TaxTMI 
TaxTMI 
2026 (3) TMI 1378
X X X X Extracts X X X X
X X X X Extracts X X X X
....as 'Impugned Order') passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-IV) in I.A. No. 2767 of 2025 in C.P. (IB) No. 1164/MB/2021. By the impugned order, the Adjudicating Authority has dismissed the IA No. 2767 of 2025 in which I.A. the Appellant had challenged the rejection of his resolution plan by the Committee of Creditors ("CoC" in short). Assailing the impugned order, the present appeal has been preferred by the Appellant. 2. Coming to the brief factual matrix of the case, Somerset Construction Pvt. Ltd.-Corporate Debtor was admitted into Corporate Insolvency Resolution Proceeding ("CIRP" in short) on 25.07.2023. The Resolution Professional ("RP" in short), with the approval of the single-member CoC, issued Form-G inviting EoI from Prospective Resolution Applicants ("PRAs" in short). In pursuance of the EoI, four PRAs including the present Appellant-Goldendreams Buildcon Pvt. Ltd. submitted their resolution plans. The Appellant had submitted their original resolution plan on 01.03.2024 alongwith EMD, and on the specific request of the RP and the CoC, further improved their resolution plans admittedly on five subsequent occasions viz. 03.06.2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity and viability of the resolution plan followed by voting, if so warranted. The RP and the CoC were also required to adhere to the terms of the RFRP, which in consonance with CIRP Regulation 39(1A)(a) and (b), had clearly laid down a step-by-step sequential process for consideration and approval of the resolution plan which included the evaluation of the resolution plan; shortlisting of the PRAs; discussions with the PRAs and conduct of the challenge mechanism to find the resolution plan with the highest value. It was asserted that only upon completion of the challenge mechanism that the resolution plan with the highest value was to be placed before the CoC for voting. However, in the present case, the steps outlined under the RFRP and the CIRP Regulations were not followed and the resolution plan submitted by the Appellant was rejected in a mechanical manner. The rejection of their plan by the CoC was conveyed by the RP by way of an e-mail dated 14.05.2025 which was a cryptic e-mail which neither assigned any reason for rejection nor provided any details of the evaluation of the plan nor contained the minutes of the relevant CoC meetings. It was also asserted by the Appellant th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gment of the Hon'ble Supreme Court in Arcelor Mittal India Pvt. Ltd. Vs Satish Kumar Chandra (2019) 2 SCC 1, it was contended that it is well settled that an unsuccessful Resolution Applicant has no vested right that its resolution plan must be considered by the CoC. In any case, the Appellant having already withdrawn his EMD from the CIRP cannot now seek reconsideration of its resolution plan or object to the restarting of the CIRP process. It was stoutly denied that there was any non- adherence to the statutory provisions of IBC or the CIRP Regulations or the RFRP by the RP and CoC in the conduct of the resolution process and consideration of the resolution plans. All the PRAs had been invited to attend the CoC meetings and all the resolution plans submitted by the PRAs had not only been presented to the CoC for deliberation but also subjected to negotiations. This is also evidenced by the fact that the Appellant as well as the other PRAs were given multiple opportunities to revise and improve their plans in accordance with the framework contemplated under the RFRP and CIRP Regulations so as to ensure value maximisation. However, inspite of repeated opportunities given to the PRA....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Adjudicating Authority in its order dated 25.04.2025, there was no room for any further complaint by the Appellant. It was also submitted that the 14th CoC had voted upon the plan and rejected all the plans which rejection was communicated to the Appellant. It was also added that the CoC in the 17th meeting had duly recorded the reason for rejection of the plans submitted by the PRAs. 6. We have duly considered the arguments advanced by the Learned Counsel for the parties and perused the records carefully. 7. The short question that requires to be answered by us is whether the decision of the CoC to reject the plans of the PRAs including the Appellant and annulment of the resolution process was impermissible and violative of the RFRP stipulations and the relevant CIRP Regulations. 8. When we look at the prayers contained in IA No. 2767 of 2025 which has been reproduced in the impugned order at para 1 therein, it is the primary prayer of the Appellant that the voting results pursuant to the 14th CoC meeting be set aside as it was conducted in deviation of the RFRP clauses and to give an opportunity to the Appellant to present its resolution plan in terms of CIRP Regulation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n duly followed by the CoC in accordance with the RFRP clauses as well as the statutory provisions of IBC and relevant CIRP Regulations. It is also evident from material on record that all the PRAs including the Appellant was given opportunity to negotiate and submit revised plans. All the PRAs including the Appellant had revised their plans based on feed-backs received from the CoC and RP in the 5th, 6th, 7th, 8th, 9th and 12th CoC meetings. The minutes of the CoC meetings clearly indicate that there was continued participation of the PRAs including the Appellant with the CoC which led to continuous modification and revision of their offers before the CoC. However, the CoC in its commercial wisdom was constrained to reject all the plans finding them to be financially non-viable as they offered values lower than the liquidation value. The reason for rejecting the plans was also clearly recorded in the 17th CoC meeting. Even the resolution plan of other PRAs who had offered higher plan value was also rejected and hence the Appellant cannot claim any prejudice on this count. Furthermore, when Clause 12 of the RFRP equipped the CoC to accept, reject or annul the bid process, this proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and that it was the commercial wisdom of the CoC to take a decision in this regard. 12. Coming to our analysis, when we look at Clause 4 of the RFRP, which has been placed on record at page 99 of the Appeal Paper Book ("APB" in short) it clearly provides that for the purpose of holding negotiations between CoC and the PRAs, challenge mechanism as contemplated under CIRP Regulation 39(1A) was required to be followed. The same is as extracted below: "4. Bidding Process Brief Snapshot of the Process is as follows ("Bid Process") ..... Negotiations between CoC and the Shortlisted Resolution Applicant(s) with using a challenge mechanism under Regulation 39 (1A) of CIRP Regulations." Also, in terms of Clause 16 of the RFRP which has been placed on record at page 118 of the APB, a step-by-step sequential process for consideration and approval of the resolution plan was required to be followed. However, it is the contention of the Appellant that their resolution plan was rejected without complying with the steps contained in Clause 16 of the RFRP and in disregard of Clause 4 of the RFRP which provides for conforming to CIRP Regulation 39(1A)(a) a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e truncated midway or reset by invoking this clause. Hence, to our minds the RFRP clauses read conjointly does not put any definitive embargo on the CoC from rejecting a resolution plan prior to implementation of the challenge mechanism by the CoC. 15. This brings us to the issue of tenability of certain other contentions raised by the Appellant in respect of various shortcomings on the part of the CoC. One such contention is denial of opportunity for the PRAs to participate, engage and interact with the CoC. It is an indisputable fact that after the Appellant submitted their original resolution plan on 01.03.2024, they further improved their resolution plans on various occasions on the specific request of the RP and the CoC. This goes to show that there was no impediment placed in the constructive participation and engagement by the Appellant with the CoC with respect to their plan. The 7th CoC minute which has been placed on record by Respondent No.2 illustratively shows that the Appellant availed earlier opportunities to improve their plans until in 7th CoC meeting held on 10.07.2024, the Appellant when asked to improve his offer indicated that the offer placed by him was the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l. This step is crucial to ensure timely progress and completion of the corporate insolvency resolution process (CIRP)..." From the above minutes, we have no reasons to entertain any doubts in our minds that the Appellant was unaware of the fact that their plans was to be put to vote. 17. More significantly, the Appellant had themselves pressed for consideration of their plan by the CoC before the Adjudicating Authority by filing IA No. 1800 of 2025 in which the RP informed the Adjudicating Authority that the CoC will consider all the plans within 10 days. The relevant orders are as reproduced below: ORDER DATED 25.04.2025 IA 1800(MB)2025 Counsel for the RP submits that within 10 days, the CoC will consider all the Resolution Plans received by the RP. In view of the above, list on 27.05.2025. 18. Finally, the plans were put to vote before the CoC in its 14th meeting in which all the plans were rejected. On the complaint that the voting results of the 14th CoC was not made available to them by the RP, it was submitted by the Ld. Counsel for the RP that the 14th CoC minutes had been shared with the Ld. Counsel for the Appellant across the bar during t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were rejected on the grounds of financial non-viability, as each plan offered a value lower than the liquidation value. The CoC also highlighted they have one investor whose LOI is approx. 200 crore which be noted in the meeting..." (Emphasis supplied) 20. When we glance through the above minutes of the 17th CoC meeting we find that all aspects of the plan including the plan value of the Appellant and other PRAs were in the knowledge of the CoC. After deliberations, the CoC was not satisfied with the plan value either offered by the Appellant or the plan value offered by other PRAs which shows that the CoC was well aware of the objective to ensure maximisation of the value of assets which in turn testifies the exercise of commercial wisdom by the CoC. Clearly therefore the CoC in the exercise of its commercial wisdom had rejected all the plans including that of the Appellant on finding them to be financially non-viable as they offered values lower than the liquidation value. Thus, the reason for rejecting the plans stood unambiguously recorded in the 17th CoC meeting. When the resolution plans failed to meet the legitimate expectation of fetching their desired value, the CoC ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the RFRP of the present case provides that "notwithstanding anything contained in the RFRP, the CoC reserve the absolute right" and clause 4.2.4(c) provides "annul the resolution plan process and reject all the resolution plans and/or combined resolution plans and call for submission of new resolution plans from any person". The above clause is wide enough to empower the CoC to annul the resolution process including the challenge process. Further clauses of the RFRP of the present case clearly reserve the power of the CoC to call the applicants for negotiations or improving their resolution bid. Hence, the CoC is not denuded of its power to take action under the RFRP in the present case and the law laid down by this Tribunal in Jindal Stainless Ltd. v. Shailendra Ajmera (2023) 23 Comp Cas-OL 388 (NCLAT) that there can be no fetter on the power of the CoC to cancel or modify any negotiation with the resolution applicant including a challenge process is fully attracted in the present case. The Adjudicating Authority itself in its judgment has noticed that challenge process can be cancelled if any fraud is found in the challenge process. The power to cancel a challenge process is ....