CoC Not Barred From Holding Second Challenge Process Despite Declaration Of Highest Bidder: NCLAT Delhi

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) held that the Committee of Creditors is not barred from holding a Second challenge process for auction of Corporate Debtor's asset, even if a highest bidder has already been declared in the first process.

Background Facts:

In the corporate insolvency resolution process of Frost International Ltd., the appellant, Anuj Goyal, was declared the highest bidder in the first challenge process. However, the Resolution Professional subsequently filed an application seeking directions to conduct a second challenge process which was allowed by the NCLT.

Thereafter, the second challenge process was conducted to allow participation by certain resolution applicants who had not taken part in the first round, as their financial offers were treated as final for the purposes of that round. A third challenge process was also scheduled thereafter.

Aggrieved by the same, the Appellant filed an Appeal challenging the NCLT's order of allowing the RP to conduct a second challenge process.

Contentions:

The Appellant contended that the CoC lacked the jurisdiction to conduct a second challenge process and that applicants who did not participate in the first round should not have been allowed to join later stages.

Findings:

The Tribunal clarified that the status of being the highest bidder in a challenge process does not entitle a resolution applicant to demand that their plan be accepted by the CoC. The CoC is not bound to accept the highest bid from any single round.

The NCLAT referred to its earlier decision in Vistara ITCL India Ltd. v. Torrent Investments Pvt. 2023, which had affirmed the CoC's right to conduct multiple challenge processes to ensure value maximisation.

Thus, the Appellate Tribunal upheld the NCLT's order and stated that the COC is not bound to conduct multiple challenge processes, even if highest bidder has been declared.

Case Title: Anuj Goyal v/s Amit Chandrakant Shah, RP of Frost International Ltd.

Case Number: Company Appeal (AT) (Insolvency) No. 766 of 2025

Judgment Date: 16/05/2025

For Appellant : Mr. Mohit Chowdhary, Mr. Prakhar Mithal and Mr. Gaurav Raj, Advocates.

For Respondent : Mr. Varun Kalra and Mr. Pranav Khadda, Advocates for R-1.

Mr. Ramji Srinavasan, Sr. Advocate with Mr. Atul Shankar Mathur, Mr. Prabal Mehrotra, Mr. Shubhankar, Ms. Shefali Munde and Mr. Arjun Bhatia, Advocates for Intervenors.

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