NCLAT upholds COC's Power to Consider Revised Financial Offers to Ensure Value Maximization; Dismisses Tata Steel's appeal in Bhushan Power Insolvency Proceedings

NCLAT upholds COC's Power to Consider Revised Financial Offers to Ensure Value Maximization; Dismisses Tata Steel's appeal in Bhushan Power Insolvency Proceedings

The National Company Law Appellate Tribunal (NCLAT) Justice Sudhansu Jyoti Mukhopadhaya yesterday, while hearing the appeal filed by Tata Steel against the blatant extension of timeframe for filling of resolution plans and consideration of revised offers by the 'Committee of Creditors' in the insolvency process of Bhushan Power and Steels Limited and dismissed the appeal terming it "premature" and "uncalled for" as the Resolution Professional (RP) was yet to submit the approved resolution plan before the NCLT.

While dismissing Tata Steel's challenge to NCLT's order dated April 23, 2018, the bench observed that the, “‘Committee of Creditors’ in its sole discretion can ask the ‘Resolution Professional’ to negotiate better terms with the ‘Compliant Resolution Applicant(s).

Granting more opportunity to all the eligible 'Resolution Applicants' to revise its 'financial offers', even by giving more opportunity, is permissible in the Law. However, all such process should complete within the time frame", the order said.

The bench in rendering its judgment placed reliance to the verdict in Binani Industries Limited Vs. Bank of Baroda & Anr. –Company Appeal (AT) (Insolvency) No. 82 of 2018 etc., wherein it was held that the ‘Committee of  Creditors’ has a statutory mandate to ensure value maximization within the timeframe prescribed by the ‘I&B Code’ and the submission of revised offer is in continuation of the 'Resolution Plan' already submitted and accepted by the 'Resolution Professional'.

As per the facts, three 'Resolution Applicants' namely - 'Tata Steel Limited', 'Liberty House' and 'JSW Steel Limited' were directed to submit their bids with regard to Corporate Debtor – Bhushan Power and Steel Limited by February 8, 2018. Both Tata Steel and JSW Steel submitted their resolution plans within the deadline.

However, Liberty House who had submitted its resolution plan on February 20, after the deadline was granted clemency by the National Company Law Tribunal (NCLT) by its order dated April 23, 2018, wherein the authority had directed the 'Committee of Creditors' of Bhushan Power to consider the belated resolution plan submitted by Liberty House Group.

Subsequent to the passing of the aforesaid order, JSW Steel furnished a revised financial offer on July 26 2018, which was adamantly objected to by Tata Steel. In view of the revised financial offer submitted by JSW Steel and to ensure equal opportunity to all the resolution applicants, the 'Committee of Creditors' in its July 27 meeting allowed the filing of revised offers up till July 31 to all the remaining applicants.

After several objections and failed appeals, Tata Steel finally submitted its improved financial offer on August 13 increasing the amounts for payment to different groups of creditors.

The main contention of Tata Steel in the present appeal was that it had offered the highest bid which was approved as H-1 and further, it opposed the six revised resolution proposals submitted by the JSW Steel on the ground that ‘Resolution Applicants’ have no right to revise their bids endlessly and the ‘Committee of Creditors’ are not authorized to entertain fresh or revised bids without exhausting available bids.

Refuting the bias allegations levelled by Tata Steel against the ‘Committee of Creditors’ in favour of JSW Steel, the counsel submitted that it was open to the ‘Committee of Creditors’ to go through the viability, feasibility and financial matrix of the ‘Resolution Plans’ taking into consideration ‘revised  financial offers’ and to decide the same in accordance with law.

Parting with the matter, the bench remitted the matter to NCLT for passing appropriate order under Section 31 and directed the ‘Resolution Professional’ to submit the approved plan before the NCLT.


Bhushan Power and Steels Limited
Committee of Creditors (CoCs)
JSW Steel
Liberty House
National Company Law Appellate Tribunal (NCLAT)
National Company Law Tribunal (NCLT)
Resolution Professional (RP)
Tata Steel Limited

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