Unsuccessful Resolution Applicant Has No Locus to Challenge the Approved Plan under IBC, Rules NCLAT
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REEDLAW Legal News Network reports: In a decisive ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, on Tuesday, 4 November 2025, held that an unsuccessful resolution applicant who failed to submit a final plan during the challenge process had no locus standi to question the resolution plan approved by the Committee of Creditors (CoC). The Appellate Tribunal reaffirmed that once the CoC exercises its commercial wisdom in approving a resolution plan, such a decision cannot be interfered with except on the limited grounds expressly provided under the Insolvency and Bankruptcy Code, 2016.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member), while adjudicating Company Appeals, ruled that an unsuccessful resolution applicant who failed to submit a final plan during the challenge process cannot question the CoC-approved plan. The Bench observed that the commercial wisdom exercised by the CoC in approving a resolution plan is paramount and insulated from judicial review, except on limited grounds such as non-compliance with mandatory provisions of the IBC or material irregularity in the process.
The Appellate Tribunal observed that the appeal had been filed by an unsuccessful resolution applicant challenging the order of the Adjudicating Authority rejecting the application, questioning the Letter of Intent issued in favour of the successful resolution applicant. The appellant had further sought a declaration that the successful resolution applicant was ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority had earlier rejected the appellant’s contentions and approved the resolution plan submitted by the successful resolution applicant, leading to the present appeal.
It was found that the corporate debtor had obtained a substantial loan for purchasing a large parcel of land and that two of its shareholders had subsequently entered into a share purchase agreement with group companies of another respondent entity. Owing to the subsequent attachment of the land by the Enforcement Directorate, the said agreement never materialised, though arbitral proceedings and a settlement followed. During the corporate insolvency resolution process, multiple prospective resolution applicants submitted expressions of interest, including the appellant and the successful resolution applicant. The appellant, however, failed to submit the final financial proposal despite being provided the opportunity to participate in the challenge mechanism. The Committee of Creditors, comprising a single financial creditor with 100% voting share, ultimately approved the plan submitted by the successful resolution applicant by unanimous vote.
The appellant contended before the Tribunal that the entire CIRP was engineered by certain entities to take over the assets of the corporate debtor and that the successful resolution applicant was ineligible under Section 29A of the Code. The respondent resolution professional and other respondents refuted the allegations, arguing that the appellant, having withdrawn from the process by failing to submit a final plan, lacked locus standi to question the outcome. It was further asserted that the share purchase agreement cited by the appellant never fructified, as the shares were never transferred and control of the corporate debtor never passed to the alleged related parties.
The Appellate Tribunal noted that in earlier proceedings involving other resolution applicants, the entire CIRP process had already been upheld as valid, transparent, and compliant with the Code and Regulations. Referring to its prior findings, the Tribunal reiterated that the challenge mechanism had been properly conducted, and that the successful resolution applicant’s plan was approved with 100% CoC votes in compliance with Section 30(4) of the Code. The Tribunal emphasised the limited scope of interference with the commercial wisdom of the CoC, consistent with the principles laid down by the Supreme Court in K. Sashidhar v. Indian Overseas Bank and Others, REEDLAW 2019 SC 02502.
Upon detailed consideration, the Tribunal held that the appellant, having not participated in the final stages of the resolution process, could not subsequently challenge either the process or the eligibility of the successful resolution applicant. It further found that the share purchase agreement relied upon by the appellant had never been acted upon, and this had been conclusively determined in earlier proceedings affirmed by the Supreme Court. Consequently, the Tribunal dismissed the appeal, affirming the approval of the resolution plan and upholding the decision of the Adjudicating Authority.
Mr. Mohit Choudhary, Mr. Prakhar Mithal and Mr. Gaurav Raj, Advocates, represented the Appellant.
Mr. Abhijeet Sinha, Sr. Advocate with Mr. Nikhil Pillai, Mr. Shwetank Ginodia, Ms. Malvi Dedhia and Ms. Mini Aggarwal, Advocates, appeared for the Respondent No. 1.
Mr. Krishnendu Datta, Sr. Advocate with Mr. Harsh Gurbani, Mr. Harshit Chaudhary and Ms. Suparna, Advocates, appeared for Respondent Nos. 2 and 3.
Mr. Arun Kathpalia, Sr. Advocate, with Ms. Ruby Singh Ahuja, Ms. Aakriti Vohra, Ms. Roopali Gupta, Ms. Varsha Himatsingka and Ms. Diksha, Advocates, appeared for the Respondent No.6.
Mr. Rajat Juneja and Mr. Anmol Kumar, Advocates, appeared for Respondent Nos 8 and 9.
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