NCLAT Reiterates: 66% Approval for Resolution Plan Must Be Computed on Total Voting Share of All Financial Creditors, Including Absentees
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 reiterated that the statutory requirement of 66% approval under Section 30(4) of the Insolvency and Bankruptcy Code, 2016 (IBC), for passing a resolution plan, must be computed on the basis of the total voting share of all financial creditors in the Committee of Creditors (CoC) — and not restricted to only those members who are present and voting at the meeting.
Background of the Case
The appeals arose from two orders of the National Company Law Tribunal (NCLT), Chandigarh Bench. By the impugned orders, the NCLT rejected the appellant’s resolution plan and directed the liquidation of the corporate debtor, M/s Hind Motors India Ltd. The rejection was premised on the plan not having received the requisite 66% approval of the CoC as required by the IBC.
The appellant contended that the plan was supported by creditors holding 77.62% voting share of those present and voting, which, according to them, should be treated as satisfying the 66% threshold. The appellant relied on the argument that the computation should exclude financial creditors who were absent from the meeting and did not cast a vote.
Appellant’s Submissions
It was argued that for evaluating the feasibility and viability of a resolution plan, active participation in the meeting is essential, and the voting percentage should be based on the members who are present in the CoC meeting. The appellant claimed that the exclusion of absentee creditors from the computation would align with the intent of the IBC to ensure that decisions are made by participating members. The appellant also placed reliance on Regulation 25 of the CIRP Regulations, suggesting that the provision contemplates decision-making in CoC meetings and therefore the percentage should be linked to attendees rather than the total creditors.
Respondents’ Submissions
The respondents countered that Section 30(4) of the IBC clearly mandates approval by “not less than 66% of voting share of the financial creditors” and this voting share is determined with reference to all financial creditors, irrespective of whether they attend the meeting or not. They submitted that the statutory scheme, read with Regulation 26 of the CIRP Regulations, allows members who do not vote during the meeting to cast their votes electronically before the close of the voting window, which confirms that non-attendance at the meeting does not exclude a creditor’s voting share from the calculation. It was further argued that the appellant’s reliance on only those present and voting was contrary to the legislative intent, which ensures that major decisions in CIRP reflect the collective approval of creditors holding the prescribed proportion of the total voting share.
Findings of the NCLAT
The Tribunal examined Section 30(4) of the IBC, noting that the provision does not use the expression “present and voting.” Instead, it requires approval by “a vote of not less than sixty-six per cent of voting share of the financial creditors.” The term “voting share” is defined with reference to the voting percentage allocated to each financial creditor in the CoC, which remains constant irrespective of attendance at meetings.
The Bench observed that Regulation 26 of the CIRP Regulations specifically provides that creditors who are not present in the meeting may cast their votes electronically up to the deadline fixed by the resolution professional. This provision, according to the NCLAT, negates the appellant’s argument that voting can only occur during the meeting itself.
The Tribunal relied on the Supreme Court’s decision in K. Sashidhar v. Indian Overseas Bank & Ors., which held that the required percentage must be computed based on the voting share of all financial creditors and that the legislature has not carved out any exception for those absent or abstaining. The Court in K. Sashidhar also emphasised that the commercial wisdom of the CoC in approving or rejecting a plan is paramount, provided the voting threshold is met.
Applying these principles, the NCLAT concluded that since the appellant’s resolution plan did not secure the approval of creditors holding 66% or more of the total voting share, the NCLT was justified in rejecting the plan and ordering liquidation. The appellant’s computation based solely on creditors present and voting was found to be inconsistent with the statutory framework.
Upholding the NCLT’s orders, the NCLAT dismissed the appeals and confirmed that the 66% requirement under Section 30(4) of the IBC must be computed on the basis of the total voting share of all financial creditors in the CoC, including those who are absent or abstain from voting.
Appearance
For Appellant: Mr. Aalok Jagga, Mr. Karan Malhotra, Mr. Anant Shankar Tripathi, Mr. Nahush Jain, Mr. APS Madaan, Advocates.
For Respondents: Mr. Nitin Kant Setia, Advocate for R-1 (RP). Mr. V. K. Sachdeva, Mr. Paras Mithal, Mr. Parakhar Mithal, Mr. Gaurav Goel, Mr. Pulkit Sachdeva, Mr. Gaurav Raj, Advocates for R-2. Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Palak Kalra, Mr. Akshit Awasthi, Mr. Rajat Gupta, Ms. Ridhima, Advocates with Ms. Vanshika Dhoot, for Liquidator.
Cause Title: Saariga Construction Pvt. Ltd. V. Arvind Kumar, RP, Richa Industries Ltd. & Anr.
Case No: Company Appeal (AT) (Insolvency) No. 887 of 2025
Coram: Justice Ashok Bhushan [Chairperson], Barun Mitra [Technical Member]
