CoC Can Prefer Feasible Resolution Plan Over Higher NPV Offer: NCLAT Rejects Vedanta’s ₹17,926 Cr Resolution Plan [Read Order]

The National Company Law Appellate Tribunal (NCLAT) has upheld the approval of the Resolution Plan submitted by Adani Enterprises Ltd. For Jaiprakash Associates Ltd. while rejecting the appeals filed by Vedanta Ltd. challenging the Corporate InsolvencyResolution Process (CIRP) outcome.

The dispute arose from the CIRP initiated against Jaiprakash Associates Ltd. pursuant to a Section 7 application filed by ICICI Bank. During the resolution process multiple bidders including Vedanta Adani Enterprises, Dalmia Cement, Jindal Power and PNC Infratech submitted resolution plans.

The NCLT Allahabad Bench order the NCLAT held that the entire CIRP was conducted transparently and in accordance with the Insolvency and Bankruptcy Code CIRP Regulations and the approved challenge process framework. The Tribunal found no material irregularity in the conduct of the Resolution Professional or the CoC.

The CoC considered the initial plans sub-optimal and a Challenge Process was conducted to maximise value. Vedanta emerged as the highest NPV bidder during the challenge rounds with an NPV of ₹12,505.85 crore.However, after evaluation under the approved Evaluation Matrix Adani Enterprises secured the highest cumulative score of 89.76 marks while Vedanta obtained 75.60 marks.

The Evaluation Matrix assigned weightage to upfront cash recovery NPV of payments viability of projections financial discipline and ability to revive distressed assets.The CoC ultimately approved Adani’s plan with 93.81% voting share.

The Resolution Professional, CoC and Adani Enterprises opposed the plea contending that the Evaluation Matrix and Request for Resolution Plan (RFRP) clearly permitted consideration of both quantitative and qualitative parameters. They further argued that Vedanta as an unsuccessful resolution applicant had no vested right to approval merely because it offered the highest NPV.

The Bench comprising Justice Ashok Bhushan observed that commercial wisdom exercised by the CoC cannot be interfered with merely because Vedanta’s plan carried a higher overall value of ₹17,926 crore and a higher NPV than the successful resolution applicant’s proposal.

The appellate tribunal held that the Committee of Creditors (CoC) is entitled to approve a more feasible and viable resolution plan even if another bidder offers a higher Net Present Value (NPV) or overall bid amount.

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