NCLT Mumbai Upholds CoC's Decision To Conduct Second E-Challenge In Future Enterprises' CIRP

The National Company Law Tribunal (NCLT) at Mumbai has recently dismissed Orissa Metaliks Private Limited's challenge to the Committee of Creditors' decision to conduct a second round of the e-challenge mechanism in the CIRP of Future Enterprises Limited.

A bench of Judicial Member Lakshmi Gurung and Technical Member Hariharan Neelakanta Iyer held that the CoC's decision to undertake a second challenge process is not in violation of Regulation 39(1A) of the CIRP Regulations, while observing that the objective of the Code includes maximisation of the value of the assets of the corporate debtor.

The tribunal observed:

“Both the objectives, when seen juxtaposition to each other, then even the object of timebound manner is for the purpose of avoiding further erosion of the value of the assets of corporate debtor and to achieve value maximization of the assets. Therefore, we are of considered view that wherever time line is provided in the Regulation, it has to be honoured but where timeline is not provided, the same cannot be supplemented by this Tribunal to supplant the other objective of value maximization"

The corporate insolvency resolution process (CIRP) of Future Enterprises Limited commenced on February 27, 2023, pursuant to an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Orissa Metaliks Private Limited and Uniworth Finlease Limited submitted resolution plans for the Cluster 3 assets of the corporate debtor.

An e-challenge mechanism was conducted on July 18, 2025 in which both resolution applicants participated, with Orissa Metaliks Private Limited submitting a bid of Rs. 148 crore and Uniworth Finlease Limited submitting a bid of Rs. 146 crore.

Subsequently, in its 38th meeting held on August 29, 2025, the Committee of Creditors decided to conduct a second round of e-challenge process on the ground that the first e-challenge was sub-optimal and not satisfactory.

Orissa Metaliks Private Limited contended that after completion of the first e-challenge process, there was no legal basis to conduct a further round, and that the decision was contrary to the objective of completing the process in a time-bound manner and in violation of Regulation 39(1A) of the CIRP Regulations.

Rejecting these submissions, the tribunal held that the expression “not more than once” appears only in clause (a) of Regulation 39(1A), which relates to modification of resolution plans, and does not apply to the use of a challenge mechanism under clause (b).

It observed:

"The words “not more than once” are used only in clause (a) of the Regulation 39(1A) which permits the Resolution Professional, if envisaged in RFRP, to modify the resolution plan only once. But there are no such expression as “not more than once” in clause (b) of Regulation 39(1A), which pertains to use of a challenge mechanism to resolutions applicants to improve their plans. Going by the plain words used in the Regulations, it is beyond this Tribunal's jurisdiction to add words into a Regulation which have been omitted in the Regulation. "

The tribunal further observed that the financial aspects, including value maximisation, fall within the commercial wisdom of the Committee of Creditors.

It held that the decision of the Committee of Creditors to conduct a second round of challenge mechanism cannot be held to be arbitrary or against the principles of the Code.

While dismissing the application, the tribunal directed that the resolution process be concluded in an expeditious and time-bound manner.