NCLAT: Power to Direct Reconsideration of Repayment Plan Under Section 114(3) IBC Is Discretionary, Not Automatic

April 1, 2026 : The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, has clarified that the power of the Adjudicating Authority under Section 114(3) of the Insolvency and Bankruptcy Code, 2016 to direct reconsideration or modification of a repayment plan is discretionary and must be exercised only when supported by sufficient material on record.

The ruling came in Omkaram Venkata Ramana v. Bank of India & Anr. (Company Appeal (AT) (CH) (Ins) No. 123/2023), where the Appellate Tribunal dismissed an appeal filed by a personal guarantor challenging the order of the National Company Law Tribunal (NCLT), Amaravati Bench.

The NCLT had accepted the Resolution Professional’s report recording rejection of the appellant’s repayment plan by the Committee of Creditors (CoC). The proceedings arose under Section 94 of the Code against the appellant, who had furnished a personal guarantee for loans availed by the Nithin Group of Companies from Bank of India.

The appellant had submitted a repayment plan offering ₹68.84 lakh, which was higher than the assessed value of his assets at ₹36.93 lakh. It was argued that this justified exercise of discretion under Section 114(3) to direct reconsideration of the plan by creditors.

However, the respondent bank opposed the plea, highlighting that the total outstanding dues exceeded ₹106 crore. The bank, holding 71.22% voting share in the CoC, had rejected the repayment plan after due consideration.

The Appellate Tribunal examined the statutory framework under Section 114 and emphasized that sub-section (3) is an enabling provision. It held that the Adjudicating Authority can direct reconsideration of a repayment plan only if it forms an opinion, based on material on record, that the plan requires modification.

Relying on the facts, the Tribunal noted that the repayment offer was not even a fraction of the admitted dues and that the financial creditor had consciously rejected the plan. It observed that merely offering an amount higher than the asset value does not, in all cases, warrant reconsideration of the repayment plan.

Importantly, the Tribunal underscored that no obligation can be imposed on a financial creditor to accept a repayment plan and that judicial interference is unwarranted unless the creditor’s decision is shown to be arbitrary.

The Bench further held that issues relating to alleged actions of the bank or disputes over disbursement cannot be examined at the stage of considering the Resolution Professional’s report on rejection of the repayment plan.

Finding no material to justify exercise of discretion under Section 114(3), the Appellate Tribunal upheld the order of the Adjudicating Authority and dismissed the appeal.

Coram: Justice Ashok Bhushan (Chairperson), Justice Sharad Kumar Sharma (Member Judicial), Jatindranath Swain (Member Technical)