Reconstituted CoC Cannot Reopen Resolution Plan Approved By Earlier CoC: NCLAT Reiterates

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has recently reaffirmed that a mere reconstitution of the Committee of Creditors does not invalidate or reopen a resolution plan that has already been approved by the earlier CoC and placed before the adjudicating authority for approval.

A bench led by Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra set aside the National Company Law Tribunal's order remanding the plan for reconsideration.

The tribunal relying on NCLAT's own ruling in Jatinder Pal Builders Private Limited vs. Sandeep Goel(2023) held that “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..”

It also said there was “no ground to remand the resolution plan to the CoC for reconsideration.”

The proceedings arose from the insolvency resolution process of Angad Infrastructure Pvt Ltd, which began in October 2018 on a petition filed by Edelweiss Asset Reconstruction Company.

Mehar Bhoomi Bhawan Pvt Ltd submitted a resolution plan for infusion of Rs 15.41 crore that received unanimous approval from the CoC in October 2019. A letter of intent was issued, and the company furnished performance guarantees.

The resolution professional moved the NCLT for approval of the plan in January 2020, but the application remained pending for several years. In 2024, following court directions, new creditors were admitted and the CoC was reconstituted.

The reconstituted CoC later chose to withdraw the plan approval application and cancel the letter of intent, leading the NCLT to send the plan back for reconsideration.

Before the appellate tribunal, the successful resolution applicant argued that once a plan is approved and placed before the NCLT, the CoC cannot step back from its decision. It said a later change in the CoC's composition could not undo an approval already granted.

The resolution professional and newly admitted creditors opposed the appeal. They argued that the plan did not meet statutory requirements and that the new CoC members had not been given a chance to consider it.

Allowing the appeal, the NCLAT found that the CoC's later decisions to cancel the letter of intent and seek withdrawal of the approval application were beyond its authority. It observed that the CoC could not take a U-turn after approving the plan and placing it before the adjudicating authority.

The tribunal also held that the resolution professional had no jurisdiction to seek recall of the plan approval application. It directed the NCLT to take up the approval application and decide it within three months.