Mehar Bhoomi Bhawan Pvt Ltd's Resolution Plan for Angad Infrastructure Pvt Ltd Restored; NCLAT Cites Jurisdictional Overreach by NCLT
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has set aside a National Company Law Tribunal (NCLT) order that remanded the resolution plan of Mehar Bhoomi Bhawan Pvt Ltd to the Committee of Creditors (CoC) for reconsideration. This judgment reinforces the binding nature of a CoC-approved resolution plan under the Insolvency and Bankruptcy Code (IBC), 2016.
The NCLAT's decision came in response to an appeal filed by Mehar Bhoomi Bhawan Pvt Ltd, formerly known as Mehar Footwear Pvt Ltd, challenging the NCLT's order dated October 14, 2025. The NCLT had remanded the resolution plan back to the CoC, citing non-compliance with statutory requirements and procedural irregularities.
The appellate tribunal, led by Justice Ashok Bhushan, ruled that once a resolution plan is approved by the CoC with the requisite majority, it becomes binding and cannot be reconsidered or withdrawn by the CoC or any other party after submission to the adjudicating authority. The NCLAT emphasized that the CoC meetings held after the resolution plan's approval, which sought to affect the pending resolution plan, were unauthorized and breached the regulations.
The CoC had initially approved the resolution plan with a 100% vote share on October 23, 2019. However, the NCLT later remanded the plan, citing changes in CoC composition and alleged procedural irregularities during the insolvency process. The appellate tribunal found these grounds insufficient for reconsideration, especially given the IBC framework's clarity on the binding nature of CoC-approved plans.
NCLAT's ruling highlighted that the inclusion of new members in the CoC post-approval does not invalidate previously made decisions. It also noted that the CoC's attempt to withdraw the resolution plan was beyond its jurisdiction and contrary to the IBC's intent.
The tribunal further clarified that the resolution plan provided for payment as per statutory requirements and that secured creditors, categorized as 'other creditors,' were not statutorily required to receive payments under Section 30(2)(b) of the IBC.
This decision reaffirms the sanctity of the resolution process and the commercial wisdom of the CoC, ensuring that insolvency resolutions are not unduly delayed or disrupted by subsequent challenges.
Bottom Line:
Insolvency and Bankruptcy Code (IBC) - Resolution Plan approved by CoC with 100% vote share is binding and cannot be withdrawn or reconsidered by CoC after submission to Adjudicating Authority.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 30(2), 31, 53, Regulation 18(2), Regulation 12(3) of CIRP Regulations 2016
