Committee Of Creditors Not Prohibited From Seeking Multiple Modifications Or Revisions Of Resolution Plans: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that the Committee of Creditors (CoC) is empowered to seek revisions or modifications in the Resolution Plans submitted by the Resolution Applicants multiple times, as Regulation 39(1A)...
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that the Committee of Creditors (CoC) is empowered to seek revisions or modifications in the Resolution Plans submitted by the Resolution Applicants multiple times, as Regulation 39(1A) of the Corporate Insolvency Resolution Process (CIRP) Regulations, 2016 (CIRP Regulations), restricts only the Resolution Professional from permitting modifications to the plan more than once, but does not impose any such restriction on the CoC.
Brief Facts:
In the Corporate Insolvency Resolution Process (CIRP) of Jabalpur MSW Pvt. Ltd., ten resolution plans were considered by the Committee of Creditors (CoC). The Plan submitted by the Appellant was also considered which was not rejected by the CoC and another plan submitted by the Successful Resolution Applicant (SRA) was approved with 100 percent vote share.
The Appellant filed two Interlocutory Applications seeking rejection of the approved plan and inquiry against the Resolution Professional. The Applications were rejected. The present appeals have been filed against this order.
The Appellant submitted that the Resolution Applicant was never informed about the rejection of his plan and approval of plan of SRA. The CoC extended the time for consideration of Resolution Plan and had not resorted to challenge process.
Per contra, the Respondent submitted that the Appellant was communicated about the decision on 15.06.2024 and was also informed about the email of the SRA.
Observations:
The Tribunal observed that the absence of a written communication of the rejection of the Appellant's resolution plan does not impact the validity of the decision taken by the CoC. The Appellant's plan was duly considered and the CoC exercised in its commercial wisdom approved the Resolution Plan submitted by the SRA. Such approval cannot be interfered with at the Appellant's instance.
The Tribunal further held that while Regulation 39(1A) of the CIRP Regulations prohibits the Resolution Professional from permitting more than one modification to a Resolution Plan, it does not bind the CoC. The CoC is allowed to seek revisions or negotiate with resolution applicants multiple times. Additionally, the challenge mechanism is an enabling tool for value maximisation and the absence of such a mechanism cannot be grounds to challenge the approval of the plan.
Based on the above, the present appeals were dismissed.
Case Title: Sagar Stone Industries Versus Sajjan Kumar Dokania (RP)
Case Number:Company Appeal (AT) (Insolvency) Nos. 524 & 525 of 2025
Order Date: 28/03/2025
For Appellant : Present but appearance not marked.
For Respondents : Mr. Vinod Chaurasia, Advocate for RP.
