The National Company Law Tribunal's (NCLT) Mumbai Bench has observed that the Committee of Creditors' commercial decisions must remain within the statutory framework, emphasising that the Corporate Insolvency Resolution Process (CIRP) cannot be kept open indefinitely or repeatedly restarted merely in the hope of securing better offers.
The Tribunal said a fresh resolution process cannot be permitted as a matter of course, given the time-bound nature of insolvency proceedings.
“At the same time, the commercial wisdom of the CoC is required to operate within the framework of the Code. The CIRP cannot be permitted to remain open indefinitely, nor can the process be repeatedly reopened merely in the expectation of receiving a better proposal. The time-bound nature of the CIRP remains one of the fundamental features of the statutory scheme. Therefore, permission to undertake a fresh process cannot be granted as a matter of course.”, a bench of Judicial Member K. R. Saji Kumar and Technical Member Anil Raj Chellan observed.
The Tribunal regularised Somerset Constructions Private Limited's Corporate Insolvency Resolution Process (CIRP) from April 22, 2024, to October 13, 2026 and granted the Resolution Professional 120 days to conduct a fresh resolution process.
Somerset Construction was admitted into CIRP on July 25, 2023 following a petition by Unity Small Finance Bank. Four resolution plans were received and negotiated but none was approved within the prescribed timeline. Unity Small Finance Bank assigned its debt to CFM Asset Reconstruction Private Limited on March 29, 2025 which became the sole member of the Committee of Creditors (CoC).
On April 28, 2025, BCAD Studies Private Limited and SR Remedial Services Private Limited sent communications indicating interest in submitting proposals offering potentially higher value. The CoC and Resolution Professional subsequently approached the Tribunal seeking a 497 day extension and permission to restart the process.
The Tribunal held that the April 28, 2025 communications could not themselves be treated as resolution plans because the two entities had not participated in the original process or submitted plans within the prescribed timeline.
Their communications therefore could not substitute the statutory procedure.
However, the Bench clarified that a fresh process would remain open to all eligible applicants. Neither company would receive preferential treatment or priority, and both would have to satisfy the eligibility requirements under the Insolvency and Bankruptcy Code and CIRP Regulations.
Considering the peculiar circumstances and the time elapsed during the proceedings, the Tribunal regularised the intervening period and granted the Resolution Professional a maximum of 120 days to complete a fresh process, including issuing a new Form G.
It allowed the applications filed by the CoC and Resolution Professional while dismissing the suspended director's intervention petition.
For RP: Advocates Rohit Gupta a/w Rubina Khan and Parth Shah
For CoC: Advocates Gaurav Joshi, Prateek Ratewa, Pratiksha Vdeshi, Sarvesh Agarwal i/b Cygnus Legar
For Intervener: Advocates Rohan Agarwal a/w Darshit Dave