Petitioner Cannot Invoke Writ Jurisdiction Under Article 226 When Alternative and Efficacious Remedies Are Available Before NCLT
- REEDLAW
- Oct 8, 2024
- 3 min read
The High Court ruled that the petitioner cannot invoke writ jurisdiction under Article 226 when alternative and efficacious remedies are available before the NCLT.
The Delhi High Court Single-Judge Bench of Justice Dharmesh Sharma reviewed a Petition and observed that the petitioner, having an alternative and efficacious remedy before the NCLT to challenge the actions of the Committee of Creditors (CoC), could not invoke writ jurisdiction under Article 226 of the Constitution. Furthermore, it reaffirmed that the Adjudicating Authority retains exclusive jurisdiction to adjudicate on matters relating to the resolution plan, emphasizing the supervisory role of the NCLT in ensuring that the CoC fulfils its fiduciary duties under the Insolvency and Bankruptcy Code (IBC).
In the matter of W.P.(C) 13278/2024 & CM APPL. 55477/2024, the petitioner company sought the writ jurisdiction of the High Court under Article 226 of the Constitution of India, 1950, requesting various reliefs against the respondents. The principal claims revolved around the petitioner being the highest bidder in the Corporate Insolvency Resolution Process (CIRP) concerning Helios Photo Voltaic Private Limited. The petitioner contended that, despite offering the highest bid in terms of monetary value and net present value during the e-auction, the Committee of Creditors (CoC), comprising respondents, rejected the bid in a manner that appeared arbitrary and contrary to established commercial norms.
Mr. Rajiv Nayar, the learned Senior Advocate for the petitioner, drew attention to the petitioner’s bid made on July 29, 2024, amounting to ₹109.87 crores payable over twelve months, which was disregarded by the CoC. He argued that the CoC's decision to accept a rival resolution plan offering ₹99 crores within a shorter timeframe demonstrated a failure to exercise their fiduciary duty responsibly. The learned Senior Advocate also referred to a previous decision by a Co-ordinate Bench, emphasizing that the CoC is obligated to operate within a framework of fairness, transparency, and reasonableness when approving resolution plans, aligning their decisions with the objectives of the Insolvency and Bankruptcy Code (IBC).
Conversely, Mr. Jayant Mehta, representing respondent No. 2, the National Asset Reconstruction Company Limited, countered that the CoC, operating within its commercial wisdom, was not bound to prefer the highest bidder. He emphasized that the IBC serves as a complete code and that the resolution plan must be considered by the National Company Law Tribunal (NCLT) for approval. Furthermore, he indicated that the petitioner could seek redress through the NCLT instead of the High Court.
The Court noted the petitioner’s alternative remedy before the NCLT, highlighting the principle that the Adjudicating Authority retains the jurisdiction to supervise the conduct of the CoC. It reiterated that the IBC mandates the CoC to function within specific parameters, underscoring that the CoC's decisions must align with their fiduciary duties as articulated in the IBC. The Court concluded that it would not exercise its judicial review powers to evaluate the CoC's commercial wisdom regarding the resolution plan rejected in the letter dated September 18, 2024. Thus, the Court refrained from issuing notice, deeming the petition unmeritorious in light of the available remedy before the NCLT.
Mr. Rajiv Nayar, Senior Advocate along with Mr. Vaibhav Mishra, Mr. Ekansh Mishra, Mr. Ashu Kansal, Mr. Akash Shrivastav, Ms. Devika Mohan and Ms. Udita Singh, Advocates represented Petitioner.
Mr. Ayush Srivastava, Advocate represented Respondent No. 1/RBI.
Mr. Jayant Mehta, Senior Advocate along with Mr. Dhruv Malik, Ms. Aditi Sinha and Ms. Rajnandini Singh, Advocates represented Respondent No. 2.
Mr. Prashant Mehta and Mr. Raghav Marwaha, Advocates appeared for Respondent No. 4.
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