NCLT Mumbai Upholds Sanctity of CIRP Voting, Authum Investment Barred from Changing Vote After Plan Approval in Reliance Broadcast Case
NCLT Mumbai Upholds Sanctity of CIRP Voting, Authum Investment Barred from Changing Vote After Plan Approval in Reliance Broadcast Case
Introduction
The National Company Law Tribunal (NCLT) at Mumbai has refused to permit Authum Investment and Infrastructure Limited, which had acquired Reliance Commercial Finance Limited’s (RCFL) claim, to change its vote on the approved resolution plan for Reliance Broadcast Network Limited. The bench comprising Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati ruled that once the voting window closes, no creditor can revise or modify their vote, as it would compromise the integrity and finality of the Corporate Insolvency Resolution Process (CIRP).
Factual Background
Reliance Commercial Finance Limited (now represented by Authum Investment) was a financial creditor holding 11.03% voting share in the Committee of Creditors (CoC) of Reliance Broadcast Network Limited. During the CoC’s 14th meeting in November 2023, the creditors voted on a resolution plan submitted by Sapphire Media Ltd. RCFL voted against the plan within the prescribed voting window.
Subsequently, upon realizing that dissenting creditors would receive no distribution under the plan — since the first-charge creditors had priority over the available assets — RCFL sought to revise its vote. On November 21, 2023, a few days after the voting period had closed, RCFL sent an email to the Resolution Professional expressing that its earlier vote had been cast “in error” and that it now wished to vote “Yes.”
Procedural Background
By the time RCFL sought to alter its vote, the resolution plan had already been approved by 88.97% of the CoC’s voting share, and the Resolution Professional had filed the plan for approval before the Adjudicating Authority. RCFL filed an application under the Insolvency and Bankruptcy Code (IBC) seeking permission to correct its vote and be treated as an assenting creditor for the purpose of payout distribution.
Issues
The primary issues before the Tribunal were:
- Whether a creditor can revise or alter its vote after the closure of the prescribed e-voting period under the CIRP regulations.
- Whether the CoC’s decision on the distribution of proceeds violated the principle of fairness or non-discrimination under the IBC.
Contentions of the Parties
Applicant’s submissions: Authum Investment (RCFL) argued that its initial negative vote was a genuine mistake and that revising it to “Yes” would not prejudice any stakeholder since the plan had already been approved. It contended that denying the change would unjustly deprive it of a payout and that the CoC’s distribution method was discriminatory, granting it only 3% of its claim.
Respondent’s submissions: The Resolution Professional and other respondents opposed the application, arguing that the voting process was bound by strict timelines under the CIRP Regulations, particularly Regulation 26, which allows no provision for altering votes after closure. They asserted that allowing post-facto changes would set a dangerous precedent and undermine the finality of the CoC’s commercial decisions.
Reasoning and Analysis
The Tribunal held that the CIRP process is strictly time-bound and that the sanctity of its procedural framework must be maintained. It observed, that “Once the process under Regulation 26 stands concluded, there remains no provision that allows any member of the CoC to alter or modify its vote thereafter. Any change in the voting beyond the voting window would compromise the integrity of the voting process and sanctity of the prescribed timeline for voting.”
The NCLT further emphasized that RCFL’s attempt to revise its vote was procedurally invalid, as it occurred after the resolution plan had been approved by the CoC and submitted to the Adjudicating Authority. On the issue of alleged discrimination, the Tribunal reiterated that the commercial wisdom of the CoC is paramount and not open to judicial interference so long as it does not contravene statutory provisions.
It observed that the internal distribution of proceeds among creditors is entirely within the CoC’s domain and cannot be challenged merely because a creditor is dissatisfied with its payout. The bench also clarified that none of the Supreme Court rulings cited by RCFL applied, as the issue of vote revision is specifically governed by CIRP Regulations.
Implications
This decision underscores the NCLT’s consistent position that the CoC’s commercial decisions and the integrity of CIRP timelines are sacrosanct. By refusing to allow RCFL’s post-closure vote change, the Tribunal has reinforced that the voting process under IBC is final once concluded, preventing any retrospective modifications that could delay or disrupt resolution timelines. The decision also reaffirms judicial deference to the CoC’s commercial wisdom in matters of plan approval and payout distribution.
In this case the applicant was represented by Mr. Shivam Bhagwati, Advocate. Meanwhile the respondent was represented by Mr. Deep Roy and Mr. Saurabh Bachhawat, Advocate.
