Back
2025 Supreme(Online)(NCLAT) 456
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
ASHOK BHUSHAN, J
GANGA CONSTRUCTION (CONSORTIUM) – Appellant
Versus
ANIL KUMAR MITTAL – Respondent
I.A. (IB) No. 2409/KB/2024 in CP (IB) No.26/KB/2023
For the Appellants/Petitioners: Mr. Mohit Choudhary, Mr. Prakhar Mithal, Mr. Gaurav Raj
For the Respondents:Mr. Abhijeet Sinha, Sr. Advocate, Mr. Nikhil Pillai, Mr. Shwetank Ginodia, Ms. Malvi Dedhia, Ms. Mini Aggarwal, Mr. Krishnendu Datta, Sr. Advocate, Mr. Harsh Gurbani, Mr. Harshit Chaudhary, Ms. Suparna, Mr. Arun Kathpalia, Sr. Advocate, Ms. Ruby Singh Ahuja, Ms. Aakriti Vohra, Ms. Roopali Gupta, Ms. Varsha Himatsingka, Ms. Diksha, Mr. Rajat Juneja, Mr. Anmol Kumar
The Tribunal upheld the validity of a resolution applicant's eligibility under Section 29A of the Insolvency and Bankruptcy Code, emphasizing the importance of participation in the resolution process to challenge eligibility.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 29A - Corporate insolvency resolution processes - Challenge to eligibility of resolution applicant - Appellant claimed Respondent No.6 ineligible under Section 29A due to alleged control and collusion with shareholders - Tribunal upheld the resolution plan by 100% vote share - Various delays and non-participation in bidding process by the Appellant were noted. (Paras 1, 10, 11, 28)
(B) Corporate Governance and Fairness - The importance of transparency and fairness in the resolution process was emphasized; non-participation in the challenge mechanism negates Appellant's standing. (Paras 10, 11, 28)
Facts of the case:
The Appellant, an unsuccessful resolution applicant, challenged the Adjudicating Authority's order approving Respondent No.6's resolution plan. It claimed ineligibility due to alleged collusion and disputes regarding shareholding agreements connecting Respondent No.6 with other entities.
Findings of Court:
The approval process for Respondent No.6 was conducted fairly, complying with necessary regulations, and prior appeals challenging similar issues were rejected.
Issues: Whether Respondent No.6 is ineligible under the stipulations of Section 29A, and whether the appeal had standing given the Appellant's non-participation in key processes.
Ratio Decidendi: The Tribunal reaffirmed that the Adjudicating Authority had limited jurisdiction regarding the commercial wisdom of the Committee of Creditors, ruling that the SRA's eligibility was valid as no control was established under Section 29A.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. limited jurisdiction of the adjudicating authority in plan approval. (Para 10 , 26) |
| 2. adjudicating authority's evaluation of the cirp process. (Para 20 , 21) |
| 3. appeal dismissed for lack of merit. (Para 29) |
JUDGMENT
ASHOK BHUSHAN, J.
This appeal by an Unsuccessful Resolution Applicant has been filed challenging the order dated 07.01.2025 passed in I.A. (IB) No. 2409/KB/2024 filed by the Appellant questioning the Letter of Intent issued in favour of Respondent No.6 – Manglam Multiplex Private Ltd. whose Resolution Plan was approved in the CIRP of the Corporate Debtor. Applicant also sought declaration that Respondent No.6 is ineligible under Section 29A of the I&B Code. The application filed by the Appellant was considered and rejected by the Adjudicating Authority (National Company Law Tribunal), Division Bench, Court No. II, Kolkata by the impugned order. Aggrieved by which order this appeal has been filed.
2. Brief facts of the case necessary to be noticed for deciding this appeal are:
(i) The Corporate Debtor – Varutha Developers Private Ltd. was declared successful Auction Purchaser of land measuring 9.2625 acres situate in Sector 62, Gurgaon and a Sale Certificate dated 09.08.2019 was issued in favour of the Corporate Debtor.
(ii) The Corporate Debtor has taken loan from SREI Equipment Finance Ltd. of Rs.300 Crore for purchasing the above asset.
(iii) Two shareholders of the Corporate Debtor; Vision India Fund (VIF) and Infra Resurrection Fund (IRF) entered into a Share Purchase Agreement dated 17.05.2019 with New Era Propcon Private Limited and Swastik Infrasolutions Private Ltd., which are group companies of M3M India Pvt. Ltd. – Respondent No.7 herein.
(iv) The Enforcement Directorate provisionally attached the land by order dated 04.02.2020. New Era Propcon and Swastik, Respondent No. 8 and 9 herein initiated arbitration proceedings alleging default on part of the shareholders of the Corporate Debtor, in which proceeding a settlement dated 23.01.2021 was entered and an arbitral award dated 19.04.2021 was passed under which steps were to be taken for withdrawal of the attachment. New Era and Swastik were to pay amount of Rs.249 Crore to the SREI Equipment Finance Ltd. against the loan sanctioned to the Corporate Debtor. Shares of the Corporate Debtor were to be transferred in favour of purchaser, New Era Propcon and Swastik. New Era Propcon and Swastik has also filed an execution application being EXE/2223/2020 before the District Court, Gurugram for enforcement of the arbitral award.
(v) An application under Section 7 was filed by SREI Equipment Finance Ltd. for default of loan of Rs.300 crore given to the Corporate Debtor before NCLT, Kolkata Bench. By order dated 20.12.2023 of the Adjudicating Authority CIRP process against the Corporate Debtor – Varutha Developers Pvt. Ltd. was initiated. Public Announcement was made on 23.12.2023 inviting claims. The Resolution Professional constituted the Committee of Creditors (COC). The CoC consist of 100% vote share of SREI Equipment Finance Ltd. Form G was published by the Resolution Professional in July, 2024 in response to which 8 PRAs submitted their Expression of Interest which included the Appellant as well as Respondent No.6 – Manglam Multiplex Private Limited.
(vi) One Consortium of Sakshi Chandana also gave Expression of Interest.
(vii) Appellant submitted preliminary Resolution Plan with a proposal of Rs.200 Crore. After submission of the Resolution Plan a challenge mechanism was held under the decision of the CoC. The Resolution Professional vide email dated 07.11.2024 informed all Resolution Applicants that negotiation process shall be now on 11.11.2024 and all Resolution Applicants should submit financial proposal having minimum value of Rs.250 Crore on or before 10:00 AM on 11.11.2024. Despite having submitted Resolution Plan, the Appellant did not submit the financial bid.
(viii) Appellant was informed by the Resolution Professional vide email dated 11.1
