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2025 Supreme(Online)(NCLAT) 1472
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Arun Baroka, Member (Technical)
Pankaj Mahajan – Appellant
Versus
Edelweiss Asset Reconstruction Asset Company – Respondent
Company Appeal (AT) (Insolvency) No. 1450 of 2025 | Company Appeal (AT) (Insolvency) No. 1451 of 2025 | Company Appeal (AT) (Insolvency) No. 1452 of 2025
For the Appellants/Petitioners:Mr. Abhijeet Sinha, Sr. Advocate, Mr. Ayush Rajani, Ms. Heena Kochar
For the Respondents:Mr. Arvind Nayyar, Sr. Advocate, Mr. Vivek Jain, Mr. Swapnil Srivastava, Mr. Abhishek Gupta, Mr. Chirag Naik, Mr. Jayesh Srivastava, Mr. Rishabh Periwal, Mr. Shubham, Ms. Diksha Dadu, Mr. Arun Kathpalia, Sr. Advocate, Ms. Misha, Ms. Mahima Sareen, Mr. Abhilash Chaudhary, Ms. Sanjukta Fauzdar, Ms. Diksha Gupta.
The court confirmed that the decision-making power of the Committee of Creditors regarding asset sales during insolvency processes must be respected, provided it adheres to transparency and maximization of asset value.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 29 - Sale of non-core assets - Appeal by resolution professionals challenging rejection of asset sale by the Adjudicating Authority - The Court found that the resolution process followed by the Committee of Creditors (CoC) was valid, aimed at maximizing asset value, and duly approved by the CoC with 85.46% voting in favor - The Adjudicating Authority erroneously directed independent bids, interfering in the CoC's commercial wisdom and jurisdiction, leading to unnecessary delays in resolving the insolvency of related entities. (Paras 25-76)
(B) Procedural Impropriety - The process for asset sale must emphasize transparency and value maximization, but was unduly criticized without just cause by the Adjudicating Authority, disregarding the comprehensive deliberations and valuations conducted during the CoC meetings. (Paras 40-44)
(C) Encumbered Assets - Sale of encumbered assets is permissible if the secured creditors consent, as evidenced here, and does not necessitate public auction procedures under Regulation 29 of the CIRP Regulations. (Paras 47-50)
(D) Regulation 36A(1A) - The introduction of this regulation regarding independent bids does not apply retroactively and should not interfere with the prior approval of the asset sale. (Paras 78-81)
Findings of Court:
The Impugned Order was set aside as it conflicted with the established commercial judgments of the CoC and misinterpreted procedural regulations.
Result: Appeals allowed, Impugned Order set aside.
JUDGMENT
(Hybrid Mode)
[Per: Arun Baroka, Member (Technical)]
The present Appeal is filed by the Resolution Professional (hereinafter referred to as the "Appellant" or "Resolution Professional") ofArshiya Limited- CIRP initiated vide order dated 23rd April 2024, Arshiya Limited (the "Corporate Debtor"), challenging the order dated 16.07.2025 (the "Impugned Order") passed by the Hon’ble National Company Law Tribunal, Mumbai Bench (the "NCLT" or "Adjudicating Authority") in IA No. 1927 of 2025 (the "Application") arising out of CP (IB) No. 3143/MB/2019 (the "Company Petition"). The Appellant contends that the Adjudicating Authority erred in passing the Impugned Order by failing to appreciate the provisions of Regulation 29 of the Insolvency and Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016 (the "CIRP Regulations").
2. The Committee of Creditors ("COC") members had approved the proposed "sale" of the non-core assets of Arshiya Limited which is a "Sale of asset outside the course of business" of the Appellant with a clear intent of maximisation of value which would not only enhance the value of the present CIRP process of Arshiya Limited but would have also had a positive impact on the CIRP process of other two Corporate Debtors i.e., NCR Rail Infrastructure Limited Respondent No. 9 (undergoing CIRP process vide order dated 07 March 2024) and also Arshiya Northern FTWZ Limited Respondent No. 10 (undergoing CIRP vide order dated 14 November 2022).
3. The appeal essentially disputes the Adjudicating Authority's rejection of the sale of non-core assets of Arshiya Limited, which was approved by the Committee of Creditors ("CoC") as a sale of assets outside the course of business, aimed at maximization of value. This sale was intended not only to enhance the value of the ongoing Corporate Insolvency Resolution Process (CIRP) of Arshiya Limited but also to positively impact the CIRP processes of two other Corporate Debtors, namely 2NCR Rail Infrastructure Limited (Respondent No. 9), undergoing CIRP by an order dated 07 March 2024, and 3Arshiya Northern FTWZ Limited (Respondent No. 10), undergoing CIRP by an order dated 14 November 2022.
4. Appellant claims that the Adjudicating Authority indirectly allowed the Intervention Petition (IBC/66/MB/2025) whilst the Impugned Order records that the Intervention Petition has been dismissed, however the application i.e., NCR Rail Infrastructure Limited-undergoing CIRP vide Order dated 07.03.2024 Arshiya Northern FTZ Ltd. (ANFL) -undergoing CIRP vide Order dated 14.11.2022 IA 1927/2025 which was filed by the Appellant i.e., Resolution Professional for Arshiya Limited before the Adjudicating Authority was only partly allowed which was predominantly based on the submissions made by the intervenor.
5. The Appellant argues that the Impugned Order, if upheld, would effectively reset the CIRP process to its initial stages (Form G stages), which is impermissible under the Code and was neither sought nor suggested. This would undermine the commercial wisdom of the CoC members, who have, after thorough deliberation and documented discussions in various meetings along with all PRAs, approved the proposed sale as the best way to maximize value. The Appellant submits that the Impugned Order, by obstructing the sale, adversely affects the stakeholders’ interests of all three involved CIRPs and defeats the fundamental objective of maximization of value envisaged under the Insolvency and Bankruptcy Code .
6. Thus, the appeal challenges the correctness of the Impugned Order and seeks its setting aside, asserting that it goes against the enabling provisions of the CIRP Regulations and the considered commercial decisions of the CoC.
7. Company Appeal (AT) (Insolvency) No. 1450 of 2025 is filed by the RP (Pankaj Mahajan) of CD i.e. Arshiya Limited- in which case CIRP was initiated vide order dated 23rd April 2024 against the impugned order dated 16.07.2025 in IA No. 1927 of 2025 arisi
