The National Company Law Appellate Tribunal has delivered a definitive ruling regarding the limitations placed upon resolution applicants during the corporate insolvency resolution process. In a significant decision, the appellate authority confirmed that a resolution applicant cannot assert an indefeasible right to the approval of a plan merely because the Committee of Creditors had previously granted its consent. This development marks a clear boundary for applicants, particularly when a plan is remitted for reconsideration and subsequent revisions fail to garner the necessary statutory support.

The ruling came in the context of the insolvency proceedings involving IVR Prime IT SEZ Pvt. Ltd., where the resolution applicant, Vasu Buildcon, sought to challenge the move toward inviting a fresh expression of interest. The tribunal, presided over by Justice N Seshasayee, along with technical members Arun Baroka and Indevar Pandey, dismissed the appeals, thereby clearing the way for the National Company Law Tribunal’s previous order permitting the issuance of a new Form G to attract potential resolution applicants.

The controversy originated from a series of procedural developments starting in March 2022. Initially, the Committee of Creditors had approved Vasu Buildcon’s resolution plan with a unanimous 100% voting share. However, before the National Company Law Tribunal could grant formal approval under Section 31 of the Insolvency and Bankruptcy Code, the plan was sent back to the Committee of Creditors. This judicial redirection was prompted by evolving legal standards regarding the status of secured creditors, specifically in light of the Supreme Court's ruling in the matter of Greater Noida Industrial Development Authority v. Prabhjit Singh Soni .

Following the remand, Vasu Buildcon submitted a revised proposal. However, the dynamics within the Committee of Creditors had shifted, and the revised plan failed to secure the mandatory 66% voting majority required for passage. Furthermore, an alternative settlement proposal submitted under Section 12A of the insolvency framework also failed to reach the threshold of 90% voting share. Faced with these failures, the creditors unanimously opted to restart the search for a viable resolution applicant by publishing a fresh Form G.

Vasu Buildcon, supported by the company’s suspended director Ankit Pathak, challenged this decision before the appellate tribunal. The appellants argued that the initial remand by the National Company Law Tribunal was restricted in scope—intended only to address the claims of the Noida Authority—and that the committee had overstepped its mandate by re-opening the entire resolution plan for negotiation. The appellant contended that the commercial wisdom of the creditors should have been confined to the narrow issues identified by the tribunal rather than effectively discarding a previously agreed-upon plan.

The resolution professional and ICICI Bank, appearing as a respondent, countered these assertions by highlighting that the revised plan submitted by Vasu Buildcon was substantively different from the original version and contained material deficiencies. They argued that the revised document raised significant concerns regarding funding arrangements, overall feasibility, and long-term viability, which naturally influenced the committee’s change in stance. The tribunal found merit in these arguments, emphasizing that the absence of a final court-sanctioned order under the insolvency code meant that no rights had yet crystallized in favor of the applicant.

In its observation, the bench clarified the limits of an applicant’s expectations during the insolvency cycle: “Based on the discussion in earlier paras, we are of the view that the earlier approval of the original Resolution Plan did not create an indefeasible right in favour of the Appellant once the Plan had been remitted for reconsideration and the revised proposal subsequently failed to secure the statutory majority.”

The appellate bench also addressed allegations regarding the voting process itself, specifically regarding the assignment of claims by 13 homebuyers to entities perceived to be linked with a competing prospective resolution applicant. Upon review, the tribunal found no evidence of fraud or material irregularity. It noted that at the time of the relevant votes, the original homebuyers were still recorded as the rightful creditors on the official ledger. The court held that subsequent recognition of claim assignments could not be used to retroactively invalidate a voting outcome that was legally valid at the time it was cast.

This decision underscores the fluid nature of the corporate insolvency resolution process, where the commercial wisdom of the committee remains the primary driver of outcomes. By confirming that a failed reconsideration process resets the stage, the appellate authority has reinforced the autonomy of creditors to pivot when a proposed plan no longer meets their internal requirements or fails to adapt to new legal constraints. For resolution applicants, the ruling serves as a stark reminder that committee approval is a conditional step, not a final guarantee of success.

The tribunal’s dismissal of these appeals effectively validates the decision of the National Company Law Tribunal to permit the publication of a fresh Form G. As the process moves into this new phase, the focus shifts to whether fresh expressions of interest will attract viable resolution plans that can satisfy the creditors' requirements. The case highlights that even in advanced stages of an insolvency proceeding, if a plan is not finalized and the statutory majority is lost, the committee retains the prerogative to seek more robust solutions to prevent the company from sliding into liquidation. The matter now rests with the resolution professional, who is mandated to proceed with the invitation of fresh expressions of interest to ensure the revival of the corporate debtor.