National Company Law Appellate Tribunal (‘NCLAT’) in Pragiti Construction v. Committee of Creditors of Rancom Healthcare Pvt. Ltd. & Ors.1 held that permitting a resolution applicant, who is also an operational creditor (sole member of the Committee of Creditors (‘CoC’)) to vote on and approve its own resolution plan, amounts to a material irregularity in the decision-making process. Such an approval of the resolution plan is void ab initio.
The NCLAT further held that the supremacy of commercial wisdom of the CoC cannot shield a decision-making process that is fundamentally flawed due to conflict of interest and absence of procedural safeguards. The SC has affirmed this judgment passed by the NCLAT.2
Footnotes
1 Pragiti Construction v. Committee of Creditors of Rancom Healthcare Pvt. Ltd. & Ors., Company Appeal (AT) (Ins) No. 2330-2331/2024.
2 Rajeev Ranjan Singh v. Pragiti Constructions & Anr., Civil Appeal Nos. 3060-3061/2026.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
