NCLT Mumbai: Voting Share of Abstaining Members Can’t Be Excluded in CoC Voting Calculations

The Mumbai Bench of the National Company Law Tribunal (NCLT), comprising Judicial Member Ms. Lakshmi Gurung and Technical Member Shri Anil Raj Chellan, ruled that the vote share of Committee of Creditors (CoC) members who abstain from voting cannot be excluded when calculating the requisite majority under Section 30(4) of the Insolvency and Bankruptcy Code (IBC), 2016.

Case Background

The ruling came in response to an application under Section 60(5) of the IBC, filed by Mr. Rohit Jindal — a shareholder and suspended director of Shree Bhimeshwari Ispat Private Limited (Corporate Debtor). The corporate insolvency process was initiated against the company on the basis of a Section 7 application filed by Oriental Bank of Commerce.

During the 5th CoC meeting, a resolution plan submitted by Khatav Man Taluka Agro Processing Ltd was presented. After multiple discussions and presentations, the plan was eventually put to vote in the 8th CoC meeting.

Out of the total CoC members, 61.31% voted in favour of the plan. However, the State Bank of India (SBI), holding an 8.32% voting share, abstained from voting.

Dispute Over Voting Share Calculation

Under Section 30(4) of the IBC, a resolution plan must be approved by at least 66% of the voting share of financial creditors. The Resolution Professional (RP) claimed the plan achieved this threshold, calculating 61.31 out of 91.68 (excluding SBI's vote), equating to 66.87% in favour. Based on this computation, the RP filed an application under Sections 30 and 31 seeking NCLT’s approval of the plan.

Mr. Jindal contested this, arguing that the RP's exclusion of SBI’s vote share distorted the actual percentage. According to him, the plan only garnered 61.31%, falling short of the required 66%, and thus, could not be considered duly approved.

Contentions from Both Sides

Applicant’s Stand:The applicant emphasized that abstentions should still count in the total voting base, citing the NCLT Chennai ruling in I.A. (IBC) No. 649/CHE/2022, which held that abstained votes cannot be disregarded when determining voting percentages under the Code.

Respondent’s Stand:The RP countered by stating that since SBI abstained, its share shouldn’t factor into the voting threshold calculation. Citing NCLAT rulings in IDBI Bank Ltd. v. Anuj Jain and Tata Steel Ltd. v. Liberty House Group, the RP argued that the computation should be based only on those who actively voted — either for or against — the resolution.

Tribunal’s Analysis & Ruling

The Bench clarified that SBI was present during the CoC meeting, even though it did not cast a vote. The Tribunal distinguished the present case from Tata Steel, where the creditor was absent altogether. It held that presence — even without voting — cannot justify exclusion from the total voting share.

Crucially, the Tribunal underscored that the IBC and its regulations do not provide any basis for excluding abstaining creditors from the denominator. It relied on the Supreme Court’s judgment in K. Sashidhar v. Indian Overseas Bank, which makes it clear that approval requires no less than 66% of the total voting share of financial creditors, not just those who choose to vote.

On the question of locus standi, the Tribunal rejected the RP’s objection. Referring to the Supreme Court’s ruling in Vijay Kumar Jain v. Standard Chartered Bank, the Bench affirmed that even a suspended director has the right to challenge the resolution plan and must be heard by the Adjudicating Authority.

Final Outcome

The Tribunal dismissed the approval of the resolution plan and directed that it be sent back to the CoC for reconsideration, since the voting outcome failed to meet the 66% approval threshold mandated by law when SBI’s vote share is included.

Case Details:

• Title: Oriental Bank of Commerce vs. Shree Bhimeshwari Ispat Private Limited

• Case No.: IA 141/2023 in CP (IB) No. 4550/MB-II/2018

• Bench: NCLT Mumbai

• Coram: Ms. Lakshmi Gurung (Judicial), Shri Anil Raj Chellan (Technical)

• Judgment Date: April 28, 2025

• Applicant Counsel: Mr. Nausher Kohli i/b Adv. Gaurav Raj Shrawat

• Respondent Counsel: Adv. Prashansa Agarwal with Kunal Chheda