NCLT Dismisses Resolution Plan Challenge by Phoenix ARC, Upholds CoC's Decision

Tribunal Affirms CoC's Commercial Wisdom as Paramount in Insolvency Resolution Process

In a significant ruling, the National Company Law Tribunal (NCLT) Kochi Bench has dismissed the application filed by M/s. Phoenix ARC Private Limited, challenging the rejection of its resolution plan for the Kerala Chamber of Commerce and Industries. The Tribunal's decision, delivered on November 21, 2025, underscores the paramount importance of the commercial wisdom of the Committee of Creditors (CoC) in the corporate insolvency resolution process, reaffirming its limited scope for judicial review unless there is evidence of illegality or procedural irregularities.

The application, filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, sought to challenge the CoC's rejection of the resolution plan submitted by Phoenix ARC. The plan was rejected on the grounds of non-compliance with mandatory requirements under Section 30(2) of the Code. Despite multiple opportunities to rectify the deficiencies, the applicant failed to submit a compliant plan within the permitted timelines.

The Tribunal noted that the CoC had unanimously rejected the plan in its 11th and 14th meetings, emphasizing that the CoC's commercial wisdom in such matters is paramount and beyond judicial intervention unless illegality or procedural irregularity is established. The Tribunal cited the Supreme Court's judgment in K. Sashidhar v. Indian Overseas Bank, reiterating that the commercial decisions of the CoC are non-justiciable.

The NCLT further observed that the applicant participated in the fresh Expression of Interest (EOI) process initiated by the CoC and is thus barred by the doctrine of approbation and reprobation from challenging the process. The Tribunal also clarified that the restriction under Regulation 36(4A) of the CIRP Regulations on modifying an existing EOI does not prevent the issuance of a fresh EOI by the CoC.

The decision has significant implications for the conduct of insolvency resolution processes in India, reinforcing the autonomy and decision-making authority of the CoC. It highlights the limited role of judicial bodies in reviewing the commercial decisions of creditors' committees, focusing instead on procedural compliance and adherence to statutory provisions.

Bottom Line:

The commercial wisdom of the Committee of Creditors (CoC) in approving or rejecting a resolution plan is paramount and beyond the scope of judicial review unless there is a finding of illegality, arbitrariness, procedural irregularity, or violation of statutory provisions.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 30(2), 60(5), Regulation 36(4A), Regulation 39(1A) of CIRP Regulations

M/s. Phoenix ARC Private Limited v. M/s. Kerala Chamber of Commerce and Industries, (NCLT)(Kochi Bench) : Law Finder Doc Id # 2812837