CoC is empowered to consider revised financial offers keeping in mind the time limit set out by law: NCLAT


Status as on- 30/07/2021

Brief Facts of the case

  1. In the case of Bhushan Power & Steel Limited’s corporate insolvency resolution procedure (CIRP), three resolution plans were filed. Liberty House Group Pte. Ltd., one of the resolution applicants, was given many opportunities to furnish essential documentation, including a confidentially affidavit, in accordance with the pre-qualification with criteria. In the current case, Tata Steel Limited challenged the NCLT’s order to allow Liberty House to submit a settlement plan.
  2. The NCLT decided that Liberty House’s resolution plan could not be rejected due to a delay caused by the process document or any other material internally issued by the resolution professional or the committee of creditors (CoC).
  3. Similarly, following the filing of the resolution plan, JSW Steel made an increased financial offer. Tata Steel Limited objected during the CoC meeting, and the CoC authorised all three resolution seekers to submit amended financial bids. Despite being designated the top bidder, Tata Steel Limited indicated that improvements were permitted.


The Hon’ble NCLAT ruled as follows:

  1. In this decision, the NCLAT dismissed the appeal filed by Tata Steel Limited (‘TSL’) against Liberty House Pte. Ltd. (‘Liberty’). TSL had challenged the order of the National Company Law Tribunal, Principal Bench (‘NCLT’) dated April 23, 2018, in which the Committee of Creditors (‘CoC’) of Bhushan Power & Steel Limited (‘BPSL’) was directed to consider the resolution plan submitted by Liberty after the deadline for submission had passed.
  2. The NCLAT ruled that the NCLT should accept JSW Steel’s approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016. Concerning the counting of the voting shares of the CoC members, the NCLAT stated:

A member of the ‘CoC’ who is not present in the meeting either directly or through Video Conferencing and thereby not considered its feasibility and viability and such other requirements as may be specified by the Board, their voting shares, therefore, cannot be counted for the purpose of counting the voting shares of the members of the ‘CoC’ under Section 30 (4) of the Code.

  1. The NCLAT dismissed Tata Steel Limited’s claim, stating that the CoC has the authority to evaluate updated financial bids while adhering to the time limit imposed by law. The NLCAT underlined that it would advance the Code’s goal of maximising the corporate debtor’s assets and may give a better alternative for restructuring stressed assets.
  2. The NCLAT cited the Supreme Court’s decision in Arcelor Mittal India Private Limited v. Satish Kumar Gupta, in which the Court stated that the “resolution applicant” has no vested or fundamental right to have its “resolution plan” reviewed or accepted. The NCLAT cited Binani Industries Limited v. Bank of Baroda, in which the NCLAT decided that an enhanced financial offer presented by a ‘resolution applicant’ constituted a continuation of its previously submitted ‘resolution plan.’

Impact of the case

In Swiss Ribbons v. Union of India, the Supreme Court decided that the submission of a resolution plan is not a vested right in the hands of the resolution petitioners. Similarly, the NCLAT relied on the Supreme Court’s ruling in Arcelor Mittal India Private Limited v. Satish Kumar Gupta. The stance is clear: regardless of eligibility to submit a resolution plan, resolution applicants cannot compel the CoC to examine their resolution plans or enhanced financial proposals.

The NCLAT had to decide whether the NCLT/CoC may provide resolution applicants repeated chances to alter their individual resolution plans and whether the CoC was authorised to entertain fresh or revised resolution plans without exhausting available bids. The NCLAT relied on the Binani Industries decision to confirm that prior to voting on resolution plans placed before the CoC, the CoC can call for and consider a “improved financial offer” in order to maximise value, and that within the IBC timelines, the CoC can grant multiple opportunities to resolution applications to revise their respective financial offers.


The NCLAT’s decision allowed the long-delayed insolvency procedure to proceed to the resolution stage. The NCLAT ruled that the resolution plan could be changed based on the dates and conditions specified in the process documents. As a result, the resolution professional’s process documentation will play an important part in establishing the legitimacy of better financial offers. It is important to highlight that submitting improved financial offers is in the best interests of both the Committee of Creditors (CoC) and the corporate debtor in cases where the resolution plan cannot be accepted and the corporate debtor is forced to liquidate. The judgement also justified the CoC’s authority and functioning in relation to the resolution proposals. At the same time, the ruling said that the CIRP Process would not be delayed. As a result, the NCLAT’s decision does not allow for the submission of a frivolous enhanced financial offer in order to delay the CIRP procedure.


Tata Steel Limited vs Liberty House Group Pte. Ltd. & Ors.

(NCLAT Judgement dated 04/02/2019 in Company Appeal (AT) (Insolvency) No. 198 of 2018)


Disclaimer – The above article is based on interpretation of the related judicial pronouncement and related laws which may differ person to person. The readers are expected to take expert opinion before placing reliance on it. For more information, please reach us at or call us at 8383011629


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