Clearing the roadblock for the lenders, the Supreme Court on Tuesday set aside the National Company Law Tribunal order that directed revaluation of assets of auto components maker Acil Ltd, despite an overwhelming number of creditors with a majority vote of 88.56% approving it in August 2019.

While asking the NCLT to pass appropriate orders in terms of its Tuesday’ judgment on giving nod to the Ramkrishna Forgings’ approved resolution plan within three weeks, a Bench led by Justice Vikram Nath said there was no occasion before the tribunal “to be swayed only on the per se ground that the hair-cut would be about 94.25% and that it was not convinced that the fair value of the assets have been projected in proper manner as the bid was very close to the fair value of the assets of Acil.”

The apex court said “it is well within the Committee of Creditor’s domain as to how to deal with the entire debt of the corporate debtor.” If after repeated negotiations, a resolution plan had been approved by the CoC with a majority vote of 88.56%, such commercial wisdom was not required to be called into question or casually interfered with, it added.

Lenders had voted in favour of Ramkrishna Forgings’ taking over Acil at Rs 129.75 crore, translating into a 94% haircut to the Rs 1,762 crore of dues from the company. However, instead of giving its nod, the NCLT on September 9, 2021 had raised doubts over the Rs 130.50-crore fair value ascribed to assets by creditors and asked for a revaluation. Even the National Company Law Appellate Tribunal had upheld the NCLT’s decision in January 2022.

ACIL was admitted to insolvency on the IDBI Bank’s plea and the NCLT had appointed Ravindra Loonkar as the

Interim Resolution Professional in October 2018.

According to the SC judgment, the NCLT’s order “cannot withstand judicial scrutiny, either on facts or in law.”

“There may have been a situation where due to glaring facts, an order of the nature impugned herein could be left untouched and this court would have refrained from interference, but only if detailed reasoning, disclosing the facts for being persuaded to embark on such path, were discernible in the September 2021 order, which unfortunately is cryptic and bereft of detail. Recording of reasons, and not just reasons but cogent reasons, for orders is a duty on courts and tribunals,” it stated.