NCLAT Sets Aside Adjudicating Authority’s Order: CoC-Approved Sale under Regulation 29 Held Valid and Binding
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REEDLAW Legal News Network reports: In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, on 7 November 2025, set aside the Adjudicating Authority’s order and upheld the validity of a Committee of Creditors (CoC)-approved sale of non-core assets conducted under Regulation 29 of the CIRP Regulations. The Appellate Tribunal reaffirmed that once such a sale process is duly approved by the CoC in the exercise of its commercial wisdom and conforms to the framework of the Insolvency and Bankruptcy Code, 2016, judicial interference is unwarranted.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member), while adjudicating a batch of three Company Appeals and connected Interlocutory Applications, held that the Committee of Creditors (CoC)-approved sale of non-core assets under Regulation 29 of the CIRP Regulations was valid and binding. The Appellate Tribunal reaffirmed that the Adjudicating Authority cannot interfere with the CoC’s commercial wisdom or mandate alternative bidding processes when the sale is conducted in strict conformity with the statutory framework of the Insolvency and Bankruptcy Code, 2016.
The National Company Law Appellate Tribunal, Principal Bench, adjudicated the appeals filed by the Resolution Professionals of three related entities engaged in Free Trade Warehousing Zone operations. The appeals challenged an order of the Adjudicating Authority that had rejected the CoC-approved sale of certain non-core land parcels under Regulation 29 of the CIRP Regulations. The Appellants asserted that the sale was undertaken in full compliance with the Code and aimed at value maximisation for the stakeholders of all three interconnected Corporate Debtors undergoing simultaneous resolution processes.
The Tribunal noted that the subject assets comprised approximately 42.08 acres located within the Khurja FTWZ, including 39.56 acres interspersed within the operational land of one related entity and 2.52 acres forming part of a crucial access road. Both parcels were encumbered to financial creditors, whose consent had been duly obtained. After obtaining two independent valuations and detailed deliberations in multiple CoC meetings, the CoC had approved the sale to the Successful Resolution Applicants of the connected entities, recognising its commercial necessity to maintain operational continuity and integrated logistics value.
The Appellate Tribunal held that the Adjudicating Authority had exceeded its jurisdiction by directing that independent bids be invited from other prospective resolution applicants, thereby intruding upon the commercial wisdom of the CoC. It emphasised that the CoC’s decision reflected a reasoned and transparent exercise of its authority, and that a public auction was not the only permissible mode of value discovery. The Tribunal clarified that Regulation 36A(1A) was not applicable, as the transaction had been approved prior to its insertion, and that the sale of encumbered assets with the charge holders’ consent was valid under Regulation 29.
The Tribunal observed that the intervenor’s objections were frivolous and obstructive, intended to derail the resolution process under the guise of allegations of undervaluation and procedural impropriety. It reiterated that judicial interference with the CoC’s commercial decisions is impermissible except in cases of evident illegality or mala fides, neither of which was established in the present case.
Accordingly, the NCLAT set aside the Adjudicating Authority’s impugned directions, upheld the CoC-approved sale of the non-core assets under IA 1927 of 2025, dismissed the intervenor’s application, and restored the commercial viability of the resolution process for all three Corporate Debtors. No order as to costs was made.
Mr. Abhijeet Sinha, Sr. Advocate, with Mr. Ayush Rajani and Ms. Heena Kochar, Advocates, represented the Appellant in Company Appeal (AT) (Insolvency) No. 1450 of 2025.
Mr. Abhijeet Sinha, Sr. Advocate, with Mr. Ayush Rajani and Ms. Heena Kochar, Advocates, represented the Appellant in Company Appeal (AT) (Insolvency) Nos. 1451, 1452 of 2025 & I.A. Nos. 5647, 5650 of 2025.
Mr. Arvind Nayyar, Sr. Advocate with Mr. Vivek Jain, Mr. Swapnil Srivastava, Mr. Abhishek Gupta, Mr. Chirag Naik, Mr. Jayesh Srivastava, Mr. Rishabh Periwal, Mr. Shubham and Ms. Diksha Dadu, Advocates, appeared for the Respondents in Company Appeal (AT) (Insolvency) No. 1450 of 2025.
Mr. Arun Kathpalia, Sr. Advocate with Ms. Misha, Ms. Mahima Sareen, Mr. Abhilash Chaudhary and Ms. Sanjukta Fauzdar and Ms. Diksha Gupta, Advocates, appeared for R 1 to R-8, R-11 and R-12/CoC in Company Appeal (AT) (Insolvency) No. 1450 of 2025.
Ms. Misha, Ms. Mahima Sareen, Mr. Abhilash Chaudhar,y and Ms. Sanyukta F., Advocates, appeared for R1- R10 – CoC in Company Appeal (AT) (Insolvency) Nos. 1451, 1452 of 2025 & I.A. Nos. 5647, 5650 of 2025.
Mr. Vivek Jain, Mr. Swapnil Srivastava, Mr. Abhishek Gupta, Mr. Chirag Naik, Mr. Jayesh Srivastava, Mr. Rishabh Periwal and Mr. Santosh Kumar, Advocates, appeared for Intervenor in Company Appeal (AT) (Insolvency) Nos. 1451, 1452 of 2025 & I.A. Nos. 5647, 5650 of 2025.
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