Reconstitution of Committee of Creditors does not invalidate prior actions when the challenging creditor was already a member.

In brief

The question

Whether the actions and decisions of the initial Committee of Creditors and the confirmation of the Resolution Professional are rendered void once the original CoC constitution is set aside by the Adjudicating Authority.

The court held

The Appellate Tribunal dismissed all three appeals, holding that they lacked merit.

It also directed

The Court held that when a CoC is reconstituted pursuant to a fresh directive, appeals against the recording of the prior (now dissolved) CoC do not survive.

The confirmation of the RP was upheld as a procedural order, and the Appellant was directed to raise objections regarding the current CoC constitution in the pending I.A. 76/2025.

No costs were awarded.

01Facts

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

¶ 2.1(a)

While pending, Respondent No. 2 filing a similar petition (CP 124/2023), which was admitted on 16.04.2024, rendering the Appellant’s petition infructuous.

¶ 2.1(a)-(c)

The IRP admitted only Rs. 121.32 crores of the Appellant’s Rs. 3,642 crore claim, granting them a 12.42% voting share in the Committee of Creditors (CoC).

¶ 2.1(f)-(g)

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

On 18.12.2024, the Adjudicating Authority (AA) set aside the CoC constitution and directed the RP to reconsider the claims afresh.

¶ 2.2(b)

On 03.01.2025, the RP revisited the claim but reaffirmed the original admitted amount of Rs. 121 crores and reconstituted the CoC.

¶ 2.2(c)

The Appellant appealed against subsequent orders in I.A. 1712/2024, I.A. 1716/2024, and I.A. 2154/2024, which recorded the initial CoC constitution and the appointment of the RP.

¶ 3-4

02Issues

i.Whether the actions and decisions of the initial Committee of Creditors and the confirmation of the Resolution Professional are rendered void once the original CoC constitution is set aside by the Adjudicating Authority.

¶ 5

ii.Whether the appeals against procedural orders recording CoC constitution remain maintainable after the CoC has been subsequently reconstituted pursuant to a fresh mandate.

¶ 7.1-7.2

03Law Applied

The Tribunal considered Regulation 12(3) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which governs the inclusion of creditors in the CoC and the legitimacy of prior actions.

¶ 6.1

It distinguished the precedent in *Edelweiss Asset Reconstruction Company Ltd. Vs Mohit Goyal*, noting that the total exclusion of a creditor from the CoC carries different legal consequences than a dispute over the quantum of a voting share.

¶ 7.2

The Tribunal also utilized Regulation 14 of the CIRP Regulations regarding the RP's power to estimate and revise claim amounts.

¶ 2.2(b)

04Reasoning

The Court found that the appeals against I.A. 2154/2024 and I.A. 1712/2024 (regarding CoC constitution) were redundant because those orders merged into and were superseded by the AA’s order dated 18.12.2024, which dissolved the CoC.

¶ 7.1-7.2

Since the RP had already reconstituted the CoC and filed a new application (I.A. 76/2025) for recording the same, the previous challenges lacked a subject matter.

¶ 7.2

Regarding the confirmation of the RP (I.A. 1716/2024), the Court determined this was a procedural necessity rather than an adversarial order.

¶ 7.3

The Court highlighted that the Appellant remained a member of the CoC at all times; thus, the dispute was merely over the "voting share" rather than "exclusion," making the *Edelweiss* ratio inapplicable.

¶ 7.2

Furthermore, since the Appellant failed to challenge the RP's renewed decision of 03.01.2025 reaffirming the claim amount, they could not validly contest the CoC’s status in these appeals.

¶ 7.3

05Holding

The Appellate Tribunal dismissed all three appeals, holding that they lacked merit.

¶ 8

The Court held that when a CoC is reconstituted pursuant to a fresh directive, appeals against the recording of the prior (now dissolved) CoC do not survive.

¶ 7.2

The confirmation of the RP was upheld as a procedural order, and the Appellant was directed to raise objections regarding the current CoC constitution in the pending I.A. 76/2025.

¶ 7.3

No costs were awarded.

¶ 8

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