Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, has reiterated that a resolution plan once approved by the Committee of Creditors (CoC) and placed before the Adjudicating Authority cannot be reopened or reconsidered merely because the CoC is subsequently reconstituted. Setting aside the order of the National Company Law Tribunal (NCLT), New Delhi, which had remanded the resolution plan for reconsideration, the appellate tribunal held that the later actions of the reconstituted CoC seeking to withdraw the plan approval application and cancel the letter of intent were beyond its jurisdiction.

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The bench comprising Justice Ashok Bhushan, Chairperson, and Barun Mitra, Technical Member, was dealing with an appeal filed by Mehar Bhoomi Bhawan Pvt. Ltd., the successful resolution applicant, arising out of the corporate insolvency resolution process (CIRP) of Angad Infrastructure Pvt. Ltd. The CIRP had commenced in October 2018 on a petition filed by Edelweiss Asset Reconstruction Company. At the relevant time, the CoC consisted of Edelweiss ARC and Bank of India.

During the CIRP, Mehar Bhoomi Bhawan Pvt. Ltd. submitted a resolution plan proposing an infusion of ₹15.41 crore. The plan was unanimously approved by the CoC in its meeting held on October 23, 2019, following which a letter of intent was issued and performance guarantees were furnished by the resolution applicant. The resolution professional thereafter filed an application before the NCLT in January 2020 seeking approval of the plan. However, the application remained pending for several years.

In 2024, pursuant to directions issued by the NCLT in proceedings relating to the verification of claims, new creditors were admitted and the CoC was reconstituted. Following this reconstitution, the new CoC passed resolutions seeking withdrawal of the plan approval application, cancellation of the letter of intent issued to the successful resolution applicant, and issuance of a fresh Form G. Accepting these submissions, the NCLT remanded the resolution plan to the CoC for reconsideration, holding that the newly inducted creditor had not been given an opportunity to deliberate on the plan and that certain issues relating to statutory compliance and eligibility of the resolution applicant required reconsideration.

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Before the NCLAT, the successful resolution applicant contended that once the CoC had approved the resolution plan with 100% voting share and the plan had been submitted to the Adjudicating Authority, the CoC had no authority to take a U-turn. It was argued that a subsequent change in the composition of the CoC could not invalidate or reopen a decision already taken, particularly in view of Regulation 12(3) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The appellant also submitted that the commercial wisdom of the CoC could not be revisited by the NCLT.

Opposing the appeal, the resolution professional and the newly admitted creditors argued that the resolution plan did not meet the requirements of Section 30(2) of the Insolvency and Bankruptcy Code and that the reconstituted CoC was entitled to reconsider the plan, especially when new creditors had not been given an opportunity to examine it.

Allowing the appeal, the NCLAT held that the NCLT had erred in remanding the resolution plan for reconsideration. The appellate tribunal observed that Regulation 12(3) clearly provides that the inclusion of a financial creditor in the CoC at a later stage “shall not affect the validity of any decision taken by the committee prior to such inclusion.” Relying on its earlier decision in Jatinder Pal Builders Private Limited v. Sandeep Goel (2023), the tribunal reiterated that “the mere fact that CoC has been reconstituted shall not have any effect on the decision already taken by the CoC i.e. earlier decision of the CoC approving the Resolution Plan.”

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The tribunal further held that once a resolution plan is approved by the CoC and submitted to the Adjudicating Authority, it becomes binding inter se the CoC and the successful resolution applicant. Any subsequent decisions of the CoC that affect the pending plan approval application, including cancellation of the letter of intent or seeking withdrawal of the approval application, were held to be beyond the scope of its authority. The NCLAT also observed that the resolution professional had no jurisdiction to seek recall of the plan approval application after the plan had already been approved by the CoC. In conclusion, the NCLAT set aside the NCLT’s order remanding the resolution plan and directed the Adjudicating Authority to take up the pending application for approval of the resolution plan and decide it expeditiously, preferably within a period of three months.

Appearance

For Applicant: Senior Advocate Krishnendu Datta with Advocates Giriraj Subramanium, IPS Oberoi, Aadhyaa Khanna, Bijaharini G., Yash Tandon,

For Respondents: Senior Advocate Abhijeet Sinha, with Advocates Abhishek Anand, Shruti Munjal, Heena Kochar, Palak Kalra, Trisha Dhara for RP; Senior Advocate Arun Kathpalia with Abhishek Parmar for Indo Jatalia Holdings Limited; Senior Advocate Arvind Nayar with Advocates Aslam Ahmed, Kheyali Singh, Abhishek Dwivedi, Diksha Dadu; Senior Advocates Arijit Prasad with Advocates Kunal Godhwani, Kinjal Chadha for Omkara ARC; Advocate Karan Gandhi, Riya Jain for Bank of India.

Cause Title: Mehar Bhoomi Bhawan Pvt Ltd v. Shashi Bushan Prasad and Ors

Case No: Company Appeal (AT) (Insolvency) No. 1876 of 2025

Coram: Chairperson Justice Ashok Bhushan, Technical Member Barun Mitra