NCLT Mumbai Rejects Financial Creditor's Plea To Revise Vote On Reliance Broadcast Resolution Plan
Pranav B Prem
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati, has dismissed an application filed by Authum Investment and Infrastructure Limited, which sought permission to revise its vote from “No” to “Yes” on the approved resolution plan for Reliance Broadcast Network Limited (RBNL).
The application, filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, was moved by Authum Investment, the entity which had acquired the debt portfolio of Reliance Commercial Finance Limited (RCFL). RCFL, holding 11.03% voting rights in the Committee of Creditors (CoC), had voted against the resolution plan submitted by Sapphire Media Ltd. in November 2023. However, after realizing that dissenting creditors would receive minimal recovery as first-charge creditors had priority, RCFL attempted to change its vote to an assenting one.
Background
The CoC had approved Sapphire Media Ltd.’s resolution plan with 88.97% votes in favor, while RCFL voted against it. Five days after the e-voting concluded on November 16, 2023, RCFL sent an email to the Resolution Professional on November 21, 2023, stating that its earlier vote was cast in error and that it wished to be treated as an assenting creditor. In its plea before the tribunal, Authum Investment argued that under Regulation 26 of the Insolvency and Bankruptcy Board of India (CIRP) Regulations, 2016, it was permissible for a creditor to change its vote before the plan’s final approval by the Adjudicating Authority. The applicant relied on Supreme Court decisions in Ashwini Kumar Upadhyay v. Union of India and Brilliant Alloys Pvt. Ltd. v. S. Rajagopal to contend that procedural regulations should not restrict statutory rights.
The applicant further argued that it had been treated unfairly, as it was entitled to only 3% of its admitted claim despite being a secured financial creditor. It claimed that this amounted to discrimination within the same class of creditors, contrary to the principles of equitable treatment under the Code.
Respondents’ Stand
The respondents, including the Resolution Professional and other secured creditors, opposed the plea, asserting that once the voting window closes, no member of the CoC can alter its vote. They emphasized that under Regulation 26(3), the voting portal is blocked immediately after the conclusion of voting, ensuring finality and confidentiality of the process.
They also highlighted that RCFL’s change of vote was communicated only after the resolution plan had been approved by the CoC and after the Resolution Professional had filed the plan before the tribunal for approval. The respondents relied on NCLAT’s ruling in Hem Singh Bharana v. Pawan Doot Estate Pvt. Ltd., which held that the CoC, once having approved a resolution plan, cannot change its stance thereafter. The respondents further justified the 3% payout to RCFL, noting that it held only a subservient charge on the current assets, unlike other creditors holding first pari passu charge. Citing Essar Steel India Ltd. v. Satish Kumar Gupta and K. Sashidhar v. Indian Overseas Bank, they argued that distribution of proceeds is a matter of commercial wisdom of the CoC and is not open to judicial interference.
Tribunal’s Observations
The NCLT noted that the e-voting window remained open from November 11 to November 16, 2023, and was duly closed as per Regulation 26(3). The Resolution Professional subsequently filed the plan approval application before the tribunal on November 21, 2023 at 5:26 PM, whereas RCFL’s email requesting vote revision was sent later the same day at 7:14 PM. The bench held that such a belated attempt was procedurally invalid, as once the voting period ends and the portal is blocked, the voting process attains finality. The tribunal observed: “Once the process under Regulation 26 stands concluded, there remains no provision that allows any member of the CoC to alter or modify its vote thereafter. Any change in the voting beyond the voting window would compromise the integrity of the voting process and sanctity of the prescribed timeline for voting.” The tribunal further noted that RCFL’s revised vote was not acknowledged even in the order approving the resolution plan on May 6, 2024, which recorded the plan’s approval with 88.97% majority — thereby implying that the dissenting vote stood unchanged.
No Discrimination in Distribution
On the claim of discrimination, the bench rejected the argument, holding that differential distribution based on the nature of security interest is permissible under the commercial wisdom of the CoC. Referring to Essar Steel India Ltd. v. Satish Kumar Gupta, it observed that the CoC is free to determine varying payouts among different subclasses of creditors based on their security and recovery positions. The tribunal stated that RCFL’s entitlement of 3% was neither arbitrary nor contrary to Section 30(2) of the Code, as it exceeded the amount payable to a dissenting creditor under the liquidation value. It reiterated that adjudicating authorities cannot interfere with the CoC’s commercial decision so long as it complies with statutory provisions.
Finding no merit in Authum Investment’s contentions, the NCLT concluded that once the voting period under Regulation 26 is closed, no revision of votes is permissible. It also found no violation of law or discrimination in the approved plan. Accordingly, the tribunal dismissed IA No. 3977 of 2024, holding that the application lacked merit.No order as to costs was passed.
Appearance
For Applicant: Advocate Shivam Bhagwati
For Respondent: Advocate Deep Roy and Advocate Saurabh Bachhawat
Cause Title: IDBI Trusteeship Services Limited Vs Reliance Broadcast Network Limited
Case No: IA (IBC) NO. 3977 OF 2024 IN CP (IB) NO. 310 OF 2022
Coram: Judicial Member Mohan Prasad Tiwari, Technical Member Charanjeet Singh Gulati
