Delay in EoI Submission Not a Material Irregularity: NCLAT Restores CoC-Approved Resolution Plan
- REEDLAW
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REEDLAW Legal News Network reports:Â In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), New Delhi, held that a delay in submission of an Expression of Interest, once condoned by the Adjudicating Authority without disturbing any eligibility conditions, cannot be treated as a material irregularity in the conduct of the CIRP. The Tribunal emphasised that the Resolution Professional and the Committee of Creditors were entitled to consider such a plan, and the approval of a compliant resolution plan could not be set aside in the absence of proven prejudice or regulatory breach.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice N. Seshasayee (Judicial Member) and Mr. Arun Baroka (Technical Member), while adjudicating a batch of three company appeals, held that the condonation of delay in filing the Expression of Interest—granted by the Adjudicating Authority without modifying any eligibility norms—validated the applicant’s participation in the CIRP. The Bench further observed that neither the Resolution Professional nor the Committee of Creditors had committed any material irregularity in evaluating the plan, and in the absence of demonstrated prejudice or violation of the CIRP Regulations, the CoC-approved resolution plan could not be interfered with.
The Appellate Tribunal examined three connected appeals arising from objections to the participation of a prospective applicant in the CIRP of the Corporate Debtor. The Resolution Professional had originally shortlisted four prospective resolution applicants in response to Form-G, and the last date for submission of the EoI expired on 21 October 2022. The additional applicant submitted its EoI forty-seven days late, leading the Resolution Professional to reject it. The applicant thereafter approached the Adjudicating Authority, which on 20 January 2023 condoned the delay without relaxing any prescribed EoI conditions. The applicant submitted its EoI and resolution plan within the next two days, with the mandatory EMD being deposited on 25 January 2023 due to intervening public holidays.
The Resolution Professional informed all shortlisted applicants that the resolution plans would be opened before the Committee of Creditors (CoC) on 2 February 2023. In subsequent meetings, the CoC evaluated all proposals and, on 11 May 2023, approved the plan of the applicant with a 99.87% voting share. Two unsuccessful applicants later filed intervention applications, alleging that the Resolution Professional and CoC had committed material irregularities by permitting the applicant to participate contrary to Regulation 36A, Form-G requirements, and the timelines applicable to other applicants. They also alleged nondisclosure, collusion, and dilution of process integrity during the evaluation of the plan.
The Resolution Professional, CoC, and the Successful Resolution Applicant opposed the allegations, asserting that the participation of the applicant flowed exclusively from the order of the Adjudicating Authority condoning delay. They submitted that all applicants were fully aware of the applicant’s presence, that each applicant was afforded equal opportunities to revise and improve their plans, and that the objections were barred by acquiescence because the unsuccessful applicants had themselves participated in subsequent rounds and accepted the return of their EMD.
The Adjudicating Authority nevertheless upheld the objections, holding that the inclusion of the applicant violated Regulation 36A and Form-G, and consequently set aside the CoC’s approval of the resolution plan. This order led to the present appeals by the Resolution Professional and the Successful Resolution Applicant.
Upon considering the record, the Appellate Tribunal held that no material irregularity had occurred because the Resolution Professional and CoC had acted strictly pursuant to the Adjudicating Authority’s own order permitting submission of the EoI and resolution plan. The Tribunal found that the condonation of delay did not dilute any of the prescribed EoI conditions or confer any undue advantage, as the integrity and fairness of the bidding process remained intact. The objections regarding lack of opportunity were rejected, as the unsuccessful applicants failed to demonstrate any disqualification or substantive ground against the applicant.
The Tribunal concluded that the applicant’s plan had been submitted on the same timeline as the other plans and that all prospective resolution applicants were accorded opportunities to revise their proposals, negating any claim of prejudice. Since no material irregularity was established and setting aside the plan would compel recommencement of the CIRP with the attendant risk of value deterioration and possible liquidation, the Appellate Tribunal set aside the order of the Adjudicating Authority and directed revival of the Resolution Professional’s application under Section 31 of the IBC for consideration of the resolution plan afresh.
Ms. Surjadipta Seth, Ms. Soumya Dutta, Mr. Siddhant Upmanyu and Mr. Abhijeet Pandey, Advocates, appeared for the Company Appeal (AT) (Insolvency) No. 411 of 2025.
Mr. Arjun Asthana, Mr. Siddhartha Sharma and Mr. Nachiket Chawla, Advocates, appeared for Company Appeal (AT) (Insolvency) Nos. 273 and 275 of 2025.
Mr. Arjun Asthana, Mr. Siddhartha Sharma and Mr. Nachiket Chawla, Advocates, represented the Respondent No. 1/RP.
Mr. Sudhanshu Khandelwal, Advocate, appeared for the Respondent No. 2.
Mr. Shaunak Mitra, Advocate, represented the Committee of Creditors (CoC).
Mr. Vasu Bushan, Mr. Abhishek Taneja and Mr. Shashank Agarwal, Advocates, appeared for R-2 and R-3.
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