Comparative Merits Of Rival Offers Or CoC’s Commercial Decision Cannot Be Reassessed In MA Arising From Disposed SLP: Supreme Court

The Court was hearing a Miscellaneous Application seeking recall of an earlier order dismissing an SLP arising from a civil revision concerning an Agreement to Sell.

A Division Bench of Justice Vikram Nath and Justice Sandeep Mehta observed: “it is necessary to state that primacy taken in the insolvency process is altogether immune from scrutiny in every situation. Where a challenge is laid in an appropriate proceeding on a legally sustainable foundation, such as statutory illegality or a jurisdictional infirmity, the matter would naturally be considered in accordance with law. However, that is not the exercise which can be undertaken in the present MA. In these proceedings, which arise out of a disposed of SLP in a civil revision concerning an Agreement to Sell, this Court cannot be called upon to sit over the comparative financial attractiveness of rival offers or to substitute its own view for the business decision taken by the CoC in the statutory process under the IBC”.

Gopal Sankaranarayanan, Senior Advocate, appeared for the applicant, while Siddhartha Dave, Senior Advocate, appeared for the respondents.

Background

The dispute originated from an Agreement to Sell in respect of a commercial property. The applicant instituted a suit for specific performance along with ancillary relief.

An interim injunction granted by the trial court was set aside by the appellate court, and the High Court dismissed the revision petition, holding that the agreement was contingent upon acceptance of a One Time Settlement by the secured creditor and therefore did not give rise to an enforceable right at that stage.

The applicant approached the Supreme Court by way of Special Leave Petition, which was dismissed.

Subsequently, the applicant filed the present Miscellaneous Application seeking recall of the dismissal order, relying upon subsequent developments in insolvency proceedings, including a settlement between the secured creditor and the corporate debtor and withdrawal of the Corporate Insolvency Resolution Process under Section 12A of the IBC.

It was contended that these developments had a material bearing on the earlier proceedings and warranted reconsideration of the dismissal of the SLP.

The respondents opposed the application, contending that the Miscellaneous Application was not maintainable and that the insolvency proceedings were independent of the civil dispute.

Court’s Observation

The Court first addressed the issue of maintainability. It held that a Miscellaneous Application filed after disposal of an SLP is maintainable only in limited circumstances, such as correction of clerical errors or impossibility of implementation of an executory order.

The Court then examined the nature of the controversy sought to be raised in the Miscellaneous Application and held that it travelled beyond the scope of the original proceedings. It noted that the SLP arose from a civil dispute concerning an Agreement to Sell, whereas the issues now raised pertained to subsequent developments in insolvency proceedings.

The Court noted that the present MA sought to found a case for recall based on later developments said to have taken place in the insolvency proceedings, including the proposal for One Time Settlement, the subsequent settlement, the decision of the Committee of Creditors, and the order passed by the National Company Law Tribunal under Section 12A of the IBC, and held that “whether those later steps were proper or otherwise cannot be examined collaterally in an MA filed in a disposed of SLP arising out of a civil revision”.

Regarding the issue of alleged fraud and suppression, the Court held that mere assertions are insufficient to invoke the exception that fraud vitiates the proceedings. It noted that the dismissal of the SLP was by a non-speaking order and that there was no material to show that the order was procured by fraud.

The Court further clarified that dismissal of an SLP does not attract the doctrine of merger, but that does not imply that the proceedings can be reopened through a Miscellaneous Application on grounds not recognised in law.

The Court also emphasised: “…an order refusing special leave to appeal, whether speaking or non-speaking, does not attract merger. However, that does not carry the matter any further for the applicant. The absence of merger does not mean that a disposed of SLP can be reopened through a miscellaneous application on grounds which do not satisfy the settled parameters of maintainability”.

The Court then examined the applicant’s attempt to invite the Court to compare the financial merits of competing offers in the insolvency process. It held that such an exercise is impermissible, as decisions relating to acceptance of settlement or continuation of insolvency proceedings fall within the domain of the Committee of Creditors.

Relying on K. Sashidhar v. Indian Overseas Bank (2019), Essar Steel v. Satish Kumar Gupta (2020), and Vallal RCK v. Siva Industries (2022), the Court reiterated that the commercial wisdom of the CoC is generally non-justiciable and that adjudicatory authorities cannot sit in appeal over such decisions.

At the same time, the Court clarified that the primacy of commercial wisdom is not absolute and that judicial scrutiny is permissible where a challenge is based on statutory illegality or jurisdictional infirmity.

However, the Court held that no such case was made out in the present proceedings, while further stating that “the mere assertion by the applicant that its offer was higher would not, by itself, furnish a ground to reopen the dismissal of the SLP or to unsettle steps taken in a separate insolvency framework.”

Upon a cumulative assessment, the Court held that the Miscellaneous Application was an impermissible attempt to reopen concluded proceedings and to challenge actions taken in a separate statutory framework.

Conclusion

The Court held that no grounds were made out to entertain the Miscellaneous Application or to recall the order dismissing the SLP. Accordingly, the application was dismissed, leaving all rights and contentions of the parties open to be agitated before the appropriate forum.

Cause Title: M/s Lamba Exports Pvt. Ltd. v. M/s Dhir Global Industries Pvt. Ltd. & Ors. (Neutral Citation: 2026 INSC 275)

Appearances

Petitioner: Gopal Sankaranarayanan, Senior Advocate with Prachi Sohi, Jasbir Singh Malik, Sumit Kumar, Pooja Devi, Vishal Sinha, Pradyut Kashyap, Varun Punia, Siddharth Venugopal and Niharika Singh, Advocates

Respondents: Siddhartha Dave, Senior Advocate with Mriganga Dutta, Anuroop Chakravarti, M.S. Vishnu Sankar, Athira G. Nair, Venugopal Pillai, Anand Kumar Soni, Anand Kumari Soni, Mandeep Kalra, Radhika Narula, Anushna Satapathy and others, Advocates

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