Commercial Wisdom explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
When pandemic disruption among CoC representatives prevented the committee concluding its vote within the CIRP timeline, the Resolution Professional filed for liquidation as the Code mandates. The Adjudicating Authority declined to drive the matter into liquidation merely because the period had expired, where resolution applicants remained willing and available, and directed the CoC to decide on the plans on record.
What happened
- Following invitation of expressions of interest, three resolution applicants were shortlisted after several rounds of negotiation. The plans received were broadly comparable in financial terms but differed materially in their treatment of the corporate debtor's non-core assets and refinery operations.
- COVID-19 disruption among CoC representatives meant the committee could not conclude voting on the resolution plans within the applicable CIRP timeline.
- The Resolution Professional accordingly filed an application for liquidation, as mandated under the Code.
- On an application filed by one of the resolution applicants, the Adjudicating Authority declined to permit the matter to be driven into liquidation.
- Voting was conducted afresh, and the successful applicant's plan was approved by e-voting concluded on 20 August 2021.
The reasoning
The Adjudicating Authority declined to send the matter to liquidation merely on account of expiry of the CIRP period where resolution applicants remained willing and available, and directed the CoC to first decide on the resolution plans on record — being consistent with the settled principle that resolution is the rule and liquidation the exception.
The point is narrow but important. The timeline is mandatory and the RP was right to file. What the tribunal declined to do was treat the procedural consequence of expiry as overriding the substantive availability of a resolution. Applicants were still there; plans were on record; the delay was caused by a pandemic, not by anyone's default.
Why the applicant, not the RP, moved
It is worth noting who applied. Once the RP has filed for liquidation as the Code mandates, the RP is not well placed to argue against their own application. It was one of the resolution applicants — the party with the strongest commercial interest in the process continuing — that applied, and the tribunal acted on that application.
For practitioners, that is a practical route: where a timeline lapses for reasons outside the process's control and a viable plan exists, the applicant has standing and motive to preserve it.
Commercial wisdom, and its limit
The NCLT, in ultimately approving the plan, reiterated that the commercial wisdom of the CoC is not open to challenge before the Adjudicating Authority in the absence of a demonstrated legal infirmity in the process followed by the Resolution Professional.
The qualification is the operative part. Commercial wisdom is protected where the process was sound. That places the burden squarely on the RP's conduct of the process — which is why, when the unsuccessful third-ranked applicant sought a further opportunity to revise its offer, the NCLT called for detailed clarifications from the Resolution Professional including the complete record of the process from the issuance of Form G before rejecting the intervention and upholding the commercial wisdom of the CoC.
The lesson about the record
The tribunal did not simply invoke commercial wisdom. It examined the process record first — from Form G onwards — and upheld the commercial wisdom because the record withstood examination.
This is why ICAI's stated lesson from the case is that contemporaneous and meticulous documentation of CoC deliberations is indispensable, since it is this documentation and not the Resolution Professional's own recollection that will ultimately support and defend the CoC's commercial wisdom before an Adjudicating Authority years after the relevant decisions were taken — particularly where there is significant turnover of personnel on the creditors' side.
How this connects to the 2026 amendment
- Amended Regulation 39(3)(b) now requires the CoC to record its deliberations on feasibility, viability, expected recovery against fair and liquidation values, and adequacy of market discovery — converting into an obligation what this case shows to be a practical necessity.
- New section 33(1A) allows the CoC, by not less than 66% voting share, to seek restoration of the CIRP for up to 120 days after a liquidation order, available once only — a statutory route to the outcome this tribunal reached by applying principle.
- The CoC Code of Conduct and mandatory decision timelines address the underlying problem of committees not deciding in time.
Compliance checklist
- File the liquidation application when the Code requires it — but do not treat it as the end.
- Where applicants remain willing and available, put that on record.
- Maintain the complete process record from Form G; it is what protects commercial wisdom.
- Minute CoC deliberations contemporaneously, anticipating personnel turnover.
- Consider section 33(1A) restoration where a liquidation order has already been passed.
- Comply with Regulation 39(3)(b) recording requirements.
Common mistakes
- Treating timeline expiry as conclusive of liquidation.
- Relying on commercial wisdom without a process record to support it.
- Minuting outcomes but not deliberations.
- Assuming the RP must be the party to resist liquidation.