as well. Being aggrieved thereby, the appellant preferred two appeals
before the learned NCLAT. Vide the common impugned judgment dated
28th January 2022, the same came to be dismissed. Hence, the present
appeals.                                                                       D
       7. Notice was issued by this Court in the present appeals on 11 th
March 2022. While issuing notice, this Court also granted stay of the
impugned judgment. Insofar as the respondent No.1 is concerned, no
one appeared. Shri Abhishek Swaroop, learned counsel appearing on
behalf of the respondent No.2 also does not wish to contest the matter.        E
As such, we could have very well allowed the appeals as being
uncontested. However, since an important question with regard to
interpretation of Section 12A of the IBC arises, we are inclined to consider
the matter for deciding the said issue.
     8. We have heard Dr. Abhishek Manu Singhvi, learned Senior                F
Counsel appearing on behalf of the appellant.
       9. Dr. Singhvi submits that it is more than well-settled that the
adjudicating authority or the appellate authority cannot sit in an appeal
over the commercial wisdom of CoC. He submitted that the CoC, having
accepted the Settlement Plan with the voting majority of 94.23%, the           G
learned NCLT and the learned NCLAT have grossly erred in rejecting
the Settlement Plan and withdrawal of CIRP.
       10. Dr. Singhvi submitted that one of the main objects of the IBC
is permitting the Corporate Debtor to continue as an on-going concern
and at the same time, paying the dues of the creditors to the maximum.
                                                                               H
584             SUPREME COURT REPORTS                           [2022] 7 S.C.R.


A     He submits that the impugned judgment dated 28th January 2022 passed
      by the learned NCLAT and the orders dated 12th August 2021 passed by
      the learned NCLT are totally contrary to the spirit behind the IBC.
            11. For considering these submissions, it will be apposite to refer
      to Section 12A of the IBC, which reads thus:
B           “12-A. Withdrawal of application admitted under Section 7,
            9 or 10.—The Adjudicating Authority may allow the withdrawal
            of application admitted under Section 7 or Section 9 or Section 10,
            on an application made by the applicant with the approval of ninety
            per cent. voting share of the committee of creditors, in such manner
C           as may be specified.”
             12. It is relevant to note that Section 12A of the IBC was brought
      in the statute book vide Insolvency and Bankruptcy Code (Second
      Amendment) Act, 2018 (Act No. 26 of 2018). The Statement of Objects
      and Reasons (for short “SOR”) of the Act No. 26 of 2018 would reveal
D     that after the IBC was enacted in 2016, it had emerged that further fine
      tuning of the IBC would be required. The Government therefore
      constituted an Insolvency Law Committee (hereinafter referred to as
      the “said Committee”) to review the functioning and implementation of
      the IBC. The SOR would further reveal that the recommendations of
      the said Committee were examined by the Government and it was
E     accordingly decided to amend the IBC. One of the amendments proposed
      was for making a provision for withdrawal of application for initiation of
      CIRP admitted by Adjudicating Authority. It was recommended that such
      an exit should be allowed provided the CoC approves such action by
      90% voting share.
F           13. It will be relevant to refer to Clause (vii) of the key
      recommendations in the Report of the said Committee dated 26th March
      2018, which reads thus:
            “(vii) in order to cater to exceptional circumstances warranting
            withdrawal of an application for CIRP post-admission, it has been
G           recommended to allow such exit provided the CoC approves such
            action by ninety per cent of voting share;”
             14. It will also be relevant to refer to paragraph (29) of the Report
      of the said Committee, which reads thus:

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VALLAL RCK v. M/S SIVA INDUSTRIES AND HOLDINGS                            585
      LIMITED AND OTHERS [B. R. GAVAI, J.]

  “29. WITHDRAWAL OF CIRP PROCEEDINGS                                     A
  PURSUANT TO SETTLEMENT
  29.1 Under rule 8 of the CIRP Rules, the NCLT may permit
  withdrawal of the application on a request by the applicant before
  its admission. However, there is no provision in the Code or the
  CIRP Rules in relation to permissibility of withdrawal post             B
  admission of a CIRP application. It was observed by the
  Committee that there have been instances where on account of
  settlement between the applicant creditor and the corporate debtor,
  judicial permission for withdrawal of CIRP was granted. This
  practice was deliberated in light of the objective of the Code as
  encapsulated in the BLRC Report, that the design of the Code is         C
  based on ensuring that “all key stakeholders will participate to
  collectively assess viability. The law must ensure that all
  creditors who have the capability and the willingness to
  restructure their liabilities must be part of the negotiation
  process. The liabilities of all creditors who are not part of the       D
  negotiation process must also be met in any negotiated
  solution.” Thus, it was agreed that once the CIRP is initiated, it is
  no longer a proceeding only between the applicant creditor and
  the corporate debtor but is envisaged to be a proceeding involving
  all creditors of the debtor. The intent of the Code is to discourage
  individual actions for enforcement and settlement to the exclusion      E
  of the general benefit of all creditors.
  29.2 On a review of the multiple NCLT and NCLAT judgments
  in this regard, the consistent pattern that emerged was that a
  settlement may be reached amongst all creditors and the debtor,
  for the purpose of a withdrawal to be granted, and not only the         F
  applicant creditor and the debtor. On this basis read with the intent
  of the Code, the Committee unanimously agreed that the
  relevant rules may be amended to provide for withdrawal
  post admission if the CoC approves of such action by a
  voting share of ninety per cent. It was specifically discussed          G
  that rule 11 of the National Company Law Tribunal Rules, 2016
  may not be adopted for this aspect of CIRP at this stage (as
  observed by the Hon’ble Supreme Court in the case of Uttara
  Foods and Feeds Private Limited v. Mona Pharmacem) and
  even otherwise, as the issue can be specifically addressed by
  amending rule 8 of the CIRP Rules.”                                     H
586             SUPREME COURT REPORTS                           [2022] 7 S.C.R.


A             15. It could thus be seen from the Report of the said Committee
      that, the said Committee had observed that there have been instances
      where on account of settlement between the applicant creditor and the
      corporate debtor, judicial permission for withdrawal of CIRP was granted.
      The Report would further reveal that it refers to Banking Law Reforms
      Committee Report which emphasizes that the law must ensure that all
B
      creditors who have the capability and the willingness to restructure their
      liabilities must be part of the negotiation process. It also emphasizes that
      the liabilities of all creditors who are not part of the negotiation process
      must also be met in any negotiated solution. The said Committee states
      that once the CIRP is initiated, it is no longer a proceeding only between
C     the applicant creditor and the corporate debtor but is envisaged to be a
      proceeding involving all creditors of the debtor. The intent of the IBC is
      to discourage individual actions for enforcement and settlement to the
      exclusion of the general benefit of all creditors. The Report would further
      reveal that a settlement may be reached amongst all creditors and the
      debtor, for the purpose of a withdrawal to be granted, and not only the
D
      applicant creditor and the debtor. The said Committee therefore
      recommended that the relevant rules may be amended to provide for
      withdrawal post admission if the CoC approves of such action by a
      voting share of ninety per cent.
             16. It could thus be seen that Section 12A of the IBC was brought
E     in the statute book on the basis of the said Committee’s Report. It could
      be noticed that though by the Amendment Act No. 26 of 2018, the voting
      share of 75% of CoC for approval of the Resolution Plan was brought
      down to 66%, Section 12A of the IBC which was brought in the statute
      book by the same amendment, requires the voting share of 90% of CoC
F     for approval of withdrawal of CIRP. It could thus clearly be seen that a
      more stringent provision has been made insofar as withdrawal of CIRP
      is concerned.
            17. It is further to be noted that after Section 12A of the IBC was
      brought in the statute book, Regulation 30A of the 2016 Regulations
G     came to be inserted vide notification dated 3rd July 2018. The same
      came to be substituted vide notification dated 25th July 2019. Regulation
      30A of the 2016 Regulations reads thus:
            “30-A. Withdrawal of application.—(1) An application for
            withdrawal under Section 12-A may be made to the Adjudicating
H           Authority—
VALLAL RCK v. M/S SIVA INDUSTRIES AND HOLDINGS                              587
      LIMITED AND OTHERS [B. R. GAVAI, J.]

     (a) before the constitution of the committee, by the applicant         A
     through the interim resolution professional;
     (b) after the constitution of the committee, by the applicant
     through the interim resolution professional or the resolution
     professional, as the case may be:
  Provided that where the application is made under clause (b) after        B
  the issue of invitation for expression of interest under Regulation
  36-A, the applicant shall state the reasons justifying withdrawal
  after issue of such invitation.
  (2) The application under sub-regulation (1) shall be made in Form
  FA of the Schedule accompanied by a bank guarantee—                       C

     (a) towards estimated expenses incurred on or by the interim
     resolution professional for purposes of Regulation 33, till the
     date of filing of the application under clause (a) of sub-regulation
     (1); or
                                                                            D
     (b) towards estimated expenses incurred for purposes of
     clauses (aa), (ab), (c) and (d) of Regulation 31, till the date of
     filing of the application under clause (b) of sub-regulation (1).
  (3) Where an application for withdrawal is under clause (a) of
  sub-regulation (1), the interim resolution professional shall submit
                                                                            E
  the application to the Adjudicating Authority on behalf of the
  applicant, within three days of its receipt.
  (4) Where an application for withdrawal is under clause (b) of
  sub-regulation (1), the committee shall consider the application,
  within seven days of its receipt.
                                                                            F
  (5) Where the application referred to in sub-regulation (4) is
  approved by the committee with ninety percent voting share, the
  resolution professional shall submit such application along with
  the approval of the committee, to the Adjudicating Authority on
  behalf of the applicant, within three days of such approval.
                                                                            G
  (6) The Adjudicating Authority may, by order, approve the
  application submitted under sub-regulation (3) or (5).
  (7) Where the application is approved under sub-regulation (6),
  the applicant shall deposit an amount, towards the actual expenses
  incurred for the purposes referred to in clause (a) or clause (b) of      H
588               SUPREME COURT REPORTS                            [2022] 7 S.C.R.


A              sub-regulation (2) till the date of approval by the Adjudicating
               Authority, as determined by the interim resolution professional or
               resolution professional, as the case may be, within three days of
               such approval, in the bank account of the corporate debtor, failing
               which the bank guarantee received under sub-regulation (2) shall
               be invoked, without prejudice to any other action permissible
B
               against the applicant under the Code.”
             18. A perusal of the said Regulation would reveal that where an
      application for withdrawal under Section 12A of the IBC is made after
      the constitution of the Committee, the same has to be made through the
      interim resolution professional or the resolution professional, as the case
C     may be. The application has to be made in Form-FA. It further provides
      that when an application is made after the issue of invitation for
      expression of interest under Regulation 36A, the applicant is required to
      state the reasons justifying withdrawal of the same. The RP is required
      to place such an application for consideration before the Committee.
D     Only after such an application is approved by the Committee with 90%
      voting share, the RP shall submit the same along with the approval of the
      Committee to the adjudicating authority. It could thus be seen that a
      detailed procedure is prescribed under Regulation 30A of the 2016
      Regulations as well.
E           19. In the case of Swiss Ribbons Privated Limited and Another
      v. Union of India and Others1, one of the challenges made was with
      regard to validity of Section 12A of the IBC. It was argued that the
      figure of 90% voting share was arbitrary. It was the contention that
      though the withdrawal was just and proper, the CoC could exercise the
      power arbitrarily to reject such a settlement. While rejecting the said
F     contention, this Court observed thus:
               “83. The main thrust against the provision of Section 12-A is the
               fact that ninety per cent of the Committee of Creditors has to
               allow withdrawal. This high threshold has been explained in the
               ILC Report as all financial creditors have to put their heads
G              together to allow such withdrawal as, ordinarily, an omnibus
               settlement involving all creditors ought, ideally, to be entered into.
               This explains why ninety per cent, which is substantially all the
               financial creditors, have to grant their approval to an individual

H     1
          (2019) 4 SCC 17
    VALLAL RCK v. M/S SIVA INDUSTRIES AND HOLDINGS                             589
          LIMITED AND OTHERS [B. R. GAVAI, J.]

      withdrawal or settlement. In any case, the figure of ninety per          A
      cent, in the absence of anything further to show that it is arbitrary,
      must pertain to the domain of legislative policy, which has been
      explained by the Report (supra). Also, it is clear, that under Section
      60 of the Code, the Committee of Creditors do not have the last
      word on the subject. If the Committee of Creditors arbitrarily
                                                                               B
      rejects a just settlement and/or withdrawal claim, NCLT, and
      thereafter, NCLAT can always set aside such decision under
      Section 60 of the Code. For all these reasons, we are of the view
      that Section 12-A also passes constitutional muster.”
       20. It could thus be seen that this Court has found that if the CoC
arbitrarily rejects a just settlement and/or withdrawal claim, the learned     C
NCLT and thereafter the learned NCLAT can always set aside such
decision under the provisions of the IBC.
       21. This Court has consistently held that the commercial wisdom
of the CoC has been given paramount status without any judicial
intervention for ensuring completion of the stated processes within the        D
timelines prescribed by the IBC. It has been held that there is an intrinsic
assumption, that financial creditors are fully informed about the viability
of the corporate debtor and feasibility of the proposed resolution plan.
They act on the basis of thorough examination of the proposed resolution
plan and assessment made by their team of experts. A reference in this         E
respect could be made to the judgments of this Court in the cases of
K. Sashidhar v. Indian Overseas Bank and Others2, Committee of
Creditors of Essar Steel India Limited through Authorised Signatory
v. Satish Kumar Gupta and Others3, Maharashtra Seamless Limited
v. Padmanabhan Venkatesh and Others4, Kalpraj Dharamshi and
Another v. Kotak Investment Advisors Limited and Another5, and                 F
Jaypee Kensington Boulevard Apartments Welfare Association and
Others v. NBCC (India) Limited and Others6.
      22. No doubt that the aforesaid observations have been made by
this Court while considering the powers of the CoC while granting its
approval to the Resolution Plan.                                               G

2
  (2019) 12 SCC 150
3
  (2020) 8 SCC 531
4
  (2020) 11 SCC 467
5
  (2021) 10 SCC 401
6
  (2022) 1 SCC 401                                                             H
590               SUPREME COURT REPORTS                            [2022] 7 S.C.R.


A            23. As already stated hereinabove, the provisions under Section
      12A of the IBC have been made more stringent as compared to Section
      30(4) of the IBC. Whereas under Section 30(4) of the IBC, the voting
      share of CoC for approving the Resolution Plan is 66%, the requirement
      under Section 12A of the IBC for withdrawal of CIRP is 90%.
B            24. When 90% and more of the creditors, in their wisdom after
      due deliberations, find that it will be in the interest of all the stake-holders
      to permit settlement and withdraw CIRP, in our view, the adjudicating
      authority or the appellate authority cannot sit in an appeal over the
      commercial wisdom of CoC. The interference would be warranted only
      when the adjudicating authority or the appellate authority finds the decision
C     of the CoC to be wholly capricious, arbitrary, irrational and de hors the
      provisions of the statute or the Rules.
             25. In the present case, the proceedings of the 13th, 14th and 15th
      meetings of CoC would clearly show that there were wide deliberations
      amongst the members of the CoC while considering the Settlement Plan
D     as submitted by the appellant. Not only that, the proceedings would also
      reveal that after suggestions were made by some of the members of the
      CoC, suitable amendments were carried out in the Settlement Plan by
      the appellant. One of the members of the CoC having voting share of
      23.60%, though initially opposed the Settlement Plant, subsequently
      decided to support the same. Accordingly, the NCLT itself, vide order
E     dated 29th March 2021, directed the RP to reconvene the CoC meeting.
      As per the directions of the NCLT, on 1st April 2021, the 17th meeting of
      the CoC was reconvened, wherein the Settlement Plan was approved
      by 94.23% votes.
             26. It is thus clear that the decision of the CoC was taken after
F     the members of the CoC, had due deliberation to consider the pros and
      cons of the Settlement Plan and took a decision exercising their
      commercial wisdom. We are therefore of the considered view that neither
      the learned NCLT nor the learned NCLAT were justified in not giving
      due weightage to the commercial wisdom of CoC.
G            27. This Court has, time and again, emphasized the need for minimal
      judicial interference by the NCLAT and NCLT in the framework of
      IBC. We may refer to the recent observation of this Court made in the
      case of Arun Kumar Jagatramka v. Jindal Steel and Power Limited
      and Another7:

H     7
          (2021) 7 SCC 474
   VALLAL RCK v. M/S SIVA INDUSTRIES AND HOLDINGS                             591
         LIMITED AND OTHERS [B. R. GAVAI, J.]

       “95. ….However, we do take this opportunity to offer a note of         A
       caution for NCLT and NCLAT, functioning as the adjudicatory
       authority and appellate authority under the IBC respectively, from
       judicially interfering in the framework envisaged under the IBC.
       As we have noted earlier in the judgment, the IBC was introduced
       in order to overhaul the insolvency and bankruptcy regime in India.
                                                                              B
       As such, it is a carefully considered and well thought out piece of
       legislation which sought to shed away the practices of the past.
       The legislature has also been working hard to ensure that the
       efficacy of this legislation remains robust by constantly amending
       it based on its experience. Consequently, the need for judicial
       intervention or innovation from NCLT and NCLAT should be kept          C
       at its bare minimum and should not disturb the foundational
       principles of the IBC…..”
       28. In the result, we pass the following order:
       (i)   The appeals are allowed;
                                                                              D
       (ii) The impugned judgment dated 28th January 2022 delivered
            by the learned NCLAT in Company Appeal (AT) (CH)
            (Insolvency) Nos. 211 and 212 of 2021 and the orders dated
            12th August 2021 passed by the learned NCLT in MA/43/
            CHE/2021 in IBA/453/2019 and in IA/837/IB/2020 in IBA/
            453/2019 are quashed and set aside; and                           E

       (iii) The application bearing No. MA/43/CHE/2021 in IBA/453/
             2019 filed by the Resolution Professional before the learned
             NCLT for withdrawal of CIRP is allowed.
      29. Pending application(s), if any, shall stand disposed of in the      F
above terms. No order as to costs.

Nidhi Jain                                                 Appeals allowed.
(Assisted by : Shashwat Jain, LCRA)

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