NCLAT: Resolution Plan Cannot Be Set Aside On Valuation Objections Raised By Dissenting Financial Creditor, Appeals By Central Bank Dismissed
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) has held that the approval of a resolution plan cannot be interfered with merely because a dissenting financial creditor is dissatisfied with the valuation of assets carried out during the Corporate Insolvency Resolution Process (CIRP). The Tribunal observed that once registered valuers have duly considered the assets and submitted their reports, the Adjudicating Authority or Appellate Tribunal cannot substitute their opinion in judicial review.
Background of the Case
The appeals were filed by the Central Bank of India, a dissenting financial creditor with 11.83% voting share in the Committee of Creditors (CoC), challenging two orders passed by the National Company Law Tribunal (NCLT), Mumbai Bench, in relation to the CIRP of M/s Neptune Developers Pvt. Ltd.
The Corporate Insolvency Resolution Process commenced on 16.07.2021 upon admission of the Section 7 application filed by the Appellant. During CIRP, the Resolution Professional appointed two registered valuers, Mr. Kunal Kantilal Vikamsey and M/s Adroit Appraisers & Research Pvt. Ltd., in compliance with Regulation 35 of the CIRP Regulations. Their reports reflected divergent valuations — one valuing the liquidation value at ₹8.39 crores and fair value at ₹11.99 crores, while the other valued them at ₹2.21 crores and ₹3.15 crores respectively.
Subsequently, a resolution plan submitted by Shree Naman Developers Pvt. Ltd. was approved by the CoC with a majority of 85.35% vote share on 31.03.2023. The Central Bank, being a dissenting creditor, objected to the valuations and moved an application before the NCLT seeking fresh valuation of the mortgaged “Project Swarajya.”
Appointment of Third Valuer
On 21.01.2025, the NCLT directed the CoC to appoint a third valuer. Accordingly, the CoC resolved to appoint Mr. Jayesh Mohan Kamat, who submitted his valuation report dated 16.06.2025, fixing the fair value at ₹13.85 crores and liquidation value at ₹11.08 crores, both higher than the earlier reports. However, the Appellant raised objections, alleging that the third valuer had failed to value certain assets, specifically 23 KDMC flats and 66 “Barter Flats” given to contractors in lieu of outstanding dues. It was argued that the non-inclusion of these assets rendered the valuation incorrect and that the resolution plan stood vitiated.
Respondents’ Contentions
Appearing for the Resolution Professional, Senior Advocate Abhijeet Sinha contended that the third valuer had been appointed at the instance of the Appellant, and his report clearly took into account the relevant documents, including MoUs and allotment letters regarding the Barter Flats. Since those flats were transferred to contractors against dues, they did not form part of the Corporate Debtor’s realizable assets and were rightly excluded. It was further submitted that the Appellant, being a dissenting financial creditor, was only entitled to liquidation value under Section 30(2)(b) of the IBC and could not challenge the commercial decision of the CoC. The valuation reports were duly considered, and the average of the two closest estimates was taken in line with Regulation 35.
Senior Advocate Gaurav Mitra, appearing for Edelweiss ARC, also argued that the CoC had exercised its commercial wisdom in approving the plan and that the Appellant could not use appellate proceedings to secure what it had failed to obtain through voting.
Tribunal’s Findings
The NCLAT noted that the third valuer had in fact considered the Barter Flats and recorded that they had been transferred to contractors towards outstanding payments. Since the Corporate Debtor was not to receive any consideration from them, their exclusion from the valuation was justified. The Tribunal observed: “When the said units were given in lieu of outstanding payments to be paid to them by the Corporate Debtor, the Corporate Debtor was not to receive any amount of the said units and addition of the value of the units in the value of the Corporate Debtor was not found acceptable by the third valuer. The above approach by the third valuer cannot be said to be perverse or unacceptable.”
The Bench emphasized that valuers appointed under the CIRP are registered valuers and experts in their field. Their reports, if based on relevant materials, cannot be lightly interfered with by the Adjudicating Authority or the Appellate Tribunal. It reiterated the principle that valuation is not an exact science and falls within the commercial wisdom of the CoC, which is not subject to judicial review except on limited grounds. The Tribunal also referred to the Supreme Court’s decision in M.K. Rajagopalan v. Periasamy Palani Gounder [(2024) 1 SCC 42], which affirmed that valuation reports are not to be re-examined by courts unless shown to be arbitrary or illegal.
Finding no error in the process of obtaining valuation reports or in the approval of the resolution plan, the NCLAT dismissed both appeals. It held that the dissatisfaction of a dissenting financial creditor with the valuation report cannot be a ground to set aside a resolution plan duly approved by the CoC in its commercial wisdom.
The Tribunal concluded that:“The Appellant as a dissenting financial creditor cannot achieve through appellate proceedings what it could not secure through voting. The third valuation report was properly considered, and the appeals deserve to be dismissed.” Accordingly, the appeals filed by the Central Bank of India were dismissed, and the resolution plan stood approved.
Appearance
For Appellant: Mr. Ravi Raghunath, Ms. Rathina Maravarman, Mr. Aditya Sharan, Advocates.
For Respondents: Mr. Abhijeet Sinha, Sr. Advocate with Ms. Niyati Merchant, Advocate for R-1. Ms. Salonee Shukla, Advocate for R-2. Mr. Gaurav Mitra, Sr. Advocate with Ms. Sneha Jaisingh, Mr. Alabh Lal, Ms. Janhavi Sakalkar, Ms. Arushi Mishra, Ms. Shambhavi Kashyap, Advocates for R-6. Mr. Chandrachur Bhattacharyya, Advocate for R10.
Cause Title: Central Bank of India V. Bijendra Kumar Jha & Ors.
Case No: Company Appeal (AT) (Insolvency) No. 713 of 2025
Coram: Justice Ashok Bhushan [Chairperson], Mr. Barun Mitra [Technical Member]
