NCLAT Upholds Resolution Plan, Reaffirms Primacy of CoC's Commercial Wisdom

New Delhi - The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal filed by an unsuccessful resolution applicant, ruling that the non-communication of individual scores during the evaluation process is not a sufficient ground to overturn a resolution plan approved by the overwhelming majority of the Committee of Creditors (CoC). The bench, led by Justice Govindrao Sable, emphasized the paramount nature of the CoC's commercial wisdom in insolvency proceedings.

Background of the Case

The appeal was filed by the Consortium of Govindrao Sable, Shobha G. Sable, and Pravin G. Sable against a National Company Law Tribunal (NCLT), Mumbai Bench order dated October 1, 2025. The NCLT had approved the resolution plan submitted by Grainotch Industries Limited, the Successful Resolution Applicant (SRA).

The appellant, an Unsuccessful Resolution Applicant (URA), challenged the approval, contending that the process was flawed and had prejudiced their ability to compete effectively.

Appellant's Arguments: A Plea for Transparency

Senior Counsel Mr. P. Nagesh, representing the appellant consortium, argued that they were not provided with their individual scores and ranking as mandated by the 'Resolution Plan Evaluation Process'. The specific clause stated: "Top Three Resolutions Highest Evaluated Complaint Resolution Plan will be communicated their individual scores and their individual ranking only."

Mr. Nagesh contended that this lack of information, despite knowing their Net Present Value (NPV), prevented the appellant from appropriately revising their plan to match the SRA's offer, thereby creating an unfair playing field. The appellant, who was the highest bidder with an NPV of ₹170 crore at the 24th round of bidding, felt this procedural lapse was critical.

Respondent's Position: Process Was Fair and Participatory

The Resolution Professional (RP) and the SRA countered that the evaluation process was transparent and robust. The court noted that a revised process note was shared with all applicants, followed by an extensive 27-round negotiation process that concluded on March 18, 2025. The appellant actively participated throughout these negotiations.

Furthermore, it was highlighted that the evaluation matrix was known to all participants from the outset. This matrix clearly indicated that while NPV carried 24 marks, upfront payment was weighted more heavily with 56 marks. The SRA’s plan proposed payment within 30 days, whereas the appellant’s plan offered payment over 12 months—a significant difference in the eyes of the CoC.

The counsel for the RP also submitted that resolution applicants were not permitted to revise their financial proposals after the conclusion of the negotiation process, making the alleged non-communication of scores inconsequential.

Court's Rationale: Commercial Wisdom is Supreme

The NCLAT, in its order, firmly sided with the decision of the adjudicating authority and the CoC. The tribunal observed that the appellant was fully aware of the evaluation matrix and consciously submitted a plan with a longer payment timeline.

The judgment underscored a core principle of the Insolvency and Bankruptcy Code (IBC): the commercial wisdom of the CoC is paramount and not subject to judicial interference on minor procedural grounds, especially when the overall process is deemed fair. The NCLAT quoted from the judgment:

> "Appellant admittedly participated in the 27 rounds of negotiation process and it is the CoC which in its commercial wisdom has approved the resolution plan. The submission on which the appellant is challenging the entire process cannot be a ground to set aside the entire process..."

The tribunal found that the CoC, after evaluating all compliant plans, approved the SRA's proposal with a commanding 99.86% vote share. This overwhelming support indicated the CoC's clear preference based on the merits of the plans presented.

Final Decision

Finding no merit in the appeal, the NCLAT dismissed the case. The decision reinforces the authority of the CoC in insolvency matters and sets a precedent that challenges to approved resolution plans must demonstrate substantial and prejudicial flaws, rather than minor procedural non-compliance, to succeed.