SC: NCLT / NCLAT should not sit in a appeal over commercial wisdom of COC

Last updated: 07 June 2022
Quick Summary
The Supreme Court has ruled that the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) should not interfere with the commercial decisions of the Committee of Creditors (CoC). This applies specifically when 90% or more of the creditors agree to a settlement plan and wish to withdraw the Corporate Insolvency Resolution Process (CIRP). The Court emphasised that the CoC's decision, representing the collective will of the creditors, is paramount unless it is found to be capricious, arbitrary, or irrational.

Court :
Supreme Court of India

Brief :
When 90% or more of the creditors decide that it will be in the interest of all the stake­holders to permit Settlement Plan filed by promoter of the Corporate Debtor and withdraw Corporate Insolvency Resolution Process as per Section 12A of the Insolvency and Bankruptcy Code, 2016, the adjudicating authority (NCLT) or the appellate authority (NCLAT) cannot sit in appeal over such commercial wisdom of Committee of Creditors.

Citation :
CIVIL APPEAL NOS. 1811-1812 OF 2022

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