Mohammed Enterprises (Tanzania) Ltd. Vs. Farooq Ali Khan & Ors. [Civil Appeal No. 48/2025 arising out of SLP (C) No. 11599 of 2024]
- ByPravleen Kaur --
- 15 Jun 2025 --
- 0 Comments
The Supreme Court of India, in Mohammed Enterprises (Tanzania) Ltd. vs. Farooq Ali Khan & Ors. [Civil Appeal No. 48 of 2025 arising out of SLP (C) No. 11599 of 2024], delivered its judgment on January 3, 2025, reinforcing the primacy of the Insolvency and Bankruptcy Code, 2016 (IBC) as a comprehensive and self-contained legal framework for corporate insolvency resolution.
Facts and Background
The Corporate Insolvency Resolution Process (CIRP) was initiated against Associate Décor Ltd. in October 2018 following a petition by Oriental Bank of Commerce (now Punjab National Bank). Mohammed Enterprises (Tanzania) Ltd. (METL), the appellant, submitted a resolution plan that was unanimously approved by the Committee of Creditors (CoC) in February 2020. However, respondent No. 1, a suspended director of the corporate debtor, challenged the approval process on grounds including the alleged lack of a 24-hour notice for the CoC meeting.
Despite prior dismissals of related appeals before the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court, respondent No. 1 filed a writ petition in the Karnataka High Court in January 2023, which quashed the resolution plan citing violation of natural justice.
Legal Issues
Whether the Karnataka High Court was justified in intervening under Article 226 of the Constitution to quash the resolution plan despite the statutory remedies under the IBC.
The scope and limits of judicial review in insolvency proceedings.
The importance of adherence to the procedural safeguards and timelines prescribed under the IBC.
Supreme Court’s Analysis and Findings
The Supreme Court held that the IBC is a complete code with sufficient checks, balances, and remedial mechanisms, including appeal provisions. It emphasized that the High Courts must exercise extreme caution in entertaining writ petitions that disrupt the CIRP, especially when statutory remedies are available and have been exhausted.
The Court found that the High Court erred in entertaining the writ petition nearly three years after the CoC’s unanimous approval, and after the petitioner had availed all statutory remedies. The alleged procedural lapse of insufficient notice did not justify the High Court’s interference, particularly as the respondent had participated in prior proceedings.
The Court underscored the need to maintain legal discipline and uphold the autonomy of the IBC framework to ensure timely and effective resolution of insolvency cases. It set aside the High Court’s order and directed the Adjudicating Authority to resume the CIRP from the stage disrupted.
Conclusion
The Supreme Court allowed the appeal, reaffirming that:
The IBC is a self-contained code that governs corporate insolvency resolution comprehensively.
High Courts must refrain from unwarranted interference in CIRP proceedings where statutory remedies exist.
Judicial review under Article 226 demands rigorous scrutiny and should not disrupt the insolvency resolution process.
The decision promotes certainty, finality, and efficiency in insolvency proceedings.
This ruling strengthens the statutory framework of the IBC, ensuring that corporate insolvency resolution processes are insulated from protracted and belated judicial interventions, thereby fostering ease of doing business and creditor confidence.
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