The petitioner company recently approached the High Court under Article 226 of the Constitution of India, seeking various reliefs against several respondents in a corporate insolvency resolution process (CIRP). The primary grievance centered on the alleged arbitrary rejection of its bid for the resolution of Helios Photo Voltaic Private Limited, despite being the highest bidder in terms of both monetary value and net present value.

The petitioner, having submitted a bid of ?109.87 crores during an e-auction held on July 29, 2024, was disappointed when the Committee of Creditors (CoC) did not accept its proposal during a meeting on September 5, 2024. The lead secured creditor, Punjab National Bank, along with other respondents, played a significant role in the decision-making process, which the petitioner claimed was inconsistent with the principles of fairness and transparency expected in such proceedings.

   

The petitioner’s counsel highlighted that their bid was not only the highest but also offered a structured repayment plan that demonstrated financial prudence. In contrast, the successful resolution applicant proposed a lower offer of ?99 crores to be paid within 30 days. The petitioner argued that this decision undermined commercial norms and the best interests of the creditors.

Drawing on precedents, particularly the case of Kunwar Sachdev v. IDBI Bank, the petitioner emphasized the fiduciary responsibilities of the CoC, which are supposed to ensure decisions reflect fairness and objectivity. The counsel for the petitioner urged the court to mandate the CoC to adhere to a framework that promotes equitable treatment in such bids.

On the other hand, the respondents contended that the CoC operates under its "commercial wisdom" and is not bound to select the highest bidder. They stressed that the Insolvency and Bankruptcy Code (IBC) allows the CoC to exercise discretion based on a comprehensive evaluation of bids, prioritizing the rapid revival of the corporate debtor over merely financial considerations.

Ultimately, the High Court declined to intervene, emphasizing that the petitioner had an adequate alternative remedy available through the National Company Law Tribunal (NCLT). The court underscored that the NCLT is tasked with regulating the CoC's conduct and adjudicating on resolution plans under the IBC. The court maintained that it would not usurp the powers of the NCLT to evaluate the CoC’s decisions regarding the rejection of the petitioner’s bid.

The court reiterated that the resolution plan approved by the CoC would be subject to review by the NCLT, which would examine whether the CoC fulfilled its fiduciary duties as prescribed by the IBC.

The writ petition was ultimately dismissed, granting the petitioner the liberty to present its grievances before the NCLT. This case highlights the complexities of corporate insolvency proceedings and the critical balance between commercial discretion exercised by the CoC and the legal rights of bidders in the resolution process. The ruling reinforces the importance of adhering to the IBC framework, ensuring that while commercial wisdom is paramount, it should also align with principles of transparency and fairness in decision-making.