Stories
Tribunals Cannot Review CoC-Approved Resolution Plans: NCLAT
- •The NCLAT ruled that adjudicating authorities cannot act as an appellate court over resolution plans approved by the Committee of Creditors.
- •The tribunal upheld the resolution plan for Mastana Foods, dismissing appeals filed by a rival bidder and suspended directors.
- •The bench emphasized that the commercial wisdom of the CoC is non-justiciable and shielded from judicial review unless specific IBC grounds are met.
- •The Supreme Court precedent in Kalyani Transco vs Bhushan Power & Steel Ltd was cited to reinforce the limited jurisdiction of tribunals.
- •The appeals were rejected after the NCLAT found that the rival bidder's enhanced bid was unsolicited and contrary to established e-bidding rules.
Key Questions Answered
No, the NCLAT ruled that adjudicating authorities and appellate tribunals cannot sit as a court of appeal over a resolution plan approved by the Committee of Creditors. Their jurisdiction is strictly limited to ensuring compliance with Section 30(2) of the Insolvency and Bankruptcy Code.
The NCLAT observed that the commercial wisdom exercised by the CoC in approving a resolution plan cannot be challenged or subjected to judicial review unless specific grounds under the IBC are satisfied. The legislature deliberately excluded this from judicial review to prevent rewriting the law.
The NCLAT dismissed the appeals after finding that Amba Grains submitted an unsolicited plan with an enhanced value after the e-bidding round closed, whereas all applicants were previously informed that no deviations would be permitted. The consortium had legally emerged as the highest bidder at Rs 131.91 crore compared to Amba's Rs 91.91 crore.
