NCLAT Upholds Order on CoC's Reconsideration of Resolution Plan Under Insolvency Rules

The NCLAT upheld the impugned order, finding no error in the directions issued to the CoC regarding reconsideration of the appellant's resolution plan. The tribunal noted the CoC had already addressed the appellant's plan and that the Adjudicating Authority properly provided an opportunity for the appellant to file an affidavit. The appeal was dismissed without expressing any opinion on the CoC's actions post-20th meeting, leaving it to the Adjudicating Authority to decide on objections filed in the plan approval application. The interim order permitting the CoC to consider the appellant's plan was clarified as not reflecting any opinion. No interference with the impugned order was warranted, and the appeal was disposed of accordingly.

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ISSUES:

Whether the Resolution Plan submitted by the appellant complied with the requirements of Section 30(2)(d) of the Insolvency and Bankruptcy Code (IBC), 2016 and the relevant IBBI Regulations, including feasibility, viability, and effective implementation under Regulation 38(3)(b) and 38(3)(c) of the CIRP Regulations, 2016.Whether the Adjudicating Authority was justified in partly allowing the application to withdraw the earlier approval application and remanding the Resolution Plan back to the Committee of Creditors (CoC) for reconsideration.Whether the Committee of Creditors was authorized to consider and approve other resolution plans after rejecting the appellant's revised plan, despite the CIRP timeline having ended and the prior direction to reconsider only the appellant's plan.Whether the appellant was entitled to file an addendum to the resolution plan after the impugned order and whether the CoC was obliged to consider it.What is the appropriate remedy for the appellant if dissatisfied with the approval of another resolution plan by the CoC and the pending plan approval application before the Adjudicating Authority.

RULINGS / HOLDINGS:

The Resolution Plan did not meet the requirements of Section 30(2)(d) of the IBC, 2016 read with Regulation 38(3)(b) and 38(3)(c) of the CIRP Regulations, 2016, due to "non-fulfilment of requirements regarding feasibility and viability" and "non fulfilment of provisions related to its effective implementation." Accordingly, the plan could not be approved under the proviso to Section 31(1) of the IBC, 2016.The Adjudicating Authority was correct in partly allowing the application and remanding the Resolution Plan to the CoC for reconsideration after addressing the identified shortcomings, as the appellant failed to file the required affidavit despite ample opportunity.The direction in the impugned order was limited to reconsideration of the appellant's plan; however, after the CoC rejected the appellant's revised plan with 100% vote share, the CoC was entitled to consider and approve another resolution plan for the corporate debtor.The appellant was permitted to submit an addendum addressing the shortcomings, which the Resolution Professional was obliged to place before the CoC for reconsideration; this was complied with as per the order dated 08.05.2025.The appellant's remedy against the approval of another resolution plan lies in filing appropriate objections before the Adjudicating Authority in the pending plan approval application; this appeal does not interfere with the steps taken by the CoC post-rejection of the appellant's plan.

RATIONALE:

The Court applied the statutory framework under the Insolvency and Bankruptcy Code, 2016, specifically Sections 7, 30, and 31, and the Insolvency and Bankruptcy Board of India (IBBI) (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, focusing on Regulation 38(3)(b) and (c) concerning feasibility, viability, and effective implementation of resolution plans.The Court emphasized strict compliance with procedural requirements, including timely filing of affidavits by the Successful Resolution Applicant, and held that failure to comply justifies refusal of plan approval.The Court recognized the limited scope of the Adjudicating Authority's direction for reconsideration of the appellant's plan only but acknowledged the CoC's authority to proceed further after rejection of that plan, consistent with the Code's objectives to resolve insolvency efficiently.The Court declined to express any opinion on the validity of the CoC's subsequent approval of another resolution plan, leaving such matters to be adjudicated by the Adjudicating Authority upon appropriate objections, thereby maintaining judicial restraint and procedural propriety.

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