After Submission Of Final Revised Resolution Plan Within Stipulated Time Frame, Resolution Applicant Cannot Be Permitted To Modify It, Says NCLAT
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member), and Mr. Barun Mitra (Technical Member), has ruled that once the final revised resolution plan is submitted within the stipulated timeframe, the resolution applicant cannot be permitted to modify it.
Background of the Case
The matter arose in an appeal filed by M/s. Findoc Finvest Private Limited against the order dated 04.10.2024, passed by the National Company Law Tribunal (NCLT), Principal Bench, New Delhi, in IA No.37/2024. The order approved the resolution plan submitted by Orissa Metaliks in the Corporate Insolvency Resolution Process (CIRP) of M/s Metenere Ltd. The CIRP was initiated against the Corporate Debtor (M/s Metenere Ltd.) on an application filed by the State Bank of India (SBI) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). Initially, the resolution plan of Jubilee Metals Pvt. Ltd. was approved, but it was later withdrawn due to constitutional changes in the company. Consequently, the Resolution Professional (RP) issued a fresh Form-G inviting Expressions of Interest (EoI). Findoc Finvest was initially included in the list of Prospective Resolution Applicants (PRAs) but was later excluded, along with two others. Following an order from the Adjudicating Authority, Findoc Finvest was allowed to submit its resolution plan, which was subsequently considered by the Committee of Creditors (CoC).
Key Events and Arguments
On 24.06.2024, Findoc Finvest submitted its resolution plan. The CoC granted all resolution applicants time to submit a revised resolution plan by 08.07.2024, provided there were no changes to the financial proposal.
On 01.07.2024, Findoc Finvest sought confirmation from the RP regarding the timeline for restarting plant operations and inquired whether it could submit a financially improved resolution plan within 2-3 days.
The RP responded on 02.07.2024, stating: "Please note that this email correspondence for submission of the Resolution Plan after incorporating Legal Counsel’s observation shall not be construed as an opportunity to revise the financial proposal submitted in the Revised Resolution Plan dated 24 June 2024, and accordingly, no changes to the financial proposal in your Revised Resolution Plan dated 24 June 2024 is permitted in your further revised Resolution Plan."
The 35th CoC meeting was held on 11.07.2024, wherein the plans of Findoc Finvest and Orissa Metaliks were put to vote. The voting process, conducted between 16.07.2024 and 24.07.2024, resulted in the approval of Orissa Metaliks’ resolution plan by a 98.95% majority vote.
Findoc Finvest filed the present appeal, arguing that it was denied the opportunity to improve its financial bid and that the CoC failed to conduct the Swiss Challenge Mechanism, which would have maximized value.
NCLAT’s Observations and Findings
Swiss Challenge Mechanism Not Mandatory: The Tribunal noted that Clause 16.8 of the Request for Resolution Plans (RFRP) states: "The CoC, in its discretion, may decide to adopt Swiss Challenge Mechanism to ascertain the Successful Resolution Applicant after receipt of all resolution plans." The discretionary nature of this clause meant that CoC was not bound to conduct the Swiss Challenge Mechanism.
Modification of Resolution Plan Not Allowed Post Submission: The Tribunal emphasized that after the submission of final revised resolution plans, no applicant could be permitted to enhance their financial offer. The RP's email on 09.07.2024 to all resolution applicants reiterated: "As requested by you in trailing mail, please ensure to submit the Resolution Plan (without changing the commercial terms) by 10 July 2024 positively."
Commercial Wisdom of CoC Supreme: The NCLAT reiterated that once the CoC approves a resolution plan in its commercial wisdom, it is not subject to interference unless it contravenes Section 30(2) of the IBC. The Tribunal cited the Supreme Court’s decision in K. Sashidhar vs. Indian Overseas Bank & Ors. [(2019) 12 SCC 150], which held: "The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyze or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan."
Regulation 39A(1) of CIRP Regulations, 2016 is Enabling, Not Mandatory: The appellant argued that under Regulation 39(1A) of the CIRP Regulations, 2016, the RP could have allowed a modification of the resolution plan at least once. However, the Tribunal held that "Regulation 39(1A) is an enabling Regulation and does not cast any obligation to permit modification of a Resolution Plan."
The NCLAT upheld the decision of the Adjudicating Authority, affirming that the CoC was within its rights to not conduct the Swiss Challenge Mechanism. It observed that the resolution applicants were given ample opportunity to submit revised plans within the stipulated timeframe. Furthermore, it reiterated that the commercial wisdom of the CoC cannot be interfered with unless it violates the provisions of the IBC. Since there was no violation found, the Tribunal found no reason to intervene in the CoC’s decision.
Accordingly, the appeal was dismissed.
Advocates representign the parties:
For Appellant: Mr. Gaurav Mitra, Mr. Harsh Vardhan Sharma, Ms. Arushi Mishra, Advocates.
For Respondents: Mr. Ankur Mittal, Ms, Preety Choudhary, Advocates for R3.
Mr. Vaijayant Paliwal, Ms. Tanya Chib, Advocates for erstwhile RP.
Case Title: M/s. Findoc Finvest Private Limited Registered Office Versus Mr. Surendera Raj Gang and Ors.
Case Number: Company Appeal (AT) (Insolvency) No.249 of 2025
Coram: Justice Ashok Bhushan[Chairperson], Barun Mitra [Member Technical], Arun Baroka [Member Technical]
[Read/Download order]
