2025 (7) TMI 1719 - AT - IBC

CoC Can Accept Revised Resolution Plan After Voting Begins Under Insolvency Rules Section 30(6)

Orissa Metaliks Pvt. Ltd. Versus Avil Jerome Menezes, RP of Future Enterprises Ltd. & Ors.

The NCLAT upheld the CoC's discretion to permit a resolution applicant (R-3) to submit a revised resolution plan after voting on another plan had ... Jurisdiction to submit revised resolution plan - R-3 not submitted a revised plan within the time allowed by the CoC - voting on the resolution plan of the appellant has already commenced on 22.05.2024, but not concluded - power of CoC to take a decison at any stage - HELD THAT:- Clause 2.8.5(d) of Resolution Plan reserves the power of the CoC to approve or not to approve resolution plan which has secured the highest as per the evaluation matrix and it is solely on the basis of discretion of the CoC to approve any compliant resolution plan. The subsequent steps are provided for approval of the resolution plan. In the present case, the facts brought on the record indicate that the voting on the resolution plan of the appellant was not completed and before completion of the voting, revised plan was submitted by R-3 for an amount of Rs.85 crore that was more than Rs.75 crore of the appellant’s revised plan. On 03.06.2024 before voting could be completed, application was filed before the adjudicating authority by R-3. The present is a case where voting was not complete and CoC in 24th CoC meeting took a conscious decision to consider the resolution plan of R-3. Affidavit was also filed by the CoC before the adjudicating authority where it had categorically stated that CoC has decided to consider revised plan. From the judgment of Jindal Stainless Ltd. [2023 (3) TMI 1282 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], it is clear that the CoC has never taken a decision to consider the plan which was sought to be filed by Shyam Sel & Power Ltd. CoC on the other hand has taken a decision not to grant any further opportunity. More so, as noticed by the adjudicating authority in Jindal Stainless Ltd. the name of the applicant Shyam Sel & Power Ltd. was never included in the final list of RA. In the present case, the CoC has taken a decision to permit the R-3 (whose name was in the final list of RA) to submit a revised plan as well as the appellant. It is the sole discretion of the CoC to approve or not approve the resolution plan. We have already extracted Clause 2.8.5(d) of the RFRP. The present is a case where out of two RAs only one has submitted a revised resolution plan and since R-3 did not submit a revised resolution plan, CoC decided to vote on the plan of the appellant with effect from 22.05.2024. Voting was to complete on 04.06.2024 and on 31.05.2024 email was received from R-3 and it is informed that R-3 shall be filing a revised plan and on 03.06.2024 revised plan was also submitted along with the application filed before the adjudicating authority seeking a direction where the plan value disclosed by R-3 was Rs.85 crore. The CoC who has decided to vote on the plan of the appellant took note of the offer given by R-3 by email 31.05.2024 and revised plan given on 03.06.2024. The CoC noted the revised plan of Rs.85 crore submitted by R-3 and decided to consider the revised plan of R-3 and to give opportunity to both appellant and R-3. NCLT has rightly come to answer the questions in the facts of the present case, CoC’s decision to permit R-3 to submit a revised plan is in accordance with law. There is no infirmity in the order of the adjudicating authority dated 16.06.2025, answers given by the adjudicating authority to the questions framed need no interference. Appeal dismissed. ISSUES: Whether the Committee of Creditors (CoC) can abate voting after commencement but before conclusion of voting on a resolution plan.Whether a Resolution Applicant (RA) who has withdrawn from the Corporate Insolvency Resolution Process (CIRP) can still be allowed to remain in the final list of Prospective Resolution Applicants (PRAs) and submit a resolution plan after the due date for submission.Whether the CoC can allow last-minute unsolicited resolution plans dehors the provisions of Regulation 36(b)(6) and Regulation 39(1)(B) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.Whether the objective of value maximisation under the Insolvency and Bankruptcy Code (IBC) can override the principles of timeliness and fairness in the CIRP.Whether the CoC, in exercise of commercial wisdom, can extend timelines to submit resolution plans and consider revised plans after commencement of voting but before approval of the plan by the CoC.Whether an RA can withdraw its resolution plan once submitted and whether the CoC has the authority to permit or reject amendments or revisions to submitted resolution plans.The extent of the CoC's discretion to negotiate and interact with resolution applicants during the resolution plan submission process. RULINGS / HOLDINGS: The CoC may abate voting after commencement if voting has not been concluded and only a portion (e.g., 20%) of members have cast votes, making such abatement permissible under the facts and circumstances.Since the Request for Resolution Plan (RFRP) clauses do not permit any PRA to withdraw from the CIRP, the CoC/RP may permit an RA to submit a revised plan even after purported withdrawal and after the expiry of the due date for submission.The CoC has full discretion and commercial wisdom to allow last-minute unsolicited resolution plans, including those dehors specific regulatory provisions, subject to conditions ensuring fairness and compliance.Value maximisation and timelines are both objectives of the Code; the principle of harmonious construction must be applied to ensure adherence to both objectives.The CoC is permitted to extend timelines and consider revised resolution plans submitted by all PRAs after commencement of voting but before approval of a plan, provided it is done in exercise of commercial wisdom and subject to conditions ensuring fairness.RAs are not permitted to amend or revise their resolution plans once submitted except pursuant to a request by the RP/CoC or if the submission date is extended; withdrawal of a resolution plan once submitted is not permitted under the RFRP.The CoC reserves the absolute right at any stage to accept or reject any or all resolution plans, annul the resolution plan submission process, and engage in negotiations or discussions with any or all RAs; regulation 39(1A) does not prohibit such negotiations. RATIONALE: The Court applied the provisions of the Insolvency and Bankruptcy Code, 2016, and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, including Regulations 36(b)(6), 39(1), 39(1A), 39(3), 39(3A), and 39(3B).The Request for Resolution Plan (RFRP) clauses were analyzed, particularly clauses 1.11.1, 1.13.3, 1.13.5(f), 2.8.4, and 2.8.5, which confer broad discretion on the CoC regarding acceptance, rejection, amendment, negotiation, and timing of resolution plans.The judgment distinguished prior precedent where the CoC had not allowed further submissions or negotiations and where the RA was not in the final list of PRAs, emphasizing that in the present case, the CoC consciously decided to permit revised plans for value maximisation.The Court endorsed the interpretation that the objectives of value maximisation and timeliness are to be harmonized, not treated as mutually exclusive, applying the principle of harmonious construction.The Court relied on authoritative interpretations of negotiation as a consensual bargaining process, recognizing that regulation 39(1A) does not preclude negotiations or further steps by the CoC beyond plan modification by the RA.The Court upheld the CoC's commercial wisdom and discretion as paramount in the CIRP process, including the power to abate voting, permit revised plans, and engage in negotiations to maximize asset value.There was no dissenting opinion recorded; the judgment reflects a unanimous view endorsing the CoC's discretion within the statutory framework.