Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), New Delhi has held that an Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 (IBC) cannot reject a resolution plan on the ground of valuation discrepancies when no objections have been raised by any stakeholders. The ruling came from a three-member bench comprising Justice Ashok Bhushan (Chairperson), Mr. Arun Baroka and Mr. Barun Mitra (Technical Members).

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The decision came in a set of three connected appeals filed by the Committee of Creditors (CoC), the Resolution Professional, and the Successful Resolution Applicant (SRA), Vashishth Builders and Engineers Ltd. (in consortium), all challenging the rejection of their resolution plan by the Adjudicating Authority (NCLT Chandigarh Bench-II) in its order dated 23.04.2025.

Background

The Corporate Insolvency Resolution Process (CIRP) of Trishul Dream Homes Ltd. was initiated by an NCLT order dated 16.06.2023. After multiple reconstitutions of the CoC and issuance of a Request for Resolution Plan (RFRP), a resolution plan was submitted by Vashishth & Vashishth and placed for voting on 26.02.2024. The CoC approved the resolution plan, including an addendum, by a substantial 91.55% majority on 28.02.2024.

An application for approval of the resolution plan was filed, and the Adjudicating Authority directed the filing of a compliance affidavit and audited financial statements. Despite compliance, the Adjudicating Authority rejected the plan on multiple grounds—including alleged irrational CIRP cost allocation, undervaluation of certain assets, and non-compliance with Regulation 6A of the CIRP Regulations.

Submissions Before NCLAT

Senior counsels representing the CoC, the RP, and the SRA submitted that the Adjudicating Authority had ventured beyond its jurisdiction by examining the commercial aspects of the plan. They emphasized that:

• No stakeholder, including any member of the CoC, raised objections regarding the valuation.

• The valuation was conducted by IBBI-registered valuers, as required under Regulation 27.

• Compliance affidavits addressing every directive from the Adjudicating Authority had been filed.

• Regulation 6A was complied with, and in any case, the public announcement sufficed where communication was not feasible.

• Statutory dues not reflected in the plan had not been claimed by any creditor and were accordingly not dealt with in the resolution plan.

NCLAT’s Observations

The Tribunal held that the role of the Adjudicating Authority is confined to checking compliance under Section 30(2) of the Code and ensuring that the plan is not in contravention of any law. It noted that the objections raised by the NCLT, particularly regarding valuation and CIRP costs, did not fall within that scope. It also cited several Supreme Court decisions to reinforce the principle that commercial wisdom of the CoC must be respected.

Quoting from M.K. Rajagopalan v. Dr. Periasamy Palani Gounder [Civil Appeal No.1682-1683 of 2022] and Ramkrishna Forgings Ltd. v. Ravindra Loonkar [Civil Appeal No.1527 of 2022], the Tribunal emphasized that when no objections were raised by stakeholders, judicial interference in matters of valuation or commercial distribution is unwarranted.

“When no objection to the valuation conducted of the Corporate Debtor was raised by any stakeholders, it was not open for the Adjudicating Authority to enter into the issue of valuation of assets... and to make the said ground for rejecting the Resolution Plan,” the Tribunal held.

On the issue of Regulation 6A, the NCLAT noted that the RP had sent notices to creditors wherever addresses were available and had filed a detailed compliance affidavit. It was further held that public announcement under Regulation 6 serves as deemed communication where individual notices are not feasible.

Regarding the treatment of proceeds from avoidance applications, the Tribunal upheld the clause allowing the SRA to retain the recoveries, holding that such a provision is permissible under Regulation 38(2)(d) of the CIRP Regulations.

It also rejected the Adjudicating Authority’s reliance on discrepancies between admitted claims and balance sheet figures, stating that such inconsistencies do not form valid grounds for rejecting the resolution plan when proper claim verification was undertaken as per the Code.

Verdict

The Tribunal found that none of the reasons given by the Adjudicating Authority in its detailed para 18 warranted rejection of the plan. The Resolution Plan did not suffer from any violation of Section 30(2) of the IBC, and the Adjudicating Authority had failed to appreciate the scope of judicial review under Sections 30 and 31.

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“The Adjudicating Authority committed error in rejecting the resolution plan... None of the observations made amount to a violation of Section 30(2),” the NCLAT concluded. Accordingly, the appeals were allowed, the impugned order dated 23.04.2025 was set aside, and the Resolution Plan submitted by the SRA was approved. The Adjudicating Authority was directed to pass the consequential order within 60 days of the receipt of the NCLAT judgment.

Appearance

For Appellant: Mr. Nipun Gautam, Mr. Kartik Pandey, Advocates.

For Respondents: Mr. Aalok Jagga, Mr. APS Madaan, Mr. Vibhu Aggarwal, Advocates for RP. Mr. Abhijeet Sinha, Sr. Advocate with Mr. Viren Sharma, Advocate for CoC.

Cause Title: Vashishth Builders And Engineers Limited And Vashisth Estates Limited (In Consortium) Vs Trishul Dream Homes Limited And Anr.

Case No: Company Appeal (AT) (Insolvency) No. 732 of 2025

Coram: Justice Ashok Bhushan [Judicial Member], Mr. Arun Baroka [Technical Member], Mr. Barun Mitra (Technical Member)

[Read/Download order]