Approved Resolution Plan Can't Be Set Aside Merely Due To Dissenting Financial Creditor's Dissatisfaction With Asset Valuation: NCLAT
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that approval of a resolution plan cannot be interfered with merely on the grievance of a single financial creditor regarding improper asset valuation of the corporate debtor, when the valuer has, in fact, duly considered all assets and submitted...
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that approval of a resolution plan cannot be interfered with merely on the grievance of a single financial creditor regarding improper asset valuation of the corporate debtor, when the valuer has, in fact, duly considered all assets and submitted its report.
The present two appeals have been filed against two orders passed by the National Company Law Tribunal (NCLT), Mumbai Bench.
The Appellant submitted that there are serious discrepancies and errors in the third valuation report dated 16.06.2025. The third valuer has not valued the KDMC Flats 23 units and Barter Flats 66 units which makes the valuation of Corporate Debtor by third valuer incorrect and faulty. The Resolution Plan is vitiated and deserves to be set aside.
Per contra, the Respondent submitted that the third valuer has now given a valuation report which according to third valuer, liquidation value is Rs.11.08 Crores which is higher than the first valuation report.
It was further submitted that it is not open for the Appellant- a dissenting creditor to challenge the approval of the plan by the CoC and the order passed by the Adjudicating Authority approving such plan. Appellant is obliged to accept the third valuation report which valuer was appointed on objection raised by the Appellant.
The Tribunal noted that it is evident from the third valuer's report that the MoU and the allotment letter for 66 units were considered. These flats were given to the contractors against outstanding dues therefore they were rightly excluded from the valuation of the corporate debtor. No infirmity was found in the valuer's reasoning as the corporate debtor was not to receive any payment from these units. Therefore, this exclusion is neither perverse nor unacceptable.
It held that “the valuers appointed in the CIRP process are the registered valuers who are registered valuers and they are expert of the job and valuation given by the valuers are not to be lightly interfered with by the Adjudicating Authority in exercise of judicial review. When the report is based on relevant material, the Court cannot give its own opinion with regard to valuation of the assets.”
The Tribunal further observed that the present is a case where CoC in its commercial wisdom has approved the Resolution Plan. The valuation report as required by Regulation 35 of the CIRP Regulations is shared with all members of the CoC. All members of the CoC have deliberated on the valuation report and approved the plan.
It further held that no error was committed in obtaining the valuation reports and the Resolution Professional also complied with Regulation 35 of the CIRP Regulations by securing two valuation reports. The third valuation report was obtained pursuant to an order passed by the Adjudicating Authority. The Appellant dissatisfaction with the third valuation report cannot be a ground to reject the resolution plan approved by the CoC in its commercial wisdom.
It also held that the Appellant as a dissenting financial creditor cannot achieve what was not secured through voting. The third valuation report was properly considered while determining the liquidation value. The valuations of the first and the third reports are very proximate and as per Regulation 35, their average must be taken to determine the liquidation value. Accordingly, the present appeals were dismissed.
Case Title: Central Bank of India Versus Bijendra Kumar Jha & Ors.
Case Number: Company Appeal (AT) (Insolvency) No. 713 of 2025
Judgment Date: 18/08/2025