A) ABSTRACT / HEADNOTE

The Supreme Court allowed the appeals challenging the Karnataka High Court’s decision to quash the Minutes of Meeting dated 11.02.2020 and set aside the resolution plan approved in the Corporate Insolvency Resolution Process (CIRP) of Associate Decor Ltd. The High Court had interdicted the CIRP primarily on the ground that principles of natural justice were violated because a 24-hour notice was not given to one of the suspended directors before the 19th meeting of the Committee of Creditors (CoC).

The Supreme Court held that the High Court erred in exercising discretionary writ jurisdiction under Article 226 because:

(i) there was inordinate delay and laches the alleged breach occurred on 11.02.2020 but the writ was filed only on 04.01.2023;

(ii) the respondent had already availed statutory remedies under the Insolvency and Bankruptcy Code, 2016 including interlocutory applications before the Adjudicating Authority and NCLAT;

(iii) the IBC is a self-contained code with built-in safeguards and hierarchical remedies, with the Adjudicating Authority (and appellate forum) vested with the power to examine and correct irregularities under Section 60(5)(c).

Relying on precedents such as Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta and Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, and recent directions in CoC of KSK Mahanadi Power Co. Ltd. v. UP Power Corporation Ltd., the Court emphasised that unwarranted interlocution by High Courts with ongoing CIRP proceedings undermines the statutory regime and delays resolution. The appeals were allowed and the High Court order set aside, with directions to the Adjudicating Authority to resume and complete the CIRP expeditiously.

Keywords: Insolvency and Bankruptcy Code, 2016; Section 60(5)(c); judicial review; natural justice; laches; Corporate Insolvency Resolution Process; Committee of Creditors; adjudicating authority; appellate hierarchy.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The appeals arise from a writ petition in the Karnataka High Court which successfully challenged the approval of a resolution plan by the CoC in the CIRP of Associate Decor Ltd. The CIRP began on 26.10.2018 at the instance of Oriental Bank of Commerce (later merged). The successful resolution applicant Mohammed Enterprises (Tanzania) Ltd. (METL) was declared by the CoC after voting and e-voting culminating in the CoC minutes of 11.02.2020 and related communications (letter of intent dated 09.03.2020).

A suspended director (respondent no.1) contested the process, saying he had not received the requisite notice before the CoC meeting and that natural justice was breached. Parallel litigation included interlocutory applications before the Adjudicating Authority and appeals to NCLAT; one third party (Swamitva Consortium) also contested CoC decisions. The High Court, on the basis that a 24-hour notice requirement and natural justice were not respected, granted relief quashing the CoC proceedings and setting aside the resolution plan.

The Supreme Court was called upon to examine whether the High Court should have exercised writ jurisdiction to interdict a statutory, time-sensitive, self-contained code which entrusts fact-finding and adjudicatory competence to the Adjudicating Authority and appellate fora, and whether delay and prior invocation of statutory remedies barred extraordinary relief under Article 226. The background highlights a tension between constitutional supervisory powers of high courts and the legislative scheme of IBC designed to centralise and expedite corporate insolvency resolution.

D) FACTS OF THE CASE

Corporate Insolvency Resolution Proceedings against Associate Decor Ltd. were admitted on 26.10.2018 after a petition by Oriental Bank of Commerce. The Resolution Professional issued the Information Memorandum on 28.11.2018 and invited Expressions of Interest. METL submitted interest and participated through successive CoC meetings (16th–19th), where resolution plans were considered. The 19th CoC meeting was adjourned and reconvened; the CoC considered a revised plan and purportedly approved METL’s plan by e-voting on 11.02.2020, leading to declaration of METL as successful resolution applicant.

A suspended director (respondent no.1) alleged he did not receive notice of the meeting and thus principles of natural justice were violated. Another entity, Swamitva, whose resolution plan was rejected, pursued remedies before the Adjudicating Authority and NCLAT; NCLAT finally set aside an initial direction and the litigation track continued, including dismissal of Swamitva’s appeal before this Court on 25.11.2022. Respondent no.1 filed a writ in the Karnataka High Court on 04.01.2023 seeking quashing of the CoC minutes and consequential orders; the High Court by order dated 22.04.2024 set aside the resolution plan on grounds of natural justice (24-hour notice).

METL, the CoC and the Resolution Professional appealed to the Supreme Court for correctness of the High Court’s intervention and for restoration of the CIRP outcomes. The factual matrix therefore involves contested service/notice, timing of challenges, parallel statutory remedies, and prolonged CIRP timeline spanning 2018–2024.

E) LEGAL ISSUES RAISED

i. Whether a High Court, exercising writ jurisdiction under Article 226, can interdict and set aside CIRP proceedings and decisions of the CoC when statutory remedies under the IBC are available?
ii. Whether delay and laches in invoking writ jurisdiction disentitle a party to challenge CoC decisions under Article 226?
iii. Whether the absence of a 24-hour notice to a suspended director before a CoC meeting constitutes a fatal breach of natural justice warranting quashing of the resolution plan?
iv. Whether the Adjudicating Authority and appellate tribunals under the IBC are the appropriate fora to remedy procedural irregularities in CIRP?

F) PETITIONER/ APPELLANT’S ARGUMENTS

The counsel for the successful resolution applicant and CoC submitted that the High Court should not have exercised Article 226 to interdict CIRP which is governed by a complete statutory code. They argued that the respondent had delayed almost three years from the date alleged breach occurred (11.02.2020) to approach the High Court (04.01.2023), while simultaneously availing IBC remedies by filing interlocutory applications before the Adjudicating Authority and NCLAT. Reliance was placed on the settled jurisprudence that Section 60(5)(c) vests powers in the Adjudicating Authority to examine disputes and that unwarranted writ interference disturbs the legislative scheme and causes inordinate delay in resolution, contrary to the object of the IBC. Counsel urged that the High Court should have relegated the petitioner to the statutory route and that CoC’s commercial decisions deserve deference subject to statutory checks.

G) RESPONDENT’S ARGUMENTS

The counsel for the suspended director contended that Article 226 remains available where natural justice is breached. Reliance was placed on Whirlpool Corporation v. Registrar of Trade Marks to contend that writs are maintainable when fundamental procedural fairness is denied. It was argued that the 24-hour notice requirement and lack of personal notice to the suspended director rendered the CoC proceedings vitiated. Counsel further urged that the respondent’s own settlement offer under Section 12A and better financial proposal lent urgency and equity to the challenge. It was submitted that ongoing contests by Swamitva explain the timing of the High Court petition and that delay should be excused.

H) JUDGEMENT

The Supreme Court allowed the appeals and set aside the High Court’s order. The Court underscored three interlinked considerations:

(1) delay and laches the alleged breach occurred on 11.02.2020 but the writ was filed nearly three years later;

(2) availability and invocation of statutory remedies respondent no.1 had itself invoked interlocutory applications before the Adjudicating Authority on identical grounds and thus could not turn to extraordinary constitutional writ after exhausting or pursuing statutory remedies;

(3) integrity of IBC as a complete code the IBC provides a comprehensive architecture (co-ordinated roles for RP, CoC, Adjudicating Authority, NCLAT and Supreme Court) and confers powers under Section 60(5)(c) to resolve disputes arising out of CIRP.

The Court relied on precedent which emphasises minimal interference by writ courts in IBC processes, notably Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta and Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, and recent directions in CoC of KSK Mahanadi Power Co. Ltd. which caution against unwarranted judicial intrusion. The Supreme Court therefore found the High Court’s exercise of jurisdiction unjustified given delay, parallel statutory remedies and the public interest in time-bound insolvency resolution. The matter was remitted to the Adjudicating Authority to resume proceedings from the point of interdiction and complete them expeditiously.

a. RATIO DECIDENDI

The decisive legal principle is that High Courts must exercise extraordinary writ jurisdiction sparingly where the IBC offers specific, efficacious, and time-sensitive remedies; interlocutory relief under Article 226 that disrupts CIRP will be impermissible if there has been unreasonable delay or the petitioner has sought statutory routes. Section 60(5)(c) places primary adjudicatory competence with the Adjudicating Authority; therefore, interference is justified only in exceptional cases where statutory remedies are demonstrably inadequate or where grave illegality exists and prompt intervention is necessary to prevent irreversible prejudice. The Court applied this ratio to dismiss the writ challenge and protect the integrity and tempo of CIRP.

b. OBITER DICTA

The Court observed in obiter that adherence to procedural formalities and record-keeping by RPs and CoC is essential, and that parties must promptly raise grievances within the IBC framework; also reiterated was the constitutional balance between supervisory jurisdiction of High Courts and legislative design of sector-specific codes. The Court hinted that natural justice claims must be promptly raised and substantiated with contemporaneous proof of prejudice.

c. GUIDELINES 

1. Where grievance arises in CIRP, parties must promptly invoke statutory remedies under IBC before seeking writ relief.

2. High Courts should exercise Article 226 only in exceptional circumstances where statutory forums are inadequate or where grave illegality exists.

3. Delay and laches are relevant and can bar extraordinary relief; courts will examine the time between cause of action and writ filing.

4. Resolution Professionals and CoC must maintain clear notice records and transparent voting records to fend off procedural challenges.

5. Adjudicating Authority must complete interdicted proceedings expeditiously on restoration.

I) CONCLUSION & COMMENTS

The decision reinforces the primacy of the IBC’s statutory architecture and channels for redress, cautioning writ courts against substituting their discretion for methodical statutory processes. It balances protection of natural justice with the policy imperative of time-bound insolvency resolution. Practically, litigants challenging CoC actions must promptly and exhaustively use IBC remedies and document prejudice; High Courts should decline relief where delay and parallel remedies exist. For insolvency practitioners, the judgment underscores the need for strict compliance with notice and voting protocols to reduce vulnerability to collateral litigation. The remand direction to complete proceedings expeditiously restates the Court’s commitment to the IBC’s objectives.

J) REFERENCES

a. Important Cases Referred
i. Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan & Ors., Civil Appeal No. 48 of 2025, [2025] 1 S.C.R. 177 : 2025 INSC 25.
ii. Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, [2019] 16 SCR 275 : (2020) 8 SCC 531.
iii. Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, [2021] 13 SCR 611 : (2021) 7 SCC 209.
iv. Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & Ors., [1998] Supp. 2 SCR 359 : (1998) 8 SCC 1.
v. CoC of KSK Mahanadi Power Co. Ltd. v. M/s UP Power Corporation Ltd., Civil Appeal No. 11086 of 2024 (referenced).

b. Important Statutes Referred
i. Insolvency and Bankruptcy Code, 2016 — Section 60(5)(c); Section 12A; Section 29.
ii. IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 — Regulation 19.