Approved Resolution Plan Cannot Be Set Aside Merely Due To Dissenting Financial Creditor's Dissatisfaction With Asset Valuation: NCLAT

Approved Resolution Plan Cannot 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, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that a resolution plan cannot be set aside merely because a dissenting financial creditor is dissatisfied with asset valuation, provided the registered valuer has duly considered all assets and submitted a report.

Factual Background

The appellant, a dissenting financial creditor, challenged the approval of a resolution plan, alleging that the third valuation report dated 16.06.2025 was flawed. The appellant claimed that the valuer failed to value KDMC Flats (23 units) and Barter Flats (66 units), rendering the valuation and plan faulty.

The respondent submitted that the valuer had duly considered all relevant assets and that the dissenting creditor cannot challenge the CoC’s approval of the plan. The third valuation report established a liquidation value of Rs. 11.08 Crores, which was higher than the first valuation report.

Issues

1. Can a resolution plan be set aside due to a dissenting financial creditor's dissatisfaction with asset valuation?

2. Does the valuer’s report warrant reconsideration?

Contentions of the Parties

Appellant:

• Claimed that the third valuation report was incorrect and incomplete.
• Argued that the resolution plan is vitiated due to valuation errors.

Respondent:

• Argued that the valuer had considered all assets, including the MoU and allotment letters for the 66 units.
• Contended that the dissenting creditor cannot overturn the CoC’s commercial decision.

Observations and Reasoning by NCLAT

• The MoU and allotment letters for 66 units were rightly excluded from valuation because the corporate debtor was not to receive any payment for these units.
• The tribunal emphasized that valuers appointed under the CIRP process are registered experts, and their valuations should not be lightly interfered with by the Adjudicating Authority.
• The CoC, in its commercial wisdom, approved the resolution plan after deliberating on the valuation report.
• The third valuation report was obtained following the Adjudicating Authority’s order, and the dissenting creditor’s dissatisfaction cannot justify rejecting the plan.
• The valuations of the first and third reports were proximate, and as per Regulation 35 of the CIRP Regulations, their average was used to determine liquidation value.

Implications

• A dissenting financial creditor cannot derail an approved resolution plan merely due to dissatisfaction with asset valuation.
• The judgment underscores the authority of CoC decisions and the expertise of registered valuers in the CIRP process.

Outcome

The NCLAT dismissed the appeals, holding that no error was committed in obtaining the valuation reports, and that the appellant's dissatisfaction with the third valuation report cannot be a ground to reject the resolution plan.

In this case the appellant was represented by Mr. Ravi Raghunath, Ms. Rathina Maravarman, Mr. Aditya Sharan, Advocates.