Reconstitution of CoC to Redetermine Voting Shares Does Not Render Prior Corporate Insolvency Resolution Process Actions Void Ab Initio

The Appellant (SASF) filed a Section 7 IBC petition against the Corporate Debtor (CD) in 2018.

While the Appellant's petition was pending, a second financial creditor (Respondent No. 2) filed another Section 7 petition (CP 124/2023), which was admitted on 16.04.2024, rendering the Appellant's petition infructuous.

The IRP/RP admitted only Rs. 121.32 crores out of the Appellant’s Rs. 3,642 crore claim, leading to a low voting share of 12.42%.

The Appellant challenged this admission in I.A. 1418/2024.

On 18.12.2024, the Adjudicating Authority (NCLT) allowed the challenge, set aside the CoC's proportional representation, and directed the RP to reconsider claims and reconstitute the CoC.

Subsequently, the RP revisited the claim but reaffirmed the original amount on 03.01.2025, which remains unchallenged.

The Appellant filed these appeals against subsequent procedural orders in I.A. 2154/2024, 1716/2024, and 1712/2024, which recorded the earlier CoC constitutions and the confirmation of the RP.

Whether the orders passed in I.A. 2154 of 2024 and I.A. 1712 of 2024 survive for adjudication after the CoC was ordered to be reconstituted on 18.12.2024.

Whether the order in I.A. 1716 of 2024 confirming the IRP as RP is valid despite the initial CoC constitution being set aside.

The Court considered Section 18(c), 21(1), and 22(3) of the IBC regarding the constitution of the Committee of Creditors (CoC) and appointment of the RP.

It interpreted Regulation 12(3) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which stipulates that a financial creditor becomes a member of the CoC from the time their claim is admitted, which maintains the legitimacy of prior CoC actions.

The Tribunal distinguished *Edelweiss Asset Reconstruction Company Ltd. v. Mohit Goyal*, noting that the legal standing of CoC decisions differs when a creditor was merely seeking a higher voting share versus being completely excluded from the process.

The Tribunal found that I.A. 2154/2024 and I.A. 1712/2024 regarding the initial CoC constitution were effectively superseded or "merged" into the NCLT's subsequent order dated 18.12.2024, which had already dissolved the old CoC and mandated a new one.

Since the RP had already moved a new application (I.A. 76/2025) for the current CoC's reconstitution, the challenges to the older procedural applications were redundant.

Regarding the appointment of the RP (I.A. 1716/2024), the Tribunal characterized it as a procedural rather than adversarial order.

The Tribunal noted that the Appellant failed to challenge the RP’s fresh determination of its claim (dated 03.01.2025), which reaffirmed the same debt amount.

Therefore, the Appellant could not demonstrate prejudice in the RP's continuing status.

The order confirming the RP (I.A. 1716/2024) was upheld as a procedural necessity.

The Tribunal directed the Appellant to raise any remaining grievances regarding claim calculation or CoC composition in the pending I.A. 76/2025 before the Adjudicating Authority.

No costs were awarded.