Siva tests IBC: NCLAT's choice between judicial wisdom & commercial wisdom

Siva Industries, a machinery part-maker, was admitted to the bankruptcy court on July 5, 2019

The National Company Law Appellate Tribunal (NCLAT) will be hearing a petition from a major shareholder of Siva Industries, which plans to argue that the National Company Law Tribunal’s (NCLT) Chennai bench far ex­ceeded its powers while rejecting the commercial wisdom of the lenders. The Indian lenders had earlier decided to accept a 95 per cent haircut on dues wor­th Rs 5,000 crore from Siva Ind­u­s­­­­tries (see chart: “Total haircut”).

NCLT rejected the Committee of Creditors’ (CoC’s) proposal on the grounds that it would rather override the lenders’ commercial wisdom with its own “judicial wisdom” because it deemed the proposal