The Supreme Court (SC) has dismissed operational creditors’ appeal to the National Company Law Tribunal’s (NCLT) approval of Reliance Infratel Limited’s resolution plan, stating that the plan was legally authorised by a required majority of the committee of creditors (CoC) in accordance with the Insolvency and Bankruptcy Code (IBC).
A bench of Justices D.Y. Chandrachud and M.R. Shah ruled that the exclusion of some financial creditors from the CoC is irrelevant because the proposal was adopted by a unanimous vote of the CoC.
Further, the bench said that the adjudicating NCLT’s competence was limited by the provisions of Section 31(1) to determining whether the requirements of the IBC were met in the plan authorised by the CoC.
Operational creditors of Reliance Infratel Limited had challenged the approval of the resolution plan by the NCLT in the top court and the upholding of the order by the National Company Law Appellate Tribunal (NCLAT) on the basis of low payout under the plan. They claim to have provided core services in the operation and maintenance of telecom towers and the optical fibre network and associated passive infrastructure equipment.
According to operational creditors, they were unfairly or inequitably treated in the distribution of funds.
However, the apex court has stated that the IBC is a complete code on its own; it defines what is fair and equitable treatment by establishing comprehensive frameworks within which the actors participating in the insolvency process operate.
