Tribunals cannot hold an appeal against CoC-approved resolution plan: NCLAT

New Delhi: Insolvency Appellate Tribunal NCLAT has said adjudicating authorities cannot hold an appeal over a resolution plan approved by the Committee of Creditors (CoC).

A two-member NCLAT bench, which upheld the resolution plans for Mastana Foods and dismissed five appeals filed by a rival bidder and the company's suspended directors, said the adjudicating authority's jurisdiction is limited to ensuring compliance with Section 30(2) of the Insolvency & Bankruptcy Code.

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Citing the Supreme Court's judgment in Kalyani Transco vs Bhushan Power & Steel Ltd, the NCLAT observed that the commercial wisdom exercised by CoC in approving a resolution plan cannot be challenged unless the grounds specified under the Insolvency and Bankruptcy Code (IBC) are satisfied.

It said the legislature had deliberately excluded a challenge to the CoC's commercial wisdom from the scope of judicial review, and any interference with its decision-making outside the grounds prescribed under the Code would amount to rewriting the law and defeating the objectives of the IBC.

"Therefore, it is evident that neither this Appellate Tribunal nor Adjudicating Authority can sit over the resolution Plan approved by the COC, as a court of appeal and the limited jurisdiction which is available is to ensure statutory compliances as provided in Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, so far, this Appellate Tribunal is concerned," the NCLAT said.

The Bench, consisting of Justice Mohd Faiz Alam Khan (Judicial Member) and Naresh Salecha (Technical Member), said it found no ground to interfere with the National Company Law Tribunal's (NCLT) approval of the plan.

NCLAT observations came over the appeals filed by Amba Grains Pvt Ltd and others, an unsuccessful prospective resolution applicant, along with suspended directors Anil Khurana and Krishan Mohan Mendiratta, both of whom are also personal guarantors of the company.

The appellants had alleged that the resolution professional (RP) and the committee of creditors (CoC) allowed only the successful applicant to improve its offer after the e-bidding round, and that Amba's higher bid was ignored.

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Rejecting the contention, the appellate tribunal said all applicants were told before April 15, 2025, that in e-bidding they must incorporate their final bids in revised plans and that no deviation would be permitted.

Amba's later plan at an enhanced value was therefore "unsolicited", it said.

The consortium had emerged as the highest bidder at Rs 131.91 crore in the e-bidding against Rs 91.91 crore offered by Amba.

Reiterating that the commercial wisdom of the CoC is non-justiciable, the NCLAT cited the Supreme Court's observation in Torrent Power Ltd that unsuccessful bidders "will always try to spin commercial decisions of the CoC as procedurally faulty" to secure a second shot through litigation.

It said the scope of judicial review is confined to compliance with Section 30(2) of the Insolvency and Bankruptcy Code.

"Having considered the stated facts, circumstances and the legal position and for the reasons given herein above, we do not find any good ground to interfere in the impugned judgment. Resultantly, the appeals being devoid of force are dismissed," the NCLAT said in its 87-page order.

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