NCLAT: No Interference with CoC-Approved Plan Offering ‘NIL’ to Operational Creditors If Claims Are Duly Addressed
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), has held that when the claims of operational creditors have been duly considered and the liquidation value available to them is nil, the Adjudicating Authority cannot interfere with a resolution plan approved by the Committee of Creditors (CoC) with 100% voting share. The current legislative framework does not mandate payment to operational creditors in the event of liquidation of the corporate debtor.
The appeals arose from an order dated 01.04.2025 of the National Company Law Tribunal (NCLT), Mumbai Bench, approving the resolution plan of Nuvoco Vistas Corporation Limited for Vadraj Cement Ltd. The appellants, admitted as operational creditors, challenged the approval on the ground that the plan proposed 'NIL' payment to them without proper consideration of their claims, contrary to Regulation 38 of the CIRP Regulations.
The appellants argued that operational creditors, being providers of goods and services, were entitled to priority in payment and that the resolution plan failed to reflect any meaningful consideration of their claims. They relied on the Supreme Court’s ruling in CoC of Essar Steel India Ltd. v. Satish Kumar Gupta and the NCLAT decision in Hammond Power Solutions Pvt. Ltd. v. Sanjit Kumar Nayak, where a resolution plan was remitted for fresh consideration due to inadequate treatment of operational creditors.
In response, the respondents submitted that under Section 30(2)(b) of the IBC, operational creditors are entitled to receive at least the amount payable to them in liquidation. Since the liquidation value of the corporate debtor was insufficient to pay even secured financial creditors, operational creditors would have received nothing in liquidation, making the proposed 'NIL' payment compliant with the Code. The CoC, exercising its commercial wisdom, had approved the plan with unanimous voting.
The NCLAT observed that Regulation 38 requires the resolution plan to state how it has dealt with the interests of all stakeholders, including operational creditors. In this case, the NCLT had noted that the claims of operational creditors, other than workmen, employees, and government dues, amounted to ₹77.65 crore and were proposed to be discharged in full with no payment, based on the liquidation value assumption. The plan also recorded detailed treatment of each creditor category, showing that operational creditors' claims were considered.
The Tribunal distinguished Hammond Power Solutions, noting that in that case there was no indication that the CoC had considered the operational creditors' interests, whereas here the claims had been acknowledged and dealt with as per the statutory scheme. It further referred to its earlier decision in Damodar Valley Corporation v. Dimension Steel and Alloys Pvt. Ltd., where the absence of legislative mandate for payment to operational creditors in such circumstances was noted as a harsh reality and forwarded to the Central Government for consideration.
Reiterating that interference with the CoC’s commercial decision is permissible only when a resolution plan violates Section 30(2) of the IBC or the CIRP Regulations, the NCLAT found no such breach in the present case. With 100% CoC approval and statutory compliance established, the Tribunal declined to interfere. Accordingly, all the appeals were dismissed.
Appearance
For Appellant: Mr. Kunal Tandon, Sr. Advocate with Mr. Yashvardhan, Mr. Kunal Godhwani, Ms. Kinjal Chadha, Ms. Kritika Nagpal and Ms. Natasha Singh, Advocates.
For Respondents: Mr. Rishabh Parikh, Mr. Gaurav Mathur and Ms. Niyati Kohli, Advocates for SRA. Mr. Viraj Parikh, Mr. Vivek Shetty, Mr. Akhilesh Menzez, Mr. Nishant Upadhyay, Ms. Alankrita Sinha and Mr. Naveet R., Advocates for RP.
Cause Title: Masyc Projects Pvt. Ltd. V. Pulkit Gupta, RP of Vadraj Cement Ltd. & Ors.
Case No: Company Appeal (AT) (Insolvency) No. 831 of 2025
Coram: Justice Ashok Bhushan [Chairperson], Barun Mitra [Technical Member]
