CoC can hold second challenge process despite highest bidder being declared in first round: NCLAT

The NCLAT New Delhi Bench has held that the Committee of Creditors (CoC) is not barred from conducting a second challenge process for the auction of a Corporate Debtor’s assets, even where a highest bidder has already been declared in the first process.

The corporate insolvency resolution process (CIRP) of Frost International Ltd. saw the appellant, Anuj Goyal, emerge as the highest bidder in the initial challenge process. However, the Resolution Professional (RP) subsequently moved an application seeking approval to conduct a second challenge process, which was allowed by the Adjudicating Authority (NCLT). This second round was intended to allow participation by resolution applicants who had not taken part in the first round, whose financial offers were earlier treated as final for that stage. A third challenge process was also scheduled thereafter. 

Aggrieved, the Appellant challenged the NCLT’s decision, arguing that the CoC lacked the jurisdiction to initiate a second challenge process and that applicants excluded from the first round should not have been allowed to participate subsequently.

The Appellate Tribunal rejected these contentions, holding that the mere status of being the highest bidder in a challenge process does not confer any right upon a resolution applicant to demand approval of their plan. The CoC retains full discretion to accept or reject any resolution plan in accordance with its commercial wisdom.

Citing the precedent in Vistara ITCL India Ltd. vs. Torrent Investments Pvt. (2023), the Tribunal reiterated that the CoC may conduct multiple challenge processes as a means to ensure value maximisation, a key objective under the Insolvency and Bankruptcy Code, 2016. It noted that while the CoC is not obligated to hold multiple challenge processes, it is certainly not precluded from doing so.

Accordingly, the Appellate Tribunal upheld the NCLT’s order and dismissed the appeal.

Anuj Goyal vs. Amit Chandrakant Shah, RP of Frost International Ltd.  

Company Appeal (AT) (Insolvency) No. 766 of 2025