Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 190

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
ASHOK BHUSHAN, J
Puro Natural Sugars JV – Appellant
Versus
Shree Warana Sahakari Bank Ltd. – Respondent
Company Appeal (AT) (Insolvency) No. 1003 of 2025

Advocates:
For the Appellants/Petitioners:Mr. Krishnendu Datta, Sr. Advocate with Mr. Ramchandra Madan, Mr. Tushar Nigam, Mr. Himanshu Yadav, Ms. Alina Merin Mathew, Mr. Harshit Chaudhary
For the Respondents:Mr. Abhijeet Sinha, Sr. Advocate with Mr. Ayush Pratap Singh, Mr. Udayraj Patwardhan, Ms. Shreya

Approved resolution plan extinguishes all encumbrances, attachments on guarantors' assets (charged or not), binding dissenting creditors post full payment and finality; state law recoveries for settled CIRP debts stand released.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 30(2), 31, 74(3), 236 - Resolution plan approved by CoC with requisite majority and affirmed by appellate tribunal and Supreme Court - Plan clauses providing for extinguishment of all encumbrances, security interests, liens, attachments (including pursuant to applicable law) over assets of erstwhile promoters, directors, guarantors (charged or not) and release of all enforcement actions - Dissenting financial creditors received full payment under plan yet continued recovery against guarantors' assets attached under state cooperative law - Such attachments for recovering debts settled in CIRP stand released by approved plan - Plan need not specify/identify individual properties; general clauses suffice when consciously dealing with securities and personal guarantees - Dissenting creditors cannot re-agitate settled objections post finality - Post-approval non-release of assets breaches binding plan under Section 31 - Observations limiting release to only mortgaged assets set aside. (Paras 10, 15, 17, 19, 20)

(B) Resolution Plan - Scope and binding nature - Extinguishes claims, rights, litigations against corporate debtor, suspended directors, guarantors; settles all obligations in perpetuity - Dissenting creditors worse-off argument inapplicable post CoC approval with requisite votes - Cannot claim inadequacy of consideration for residual debt assignment after plan finality. (Paras 11, 20)

Facts of the case:
Corporate debtor (MSME) underwent CIRP; consortium banks (dissenting financial creditors with ~22% voting share) filed claims; resolution plan by successful resolution applicant approved by CoC (78.03%), providing full payment to dissenters plus Rs.2 crores for residual debt assignment, and extinguishment of all guarantor securities/attachments - Plan initially rejected by adjudicating authority for extinguishing dissenting creditors' rights against guarantors; set aside by appellate tribunal, affirmed by Supreme Court dismissal - Post-approval, dissenters retained guarantors' assets attached under state cooperative law despite payments received; successful resolution applicant sought implementation and restraint on recovery.

Findings of Court:
Impugned order allowing application upheld except paras 55-57 deleted; all attachments/enforcements against promoters'/guarantors'/third-party assets released per plan; non-compliance triggers IBBI reference for prosecution under Section 74(3).

Issues: Whether resolution plan validly extinguishes all encumbrances/attachments (mortgaged or not, including under state law) on guarantors' assets despite dissent; whether dissenting creditors can continue recovery post full payment and plan finality; scope of release without property-specific identification.

Ratio Decidendi: Approved resolution plan irrevocably releases all encumbrances/attachments over guarantors' assets (even non-mortgaged or state law-based) as debts settled; prior objections overruled attain finality; creditors bound by Section 31, cannot persist with recovery breaching plan.

Result: Appeal allowed; paras 55-57 set aside; direction for IBBI reference if non-release persists.

Table of Content
1. appeal challenges nclt observations on sra's ia allowing resolution plan implementation. (Para 1 , 2)
2. parties argue over extinguishment of personal guarantees and securities. (Para 4 , 5 , 6)
3. resolution plan clauses extinguish all encumbrances on guarantors' assets. (Para 8 , 9 , 10 , 11 , 12)
4. attachments under state law released post-debt resolution in cirp. (Para 13 , 14 , 15 , 16 , 17)
5. prior objections overruled; dissenting creditors bound by approved plan. (Para 18 , 19 , 20 , 21)
6. set aside paras 55-57; direct ibbi prosecution if non-compliance. (Para 23)

JUDGMENT

ASHOK BHUSHAN, J.

This appeal by a Successful Resolution Applicant (SRA) has been filed challenging only the observations in paragraphs 55 to 57 of the impugned judgment dated 25.04.2025 passed by the adjudicating authority (National Company Law Tribunal, Mumbai Bench, Court – V) in I.A. No.4484/2024. The I.A. 4484/2024 filed by the appellant – SRA, has been allowed by the impugned order, however, by allowing the application, certain observations in paragraphs 55 to 57 have been made, aggrieved by which observations, this appeal has been filed.

2. Brief facts of the case necessary to be noticed for deciding the appeal are:

i. The corporate debtor, Shivaji Cane Processors Limited an MSME was put to Corporate Insolvency Resolution Process (CIRP), on an application by ASREC (India) Ltd. vide order dated 18.02.2021.

ii. The corporate debtor was sanctioned a consortium loan amounting to Rs.18,20,00,000/- under which the Respondent No. 1 – Shree Warana Sahakari Bank Ltd. has advanced the loan of Rs. 6,20,00,000/- vide sanction letter dated 23.01.2017 and Respondent No. 2 – Kolhapur Urban Co-operative Bank Ltd. haD advanced the loan of Rs. 6,00,00,000/- vide sanction letter dated 11.01.2017.

iii. The corporate debtor to secure the loan of respondents No. 1 & 2 as a security has executed Mortgage Deed, third-party guarantees and guarantees by personal guarantors.

iv. On initiation of CIRP against the corporate debtor, Respondent No. 1 filed a claim under Form-C dated 25.02.2021 (revised on 05.03.2021 for total amount of Rs. 8,94,62,429/-). The respondent No. 2 filed a claim in Form–C dated 25.02.2021 for an amount of Rs.8,65,70,898/-.

v. Pursuant to invitation of Expression of Interest (EoI), the appellant – Puro Natural Sugars JV a joint venture between three entities submitted their resolution plan.

vi. Committee of Creditors (CoC) was constituted by the Resolution Professional (RP) in which committee, the respondent No. 1 – Shree Warana Sahakari Bank Ltd. was allocated 11.13% vote shares, whereas, Respondent No. 2 – Kolhapur Urban Co-operative Bank Ltd. was allocated 10.84% vote shares. The CoC vide its resolution 27.07.2021 approved the resolution plan submitted by the appellant with 78.03% vote shares. The respondents No. 1 & 2 dissented and were treated as dissenting financial creditors. I.A. No. 2156/2021 filed by the RP for approval of resolution plan.

vii. The adjudicating authority vide its order dated 01.05.2023 rejected the application filed by the RP on the ground that resolution plan seeks to extinguish the personal guarantee and securities without the consent of the dissenting financial creditors.

viii. Aggrieved by the order dated 01.05.2023, the Comp. App. (AT) (Ins.) No. 661-663/2023 was filed in this Tribunal by the appellant, Puro Natural Sugars JV and Comp. App. (AT) (Ins.) No. 651/2023 was filed by the RP and Comp. App. (AT) (Ins.) No. 1005/2023 was filed by the Suspended Director of the corporate debtor challenging the order dated 01.05.2023. This Tribunal vide its judgment and order dated 24.11.2023 allowed all the appeals. Resolution plan submitted by Puro Natural Sugars JV was approved. Challenging the order of this Tribunal dated 24.11.2023, respondents No. 1 & 2 filed an appeal before the Hon’ble Supreme Court. Respondent No. 1 preferred the appeal being Civil Appeal No. 3965–3969/2024 before the Hon’ble Supreme Court. The Hon

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2026 Supreme(Online)(NCLAT) 190

NATIONAL COMPANY LAW APPELLATE TRIBUNALASHOK BHUSHAN, JPuro Natural Sugars JV – AppellantVersusShree Warana Sahakari Bank Ltd. – RespondentCompany Appeal (AT) (Insolvency) No. 1003 of 2025

Approved resolution plan extinguishes all encumbrances, attachments on guarantors' assets (charged or not), binding dissenting creditors post full payment and finality; state law recoveries for settled CIRP debts stand released.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
ASHOK BHUSHAN, J
Puro Natural Sugars JV – Appellant
Versus
Shree Warana Sahakari Bank Ltd. – Respondent
Company Appeal (AT) (Insolvency) No. 1003 of 2025