Court can not sit over comparative financial attractiveness of rival offers or to substitute its own view for the decision taken by the CoC in IBC
In a recent judgment, Hon’ble Supreme Court has held that it cannot be called upon to sit over the comparative financial attractiveness of rival offers or to substitute its own view for the business decision taken by the CoC in the statutory process under the IBC.
ABCAUS Case Law Citation:
5078 (2026) (03) abcaus.in SC
The respondent company had sought to resile from the Agreement to Sell with the Applicant on the ground that the proposed OTS had not been accepted by the Bank.
The High Court held that the Agreement to Sell was itself contingent in nature, inasmuch as its performance was predicated upon the acceptance of the OTS by the Bank. The suit property was mortgaged and the Bank was not a party to the Agreement to Sell, and that without the Bank’s approval to the OTS, respondent company was not in a position to convey title in respect of the property. SLP against the judgment of Hon’ble High Court was dismissed by Hon’ble Supreme Court.
The Applicant had again approached Hon’ble Supreme Court stating that during the pendency of the SLP, the company addressed a proposal to bank for an OTS and for withdrawal of the CIRP under Section 12A of the IBC. That OTS was thereafter concluded and the Committee of Creditors (CoC) approved withdrawal of the CIRP under Section 12A of the IBC.
The Applicant before the Hon’ble Supreme Court canvassed that the alleged non-disclosure of the proposal for a One Time Settlement (OTS), the eventual settlement arrived at between the secured creditor and the corporate debtor, and the withdrawal of the Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) under Section 12A of the Insolvency and Bankruptcy Code, 2016 (IBC), had a material bearing on the foundation on which the matter proceeded earlier.
The Hon’ble Supreme Court held that the order recall of which was sought, was not an executory order. It merely records that the Court was not inclined to interfere with the impugned judgment and order and, accordingly, dismissed the SLP. The said order does not indicate that the dismissal turned upon any specific representation which is now alleged to have been suppressed. Further, refusing special leave to appeal, whether speaking or non-speaking, does not attract merger.
The Hon’ble Supreme Court observed that the statutory scheme of Section 12A of the IBC contemplates withdrawal of the insolvency process, after constitution of the CoC, only upon approval by the requisite voting share of the CoC. Once the matter enters that domain, the decision whether to accept a settlement, whether to continue with the process, or whether to adopt one commercial course over another, falls essentially within the realm of the collective commercial wisdom of the CoC.
The Hon’ble Supreme Court held that in proceedings, which arise out of a disposed of SLP in a civil revision concerning an Agreement to Sell, this Court cannot be called upon to sit over the comparative financial attractiveness of rival offers or to substitute its own view for the business decision taken by the CoC in the statutory process under the IBC. The mere assertion by the applicant that its offer was higher would not, by itself, furnish a ground to reopen the dismissal of the SLP or to unsettle steps taken in a separate insolvency framework.
Accordingly, the Miscellaneous Application was dismissed.
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