NCLAT Upholds Nuvoco’s ₹1,800 Crore Vadraj Cement Resolution Plan, Dismisses Employee Objections

On 24 August 2025, the National Company Law Appellate Tribunal (NCLAT) dismissed challenges raised by a group of employees against the insolvency resolution plan of Vadraj Cement Ltd., thereby affirming Nuvoco Vistas Corporation’s ₹1,800 crore acquisition bid. Nuvoco Vistas, part of the Aditya Birla Group, will now proceed with its takeover of the distressed cement manufacturer, marking the conclusion of a long-running corporate insolvency resolution process (CIRP).

The Appellate Tribunal observed that Nuvoco’s plan offered full payment of admitted dues, exceeding the liquidation value, and had been approved by the Committee of Creditors (CoC) in line with statutory requirements. In contrast, the employees’ competing draft plan—since withdrawn—was noted to be opaque and lacking in transparency. The ruling clears a critical roadblock for the resolution process, emphasizing judicial reluctance to derail bona fide and CoC-approved plans through belated objections.

A Tribunal’s Reaffirmation of CIRP Objectives

The NCLAT’s ruling underscores a familiar principle in Indian insolvency jurisprudence: the CIRP under the Insolvency and Bankruptcy Code, 2016 (IBC) prioritizes timely resolution and value maximization. By dismissing the objections, the Appellate Tribunal reinforced that the judicial role is not to reopen commercial decisions of the CoC unless they are patently illegal, discriminatory, or against the framework of the Code.

The Tribunal highlighted that Nuvoco’s ₹1,800 crore plan offered higher value than liquidation and met the Code’s core objectives. Importantly, it reiterated that belated objections—particularly when competing proposals have been withdrawn—cannot be entertained to stall implementation. In doing so, NCLAT aligned with the Supreme Court’s jurisprudence in K. Sashidhar v. Indian Overseas Bank (2019) and Essar Steel India Ltd. v. Satish Kumar Gupta (2019), both of which emphasized the finality of CoC’s commercial wisdom.

Employees’ Objections and the Transparency Standard

The contesting employees sought to challenge the CoC-approved plan on grounds of fairness and transparency. However, the Tribunal noted that their draft resolution plan had been withdrawn, and its terms were neither comparable nor subjected to CoC scrutiny. In contrast, Nuvoco’s plan satisfied both statutory and procedural requirements.

The Appellate Tribunal’s treatment of these objections resonates with earlier precedents, where courts have consistently required objectors to demonstrate substantive illegality or contravention of Section 30(2) of the IBC. Absent such a showing, challenges based on perceived unfairness are unlikely to succeed. The ruling further narrows the window for employee or minority stakeholder interventions once the CoC has exercised its commercial discretion.

Reinforcing the Doctrine of Commercial Wisdom

The decision adds to the growing body of case law reinforcing the doctrine of commercial wisdom of creditors. Since the landmark Essar Steel judgment, courts have maintained a consistent line that CoC’s decisions on viability and feasibility of resolution plans are not subject to judicial review, save for limited grounds of legality.

In the Vadraj Cement matter, the CoC had duly assessed Nuvoco’s plan, which included:

• Full settlement of admitted dues,

• Value enhancement over liquidation estimates, and

• A transparent structure meeting disclosure obligation.

These considerations, once approved by the CoC, effectively insulated the plan from subsequent objections, unless clear statutory violations could be demonstrated.

Comparative Perspective: India’s IBC and Global Insolvency Norms

The approach taken by the NCLAT is broadly consistent with international best practices in insolvency. For instance:

• United States: Under Chapter 11 of the U.S. Bankruptcy Code, courts generally defer to creditor committees’ decisions on reorganization plans unless there is evidence of bad faith or statutory violations.

• United Kingdom: The UK’s administration regime similarly emphasizes creditor approval and restricts judicial intervention to issues of legality and fairness.

By upholding Nuvoco’s plan, Indian tribunals signal continuity with global norms—prioritizing speed, certainty, and maximization of value over extended litigation.

Conclusion: A Clear Path for Corporate Rescue

The NCLAT’s dismissal of employee objections in the Vadraj Cement case provides critical clarity for the insolvency ecosystem. It underscores three interlocking principles: (i) CIRP is designed to deliver value maximization over liquidation, (ii) CoC’s commercial wisdom remains the touchstone of resolution, and (iii) delayed or withdrawn proposals cannot obstruct the implementation of approved plans.

With Nuvoco Vistas now set to take over Vadraj Cement, the case also illustrates the growing confidence of large industrial groups in India’s insolvency regime as a tool for strategic acquisitions. For the broader IBC landscape, the decision reaffirms the Tribunal’s commitment to balancing fairness with finality, ensuring that insolvency resolution remains both commercially viable and legally robust.