High Court Cannot Interdict CIRP; Supreme Court Directs Adjudicating Authority To Resume Proceedings

A bench of Justice Pamidighantam Sri Narasimha and Justice Manoj Misra heard appeals under Article 136 challenging a Karnataka High Court order which had set aside acceptance of a resolution plan approved by the Committee of Creditors (CoC) on 11.02.2020. The batch comprised three appeals — by the successful resolution applicant (Mohammed Enterprises (Tanzania) Ltd.), by the banks constituting the CoC, and by the Resolution Professional appointed in the corporate insolvency resolution process (CIRP) of Associate Decor Ltd.

The Court allowed the appeals, set aside the High Court’s impugned order dated 22.04.2024 and directed the Adjudicating Authority to recommence and conclude the CIRP proceedings “as expeditiously as possible.” The Bench found that the High Court erred in entertaining the writ petition after an inordinate delay and that the Insolvency and Bankruptcy Code, 2016 (IBC) constituted a complete code with its own remedial architecture which ordinarily should not be bypassed by Article 226 jurisdiction. The Court, in its reasoning, observed: “Apart from delay and laches, High Court should have noted that Insolvency and Bankruptcy Code is a complete code in itself, having sufficient checks and balances, remedial avenues and appeals. Adherence of protocols and procedures maintains legal discipline and preserves the balance between the need for order and the quest for justice. The supervisory and judicial review powers vested in High Courts represent critical constitutional safeguards, yet their exercise demands rigorous scrutiny and judicious application. This is certainly not a case for the High Court to interdict CIRP proceedings under the Insolvency and Bankruptcy Code.” The Court further concluded that the High Court’s intervention breached the discipline of the IBC and amounted to unjustified interference with statutory insolvency machinery.

Background The CIRP against Associate Decor Ltd. commenced on 26.10.2018 on the application of Oriental Bank of Commerce. An Information Memorandum issued on 28.11.2018 drew expressions of interest, and METL participated in multiple CoC meetings. The 19th CoC meeting was adjourned and reconvened on 11.02.2020 to consider a slightly amended resolution plan which, following deliberations and e‑voting, the CoC approved with 100% voting share and declared METL the successful resolution applicant. At an earlier adjourned sitting a director present reportedly confirmed “they have no objection to the plans or to the process that was followed,” a fact contested by the suspended director’s counsel.

A rival consortium (Swamitva) and the suspended director challenged aspects of the process before the Adjudicating Authority and the NCLAT; the NCLAT allowed an appeal and set aside certain directions of the Adjudicating Authority, and a subsequent appeal by the consortium to this Court was dismissed. Notwithstanding these proceedings, respondent no.1 (the suspended director) filed a writ petition before the Karnataka High Court seeking to quash the CoC minutes dated 11.02.2020 and related consequential orders, alleging violation of natural justice on grounds that adequate notice was not given. The High Court initially granted interim relief and ultimately set aside the resolution plan on 22.04.2024 primarily on the ground that 24 hours’ notice was not provided.

The Supreme Court held that the writ petition was barred by delay and laches — the challenge to events of 11.02.2020 was mounted only on 04.01.2023 — and that respondent no.1 had already invoked statutory remedies under the Code, including an interlocutory application before the Adjudicating Authority on 06.10.2022. Citing precedents that recognised the finality and self-contained nature of insolvency proceedings, the Court emphasised that High Courts should exercise supervisory jurisdiction with caution and should not ordinarily interdict CIRP where the Code provides remedies. The appeals were allowed, the Karnataka High Court judgment dated 22.04.2024 was set aside, the Adjudicating Authority was directed to recommence proceedings from the point of interdiction and complete them expeditiously, and there was “no order as to costs.”

Case Details: Case No.: CIVIL APPEAL NO. 48/2025 (Arising out of SLP (C) No. 11599 of 2024) (batch with Civil Appeal Nos. 49/2025 and 50/2025) Case Title: Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan & Ors. Appearances: For the Petitioner(s): Dr. Abhishek Manu Singhvi, Senior Advocate; Mr. Tushar Mehta, Learned Solicitor General (assisted submissions) For the Respondent(s): Mr. Shyam Divan, Senior Counsel (for the suspended director/Corporate Debtor) (Other counsel for the Committee of Creditors and Resolution Professional appeared; specific names were not recorded in the reported judgment.)