The Supreme Court of India dismissed the appeal by the NOIDA Special Economic Zone (SEZ) Authority challenging the resolution plan approved by the National Company Law Appellate Tribunal (NCLAT) regarding Shree Bhoomika International Limited's insolvency. The appellant contended that its claims were undervalued and its statutory dues were not prioritized. However, the Court upheld the NCLAT’s decision, emphasizing the Committee of Creditors’ (CoC) commercial wisdom and the overriding provisions of the Insolvency and Bankruptcy Code (IBC) over other laws, including the SEZ Act. The Court reiterated the principle that insolvency proceedings prioritize creditor consensus over individual claims, supporting a resolution process aimed at economic rehabilitation.

1. Background and Parties Involved

• Appellant: NOIDA SEZ Authority, an Operational Creditor
• Respondents: Shree Bhoomika International Ltd. (Corporate Debtor) and others
• Core Issue: Approval of a resolution plan that reduced NOIDA SEZ’s dues in the CIRP for the Corporate Debtor, Shree Bhoomika International Ltd.

2. Case Details

• The Corporate Debtor, Shree Bhoomika International Ltd., was in arrears of lease payments and inactive since 2004. The NOIDA SEZ initiated CIRP, which led to appointing an Interim Resolution Professional (IRP) and creating a CoC.
• Appellant’s Claim: ₹6.29 Crores was admitted but only ₹50 lakhs was awarded through the resolution plan.

3. Legal Process and Resolution Plan Approval

• The NCLT approved the resolution plan, allotting only ₹50 lakhs to NOIDA SEZ. The appellant challenged this before the NCLAT, which upheld the plan.
• NOIDA SEZ contended the CoC’s valuation and exclusion from auction proceedings.

4. Supreme Court’s Analysis on Key Contentions

• Valuation Dispute: The Court observed that the valuation was conducted per IBC norms, which are factual determinations not open to challenge if based on substantial material.
• Statutory Dues: The Court reiterated that statutory dues not included in the resolution plan are extinguished as per Sections 30 and 31 of the IBC.
• Commercial Wisdom of CoC: The Court emphasized that the CoC's decisions, unless violating explicit provisions of the IBC, are non-justiciable.

5. Overriding Effect of IBC over SEZ Act

• The Court clarified that IBC provisions override SEZ regulations as per Section 238 of IBC, which was pivotal in rejecting the appellant’s claims for additional statutory charges.

6. Dismissal and Final Decision:

• Outcome: The appeals were dismissed, affirming that the CoC’s approval of the resolution plan cannot be interfered with on commercial grounds.
• Ratio Decidendi: IBC’s objective to ensure collective debt resolution and economic revival, with the CoC’s commercial wisdom having primacy, was upheld.

Acts and Sections Discussed

• Insolvency and Bankruptcy Code, 2016 (IBC)

  • Section 30(2): Approval of resolution plans based on CoC’s commercial wisdom.
  • Section 31: Binding nature of resolution plan once approved by Adjudicating Authority.
  • Section 238: Overriding effect of IBC over other laws.

• Special Economic Zone Act, 2005 (SEZ Act)

  • Section 34(2)(d): Statutory dues within SEZs, subject to IBC overriding provisions.

Subjects:

#InsolvencyAndBankruptcy #CommercialWisdom #NOIDASEZ #CorporateInsolvency #ResolutionPlan