Insolvency and Bankruptcy Code – High Court Cannot Interdict CIRP under Article 226; Delay and Alternate Remedies Bar Writ Jurisdiction
Case Name: Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan & Others (with connected matters)
Citation: Civil Appeal Nos. 48–50 of 2025 (arising out of SLP (C) Nos. 11599, 11095 and 13493 of 2024); 2025 INSC 25
Date of Judgment: 3 January 2025
Bench: Justice Pamidighantam Sri Narasimha and Justice Manoj Misra (DB)
Held: The Supreme Court held that the Karnataka High Court erred in exercising writ jurisdiction under Article 226 to interdict Corporate Insolvency Resolution Process (CIRP) proceedings after the Committee of Creditors (CoC) had approved a resolution plan. It ruled that challenges to CIRP must be raised through remedies provided under the Insolvency and Bankruptcy Code, 2016 (IBC), and that extraordinary delay of nearly three years in filing the writ petition barred recourse to Article 226.
Summary: The CIRP against Associate Decor Ltd. was admitted on 26.10.2018 at the instance of Oriental Bank of Commerce. The appellant, Mohammed Enterprises (Tanzania) Ltd. (METL), submitted its resolution plan, which was approved by the CoC at its meeting on 11.02.2020 by 100% voting share. The suspended director, Farooq Ali Khan, opposed the process claiming he was not given adequate notice of the 19th CoC meeting. He approached the Karnataka High Court in 2023, nearly three years after the CoC’s decision, seeking quashing of the minutes of meeting dated 11.02.2020 and subsequent steps.
The High Court allowed the writ petition on 22.04.2024, holding that principles of natural justice had been violated since only 24 hours’ notice was given for the CoC meeting. It set aside the approval of METL’s resolution plan.
On appeal, the Supreme Court rejected this view. It held that respondent no.1 had himself participated in proceedings before the NCLT and NCLAT, and even moved interlocutory applications challenging the resolution plan, which showed he was availing remedies under the IBC. The Court emphasized that writ jurisdiction cannot be invoked to bypass or duplicate remedies under the Code. Citing Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020) and Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta (2021), it reiterated that the IBC is a complete code with sufficient checks and balances, and High Courts must refrain from interfering except in exceptional cases. Delay of three years in filing the writ petition further disentitled the respondent.
Decision: The Supreme Court allowed the appeals, set aside the Karnataka High Court’s judgment dated 22.04.2024, and restored the resolution plan approved by the CoC on 11.02.2020. It directed the Adjudicating Authority (NCLT) to resume the CIRP from where it had been stalled and to complete proceedings expeditiously in the spirit of the IBC.