Remitting Resolution Plan for Reconsideration Not Equivalent to Plan Approval: NCLAT Clarifies CoC’s Commercial Authority
- REEDLAW
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REEDLAW Legal News Network reports: In a pivotal ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, clarified that remitting a resolution plan to the Committee of Creditors (CoC) for fresh consideration does not amount to plan approval. The Tribunal underscored that such remittance falls within the ambit of the CoC’s commercial wisdom and may be directed by the Adjudicating Authority when there are material changes affecting the eligibility or composition of the Successful Resolution Applicant.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating a batch of two Company Appeals, held that remitting a resolution plan to the CoC for fresh consideration cannot be construed as its approval. The Bench observed that the Adjudicating Authority retains the power to direct such reconsideration when significant developments or changes in the resolution applicant’s eligibility arise. The judgment reaffirmed that the CoC’s commercial discretion continues to play a decisive role in the resolution process, subject to statutory safeguards under the Insolvency and Bankruptcy Code, 2016.
The Appellate Tribunal observed that the Adjudicating Authority, by its order dated 20 August 2025, had remitted the Resolution Plan to the Committee of Creditors for fresh consideration, after allowing certain interlocutory applications filed by the Financial Creditor and homebuyer associations. The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, a real estate company developing a commercial project, had a long procedural history, beginning with the admission of a Section 7 application in 2018. During the CIRP, multiple Resolution Plans were received, and the plan submitted by a joint venture, HGAS–Apex JV, received 58.19% votes in favour but was never finally approved by the Adjudicating Authority due to subsequent developments concerning changes in the composition of the Successful Resolution Applicant (SRA).
The Appellants, comprising a Financial Creditor and an association representing homebuyers, challenged the Adjudicating Authority’s direction remitting the plan to the CoC for reconsideration. They argued that the SRA, which had originally submitted the plan, no longer existed in its approved form due to the removal of one joint venture partner and the conversion of the lead partner into a new entity. It was contended that the plan had effectively become ineligible for reconsideration and that the Adjudicating Authority should have rejected it outright rather than remitting it to the CoC. The Appellants further contended that the Resolution Professional, whose registration had been suspended by the IBBI for misconduct, was unfit to continue and that the CIRP process had been compromised by irregularities, including unauthorised agreements with the SRA.
The Respondents, representing the SRA and the Resolution Professional, opposed the Appeals, contending that the Appellants lacked locus to challenge the impugned order, as they were part of a class of Financial Creditors bound by the majority decision under the principles laid down in Jaypee Kensington Boulevard Apartments Welfare Association and Others v. NBCC (India) Limited and Others, REEDLAW 2021 SC 03527. It was further submitted that the Adjudicating Authority’s order was in the nature of a consent order, as the Applicants and the SRA had agreed that the Resolution Plan could not be approved in its present form. The Respondents maintained that remitting the plan to the CoC was within the commercial domain of the creditors and that the CoC retained the discretion to evaluate the reconstituted SRA or take further steps, including replacement of the Resolution Professional under Section 27 of the Code.
The Appellate Tribunal, after reviewing the record and submissions, noted that the Adjudicating Authority had directed the CoC to call for complete disclosures from the SRA regarding its current constitution and financial capability while remitting the plan for reconsideration. It held that the principle laid down in Jaypee Kensington Boulevard Apartments Welfare Association and Others v. NBCC (India) Limited and Others, REEDLAW 2021 SC 03527 was not directly applicable, as the Appeals were not against the approval of a plan by the CoC but against the order remitting it for fresh evaluation. The Tribunal rejected the preliminary objection regarding locus and observed that there was no material to establish that the impugned order was a consent order, as the Appellants had never expressly agreed to remitting the plan for reconsideration. The Tribunal concluded that the Adjudicating Authority’s order merely permitted the CoC to exercise its commercial wisdom afresh and did not affirm the previously approved plan, thereby keeping open the statutory process under the Insolvency and Bankruptcy Code.
Mr. Ajit Kumar Sinha, Sr. Advocate, with Mr. Subhay Chaudhary and Mr. Naveen, Advocates, represented the Appellants.
Mr. Arun Kathpalia, Sr. Advocate with Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Palak Kalra, Ms. Ridhima Mehrotra, Ms. Vanshika and Ms. Diksha, Advocates, appeared for the RP.
Dr. Abhishek Manu Singhvi, Sr. Advocate with Mr. Abhijeet Sinha, Sr. Advocate, Mr. Nilotpal Shyam, Mr. Avishkar Singhvi, Ms. Shivali and Mr. Tejas Mishra, Advocates, appeared for the SRA.
Mr. Sunil Fernandes, Sr. Advocate, with Mr. Krishna Mohan Menon, Mr. Chetna Priyadarshi, Ms. Muskan Surana and Ms. Priya, Advocates, appeared for the Respondents.
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