Tribunal rules that commercial wisdom of Committee of Creditors is not open to judicial review; Practising Chartered Accountant’s eligibility as Resolution Applicant affirmed; Allegations of procedural irregularity and one-time settlement dismissed
In a significant ruling on 21st August 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench in New Delhi, dismissed two appeals filed by suspended directors Vinay Gupta and Niharika Goel challenging the approval of the Resolution Plan for Satellite Cables Private Limited. The Resolution Plan, submitted by Mr. Suraj Garg, a practising Chartered Accountant, had been approved by the Committee of Creditors (CoC) with 100% voting share and subsequently sanctioned by the National Company Law Tribunal (NCLT), New Delhi Bench-III.
The appeals primarily raised objections on multiple grounds: violation of natural justice for non-supply of the Resolution Plan to suspended directors before approval, ineligibility of the practising Chartered Accountant as Resolution Applicant, the continuation of Corporate Insolvency Resolution Process (CIRP) despite an alleged One Time Settlement (OTS) proposal, acceptance of a lower financial bid against a higher offer, and the exclusion of substantial government dues from the Resolution Plan.
Addressing the contention of procedural unfairness, the NCLAT emphasized that suspended directors are entitled to meaningful participation during the CIRP, including receipt of CoC minutes and relevant documents upon furnishing confidentiality undertakings. However, mere procedural irregularities without demonstrable prejudice do not vitiate the approval of a Resolution Plan. Vinay Gupta failed to demonstrate any specific objections that could not be raised due to non-supply of the plan, and the Tribunal held the NCLT's refusal to adjourn the hearing as not violative of natural justice.
On the issue of eligibility, the Tribunal scrutinized the claim that Mr. Suraj Garg, being a practising Chartered Accountant, was barred from submitting a Resolution Plan by virtue of professional conduct regulations under the Chartered Accountants Act, 1949. The Institute of Chartered Accountants of India (ICAI) clarified that a practising CA is not disqualified under Section 29A of the Insolvency and Bankruptcy Code (IBC), 2016, and may submit a plan provided they do not act as whole-time directors. The Tribunal observed that Mr. Garg’s role was as a non-executive director, in compliance with professional ethics and MCA filings.
Regarding the OTS proposal, the NCLAT noted that an OTS does not automatically halt the CIRP. Withdrawal of CIRP requires compliance with Section 12A of the IBC, including 90% CoC voting approval, which was not obtained. The alleged OTS did not materialize fully and could not invalidate the ongoing resolution process.
The appellants’ claim that the CoC erred by approving a lower bid was rejected, with the Tribunal reiterating the established legal position that the CoC’s commercial wisdom in approving a Resolution Plan is not subject to judicial interference except on limited grounds such as fraud or violation of law. The CoC considered multiple factors beyond mere financial offer, including feasibility and viability of the plan.
On the exclusion of government dues amounting to over Rs. 17 crore, the Tribunal discussed the recent Supreme Court jurisprudence, including the landmark judgments in “Rainbow Papers” and “Ghanashyam Mishra.” It held that once a Resolution Plan is approved under Section 31 of the IBC, statutory dues not included in the plan stand extinguished under the “clean slate” doctrine, binding all stakeholders including government authorities. The appellants, being suspended directors and not statutory creditors, lacked standing to challenge on this basis.
The Tribunal also found no material irregularity in the conduct of the Resolution Professional, rejecting allegations of collusion and non-transparency. It noted the non-cooperation of the suspended directors during the CIRP and their failure to comply with directions to furnish information.
Highlighting the time-bound nature and objectives of the IBC, the NCLAT affirmed the NCLT order dated 23rd April 2024 approving the Resolution Plan, emphasizing that reopening of completed resolution processes on speculative or procedural grounds is discouraged. Both appellants were ordered to pay exemplary costs of Rs. 1 lakh each for abusing the legal process and causing undue delay.
This judgment reaffirms the sanctity of the Committee of Creditors’ commercial wisdom, clarifies the eligibility of practising Chartered Accountants to participate as Resolution Applicants under the IBC framework, and underscores the limited scope of judicial review in CIRP proceedings. It also elucidates the binding effect of approved Resolution Plans on government dues, consistent with evolving Supreme Court jurisprudence.
Bottom Line:
Insolvency and Bankruptcy Code (IBC) - Commercial wisdom of the Committee of Creditors (CoC) in approving a Resolution Plan with 100% voting share is not subject to judicial review unless there is material irregularity or contravention of statutory provisions under Section 61 of the Code.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 12A, 19(2), 24(3)(b), 29A, 30(2), 30(4), 30(5), 30(6), 31, 53, 61(3)
