NCLAT Clarifies Voting Requirements for Passing Resolution Plans under IBC

NCLAT Clarifies Voting Requirements for Passing Resolution Plans under IBC

Introduction

The National Company Law Appellate Tribunal (NCLAT), New Delhi, clarified that the statutory requirement of 66% voting share for passing a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC), must be calculated based on the total voting shares of all financial creditors, and not merely on those who are present and voting in the Committee of Creditors (CoC) meeting.

Factual Background

Two appeals were filed against orders of the NCLT, Chandigarh, which had directed the liquidation of the corporate debtor and rejected the appellant’s resolution plan. The appellant argued that votes of absent CoC members should not be considered while calculating the 66% threshold.

Issues

1. Whether the 66% requirement under Section 30(4) IBC should be calculated only on the basis of creditors present and voting, or on the total voting shares of all financial creditors?

Contentions

• Appellant: Submitted that only votes of creditors who are present in the CoC meeting should count towards the 66% threshold.
• Respondents: Argued that Section 30(4) IBC clearly requires approval by not less than 66% of the total voting share of financial creditors, including those absent.

Tribunal’s Reasoning

The bench of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) held:

• The term “voting shares of financial creditors” under Section 30(4) refers to the entire voting share of all creditors, not just those attending.
• Regulation 26 of the CIRP Regulations allows creditors absent from the meeting to cast votes electronically, negating the appellant’s contention.
• Reliance was placed on the Supreme Court’s ruling in K. Sashidhar, which also affirmed that the required percentage must be calculated based on the total voting shares.

Outcome

The NCLAT dismissed the appeals, upholding that the 66% threshold must include the voting share of all financial creditors, including absentees, to ensure fairness and compliance with IBC.

Case Details

• Case Title: Saariga Construction Pvt. Ltd. v. Arvind Kumar, RP, Richa Industries Ltd. & Anr.
• Case No.: Company Appeal (AT) (Insolvency) No. 887 of 2025
• Judgment Date: 11.08.2025
• For Appellant: Mr. Aalok Jagga, Mr. Karan Malhotra, Mr. Anant Shankar Tripathi, Mr. Nahush Jain, Mr. APS Madaan, Advocates.
• For Respondents: Mr. Nitin Kant Setia (for RP); Mr. V. K. Sachdeva, Mr. Paras Mithal, Mr. Parakhar Mithal, Mr. Gaurav Goel, Mr. Pulkit Sachdeva, Mr. Gaurav Raj (for R-2); Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Palak Kalra, Mr. Akshit Awasthi, Mr. Rajat Gupta, Ms. Ridhima, with Ms. Vanshika Dhoot (for Liquidator).