TaxTMI 
TaxTMI 
2026 (4) TMI 1671
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....r dated 21.01.2026 passed by the adjudicating authority (National Company Law Tribunal, Court V, Mumbai Bench) disposing of the IA (Plan)/6/2025 in C.P. (IB) No.1152(MB)2023. By the impugned order, adjudicating authority observed that resolution plan reapproved by the Committee of Creditors (CoC) on 09.12.2024 is not in compliance with the provisions of law and it need to be remanded back to the CoC for the reconsideration and requisite action. Appellant who was Successful Resolution Applicant (SRA) has filed this appeal, challenging the said order. 2. Brief facts of the case necessary to be noticed for deciding the appeal are: i. The corporate debtor - Green Soul Ergonomics Pvt. Ltd. was admitted into Corporate Insolvency Resolution Process (CIRP) vide order dated 01.05.2024. ii. The R-1 was appointed as an Interim Resolution Professional (IRP) who was subsequently confirmed the Resolution Professional (RP). iii. On 09.06.2024, RP issued 'Form-G' inviting Expression of Interest (EoI). Appellant submitted EoI as a consortium consisting of Wafi Investments Ltd. (60% shareholding) and Mr. Suhail Sameer holding 40% shareholding. iv. Provisional l....
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....me I to file a detailed affidavit clarifying the necessity for adding OTP Venture Funds Scheme I. An affidavit was filed on 04.07.2025. Adjudicating authority after hearing the parties passed the impugned order 21.01.2026 holding that plan once approved cannot be re-approved by CoC by adding a third new Member to the consortium. xv. Resolution plan was held to be not in compliance with Section 30(2)(e) & (f). In paragraphs 63 & 64, adjudicating authority held: "63. The above judgements appropriately apply to the present case. Further from a bare perusal of the above regulations and provisions of IBC we also note that it is nowhere mentioned in the Regulations or the provisions of IBC that a Resolution Plan once approved can be reapproved by the CoC by adding a third and new member to the Consortium. Further, the Resolution Plan which was reapproved by the CoC on 09.12.2024 is not in compliance with Section 30(2)(e) & (f) of the Code and in violation of Regulation 36(1A)(a), 39(1), 39(1B)(a), 39(1B)(b), 36B(7), 39(3) of the IBBI (CIRP) Regulations, 2016. 64. In light of the above discussions and the provisions of law, it is held that the Resolution Plan ap....
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....es Fund Scheme I no stakeholder was going to adversely affected nor there is any change in financial offers given in the resolution plan. The change was permitted by RFRP in the consortium, no exception can be taken for addition of OTP Ventures Fund Scheme I. Adjudicating authority committed error in not approving resolution plan submitted by the appellant. 5. Learned counsel appearing for the RP refuting the submissions of the appellant submits that appeal filed by the appellant deserves to be dismissed. RP subsequent to the order dated 21.01.2026 has issued information memorandum to PRAs in the final list. CoC on 19.02.2026 decided to reissue RFRP and run the fresh CIRP by inviting resolution plans of all legible PRAs to ensure fresh, transparent and predictable CIRP Process. It is submitted that in pursuance of fresh process, appellant and other 2 PRAs have resubmitted its resolution plan. Appellant having actively participated in the renewed process, the present appeal need to be dismissed. The resolution plan once approved is binding it cannot be modified either by the Resolution Applicant or the CoC. There cannot be any change in the composition of Resolution Applicant aft....
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.... 95.44% vote shares. It was on 25.11.2024 email was sent by appellant desiring to add one addition member in the consortium with OTP Ventures Fund Scheme I. RP after asking certain information and documents has placed the matter before the CoC and in 11th CoC Meeting on 04.12.2024, the CoC approved the reconstitution of the consortium by adding OTP Ventures Fund Scheme I. It was thereafter third Addendum was approved on 07.12.2024 by the consortium where shareholding was changed, Wafi Investments Ltd. being 60%, OTP Ventures Fund Scheme I being 39% and Suhail Sameer being 1%. In the 12th CoC Meeting held on 09.12.2024, resolution plan was re-approved by Addendum 1, Addendum 2 & Addendum 3, which was approved with 82.06% vote shares and it was thereafter the application was filed by the RP for approval of the plan being application I.A./6/2024. 10. Adjudicating authority in the impugned order has found the resolution plan as re-approved on 09.12.2024 being contrary to provisions of Section 30(2)(e) and violation of Regulations. Adjudicating authority had held that there is a procedural violation of the RFRP since after approval of the resolution plan Letter of Intent (LoI) was no....
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....th of each members of the Consortium (mentioned in para no.29 above) shows that Wafi Investment Ltd's net worth is Rs. 197,16,86,500/-, Mr. Suhail Sameer's net worth is Rs. 26,28,94,90,944/-, OTP Ventures Scheme's net worth is merely Rs. 19,35,00,000/-. Since the net worth of Wafi Investment and Mr. Suhail Sameer individually is more and far higher than the requirement of funds for the Resolution Plan, such submission does not justify the addition of OTP Ventures Scheme in the Original Consortium for infusion of funds. Jurisprudence under the IBC consistently requires that any modification to a consortium, that too for implementation of the plan at the preapproval stage of the plan, must be supported by transparent and bona fide reasons- such as bridging gaps in technical, financial, or sector-specific expertise. In this respect it is noted that OTP Ventures Scheme is an Alternative Investment Fund. In no respect can an investment fund be expected to possess technical expertise in on furniture products business in which the Corporate Debtor is. In the absence of a credible explanation, the proposed inclusion appears arbitrary and raises concerns regarding the possibility of extrane....
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....ion applicants, to submit resolution plans." 16. Performance security as contemplated by Regulation 36B(4A) is required to be submitted within the time specified. Clause 1.7 deals with the preparation and submission of the resolution plan. Clause 1.7.7 is as follows: "1.7.7 In case of submission of the Resolution Plan by a consortium (whether incorporated or not), the Resolution Plan along with all requisite documents required to be submitted pursuant to this RFRP shall be signed by an authorized signatory of the lead member of such consortium. The authorized signatory shall have a designation of no less than a director of the lead member of the consortium supported by evidence of such authority by way of a board resolution authorizing such director. The authorize signatory may also be a person holding a designation equivalent to a key managerial personnel (as defined under the Companies Act, 2013) authorized in terms of a power of attorney in his favor executed under the authority of a board resolution of such lead member of the consortium. In event the Resolution Applicant(s) is a consortium, it shall comply with the following requirements: a. A Person cannot....
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....ted without prior approval of Financial Creditors (which shall be banks and financial institutions which are Financial Creditor to Green Soul Ergonomics Private Limited at such time, if any) by requisite majority required under IBC. Provided that inter-se transfer of shareholding shall be permitted with prior intimation to the Financial Creditor (which shall be banks and financial institutions which are Financial Creditor to Green Soul Ergonomics Private Limited at such time, if any). h. There shall be no change in SPC's shareholding in Green Soul Ergonomics Private Limited or change in Control of Green Soul Ergonomics Private Limited without prior approval of the Financial Creditors (which shall be banks and financial institutions which are Financial Creditor to Green Soul Ergonomics Private Limited at such time, if any). i. All the members of the consortium shall be jointly and severally liable in respect of obligations under the RFRP, the Resolution Plan and for the implementation of the Approved Resolution Plan. j. All the members of the consortium shall issue a power of attorney in the format provided in herein (Appendix 5) for appointing the Lead Me....
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....e resolution plan is submitted by a consortium, eligibility of the Members of consortium and their financial capacity, viability and feasibility of the plan are all examined on the basis of credentials of the Members of the consortium. RFRP also contains the evaluation matrix in Appendix I which Appendix I is as follows: "APPENDIX 1 EVALUATION MATRIX S. No. Parameter and Score Matrix Max Score Quantitative Parameters (A) 1 Upfront Cash Recovery as per Resolution Plan 50 2 NPV of deferred cash recovery (Rate of discounting 9%) 25 3 Term / Tenure of Resolution Plan 25 Total weight of Quantitative Parameters (A) 80% - Total Score 100% 100 S. No. Parameter and Score Matrix Max Score Quantitative Parameters (B) 1 Experience of Resolution Applicant / Group in Same Business 25 2 Financial Strength of Resolution Applicant determined by RP in consultation with CoC 75 Total Weight of Qualitative Parameters (B) 20% - Total Score 100% 100 Scores allotted to each RA with Quantitative Parameters (A) will be reduced to 80% & with ....
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....ith a minimum lock in period for the term of the Resolution Plan. The SPC shall contribute, hold and maintain 100% of the shares and voting rights of Green Soul Ergonomics Private Limited with a minimum lock in period for the term of the Resolution Plan, and control the management and affairs of Green Soul Ergonomics Private Limited 21. The respective obligation of consortium Members who submitted the plan is relevant factor after the approval of resolution plan by induction of new Member composition of consortium has changed since new Member has been allocated shareholding of 39% and Suhail Sameer who had earlier 40% shareholding is now reduced to 1% shareholding. Implementation of plan thus is now sought to be undertaken by a new consortium which was never contemplated in the resolution plan. 22. Learned counsel for the appellant in support of his submissions has submitted that commercial wisdom of the CoC in approving the resolution plan cannot be interfered with by the adjudicating authority, since the adjudicating authority has been given a very limited scope for interference that is when the plan is not in accordance with the Section30(2) of the IBC. Learned counsel for....
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....in the present case, there was a failure to maximise the value of the assets and to balance the interests of the stakeholders." 23. Learned counsel for the appellant has also relied on paragraph 37 of the judgment, which is as follows: "37. The above principles have been re-emphasised and taken further by a three-Judge Bench in Essar Steel India Ltd. [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] The Court, speaking through R.F. Nariman, J., held : (SCC p. 593, para 73) "73. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or sub-class of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the adjudicating authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that....
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....2024 does not help the appellant. Thus, re-approval of resolution on 09.12.2024 was contrary to the RFRP. 26. Learned counsel for the appellant placing reliance on Clause 1.7.7(g) submits that even after approval of the resolution plan, change in shareholding or control of the Special Purpose Company (SPC) is permitted, SPC as contemplated in Clause 1.7.7(e) which is to be identified/incorporated after the approval of the plan which is submitted by consortium, the RFRP itself contemplate implementation of plan by SPC in case of consortium and change in shareholding or control of SPC is permitted which is subsequent to the approval of resolution plan, hence change in consortium can also be permitted after approval of plan. The Clauses 1.7.7(e) & 1.7.7(g) cannot be read to mean that after approval of the plan, change in composition of the consortium is also permissible. The change in shareholding or control of the SPC is permitted which SPC is identified or incorporated after approval of the resolution plan, the said explicit provision is for purpose and object but reliance on said clauses to hold that change in composition of consortium is also permissible after approval of the r....
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....nst the order by which application filed by the Appellant has been rejected and we fully agree with the reasons given by the Adjudicating Authority for rejecting the application filed by the Appellant for substituting another Resolution Applicant in place of the Appellant. When plan of the Appellant as Resolution Applicant was approved, the Adjudicating Authority rightly refused to substitute another Resolution Applicant, in which order no infirmity is found." 29. Learned counsel for the respondent has also relied on the judgment of this Tribunal in 'M/s. Sawan Energy Limited' Vs. 'Chandra Prakash Jain & Ors.' in [Comp. App. (AT) (Ins.) No.313/2024]. In the above case also in place of the Resolution Applicant it was submitted, in event, Asset Securities and Reconstruction Pvt. Ltd. another entity Westend Investment and Finance Consultancy Private Limited was permitted to be substituted by the CoC which plan was approved. The order passed by the adjudicating authority approving the plan was challenged. Paragraph 1 of the judgment reads as follows: "1. This Appeal by a Resolution Applicant has been filed challenging the order dated 04.12.2023 passed by the Adjudicating Au....
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....pellant. Counsel for the Respondents sought to distinguish the above judgment on the ground that in the above case, it was after approval of the plan by Adjudicating Authority, application was filed to substitute the SRA and the present case is a case where approval by Adjudicating Authority has not yet been granted. When the SRA cannot be substituted, the above analogy shall also apply to the change of SRA after approval of the Resolution Plan by the CoC. Thus, the above judgment of this Tribunal in "UV Asset Reconstruction Company Ltd. vs. Aircel Ltd." fully supports the submission of the Appellant. The above judgment of this Tribunal has also been affirmed by the Hon'ble Supreme Court by its order dated 10.07.2024 in Civil Appeal (D. No.16938 of 2024). 45. In view of the aforesaid discussions, we are of the view that the Adjudicating Authority committed error in approving the Resolution Plan which was modified Resolution Plan substituting Respondent No.4 as SRA. Order of the Adjudicating Authority is unsustainable and cannot be approved." 32. Learned counsel for the appellant has also relied on the judgment of the Hon'ble Supreme Court in 'Ramakrishna Forgings Limite....
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....cessful resolution applicant to enhance its fund flow was disapproved of by this Court. Thus, if the CoC, including the FC(s) to whom money is due from the corporate debtor, had undertaken repeated negotiations with the appellant with regard to the resolution plan and thereafter, with a majority of 88.56% votes, approved the final negotiated resolution plan of the appellant, which the RP, in turn, presented to the adjudicating authority - NCLT for approval, unless the same was failing the tests of the provisions of the Code, especially Sections 30 and 31, no interference was warranted." 33. There cannot be any dispute to the proposition laid down by the Hon'ble Supreme Court in the above case, however the above case, order by which valuation of assets directed by adjudicating authority while putting the plan approval application in abeyance. 34. Learned counsel for the appellant has further relied on the judgment of this Tribunal in 'Committee of Creditors of Rajesh Business and Leisure Hotels Pvt. Ltd., Through its Member, ICICI Bank Limited' Vs. 'Rajesh Business and Leisure Hotels Pvt. Ltd., Through Its Resolution Professional Mr. Rohit Mehra and Ors.' reported in [(2025 SC....
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....espondent 2, a government company, is the owner of the subsidiary companies and subsidiary companies have experience. The 1st respondent, as it appears, has applied its commercial wisdom in the understanding and interpretation which has been given the concurrence by the Committee concerned and the financing bank. We are disposed to think that the concept of "government-owned entity" cannot be conferred a narrow construction. It would include its subsidiaries subject to the satisfaction of the owner. There need not be a formation of a joint venture or a consortium. In the obtaining fact situation, the interpretation placed by the 1st respondent in the absence of any kind of perversity, bias or mala fide should not be interfered with in exercise of power of judicial review. Decision taken by the 1st respondent, as is perceptible, is keeping in view the commercial wisdom and the expertise and it is in no way against the public interest. Therefore, we concur with the view expressed by the High Court." 93. In our considered view, the induction of Check-Inn Hotels into the consortium of Rare ARC was not in violation of Regulation 39(1B). The purpose of the regulation was served ....
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....on Applicant to further increase the plan value. There can be no dispute to the proposition of law that under the direction of the CoC Resolution Applicant be asked to amend the resolution plan. In the present case, amendment in the composition of consortium was sought by the appellant by email dated 25.11.2024 after approval of the resolution plan. The said amendment in the consortium was not at the instance of the CoC. The above judgment of this Tribunal does not help the appellant in any manner. 39. To the same effect is the another judgment of this Tribunal relied by the appellant in 'Sagar Stone Industries' Vs. 'Sajjan Kumar Dokania & Ors.' reported in [2025 SCC OnLine NCLAT 629], where this Tribunal in paragraph 8 has reiterated that Regulation 39(1A) does not bind the CoC and CoC has unfettered rights to ask for revision of plan. Paragraph 8 of the judgment is as follows: "8. Regulation 39(1A) is a regulation which provides that Resolution Professional shall not permit modification to resolution plan more than once, which regulation, however, does not bind the CoC and the CoC has unfettered right to ask for revision of plan or negotiate with all Resolution Applic....