# In the matter of M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder & Anr.

> SC judgment dated 2023-05-03. Citation: TCN-2023-SC-00077. The case involves civil appeals directed against a common judgment and order passed by the National…

- **Court:** SC
- **Order date:** 3 May 2023
- **Citation:** TCN-2023-SC-00077
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/mk-rajagopalan-vs-dr-periasamy-palani-gounder-anr-2c6201ff

## Summary

### Background

The case involves civil appeals directed against a common judgment and order passed by the National Company Law Appellate Tribunal (NCLAT), Chennai Bench, concerning the Corporate Insolvency Resolution Process (CIRP) of Appu Hotels Limited under the Insolvency and Bankruptcy Code, 2016. The NCLAT reversed the order of the National Company Law Tribunal (NCLT), Chennai, which had approved a resolution plan, and remanded the matter to the committee of creditors (CoC) for fresh consideration. The appeals challenge the NCLAT's decision, raising issues about the valuation process, eligibility of the resolution applicant, and consideration of a settlement proposal from the promoter.

## Facts

Appu Hotels Limited faced CIRP after defaulting on loan repayments. Tourism Finance Corporation of India Limited (TFCI) initiated CIRP under Section 7 of the IBC. The resolution plan submitted by M.K. Rajagopalan was approved by 87.39% of the CoC. The NCLT approved the resolution plan, but the NCLAT reversed this decision, citing irregularities in the valuation process, ineligibility of the resolution applicant, and non-consideration of the promoter's settlement proposal. The NCLAT directed the resolution professional to proceed with CIRP from the stage of publication of Form G and to invite fresh EOIs. The promoter submitted a settlement proposal under Section 12-A of the Code, which was initially rejected but later approved by 100% of the CoC. The resolution

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## Issues and analysis

### Issue 1: Whether the valuation process of the assets of the corporate debtor had been in violation of the …

**Ratio:** The commercial wisdom of the CoC is paramount, and judicial intervention is limited.

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**Reasoning:** The Supreme Court found that the CoC members were provided with fair value and

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**Interpretation:** The valuation process must be transparent and provide the CoC with sufficient

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**Application:** The Supreme Court held that the Appellate Tribunal erred in presuming blatant

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## Parties

- **Judges:** DINESH MAHE…; VIKRAM…
- **Appellants:** M.K. Rajag…
- **Respondents:** Appu Hotels…; Periasamy Palani…

## Timeline

- **2019-01-01 — Application for…**: Application for initiation of CIRP was filed by the Financial Creditor as early as in the…
- **2020-03-01 — Orders re…**: Matter was heard in detail and the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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