NCLAT held that a resolution plan submitted after the deadline cannot be entertained and the Adjudicating Authority cannot direct the CoC to accept it.
On 17-03-2025, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Member Barun Mitra, heard and adjudicated an appeal along with connected IAs and held that the Committee of Creditors (CoC) has the exclusive commercial discretion to reject a resolution plan submitted beyond the prescribed deadline. The Adjudicating Authority cannot interfere with this decision unless it is found to be arbitrary or contrary to the provisions of the Insolvency and Bankruptcy Code, 2016, or the CIRP Regulations. The NCLAT reaffirmed that adherence to the timeline under Regulation 36B(6) and Regulation 39(1B) of the CIRP Regulations, 2016, is crucial, and a resolution plan submitted after the deadline cannot be entertained without the CoC’s approval.
The appeal before the National Company Law Appellate Tribunal (NCLAT) was filed by a Resolution Applicant (RA) challenging the order dated 29.07.2024, passed by the Adjudicating Authority (NCLT, Mumbai Bench, Court – IV) in I.A. No. 1143/2024. The Adjudicating Authority had directed the Committee of Creditors (CoC) to consider the resolution plan submitted by Respondent No. 1, Ashden Properties Private Limited. The appellant, being one of the RAs, was aggrieved by this decision. The Corporate Insolvency Resolution Process (CIRP) of AA Estate Private Limited commenced on 06.12.2022, with the Resolution Professional (RP) inviting Expressions of Interest (EoIs) and issuing the Request for Resolution Plan (RFRP) to prospective applicants. The final deadline for submitting resolution plans was extended until 14.02.2024, 5:00 PM. The appellant submitted its plan within the deadline, whereas Respondent No. 1 submitted its plan and Earnest Money Deposit (EMD) on 15.02.2024, beyond the stipulated timeframe. In the CoC meeting held on 16.02.2024, the RP informed the CoC about the late submission, and the CoC, in the exercise of its commercial wisdom, decided not to accept Respondent No. 1’s plan.
Respondent No. 1 filed I.A. 1143/2024 before the Adjudicating Authority, seeking condonation of the one-day delay and a direction for the CoC to consider its resolution plan. Despite opposition from the RP, the Adjudicating Authority allowed the application, holding that the CoC should have exercised discretion under Regulation 36B(6) of the CIRP Regulations, 2016. Meanwhile, the CoC proceeded with a challenging process, declaring the appellant as the H-1 bidder and considering the submitted resolution plans. Aggrieved by the Adjudicating Authority’s interference, the appellant filed the present appeal, contending that the CoC had rightly exercised its commercial wisdom in rejecting the time-barred plan. The appellant argued that Regulation 39(1-B) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, mandates strict adherence to timelines, and the Adjudicating Authority erred in overriding the CoC’s decision.
Respondent No. 1, in its defence, contended that it had sought additional information from the RP but did not receive it in time, leading to the delay. It argued that since the CoC was to consider the resolution plans on 16.02.2024, the delay of one day should not have been fatal. The RP countered this by asserting that all relevant information had been provided and that the CoC had duly exercised its discretion in rejecting the late submission. Relying on precedents such as Jindal Stainless Limited v. Shailendra Arora, Resolution Professional of Mittal Corporation Limited, REEDLAW 2023 NCLAT Del 01582 and Ngaitlang Dhar v. Panna Pragati Infrastructure Private Limited and Others, REEDLAW 2021 SC 12575, the NCLAT observed that the CoC had the authority to set and enforce deadlines and that judicial interference was unwarranted unless the decision was arbitrary or perverse. The Tribunal distinguished the present case from Kalpraj Dharamshi v. Kotak Investment Advisors Limited and Another, REEDLAW 2021 SC 03545, noting that in that instance, the CoC had itself resolved to allow revised plans, which was not the case here.
The NCLAT, after considering the submissions and regulatory framework, upheld the CoC’s decision, affirming that resolution plans submitted beyond the prescribed timeline could not be entertained. It emphasized that Regulation 36B(6) required CoC approval for extending deadlines, which had not been granted in the present case. Consequently, the appeal was allowed, and the order of the Adjudicating Authority directing consideration of Respondent No. 1’s late submission was set aside. The Tribunal reinforced the importance of procedural discipline in the CIRP framework, thereby upholding the CoC’s commercial wisdom and ensuring adherence to regulatory timelines.
Mr. Arun Kathpalia, Sr. Advocate with Mr. Mahesh Agarwal, Ms. Geetika Sharma and Mr. Shivam Shukla, Advocates, represented the Appellant.
Mr. Sumesh Dhawan, Ms. Pragya Choudhary and Mr. Shaurya Shyam, Advocates, appeared for the Applicant in I.A.6380/2024.
Mr. Abhinav Vashisht, Sr. Advocate with Mr. Ritesh Kumar, Ms. Mallika Kamal, Mr. Adithya Devarayan and Ms. Akshita Sachdeva Jaitly, Advocates, appeared for Respondent No. 1.
Mr. Abhijeet Sinha, Sr. Advocate with Ms. Joshua Borges, Advocates, appeared for Respondent No. 2/Resolution Professional.
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