The National Company Law Appellate Tribunal (NCLAT) has ruled that the Committee of Creditors (CoC) cannot alter or reallocate funds under a resolution plan after it has been approved. | Photo credit:
A two-member NCLAT bench has dismissed an appeal by Bank of Baroda in the Reliance Communications Infrastructure Ltd (RCIL) case, saying the assenting members of the committee cannot change the financial setup once the bids are approved.
“It is true that the CoC with commercial wisdom can take a decision on various aspects of the plan including the mode of distribution, but once the commercial wisdom is exercised by approving the resolution plan at the meeting, the change in the said distribution mechanism, which is impermissible, cannot be saved in the name of the commercial wisdom of the CoC,” NCLAT said.
RCIL case details
The order of the National Company Law Appellate Tribunal (NCLAT) came after an appeal by the Bank of Baroda in the insolvency proceedings relating to Reliance Communications Infrastructure Ltd (RCIL).
The NCLT had approved the bid of Reliance Projects & Property Management Services Ltd (RPPMSL), a subsidiary of Jio. This resolution plan was approved by 67.97 percent of the votes of the CoC on August 5, 2021.
Bank of Baroda was among the CoC members that approved RPPMS’ plan. However, IDBI Bank, State Bank of India and some other financial institutions took a different view.
The plan was submitted to the Mumbai bench of the National Company Law Tribunal (NCLT) for approval.
Plea of the Bank of Baroda
Meanwhile, the Bank of Baroda, in its capacity as a consenting financial creditor, has filed an application before the NCLT, seeking direction to the CoC to convene a meeting on the proposal to reallocate the distribution of proceeds under the resolution plan in respect of the loan to Reliance Bhutan.
Later, NCLT directed RCIL’s resolution professional on October 17, 2023 to convene a meeting of the CoC to discuss the mode of reallocation of payments to creditors.
RP convened a meeting of the CoC on October 27, 2023, where the resolution for redistribution and relocation of Reliance Bhutan was passed by a majority of 67.55 percent. However, IDBI Bank and State Bank of India objected.
After rejecting the BoB’s plea, NCLT on December 19 approved the resolution plan proposed by RPPMS.
Dissenting creditors
IDBI then moved to NCLT and challenged the redistribution of proceeds by the CoC on October 27, 2023. On this point, NCLT held that the CoC in its decision cannot change the financial scheme with regard to the rights of financial creditors.
The Reliance Bhutan loan would be transferred to the approving financial creditor. This resolution plan could not be changed by allocating the Reliance Bhutan loan to the dissenting financial creditors, NCLT said on October 10, 2025.
The order was challenged by Bank of Baroda and was dismissed.
“The Adjudicating Authority in the impugned decision, after considering all the relevant clauses, has rightly concluded that the decision of the CoC dated October 27, 2023 is contrary to the approved resolution plan and cannot bind the dissenting financial creditors,” NCLAT said.
It was held that the dissenting financial creditors are entitled to payment in the manner provided for in the resolution plan and the CoC cannot change the financial setup in respect of their claims under the plan.
“We fully agree with the stand of the trial court as stated above. The trial court has not committed any error in allowing the plea filed by IDBI Bank. We find no good ground to interfere with the decision of the trial court,” NCLAT said, dismissing the appeal.
Published on December 26, 2025
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