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

[B.R. GAVAI, J. ]

743] was a judgment which turned on the three features mentioned A in the said case. Unlike the U.P. Sales Tax Act, there is no provision in the Customs Act which enables a party to invoke suo motu the appellate power and grant relief to a person who institutes an appeal out of time in an appropriate case. Also, Section 10 of the U.P. Sales Tax Act dealt with the filing of a revision petition after B a first appeal had already been rejected, and not to a case of a first appeal as provided under Section 128 of the Customs Act. Another feature, which is of direct relevance in this case, is that for revision petitions filed under the U.P. Sales Tax Act a sufficiently long period of 18 months had been given beyond which it was the policy of the legislature not to extend limitation any further. This C aspect of Parson Tools [(1975) 4 SCC 22 : 1975 SCC (Tax) 185 : (1975) 3 SCR 743] has been explained in Consolidated Engg. [(2008) 7 SCC 169] in some detail by both the main judgment as well as the concurring judgment. In the latter judgment, it has been pointed out that there is a vital distinction between extending D time and condoning delay. Like Section 34 of the Arbitration Act, Section 128 of the Customs Act is a section which lays down that delay cannot be condoned beyond a certain period. Like Section 34 of the Arbitration Act, Section 128 of the Customs Act does not lay down a long period. In these circumstances, to infer exclusion of Section 14 or the principles contained in Section 14 E would be unduly harsh and would not advance the cause of justice. It must not be forgotten as is pointed out in the concurring judgment in Consolidated Engg. [(2008) 7 SCC 169] that: (SCC p. 193, para 54) ‘54. … Even when there is cause to apply Section 14, the limitation period continues to be three months and not more, but in computing the limitation period of three months for the application under Section 34(1) of the AC Act, the time during which the applicant was prosecuting such application before the wrong court is excluded, provided the proceeding in the wrong court was prosecuted bona fide, with due diligence. Western Builders [State of Goa v. Western Builders, (2006) 6 SCC 239] therefore lays down the correct legal position.’

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

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A statute does not make the ratio of the said decision apply to a completely differently worded tax statute with a much shorter period of limitation— Section 128 of the Customs Act. Also, the principle of Section 14 would apply not merely in condoning delay within the outer period prescribed for condonation but would apply dehors such period for the reason pointed out in Consolidated B Engg. [(2008) 7 SCC 169] above, being the difference between exclusion of a certain period altogether under Section 14 principles and condoning delay. As has been pointed out in the said judgment, when a certain period is excluded by applying the principles contained in Section 14, there is no delay to be attributed to the appellant and the limitation period provided by the statute concerned continues to be the stated period and not more than the stated period. We conclude, therefore, that the principle of Section 14 which is a principle based on advancing the cause of justice would certainly apply to exclude time taken in prosecuting proceedings which are bona fide and with due diligence pursued, which ultimately end without a decision on the merits of the case.”

53Copy pinpoint53. Perusal of the aforesaid would therefore reveal, that the Court has clearly rejected the objection raised by the Revenue in M.P. Steel Corporation (supra) which was raised relying on the judgment of this Court in the case of Parson Tools and Plants (supra). This Court E observed, that the time during which the applicant was prosecuting such application before the wrong court can be excluded, provided the proceeding in the wrong court was prosecuted bona fide, with due diligence. This Court distinguished the judgment in the case of Parson Tools and Plants (supra) on the ground, that the period provided for F filing a revision under the U.P. Sales Tax Act was sufficiently long period of 18 months, beyond which it was the policy of the legislature not to extend limitation any further. Relying on the Consolidated Engineering Enterprises (supra), it has been observed, that there is a vital distinction between extending time and condoning delay. It was further observed, that like Section 34 of the Arbitration Act, the period provided in Section G 128 of the Customs Act did not lay down a long period for preferring an appeal. As such, it would be unduly harsh to exclude the principles contained in Section 14 of the Limitation Act. Relying on Consolidated Engineering Enterprises (supra) it was observed, that there is a difference between exclusion of a certain period altogether under H principles of Section 14 and condoning the delay. It has been observed,

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[B.R. GAVAI, J. ]

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

54Copy pinpoint54. Coming to the facts of the present case, immediately after NCLT pronounced its judgment on 28.11.2019 and even before the certified copy was made available on 18.12.2019, KIAL had filed writ petition before the Division Bench of the Bombay High Court on C 11.12.2019 on the principal ground, that the procedure followed by NCLT was in breach of principles of natural justice. Such a ground could be legitimately pursued before a writ court. In that sense, it was not a proceeding before a wrong court, as such. Perusal of the judgment and order dated 28.1.2020, passed by the Division Bench of the Bombay D High Court, which dismissed the writ petition on the ground of availability of alternate and equally efficacious remedy would reveal, that the said writ petition was hotly contested between the parties and by an order running into 32 pages, the Division Bench of the Bombay High Court dismissed the petition relegating the petitioner therein (i.e. KIAL) to avail of an alternate remedy available in law. E

55Copy pinpoint55. Perusal of the memo of the writ petition would reveal, that the petitioner (i.e. KIAL) has specifically averred thus in the petition: “2. By way of present Petition seeks to challenge order dated 28th November 2019 passed by Hon’ble National Company Law F Tribunal – Bench – II, Mumbai (“NCLT”) on Misc. Application No.1039 of 2019 filed by the present Petitioner. The NCLT, in gross abuse of process of law and in complete disregard of true and actual circumstances has proceeded to pass the impugned order. The order impugned is passed by bench of two members, Hon’ble M.K. Sharawat (Judicial) and Hon’ble Chandra Bhan G Singh (Technical) on 28th November, 2019. However, the matter was heard and reserved for orders on 03rd July, 2019, by Hon’ble Member, Shri M.K. Sharawat (Judicial). At the relevant point of time, when the matter was heard and argued, Hon’ble Chandra Bhan Singh (Technical) was not even appointed as Member of H

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A NCLT and never had occasion to hear and adjudicate upon the Application filed by the Petitioner. It is not just the Application filed by the Petitioner but 3 other Applications which are disposed off by the common order were not heard by the bench who has passed the order. This is not just contrary to law but demonstrate that the entire process of passing the orders was in an absolute mechanical manner. Annexed hereto and marked as EXHIBIT “A” is the copy of the order dated 28th November 2019 passed by NCLT on Miscellaneous Application No. 1039 of 2019.”

56Copy pinpoint56. It could therefore be seen, that the petitioner - KIAL has specifically stated, that though the application of the petitioner was heard by a Member (Judicial), the order was passed by a Division Bench consisting of Member (Judicial) as well as Member (Technical). Perusal of the grounds would further reveal, that a specific ground has been taken, that the procedure adopted by NCLT was in breach of principles of natural justice.

57Copy pinpoint57. It will also be relevant to refer to paragraph 14 of the Memo of the writ petition, which reads thus: “14. The Petitioner submits that the Petitioner has alternate remedy of filing of Appeal before the Hon’ble NCLAT. However, the issue involved in present Writ Petition is not just about the merits of the impugned order, but also in respect of functioning of the Tribunal and the manner in which Tribunal deals with the matters. These Tribunals come under supervisory control of jurisdictional High Court i.e. this Hon’ble Court. The issue involved is not in respect of this matter but also in respect of day to day functioning of the Tribunal and the manner in which such issues are being dealt with by the Tribunal. Therefore, Petitioner is exercising Writ Jurisdiction of this Hon’ble Court.”

58Copy pinpoint58. It could thus clearly be seen, that the petitioner therein i.e. KIAL has specifically stated, that though it had an alternate remedy of filing an appeal before NCLAT, since the petition was not just about the merits of the impugned order, but also in respect of functioning of the Tribunal the petitioner was invoking the writ jurisdiction of the Court.

59Copy pinpoint59. By now, it is a settled principle of law, that non-exercise of jurisdiction by the High Court under Article 226 of the Constitution is not a hard and fast rule, but a rule of self-restraint. As early as in 1969, in H

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[B.R. GAVAI, J. ]

the case of Babu Ram Prakash Chandra Maheshwari (supra), this A Court observed thus: “It is a well-established proposition of law that when an alternative and equally efficacious remedy is open to a litigant he should be required to pursue that remedy and not to invoke the special jurisdiction of the High Court to issue a prerogative writ. It is true that the existence of a statutory remedy does not affect the jurisdiction of the High Court to issue a writ. But, as observed by this Court in Rashid Ahmed v. The Municipal Board, Kairana [(1950) SCR 566], “the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs” and where such a remedy exists it will be a sound exercise of discretion to refuse to interfere in a writ petition unless there are good grounds therefore. But it should be remembered that the rule of exhaustion of statutory remedies before a writ is granted is a rule of self imposed limitation, a rule of policy, and discretion rather than a rule of law and the court may therefore in exceptional cases issue a writ such as a writ of certiorari notwithstanding the fact that the statutory remedies have not been exhausted.”

60Copy pinpoint60. This Court further laid down two well recognized exceptions to the doctrine with regard to the exhaustion of statutory remedies, which reads thus: E “There are at least two well-recognised exceptions to the doctrine with regard to the exhaustion of statutory remedies. In the first place, it is well-settled that where proceedings are taken before a Tribunal under a provision of law, which is ultra vires, it is open to a party aggrieved thereby to move the High Court under Art. F 226 for issuing appropriate writs for quashing them on the ground that they are incompetent, without his being obliged to wait until those proceedings run their full course.—(See the decisions of this Court in Carl Still G.m.b.H. v. The State of Bihar [A.I.R. 1961 S.C. 1615] and The Bengal Immunity Co. Ltd. v. The State Bihar [(1955) 2 S.C.R. 603]. In the second place, the doctrine G has no application in a case where the impugned order has been made in violation of the principles of natural justice (See The State of Uttar Pradesh v. Mohammad Nooh [(1958) S.C.R. 595].”

61Copy pinpoint61. It has been clearly held, that when the proceedings invoked before a statutory authority are de hors the jurisdiction or when they are H

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A in breach of principles of natural justice, the party would be entitled to invoke the jurisdiction of the High Court under Article 226 of the Constitution.

62Copy pinpoint62. Referring to earlier judgments, this Court in the case of Whirlpool Corporation (supra) observed thus: B “15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.”

63Copy pinpoint63. A similar view has been reiterated in the judgment of this E Court in the case of Nivedita Sharma vs. Cellular Operators Association of India (supra).

64Copy pinpoint64. In the present case, perusal of the writ petition would reveal, that it was the specific case of KIAL, that its application, objecting to the application of RP for approval of the resolution plan was heard by a F Member (Judicial), whereas, the final orders were passed by a Bench consisting of Member (Judicial) and Member (Technical). It has specifically averred, that though an alternate remedy was available to it, it was invoking the jurisdiction of the High Court since the question involved was also with regard to the manner in which the jurisdiction was exercised by NCLT. It could thus be seen, that KIAL was bona fide prosecuting the proceedings before the High Court in good faith. Perusal of the dates referred to herein above would also reveal, that KIAL was prosecuting the proceedings before the High Court with due diligence. Even before the availability of the certified copy, it had knocked the doors of the High Court. The matter before the High Court was hotly contested and ultimately, the petition was dismissed by an elaborate

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[B.R. GAVAI, J. ]

judgment relegating KIAL to the alternate remedy available to it in law. A As such, the conditions which enable a party to invoke the provisions of Section 14 of the Limitation Act are very much available to KIAL. If the period during which KIAL was bona fide prosecuting the writ petition before the High Court and that too with due diligence, is excluded applying the principles underlying Section 14 of the Limitation Act, the appeals B filed before NCLAT would be very much within the limitation. We find, that KIAL would be entitled to exclusion of the period during which it was bona fide prosecuting the remedy before the High Court with due diligence.

65Copy pinpoint65. That leaves us to consider the judgments referred to by the appellants on the issue of limitation. C

66Copy pinpoint66. In the case of Popular Construction Co. (supra) this Court was considering the question as to whether the provisions of Section 5 of the Limitation Act are applicable to an application challenging an award under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act”). This Court observed thus: D “14. Here the history and scheme of the 1996 Act support the conclusion that the time-limit prescribed under Section 34 to challenge an award is absolute and unextendible by court under Section 5 of the Limitation Act. The Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main E objectives the need “to minimise the supervisory role of courts in the arbitral process” [ Para 4(v) of the Statement of Objects and Reasons of the Arbitration and Conciliation Act, 1996]. This objective has found expression in Section 5 of the Act which prescribes the extent of judicial intervention in no uncertain terms: ‘5. Extent of judicial intervention.—Notwithstanding F anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.’ “

67Copy pinpoint67. It must be noticed, that the judgment in the case of Popular Construction Co. (supra) was considered by this Court by a Bench G consisting of three Judges in the case of Consolidated Engineering Enterprises (supra) wherein, the question with regard to applicability of Section 14 of the Limitation Act to an application under Section 34(3) of the Arbitration Act fell for consideration. In Consolidated Engineering Enterprises (supra), the appellant before this Court was an enterprise H

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A engaged in civil engineering construction as well as development of infrastructure. It entered into an agreement with the respondent for construction of earthen bund, head sluices and the draft channel of the Y.G. Gudda tank. A dispute arose between the parties and therefore, the appellant invoked arbitration Clause 51 of the agreement. The dispute was referred to the sole arbitrator who passed his award in favour of the appellant. Feeling aggrieved by the said award, the respondents preferred an application to set aside the said award as provided by Section 34 of the Arbitration Act in the Court of the Civil Judge (Senior Division), Ramanagaram, Bangalore Rural District, Bangalore. However, it was realised by the respondents, that an application for setting aside the award should have been filed before the Principal District Judge, Bangalore District (Rural). As such, an application was preferred by the respondents in the Court of the Civil Judge (Senior Division), Ramanagaram with a request to transfer the application made for setting aside the award to the Court of the Principal District Judge (Rural), Bangalore. D

68Copy pinpoint68. The Civil Judge (Senior Division), Ramanagaram passed an order directing return of the suit records for presentation before the proper court. The respondents therefore collected the papers from the Court of the Civil Judge (Senior Division), Ramanagaram and presented the same in the Court of the Principal District Judge, Bangalore (Rural). E The District Court framed a preliminary issue, as to whether the suit was barred by the limitation under Section 34(3) of the Arbitration Act. The District Judge held, the application for setting aside the award to be time-barred. The respondents invoked the appellate jurisdiction of the High Court of Karnataka at Bangalore. The Division Bench of the F Karnataka High Court held, that the District Judge, Bangalore had committed an error in holding, that Section 14 of the Limitation Act was not applicable to an application submitted under Section 34 of the Act. It was therefore held, that the time taken during which the respondents had been prosecuting in the Court of the Civil Judge (Senior Division), Ramanagaram was excludable. G

69Copy pinpoint69. Feeling aggrieved, the appellant had approached this Court. Panchal, J. speaking for himself and Balakrishna, C.J. (as their Lordships then were) observed thus: “27. The contention that in view of the decision of the Division Bench of this Court in Union of India v. Popular Construction H

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[B.R. GAVAI, J. ]

Co. [(2001) 8 SCC 470] the Court should hold that the provisions of Section 14 of the Limitation Act would not apply to an application filed under Section 34 of the Act, is devoid of substance. In the said decision what is held is that Section 5 of the Limitation Act is not applicable to an application challenging an award under Section 34 of the Act. Section 29(2) of the Limitation Act inter alia provides that where any special or local law prescribes, for any application, a period of limitation different from the period prescribed by the Schedule, the provisions contained in Sections 4 to 24 shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law. On introspection, the Division Bench of this Court held that the provisions of Section 5 of the C Limitation Act are not applicable to an application challenging an award. This decision cannot be construed to mean as ruling that the provisions of Section 14 of the Limitation Act are also not applicable to an application challenging an award under Section 34 of the Act. As noticed earlier, in the Act of 1996, there is no express provision excluding application of the provisions of Section 14 of the Limitation Act to an application filed under Section 34 of the Act for challenging an award.

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

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70Copy pinpoint70. This Court clearly held, that the decision in the case of the Popular Construction Co. (supra) cannot be construed to mean as a ruling, that provisions of Section 14 of the Limitation Act are also not applicable to an application challenging an award under Section 34 of the Act. It has been held, that in the Arbitration Act, there is no express provision excluding application of the provisions of Section 14 of the B Limitation Act to an application filed under Section 34 of the Arbitration Act for challenging the award. It has further been found, that there is fundamental distinction between the discretion to be exercised under Section 5 of the Limitation Act and exclusion of the time provided in Section 14 of the said Act. It was held, that the power to excuse delay C and grant an extension of time under Section 5 is discretionary, whereas under Section 14, exclusion of time is mandatory, if the requisite conditions are satisfied. It held, that the effect of Section 14 is that in order to ascertain what is the date of expiration of the “prescribed period”, the days excluded from operating by way of limitation, have to be added to what is primarily the period of limitation prescribed. D

71Copy pinpoint71. Raveendran, J. (as His Lordship then was) in his concurring judgment observed thus: “54. On the other hand, Section 14 contained in Part III of the Limitation Act does not relate to extension of the period of limitation, but relates to exclusion of certain period while computing the period of limitation. Neither sub-section (3) of Section 34 of the AC Act nor any other provision of the AC Act exclude the applicability of Section 14 of the Limitation Act to applications under Section 34(1) of the AC Act. Nor will the proviso to Section 34(3) exclude the application of Section 14, as Section 14 is not a provision for extension of period of limitation, but for exclusion of certain period while computing the period of limitation. Having regard to Section 29(2) of the Limitation Act, Section 14 of that Act will be applicable to an application under Section 34(1) of the AC Act. Even when there is cause to apply Section 14, the limitation period continues to be three months and not more, but in computing the limitation period of three months for the application under Section 34(1) of the AC Act, the time during which the applicant was prosecuting such application before the wrong court is excluded, provided the proceeding in the wrong court was prosecuted bona fide, with due diligence. Western Builders [(2006) 6 SCC 239] therefore lays down the correct legal position.”

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[B.R. GAVAI, J. ]

72Copy pinpoint72. In paragraph 57, Raveendran, J. also observed, that the decision A in Popular Construction Co. (supra) did not consider the applicability of Section 14 of the Limitation Act to an application under Section 34 of the Arbitration Act.

73Copy pinpoint73. As such, in view of the judgment of three Judges Bench of this Court in the case of Consolidated Engineering Enterprises (supra), B the reliance placed by the appellants on the judgment of this Court in Popular Construction Co. (supra) would not be of any assistance.

74Copy pinpoint74. Reliance is also placed on the judgment of this Court in the case of Singh Enterprises (supra) wherein, the question raised was with regard to applicability of the provisions of Section 5 of the Limitation C Act to an appeal filed under Section 35 of the Central Excise Act, 1944. Again, the said judgment deals with applicability of Section 5 and not of Section 14 of the Limitation Act and therefore would not support the case of the appellants.

75Copy pinpoint75. Similarly, reliance placed by the learned counsel for the D appellants on the judgment of this Court in the case of Commissioner of Customs and Central Excise vs. Hongo India Private Limited and another33, would also not help the appellants inasmuch as, the question, that fell for consideration there was, with regard to the applicability of Section 5 of the Limitation Act to a reference application provided under Section 35-H(1) of the unamended Central Excise Act, E 1944.

76Copy pinpoint76. For the same reasons, the judgment of this Court in the case of Chhattisgarh State Electricity Board (supra) would also not take the case of the appellants any further inasmuch as, again the question, that fell for consideration was, with regard to applicability of Section 5 F of the Limitation Act to an appeal under Section 125 of the Electricity Act, 2003.

77Copy pinpoint77. For the same reasons, we find, that the judgment relied on by the appellants in the case of Bengal Chemists and Druggists Association vs. Kalyan Chowdhury34 would also not be applicable to G the facts of the present case inasmuch as, the said judgment also considered the applicability of Section 5 of the Limitation Act to an appeal to the Appellate Tribunal provided under Section 421(3) and 433 of the Companies Act, 2013. 33 (2009) 5 SCC 791 34 (2018) 3 SCC 41 H

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78Copy pinpoint78. The judgment of this Court in the case of Neeraj Jhanji (supra) would not be applicable to the facts of the present case. In the said case, the petitioner had initially filed a writ petition before the Delhi High Court against the order-in-original passed by the Commissioner of Customs, Kanpur. Delhi High Court converted the writ petition into a statutory appeal under the Customs Act, 1962 by order dated 9-11-2009. B On 9-9-2010 the Revenue raised an objection about the territorial jurisdiction of that Court. On 5-1-2012 the petitioner withdrew the appeal with liberty to approach the jurisdictional High Court and then filed a statutory appeal before the Allahabad High Court after a delay of 697 days. It will be relevant to refer to the following observations in Neeraj C Jhanji (supra): “3. The very filing of writ petition by the petitioner in the Delhi High Court against the order-in-original passed by the Commissioner of Customs, Kanpur indicates that the petitioner took a chance in approaching the High Court at Delhi which had D no territorial jurisdiction in the matter. We are satisfied that filing of the writ petition or for that matter, appeal before the Delhi High Court was not at all bona fide. We are in agreement with the observations made by the Allahabad High Court in the impugned order [Neeraj Jhanji v. CCE & Customs, Custom Appeal Defective 16 of 2012, order dated 6-8-2012 (All)]. The Allahabad E High Court has rightly dismissed the petitioner’s application of condonation of delay and consequently the appeal as time barred.”

79Copy pinpoint79. It is thus clear, that this Court found, that the petitioner therein had adopted tactics of taking chances by approaching High Court of Delhi, which had no territorial jurisdiction. As such, it was found, that F neither the writ petition nor the appeal before the Delhi High Court could be construed to be a bona fide. It was further noticed, that there was an inordinate delay of 697 days. It is thus apparent, that the petitioner therein had not satisfied the necessary conditions for applicability of Section 14.

80Copy pinpoint80. In the present case, as already discussed herein above, the petitioner was bona fide prosecuting his remedy before the High Court and that too with due diligence. As such, the said judgment also would be of no avail to the case of the appellants.

81Copy pinpoint81. The judgment of this Court in the case of Ketan V. Parekh H (supra) is relied upon by both the parties. The question, that arose for

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[B.R. GAVAI, J. ]

consideration in the said case was with regard to applicability of Section A 14 of the Limitation Act to an Appeal from Order of an Appellate Tribunal as provided under Section 35 of the Foreign Exchange Management Act, 1999. This Court relying on the earlier judgment in the case of Consolidated Engineering Enterprises (supra) and State of Goa vs. Western Builders35 held, that Section 14 can be invoked in an appropriate case for exclusion of the time, during which the aggrieved person may have prosecuted with due diligence a remedy before a wrong forum. However, on facts and on the averments made in the pleadings, this Court came to the conclusion, that there was not even a whisper in the applications filed by the appellants, that they had been prosecuting remedy before a wrong forum i.e. the Delhi High Court with due diligence and in good faith. It will be relevant to refer to the following paragraphs of the said judgment. “32. There is another reason why the benefit of Section 14 of the Limitation Act cannot be extended to the appellants. All of them are well conversant with various statutory provisions including D FEMA. One of them was declared a notified person under Section 3(2) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 and several civil and criminal cases are pending against him. The very fact that they had engaged a group of eminent advocates to present their cause before the Delhi and the Bombay High Courts shows that they have the assistance of legal experts and this seems to be the reason why they invoked the jurisdiction of the Delhi High Court and not of the Bombay High Court despite the fact that they are residents of Bombay and have been contesting other matters including the proceedings pending before the Special Court at Bombay. It also appears that the appellants were sure that keeping in view their past conduct, the Bombay High Court may not interfere with the order of the Appellate Tribunal. Therefore, they took a chance before the Delhi High Court and succeeded in persuading the learned Single Judge of the Court to entertain their prayer for stay of further proceedings before the Appellate Tribunal. The G promptness with which the learned Senior Counsel appearing for the appellant, Kartik K. Parekh made a statement before the Delhi High Court on 7-11-2007 that the writ petition may be converted into an appeal and considered on merits is a clear indication of the 35 (2006) 6 SCC 239 H

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

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

82Copy pinpoint82. It is thus clear, that the appellants therein were indulging into a practice of taking chances. They had approached Delhi High Court, which totally lacked territorial jurisdiction and had not approached Bombay High Court though they were residents of Bombay and had been contesting other matters including the proceedings pending before the F Special Court at Bombay. It has been observed, that keeping in view their past conduct, Bombay High Court might not have interfered with the order of the Appellate Tribunal. Therefore, they took a chance before Delhi High Court and succeeded in persuading the learned Single Judge of that Court to entertain their prayer for stay of further proceedings G before the Appellate Tribunal. This Court further observed, that the promptness with which the statement was made on behalf of the appellants, that the writ petition may be converted into an appeal was a clear indication of the appellant’s unwillingness to avail remedy before the High Court of Bombay which had the exclusive jurisdiction to entertain an appeal under Section 35 of the Act. H

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83Copy pinpoint83. In the present case, the facts are totally contrary. KIAL had approached the High Court of Bombay making a specific grievance, that NCLT had adopted a procedure which was in breach of the principles of natural justice. It is specifically mentioned in the writ petition, that though an alternate remedy was available to it, it was approaching the High Court since the issue with regard to functioning of NCLT also fell for consideration. The proceedings before the High Court were hotly contested and by an elaborate judgment, the High Court dismissed the writ petition relegating the petitioner therein i.e. KIAL to an alternate remedy available in law. It is thus apparently clear, that KIAL was bona fide prosecuting a remedy before the High Court in good faith and with due diligence. In a given case, the High Court could have exercised jurisdiction under Article 226 of the Constitution inasmuch as, the grievance was regarding procedure followed by NCLT to be in breach of principles of natural justice. That would come within the limited area earmarked by this Court for exercise of extraordinary jurisdiction under Article 226 despite availability of an alternate remedy. D

84Copy pinpoint84. This Court recently in the judgment of Embassy Property Developments Pvt. Ltd. vs. State of Karnataka and Others36 had an occasion to consider a similar issue. We find it apposite to refer to the question framed by this Court, which reads thus: “i) Whether the High Court ought to interfere, under Article 226/ E 227 of the Constitution, with an order passed by the National Company Law Tribunal in a proceeding under the Insolvency and Bankruptcy Code, 2016, ignoring the availability of a statutory remedy of appeal to the National Company Law Appellate Tribunal and if so, under what circumstances.” F

85Copy pinpoint85. It will also be apposite to reproduce the answer given by this Court. “47. Therefore, in fine, our answer to the first question would be that NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute G Supplemental Lease Deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice.” 36 2019 SCC Online 1542 H

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A We therefore have no hesitation to hold, that KIAL was entitled to extension of the period during which it was bona fide prosecuting a remedy before the High Court with due diligence. (ii) WHETHER THERE WAS WAIVER AND ACQUIESCENCE BY KIAL SO AS TO ESTOP IT FROM B CHALLENGING THE PARTICIPATION OF KALPRAJ?

86Copy pinpoint86. It is strenuously urged on behalf of the appellants, that under clause 10.4 of the Process Memorandum, if any Resolution Plan is received by RP from any eligible applicant(s) at any stage of the Resolution Plan Process, RP is free to examine any resolution plan with the approval of CoC and the applicant will not have any right to object to the submission or consideration of such plan. It is further submitted, that even under clause 11.2 of the Process Memorandum, RP or CoC, at their sole discretion, may request for additional information/documents and/or seek clarification from the resolution applicant after the due date for submission of the plan. It is further submitted, that delay in submission of additional information and/or documents sought by RP, CoC or the Process Manager would entitle RP, CoC or the Process Manager to reject the resolution plan.

87Copy pinpoint87. It was further submitted by the appellants, that KIAL, in a letter submitted along with the resolution plan to RP, had expressly waived any and all claims with respect to the Resolution Plan Process. Not only that, but KIAL had submitted its revised plans twice after Kalpraj was permitted to participate in the proceedings. It is therefore submitted, that since KIAL had expressly waived all its claims and had also submitted its revised plans, after Kalpraj entered into the fray, it was not entitled to raise any grievance. It is submitted, that the principles of waiver and acquiescence are squarely applicable in the present case. It was also submitted on behalf of the appellants, that the revised plans, submitted by KIAL, were submitted without mentioning, that it was without prejudice and as such, it was not entitled to make any grievance on that count.

88Copy pinpoint88. It is submitted, that the approach adopted by KIAL amounted to taking chances, as after having failed in the process, challenging the same would not be permissible in law. It is also contended that during the 12th meeting of CoC, Kotak Bank, of which KIAL is a 100% subsidiary, also agreed with CoC counsel’s view, that Kalpraj’s resolution plan can be considered. H

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89Copy pinpoint89. It could thus be seen, that the main thrust of the arguments A advanced on behalf of the appellants with regard to waiver and acquiescence is on two grounds, viz., (i) clause 10.4 of the Process Memorandum read with paragraph 5(b) of the covering letter for submission of resolution plan by KIAL, and (ii) participation of KIAL in the process after Kalpraj was permitted to participate in the process. B

90Copy pinpoint90. We may refer to clause 10.4 of the Process Memorandum and paragraph 5(b) of the covering letter for submission of resolution plan by KIAL, which read thus: Clause 10.4 of the Process Memorandum “if any Resolution Plan is received by the Resolution professional C from any eligible Applicant(s) at any stage of the Resolution Plan Process, the Resolution professional shall be free to examine such Resolution Plan with the approval of the Committee of Creditors and the Applicant(s) will not have any right to object to submission or consideration of such plan.” D Paragraph 5(b) of the covering letter for submission of resolution plan by KIAL. “5. We further represent and confirm as follows: (a) ….. E (b) Acceptance We hereby unconditionally and irrevocably agree and accept the terms of the Process Memorandum and that the decision made by the CoC, Resolution professional and/or the Adjudicating Authority in respect of any matter with respect to, or arising out of, the Process Memorandum and the Resolution Plan Process shall be binding on us. We hereby expressly waive any and all claims in respect of the Resolution Plan Process.”

91Copy pinpoint91. On the basis of clause 10.4, it is sought to be urged, that even if the Resolution Plan is received by RP from any eligible applicant(s) at any stage of the Resolution Plan Process, RP was free to examine such Resolution Plan with the approval of CoC and the applicant(s) will not have any right to object to submission or consideration of such plan.

92Copy pinpoint92. On the basis of paragraph 5(b) of the covering letter for submission of resolution plan by KIAL, it is sought to be urged, that H

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A KIAL had unconditionally and irrevocably agreed and accepted the terms of the Process Memorandum and the decision made by CoC, RP and/or the Adjudicating Authority in respect of any matter with respect to, or arising out of, the Process Memorandum and the Resolution Plan Process. It is further sought to be urged, that KIAL had agreed to surrender all and any of its claim in respect of the Resolution Plan Process. B It is sought to be urged, that this stipulation amounts to a concluded contract between the parties and having waived its all claims, KIAL is not permitted in law to challenge the participation of Kalpraj in respect of Resolution Plan Process.

93Copy pinpoint93. In this respect, it will be relevant to refer to paragraphs 89 and C 90 of the judgment of this Court in the case of Central Inland Water Transport Corporation Limited and another vs. Brojo Nath Ganguly and another37. “89. Should then our courts not advance with the times? Should they still continue to cling to outmoded concepts and outworn D ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of 19th century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should E the courts sit back and watch supinely while the strong trample underfoot the rights of the weak? We have a Constitution for our country. Our judges are bound by their oath to “uphold the Constitution and the laws”. The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article 14. This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations

H 37 (1986) 3 SCC 156

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which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In today’s complex world of giant corporations with their vast infrastructural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances.” [emphasis supplied]

94Copy pinpoint94. This Court has held, that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It has been held, that this principle will apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be.

95Copy pinpoint95. Applying the said principles to the facts of the present case, KIAL had no choice than to accept the terms of the contract. Paragraph H

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A 5(b) of the letter is a part of a covering letter format, which is provided in the Process Memorandum itself. The covering letter is in Format I and the party desiring to participate in the Resolution Plan Process has no other option, than to sign the dotted lines. Hence, the parties cannot be said to have equal bargaining power and the applicants have no other choice than to sign on the documents prescribed in the format. Paragraph B 5(b) of the covering letter format, requires a party to undertake, that it will accept all the decisions made by CoC, RP and/or the Adjudicating Authority and that the decisions taken will be binding on it. It also requires the applicant, to sign on the document thereby, providing expressly waiving any and all claims with respect to the Resolution Plan Process. C In turn, it provides for a party to agree to a stipulation, that even if RP or CoC acts in any manner, which is not permissible in law, still the resolution applicant would be bound by such a decision and shall waive any or all its claims in respect of the Resolution Plan Process.

96Copy pinpoint96. The said principle of law has been subsequently followed in various judgments of this Court including the one in the case of Assistant General Manager and others vs. Radhey Shyam Pandey38.

97Copy pinpoint97. No doubt, that this Court in Central Inland Water Transport Corporation Limited (supra) has observed, that the principle laid down therein may not apply where both parties are businessmen and the contract is a commercial transaction. In the first place, RP and the resolution applicant cannot be said to be the contracting parties having equal bargaining power. Secondly, since RP functions under the I&B Code for discharging the duties bestowed upon him and assisting the process for finalization of resolution plan for survival of the Corporate Debtor, it cannot be said that it is a purely commercial transaction between F RP and the resolution applicant.

98Copy pinpoint98. It may be argued, that the judgment in the case of Central Inland Water Transport Corporation Limited (supra) arose from a case involving a statutory corporation, which was an instrumentality of State within the meaning of Article 12 of the Constitution. However, G recently, this Court in the case of Pioneer Urban Land and Infrastructure Limited vs. Govindan Raghavan39 while construing the term of contract between a builder and a flat purchaser observed thus: 38 (2020) 6 SCC 438 H 39 (2019) 5 SCC 725

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

99Copy pinpoint99. We see no reason, as to why the said principle should not be applicable when RP and CoC are acting under the statutory provisions under the Code. C

100Copy pinpoint100. We are therefore of the view, in light of the law laid down in Central Inland Water Transport Corporation Limited (supra), KIAL cannot be held to be bound by such unconscionable clause in the letter, which is in a prescribed format. D

101Copy pinpoint101. The second ground raised, with regard to waiver and acquiescence, is based upon the participation of KIAL in the Resolution Plan Process after Kalpraj was permitted to participate in the proceedings.

102Copy pinpoint102. The word ‘waiver’ has been described in Halsbury’s Laws of England, 4th Edn., Para 1471, which reads thus: E “1471. Waiver.—Waiver is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted, and is either express or implied from conduct. … A person who is entitled to rely on a stipulation, existing for his benefit alone, in a F contract or of a statutory provision, may waive it, and allow the contract or transaction to proceed as though the stipulation or provision did not exist. Waiver of this kind depends upon consent, and the fact that the other party has acted on it is sufficient consideration. … G It seems that, in general, where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, so as to alter his position, the party who gave the promise or assurance cannot afterwards be allowed to H

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A revert to the previous legal relationship as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he has himself so introduced, even though it is not supported in point of law by any consideration.’ B (See Halsbury’s Laws of England, 4th Edn., Para 1471.)”

103Copy pinpoint103. In Halsbury’s Laws of England, Vol. 16(2), 4th Edn., Para 907, it is stated: “The expression ‘waiver’ may, in law, bear different meanings. The primary meaning has been said to be the abandonment of a C right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted, and is either express or implied from conduct. It may arise from a party making an election, for example whether or not to exercise a contractual right… Waiver may also be by virtue of equitable or promissory estoppel; unlike waiver arising from an election, no question arises of any particular knowledge on the part of the person making the representation, and the estoppel may be suspensory only… Where the waiver is not express, it may be implied from conduct which is inconsistent with the continuance of the right, without the need for writing or for consideration moving from, or detriment to, the party who benefits by the waiver, but mere acts of indulgence will not amount to waiver; nor may a party benefit from the waiver unless he has altered his position in reliance on it.”

104Copy pinpoint104. For considering, as to whether a party has waived its rights or not, it will be relevant to consider the conduct of a party. For establishing waiver, it will have to be established, that a party expressly or by its conduct acted in a manner, which is inconsistent with the continuance of its rights. However, the mere acts of indulgence will not amount to waiver. A party claiming waiver would also not be entitled to claim the benefit of waiver, unless it has altered its position in reliance on the same.

105Copy pinpoint105. As early as in 1957 in the case of Manak Lal vs. Dr. Prem Chand40 an advocate was held guilty for professional misconduct by a Tribunal of Three Members. The matter was argued before the High Court. An objection was taken before the High Court, that one of the H 40 1957 SCR 575 = AIR 1957 SC 425

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106Copy pinpoint106. It has been held, that a waiver cannot always and in every case be inferred merely from the failure of the party to take the objection. Waiver can be inferred, only if and after it is shown that the party knew about the relevant facts and was aware of his right to take the objection in question. The waiver or acquiescence, like election, presupposes, that the person to be bound is fully cognizant of his rights, and that being so, he neglects to enforce them, or chooses one benefit instead of another.

107Copy pinpoint107. As such, for applying the principle of waiver, it will have to be established, that though a party was aware about the relevant facts and the right to take an objection, he has neglected to take such an objection.

108Copy pinpoint108. In the case of Krishna Bahadur vs. Purna Theatre and others41, the appellant was appointed in the post of messenger-cum- F bearer in the establishment of the respondent. A disciplinary proceeding was initiated against him wherein, he was found guilty and he was dismissed from service. The Industrial Tribunal set aside the dismissal with full back wages and compensation. The appellant was permitted to join his duties but back wages were not paid. He was again retrenched G from services and a sum of Rs.9,030/- was paid as retrenchment compensation, which the appellant was said to have received under protest. A trade union took the cause of the appellant, inter alia, on the ground of contravention of Section 25-G of the Industrial Disputes Act, 41 (2004) 8 SCC 229 H

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A 1947, so also on the ground of insufficiency of the amount of compensation paid to the appellant in terms of Section 25-F(b) thereof. An industrial dispute was raised before the Assistant Labour Commissioner, which failed, whereupon the Industrial Tribunal was approached by the appellant. In the meantime, the appellant had also initiated a proceeding under Section 33-C(2) of the Industrial Disputes Act, 1947 which ended in an amicable settlement, according to which, the appellant agreed to receive a sum of Rs.39,000/- as full and final settlement.

109Copy pinpoint109. However, in the proceedings initiated by the trade union, the retrenchment was held to be illegal and he was directed to be deemed to be in continuous service with all benefits. A writ petition was filed by the respondent before the High Court. The said writ petition was dismissed by the single judge of the High Court, upholding the findings of the Tribunal. In an appeal before the Division bench, a plea was taken for the first time, that the workman had accepted the amount paid by the employer and as such, it amounted to waiver by the workman. The Division Bench D allowed the appeal and set aside the award passed by the Tribunal and the judgment and order passed by the single judge. Setting aside the judgment of the Division Bench, this Court observed thus: “9. The principle of waiver although is akin to the principle of estoppel; the difference between the two, however, is that whereas estoppel is not a cause of action; it is a rule of evidence; waiver is contractual and may constitute a cause of action; it is an agreement between the parties and a party fully knowing of its rights has agreed not to assert a right for a consideration.

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

110Copy pinpoint110. This Court has thus held, that the principle of waiver although is akin to the principle of estoppel; estoppel is not a cause of action and is a rule of evidence, whereas waiver is contractual and may constitute a cause of action. It is an agreement between the parties and a party fully knowing of its rights has agreed not to assert a right for a H

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

111Copy pinpoint111. This Court in the case of State of Punjab vs. Davinder Pal Singh Bhullar and others42 had an occasion to consider an issue, as to when an issue of bias was not raised by the party at the earliest possible, if it is aware of it and knows its right to raise the said issue, would it amount to waiver or not. This Court while considering the earlier judgments observed thus: “II. Doctrine of waiver C

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

38. Thus, in a given case if a party knows the material facts and is conscious of his legal rights in that matter, but fails to take the plea of bias at the earlier stage of the proceedings, it creates an effective bar of waiver against him. In such facts and circumstances, it would be clear that the party wanted to take a chance to secure a favourable order from the official/court and when he found that he was confronted with an unfavourable order, he adopted the device of raising the issue of bias. The issue of bias must be raised by the party at the earliest. (See Pannalal Binjraj v. Union of India [AIR 1957 SC 397] and P.D. Dinakaran (1) v. Judges Enquiry Committee [(2011) 8 SCC 380].) 42 (2011) 14 SCC 770 H

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

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

41. Waiver is an intentional relinquishment of a right. It D involves conscious abandonment of an existing legal right, advantage, benefit, claim or privilege, which except for such a waiver, a party could have enjoyed. In fact, it is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. E (Vide Dawsons Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha [(1934-35) 62 IA 100 : AIR 1935 PC 79], Basheshar Nath v. CIT [AIR 1959 SC 149], Mademsetty Satyanarayana v. G. Yelloji Rao [AIR 1965 SC 1405], Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh [AIR 1968 SC F 933], Jaswantsingh Mathurasingh v. Ahmedabad Municipal Corpn. [1992 Supp (1) SCC 5], Sikkim Subba Associates v. State of Sikkim [(2001) 5 SCC 629 : AIR 2001 SC 2062] and Krishna Bahadur v. Purna Theatre [(2004) 8 SCC 229 : 2004 SCC (L&S) 1086 : AIR 2004 SC 4282].)

G 42. This Court in Municipal Corpn. of Greater Bombay v. Dr Hakimwadi Tenants’ Assn. [1988 Supp SCC 55 : AIR 1988 SC 233] considered the issue of waiver/acquiescence by the non-parties to the proceedings and held: (SCC p. 65, paras 14-15) H

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“14. In order to constitute waiver, there must be A voluntary and intentional relinquishment of a right. The essence of a waiver is an estoppel and where there is no estoppel, there is no waiver. Estoppel and waiver are questions of conduct and must necessarily be determined on the facts of each case. … B

15. There is no question of estoppel, waiver or abandonment. There is no specific plea of waiver, acquiescence or estoppel, much less a plea of abandonment of right. That apart, the question of waiver really does not arise in the case. Admittedly, the tenants were not parties to the earlier proceedings. There is, therefore, no question of waiver of rights by Respondents 4-7 nor would this disentitle the tenants from maintaining the writ petition.”

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

112Copy pinpoint112. Thus, for constituting acquiescence or waiver it must be established, that though a party knows the material facts and is conscious of his legal rights in a given matter, but fails to assert its rights at the earliest possible opportunity, it creates an effective bar of waiver against him. Whereas, acquiescence would be a conduct where a party is sitting by, when another is invading his rights. The acquiescence must be such as to lead to the inference of a licence sufficient to create a new right in the defendant. Waiver is an intentional relinquishment of a right. It involves conscious abandonment of an existing legal right, advantage, benefit, claim or privilege. It is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. H

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113Copy pinpoint113. In the case of Galada power and Telecommunication limited vs. United India Insurance Company Limited and another 43, this Court had an occasion to consider the question, as to whether the insurer has waived its right on the basis of claim hit by clause relating to duration.

114Copy pinpoint114. On the facts, holding, that the case was a case of waiver, this Court observed thus: “18. In the instant case, the insurer was in custody of the policy. It had prescribed the clause relating to duration. It was very much aware about the stipulation made in Clauses 5(3) to 5(5), but despite the stipulations therein, it appointed a surveyor. Additionally, as has been stated earlier, in the letter of repudiation, it only stated that the claim lodged by the insured was not falling under the purview of transit loss. Thus, by positive action, the insurer has waived its right to advance the plea that the claim was not entertainable because conditions enumerated in duration clause were not satisfied. In our considered opinion, the National Commission could not have placed reliance on the said terms to come to the conclusion that there was no policy cover in existence and that the risks stood not covered after delivery of goods to the consignee.”

115Copy pinpoint115. In the background of this legal position, we will have to examine, as to whether the conduct of KIAL can be said to be of such a nature, which would amount to acquiescence or waiver.

116Copy pinpoint116. The dates are not in dispute. As per the invitation of EOI published on 9.7.2018, the last date for submission of EOI was 8.8.2018. F The first Form ‘G’ was also issued on 9.7.2018, according to which, the last date for submission of resolution plan was 21.9.2018. KIAL had submitted its EOI on 7.8.2018. First Process Memorandum was issued on 17.8.2018. However, since there was no response, four more Form ‘G’ were issued on various dates. The last of such Form ‘G’ was issued G on 11.12.2018, according to which the last date for submission of resolution plan was 8.1.2019. KIAL submitted its resolution plan on 8.1.2019. Subsequently, Kalpraj submitted its resolution plan on 27.1.2019.

117Copy pinpoint117. On KIAL coming to know about the same, on 29.1.2019 itself, it had sent an email protesting to RP against acceptance of belated H 43 (2016) 14 SCC 161

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resolution plan of Kalpraj. The said email dated 29.1.2019 sent by KIAL A to RP reads thus: “As you are aware, that the last date for submission of the bids for Ricoh India Limited, under the CIRP was 8th January, 2019. Consequently, we duly submitted our bid (along with the requisite Bid Bond Guarantee) within the said time. However, we are given to understand that you have been receiving and accepting the bids even after the said date, when no extension of time (filing of Form ‘G’) was notified. This severely jeopardises our position and is against the spirit of the code, especially when our Resolution Plan was opened immediately (along with the commercials) and subsequently, even discussed at length in the meeting of 15th January, 2019, which was attended by various stakeholders. In this light, we would request you to share with us the requisite notification (Form G) towards extension of time for bid submission at the earliest. However, in the event, such a notification has not been made, it would only be logical that all plans submitted after 8th January, 2019 should be held invalid, more so when our plan has now been opened. We look forward to your confirmation on the above.” E

118Copy pinpoint118. It could therefore be seen, that immediately within a day of the submission of the plan by Kalpraj, KIAL objected to the acceptance of its plan after 8.1.2019, when no extension of time for the same was notified. It is specifically stated, that the said severely jeopardized its position and was against the spirit of the Code, especially when KIAL’s F resolution plan was opened immediately and discussed at length with various stakeholders. KIAL has therefore requested for sharing the requisite information providing for extension of time for bid submission. It is further stated, that in the event no such notification was issued, all plans submitted after 8.1.2019 should be held to be invalid. G

119Copy pinpoint119. After the said email was addressed by KIAL to RP, it received an email from RP on 30.1.2019. It is stated in the said email dated 30.1.2019, that subsequent to the resolution plan submitted on 8.1.2019, CoC’s representative and RP had a detailed discussion with its team on the changes required to be made in the resolution plan. Vide the said email dated 30.1.2019, KIAL was requested to submit the amended H

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A resolution plan by 3 p.m. on 1.2.2019. On 1.2.2019, left with no choice, KIAL submitted its revised resolution plan.

120Copy pinpoint120. On 10.2.2019, KIAL sent another email to RP, which reads thus: “It has been quite sometime, since we sought from you on your B decision to accept another resolution plan well after the expiry of the deadline for submission of the same. As pointed out earlier, such an action, after opening of our bid and having detailed discussions on the same is not only prejudicial to our interests but also against the spirit of the IBC code. C The code provides equal treatment to all potential resolution applicants within the framework of law and fixes personal responsibilities upon COC members and RPs in the event instances of discrimination or departure from the established law are found.

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

121Copy pinpoint121. In the said email dated 10.2.2019 sent by KIAL, it was stated, that it has been quite sometime, that it had sought a response from RP on his decision to accept another resolution plan well after the expiry of the deadline for submission of the same. It was reiterated, that such an action, after opening of the bids and having detailed discussions on the same was not only prejudicial to its interest but against the spirit of the I&B Code. It was reiterated, that the I&B Code, provides equal treatment to all potential resolution applicants within the framework of law and fixes personal responsibilities upon CoC members and RPs in the event of instances of discrimination or departure from the established law.

122Copy pinpoint122. Perusal of the record would reveal, that RP had replied to KIAL by email dated 11.2.2019. It was stated in the said email, that his act of acceptance of resolution plans, submitted after the due date, was under the overall supervision of CoC and as per the opinion given by G CoC’s legal counsel and RP’s legal counsel. It was also submitted, that this was in the spirit of value maximisation of assets of the Corporate Debtor.

123Copy pinpoint123. It is in dispute, as to whether RP had again directed KIAL and Kalpraj vide email dated 11.2.2019 to submit revised plan. It is asserted H on behalf of the KIAL, that such email was received by it, whereas it is

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denied by RP. In any event, it is not in dispute, that both KIAL and A Kalpraj submitted their revised plans on 12.2.2019.

124Copy pinpoint124. On 13/14.2.2019, the resolution plan of Kalpraj was accepted by CoC. On 18.2.2019, RP filed M.A. No.691 of 2019 before NCLT for approval of the resolution plan of Kalpraj. KIAL filed its M.A. No. 1039 of 2019 on 14.3.2019 before the Adjudicating Authority objecting to the approval of resolution plan of Kalpraj.

125Copy pinpoint125. It could thus be clearly seen, that KIAL had raised its objection immediately after the Kalpraj submitted its resolution plan. Not only that, but, it had also reiterated its objection to the participation of Kalpraj. Insofar as, submission of amended plans is concerned, it had no other option than to submit its revised plan. This is specifically so in view of clause 11.2, which reads thus: “11.2 No change or supplemental information to the Resolution Plan shall be accepted after the Resolution Plan Due Date, unless agreed otherwise by the Resolution Professional (in consultation with the Committee of Creditors). The Resolution Professional or the CoC may, at their sole discretion, request for additional information/document and/or seek clarifications from a Resolution Applicant after the Resolution Plan Due Date. Delay in submission of additional information and/or documents sought by the Resolution Professional, the CoC or the Process Manager shall make the Resolution Plan liable for rejection.”

126Copy pinpoint126. It is thus clear that, had KIAL not responded to the email of RP and submitted its revised plan, it had to run the risk of being out of fray. F

127Copy pinpoint127. Dr. Singhvi, learned Senior Counsel appearing on behalf of Kalpraj relied on the judgment of this Court in the case of ITC Limited vs. Blue Coast Hotels Limited and others (supra), wherein it is held, that even if a debtor has used the word “without prejudice” it has no significance. However, in the said case, the debtor had acknowledged the debt even after action was initiated under the Act and even after G payment of a smaller sum. In this background, it was held, that the words “without prejudice” would have no significance. As such, the said case would not be applicable to the facts of the present case.

128Copy pinpoint128. Reliance placed on the judgment of this Court in the case of Tarapore and Company (supra) would also not be of any assistance to H

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A the case of the appellants. It will be relevant to refer to the following observations of this Court in the said case. “Apart from the technical meaning which the expression “without prejudice” carries depending upon the context in which it is used, in the present case on a proper reading of the correspondence and in the setting in which the term is used, it only means that the respondent reserved to itself the right to contend before the arbitrator that a dispute raised or the claim made by the contractor was not covered by the arbitration clause. No other meaning can be assigned to it. An action taken without prejudice to one’s right cannot necessarily mean that the entire action can be ignored by the party taking the same.”

129Copy pinpoint129. That leaves us with the last submission in this regard made on behalf of the appellants. It is submitted, that Kotak Bank had participated in the 12th meeting of CoC dated 13.1.2019 and agreed to consider resolution plan of Kalpraj in view of clause 10.4 of the Process D Memorandum. It is submitted, that KIAL was a 100% subsidiary of Kotak Bank and as such, its agreement to consider the resolution plan of Kalpraj would amount to waiver and acquiescence by KIAL.

130Copy pinpoint130. This question has been squarely answered by this Court in the case of Vodafone International Holdings BV vs. Union of India E and another44. It will be apposite to refer to the following observation of this Court: “257. The legal relationship between a holding company and WOS is that they are two distinct legal persons and the holding company does not own the assets of the subsidiary and, in law, the management of the business of the subsidiary also vests in its Board of Directors. In Bacha F. Guzdar v. CIT [AIR 1955 SC 74], this Court held that shareholders’ only right is to get dividend if and when the company declares it, to participate in the liquidation proceeds and to vote at the shareholders’ meeting. Refer also to Carew and Co. Ltd. v. Union of India [(1975) 2 SCC 791] and Carrasco Investments Ltd. v. Directorate of Enforcement [(1994) 79 Comp Cas 631 (Del)].”

131Copy pinpoint131. In view of the aforesaid observation, the objection in this regard deserves to be rejected. 44 H (2012) 6 SCC 613

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132Copy pinpoint132. Taking into consideration the fact, that KIAL had objected to participation of any other applicant submitting plan after the due date as per the last Form ‘G’ and also reiterated its objection, we are of the considered view, that it cannot be held, that having participated by submitting the revised plans, KIAL is estopped from challenging the process on the ground of acquiescence and waiver. Merely because, the revised plans are not submitted with the words “without prejudice”, in our view, would not make any difference. As already discussed hereinabove, KIAL had no other option than to submit its revised plans in view of clause 11.2 of the Process Memorandum. Inasmuch as, had it not responded, it had to run the risk of being out of fray. As already discussed hereinabove, the conduct of the party is relevant for considering, whether it can be held, that a case is made out of waiver or acquiescence.

133Copy pinpoint133. None of the appellants have been in a position to establish, that KIAL had given up/surrendered its rights to take recourse to the legal remedies. In any case, the appellants had also not been in a position to establish, that on account of any such waiver or acquiescence any of the appellants had altered their position to their detriment.

134Copy pinpoint134. As such, it cannot be held, that KIAL had waived or acquiesced its rights to challenge the decision of RP or CoC. E (iii) WHETHER NCLAT WAS RIGHT IN LAW IN INTERFERING WITH THE DECISION OF COC OF ACCEPTING THE RESOLUTION PLAN OF KALPRAJ?

135Copy pinpoint135. For deciding the said issue, it will be apposite to refer to Section 30 and 31 of the I&B Code, which read thus: F “30. Submission of resolution plan.—(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under Section 29-A to the resolution professional prepared on the basis of the information memorandum. G (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan— (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor; H

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A (b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than— (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under Section B 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of Section C 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) D of Section 53 in the event of a liquidation of the corporate debtor. Explanation 1.—For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.—For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor— (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under Section G 61 or Section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating H Authority in respect of a resolution plan;]

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(c) provides for the management of the affairs of the corporate A debtor 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 for the time being in force; B (f) conforms to such other requirements as may be specified by the Board. Explanation.—For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). (4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of Section 53, including the priority and value of the security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve F a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred G to in the first proviso is ineligible under clause (c) of Section 29-A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of Section 29-A: H

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A Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of Section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section.] B Provided also that the eligibility criteria in Section 29-A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. C (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such D resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority.

31. Approval of resolution plan.—(1) If the Adjudicating E Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of Section 30 meets the requirements as referred to in sub-section (2) of Section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government F or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan: Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation. (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan.

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(3) After the order of approval under sub-section (1),— A (a) the moratorium order passed by the Adjudicating Authority under Section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its B database. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the C Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in Section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the D approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.”

136Copy pinpoint136. The aforesaid provisions have been recently considered in three judgments of this Court. The first one, being in the case of K. E Sashidhar (supra), to which one of us (A.M. Khanwilkar, J.) was a party, and two other judgments, delivered by three Judges Bench of this Court, in the cases of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra) and Maharashtra Seamless Limited vs. Padmanabhan Venkatesh and others45.

137Copy pinpoint137. This Court in the case of Committee of Creditors of Essar F Steel India Limited through Authorised Signatory (supra) has set out the 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 extracts from the aforementioned Report: G “2. Executive Summary * * * The key economic question in the bankruptcy process *** 45 (2020) 11 SCC 467 H

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

5. Process for legal entities * * * C Business decisions by a creditor committee All decisions on matters of business will be taken by a committee of the financial creditors. This includes evaluating proposals to keep the entity as a going concern, including decisions about the sale of business or units, retiring or restructuring debt. The D debtor will be a non-voting member on the creditors committee, and will be invited to all meetings. The voting of the creditors committee will be by majority, where the majority requires more than 75 per cent of the vote by weight. *** E No prescriptions on solutions to resolve the insolvency The choice of the solution to keep the entity as a going concern will be voted on by the creditors committee. There are no constraints on the proposals that the resolution professional can present to the creditors committee. Other F than the majority vote of the creditors committee, the resolution professional needs to confirm to the Adjudicator that the final solution complies with three additional requirements. The first is that the solution must explicitly require the repayment of any interim finance and costs of the insolvency resolution process will be paid in priority to other payments. Secondly, the plan G must explicitly include payment to all creditors not on the creditors committee, within a reasonable period after the solution is implemented. Lastly, the plan should comply with existing laws governing the actions of the entity while implementing the solutions. H ***

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

4. Creation of the creditors committee The creditors committee will have the power to decide the final solution by majority vote in the negotiations. The majority vote requires more than or equal to 75 per cent of the creditors committee by weight of the total financial liabilities. The majority vote will also involve a cram down option on any dissenting creditors once the majority vote is obtained. … The Committee deliberated on who should be on the creditors committee, given the power of the creditors committee to ultimately keep the entity as a going concern or liquidate it. The Committee reasoned that members of the creditors committee have to be creditors both with the capability to assess viability, as well as to be willing to modify terms of existing liabilities in negotiations. Typically, operational creditors are neither able to decide on matters regarding the insolvency of the entity, nor willing to take the risk of postponing payments for better future prospects for the entity. The Committee concluded that, for the process to be rapid and efficient, the Code will provide that the creditors committee should be restricted to only the financial creditors. 5.3.3. Obtaining the resolution to insolvency in the IRP The Committee is of the opinion that there should be freedom permitted to the overall market to propose solutions on keeping the entity as a going concern. Since the manner and the type of possible solutions are specific to the time and environment in which the insolvency becomes visible, it is expected to evolve over time, and with the development of the market. The Code will be open to all forms of solutions for keeping the entity going without prejudice, within the rest of the constraints of the IRP. Therefore, how the insolvency is to be resolved will not be prescribed in the Code. There will be no restriction in the Code on possible ways in which the business model of the entity, or its financial model, or both, can be changed so as to keep the entity as a going concern. The H

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A Code will not state that the entity is to be revived, or the debt is to be restructured, or the entity is to be liquidated. This decision will come from the deliberations of the creditors committee in response to the solutions proposed by the market.”

138Copy pinpoint138. It is thus clear, that the Committee was of the view, that for deciding key economic question in the bankruptcy process, the only one correct forum for evaluating such possibilities, and making a decision was, a creditors committee, wherein all financial creditors have votes in proportion to the magnitude of debt that they hold. The BLRC has observed, that laws in India in the past have brought arms of the C Government (legislature, executive or judiciary) into the question of bankruptcy process. This has been strictly avoided by the Committee and it has been provided, that the decision with regard to appropriate disposition of a defaulting firm, which is a business decision, should only be made by the creditors. It has been observed, that the evaluation of D proposals to keep the entity as a going concern, including decisions about the sale of business or units, restructuring of debt, etc., are required to be taken by the Committee of the Financial Creditors. It has been provided, that the choice of the solution to keep the entity as a going concern will be voted upon by CoC and there are no constraints on the proposals that the resolution professional can present to CoC. The E requirements, that the resolution professional needs to confirm to the Adjudicator, are: (i) that the solution must explicitly require the repayment of any interim finance and costs of the insolvency resolution process will be paid in priority to other payments; F (ii) that the plan must explicitly include payment to all creditors not on the creditors committee, within a reasonable period after the solution is implemented; and lastly (iii) the plan should comply with existing laws governing the G actions of the entity while implementing the solutions.

139Copy pinpoint139. The Committee also expressed the opinion, that there should be freedom permitted to the overall market, to propose solutions on keeping the entity as a going concern. The Committee opined, that the details as to how the insolvency is to be resolved or as to how the entity is to be revived, or the debt is to be restructured will not be provided in H

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

140Copy pinpoint140. This Court in the case of K. Sashidhar (supra) observed thus: “32. Having heard the learned counsel for the parties, the moot question is about the sequel of the approval of the resolution plan by CoC of the respective corporate debtor, namely, KS&PIPL and IIL, by a vote of less than seventy-five per cent of voting share of the financial creditors; and about the correctness of the view taken by Nclat that the percentage of voting share of the financial creditors specified in Section 30(4) of the I&B Code is mandatory. Further, is it open to the adjudicating authority/ appellate authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the I&B Code as the case may be which, according to the resolution applicant and the stakeholders supporting the resolution plan, may be relevant?” D

(emphasis supplied)

141Copy pinpoint141. After considering the judgment of this Court in the case of Arcelormittal India Private Limited vs. Satish Kumar Gupta and others46 and the relevant provisions of the I&B Code, this court further observed in K. Sashidhar (supra) thus: “52. As aforesaid, upon receipt of a “rejected” resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been 46 (2019) 2 SCC 1 H

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A made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. 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. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable.” (emphasis supplied)

142Copy pinpoint142. This Court has held, that it is not open to the Adjudicating Authority or Appellate Authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the I&B Code. It has further been held, that the commercial wisdom of CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. This Court thus, in unequivocal terms, held, that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. It has been held, that the opinion expressed by CoC after due deliberations in the meetings through voting, as per voting shares, is a collective business decision. It has been held, that the legislature has consciously not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before the Adjudicating Authority and that the decision of CoC’s ‘commercial wisdom’ is made non-justiciable.

143Copy pinpoint143. This Court in Committee of Creditors of Essar Steel India H Limited through Authorised Signatory (supra) after referring to the