Supreme Court Refuses to Reopen Disposed SLP, Upholds CoC’s Commercial Primacy Under IBC
Supreme Court Refuses to Reopen Disposed SLP, Upholds CoC’s Commercial Primacy Under IBC
Introduction
The Supreme Court of India has dismissed a recall application seeking reopening of a disposed Special Leave Petition (SLP), holding that subsequent developments in insolvency proceedings or rival financial offers cannot justify such recall.
A Bench comprising Justice Vikram Nath and Justice Sandeep Mehta emphasized that courts cannot evaluate or substitute the commercial wisdom of the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code, 2016 (IBC).
Factual Background
The dispute arose between Lamba Exports Pvt Ltd and Dhir Global Industries Pvt Ltd from an Agreement to Sell dated August 13, 2021 concerning a property located in Gurugram. The agreement was contingent upon approval of a one-time settlement (OTS) by the lending bank.
Procedural Background
The Punjab and Haryana High Court declined interim relief on May 6, 2024, noting that the agreement was conditional in nature. An SLP filed against this order was dismissed by the Supreme Court on February 25, 2025. Subsequently, a recall application was filed, citing developments in parallel insolvency proceedings, including a higher financial offer and withdrawal of CIRP under Section 12A of the IBC.
Issues
1. Whether a disposed SLP can be reopened based on subsequent developments in insolvency proceedings.
2. Whether courts can examine or compare rival financial offers placed before the Committee of Creditors.
3. Scope of judicial interference in commercial decisions under the IBC.
Contentions of the Parties
The applicant contended that subsequent developments, including a higher financial offer and settlement of dues, warranted reconsideration of the dismissed SLP. It argued that its offer was more beneficial and should have been taken into account.
The opposing side maintained that the SLP had already been disposed of and that developments in insolvency proceedings could not form a valid ground for recall.
Reasoning and Analysis
The Supreme Court held that once an SLP is disposed of, it cannot be reopened merely on the basis of subsequent developments in parallel proceedings. The Bench emphasized that judicial intervention under the IBC is limited and does not extend to evaluating the comparative financial merits of rival offers placed before the CoC.
It reiterated that the CoC’s commercial wisdom is paramount and cannot be supplanted by courts, which are not equipped to undertake such economic assessments. The Court further observed that a mere assertion that a higher offer exists does not constitute a valid ground to unsettle concluded judicial proceedings or decisions taken within the statutory insolvency framework.
Decision
The Supreme Court dismissed the recall application, holding that no grounds existed to reopen the disposed SLP. It reaffirmed that courts cannot sit in appeal over the commercial decisions of the CoC or reassess competing financial offers under the IBC.
