Karnataka High Court Pronounces Final Order in Writ Petition Challenging Minutes of Committee of Creditors Meeting under IBC, 2016. Key Issue Involved Adequacy of Notice under Section 24 and Natural Justice in Approval of Resolution Plan.

Writ petition under Articles 226 and 227 of the Constitution of India challenging the minutes of the 2nd adjourned 19th meeting of the Committee of Creditors of Associate Decor Limited held on 11.02.2020 approving a resolution plan under the Insolvency and Bankruptcy Code, 2016.

Petitioner sought to quash the impugned minutes as non est and illegal, and to set aside all subsequent actions and proceedings emanating from that meeting.

Petitioner alleged that the meeting was held with only three hours' notice, thereby contravening Section 24 of the Insolvency and Bankruptcy Code, 2016 and Regulation 19 of the IBBI Regulations, and that his offer to pay a higher amount was rejected without reason, amounting to violation of principles of natural justice.

The High Court had earlier allowed the writ petition in part on 21.11.2023; upon review petitions, that order was recalled on 28.02.2024 and the matter was directed to be heard afresh. In parallel proceedings, the NCLT had initially allowed a petition by Svamitva Landmarks; the NCLAT set aside that order and directed approval of the 5th respondent's plan; the Supreme Court dismissed Svamitva's civil appeal. The petitioner's application for impleadment in the NCLAT proceedings was rejected.

Whether the meeting of the Committee of Creditors held on 11.02.2020 with three hours' notice is in violation of Section 24 of the Insolvency and Bankruptcy Code, 2016 and Regulation 19 of the IBBI Regulations. Whether the approval of the resolution plan in such meeting is vitiated by breach of natural justice. Whether the petitioner is entitled to maintain the challenge at this stage given the subsequent finality of the resolution plan approved by the Supreme Court.

Petitioner argued that he had offered a higher payment of Rs 280 crores which was rejected without reason; that the resolution plan of the 5th respondent was approved in a meeting convened with only three hours' notice, contrary to Section 24 and Regulation 19; and that this violated principles of natural justice. Respondents 1-3 argued that the resolution plan had been subject to litigation up to the Supreme Court and had attained finality; the petitioner's impleadment application before the NCLAT was rejected; and allowing the challenge would be putting the clock back impermissibly.

the petitioner had offered ` 280 cores as payment to the Committee of Creditors as opposed to ` 243 crores by the 5 th respondent. the Committee of Creditors rejected the offer of the petitioner without any reason three hours notice was given to the petitioner in complete contravention of Section 24 of the Code and Regulation 19 of the IBBI Regulations

Associate Decor Limited (the Company) was established between 2007-2011. Between 2010-2015, it obtained loans of Rs 582 crores from a consortium of banks (respondents 1-3). In 2016, due to disputes and market changes, loan repayments became irregular and the account was classified as NPA. Banks initiated recovery proceedings before DRT, Bengaluru, and Punjab National Bank filed a Section 7 petition under the IBC before the NCLT, Bengaluru. The NCLT appointed an Interim Resolution Professional; the petitioner ceased to be a director. A Committee of Creditors was constituted on 26.12.2018, comprising the three banks with varying voting shares. The Resolution Professional was appointed and Form-G was issued inviting resolution plans. On 09.10.2019, in the 11th CoC meeting, 22 prospective resolution applicants were identified. On 07.02.2020 the 19th CoC meeting was convened; on 10.02.2020 two resolution plans were discussed and scored. On 11.02.2020, an email was sent at 12:20 pm scheduling a meeting for the same day at 3:00 pm, and in that meeting the CoC approved the 5th respondent's plan. On 13.02.2020, the petitioner wrote offering Rs 250 crores to clear the loan. The petitioner then filed the present writ petition. This Court allowed the petition in part on 21.11.2023. In review petitions, the order was recalled on 28.02.2024. The matter was heard afresh and order pronounced on 22.04.2024. Meanwhile, in separate proceedings, Svamitva Landmarks approached the NCLT; the NCLT allowed its petition; the CoC appealed to the NCLAT, which set aside the NCLT order and directed approval of the 5th respondent's plan; Svamitva appealed to the Supreme Court, which dismissed the appeal. The petitioner's impleadment application in the NCLAT was rejected.

• Insolvency and Bankruptcy Code, 2016: Section 7, Section 24
• Constitution of India: Article 226, Article 227
• Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016: Regulation 19