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

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 commenced but not concluded. Despite the initial voting on the appellant's plan starting on 22.05.2024, the CoC allowed R-3 to submit a higher offer of Rs.85 crore on 03.06.2024 and decided to consider both plans before completing voting. The tribunal found no illegality in the CoC's decision, emphasizing that the CoC has sole authority to approve or reject resolution plans at any stage. The NCLT's order affirming the CoC's decision was upheld, and the appeal was 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after commencement but before conclusion of voting on a resolution plan.Whether a Resolution Applicant (RA) who has withdrawn from the Corporate Insolvency Resolution Process (CIRP) can still be allowed to remain in the final list of Prospective Resolution Applicants (PRAs) and submit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.

---