Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 194

NATIONAL COMPANY LAW TRIBUNAL
Mohan Prasad Tiwari, Member (Judicial), Charanjeet Singh Gulati, Member (Technical)
Krishna Chamadia – Appellant
Versus
S V Distributors Private Limited – Respondent
IA(PLAN)/47/2025|C.P. (IB)/434(MB)2024

Advocates:
For the Applicant: Sr. Adv. Gaurav Joshi, Adv. Rohit Gupta, Adv. Tejas Agarwal, Adv. Aushka Singh
For the RP: Adv. Krishna Chamadia
For the SRA: Adv. Rohan Agarwal, Adv. Sneha Nahawar

Resolution plan rejected for furnishing performance security only on infusion amount, not total plan value as mandated by unamended RFRP; post facto CoC decisions cannot cure process deviation, ensuring transparency and equal treatment.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 7, 25(2)(h), 30(2), 30(6), 31, 32A - CIRP Regulations, 2016 - Regulations 27, 36B, 38, 39(4) - Approval of resolution plan - Request for Resolution Plans (RFRP) mandating performance security at 10% of total plan value offered to creditors - Failure to furnish required security or revise RFRP terms prior to plan submission - Post facto CoC deliberations cannot cure deviation - Existing cash balances vest in successful resolution applicant upon plan approval and cannot justify reduced security - Non-compliance undermines process transparency, competitiveness, and equal treatment of applicants - Plan rejected for violating mandatory RFRP terms and failing Section 30(2) requirements. (Paras 39-47)

(B) Insolvency Resolution Process - RFRP as foundational binding document - Terms cannot be altered post-conclusion without prior amendment and disclosure to all applicants - CoC commercial wisdom cannot override unamended mandatory process requirements - Deviation results in discrimination against other applicants. (Paras 39-42, 46)

Facts of the case:
CIRP initiated against corporate debtor. CoC approved resolution plan with total value of Rs.19.51 crores, comprising Rs.8.51 crores fresh infusion and Rs.11 crores existing cash. Performance security furnished only at Rs.85.10 lakhs (10% of infusion), contrary to RFRP requiring 10% of total plan value (Rs.1.951 crores). Tribunal directed explanations; RP claimed post-approval CoC decision justified reduction.

Findings of Court:
Resolution plan in violation of RFRP Clauses 2.15.1, 2.15.6, 4.1.1(m); no prior revision of terms; acceptance of reduced security impermissible.

Issues: Whether reduced performance security complied with RFRP; validity of post facto CoC decision to limit security to infusion amount excluding existing cash.

Ratio Decidendi: RFRP terms are mandatory and binding; performance security must be 10% of total plan value; existing assets not insulated from risk post-approval; process deviations vitiate CoC approval under Sections 30(2), 31.

Result: I.A. disposed; resolution plan not approved. CoC at liberty to proceed per law.

Table of Content
1. cirp initiation and coc constitution process (Para 1 , 2 , 3 , 4 , 5 , 6)
2. eoi, rfrp issuance and resolution plan approval (Para 7 , 8 , 9 , 10 , 11)
3. rp compliance, sra background and valuation (Para 12 , 13 , 14)
4. cirp costs, funding and stakeholder payments (Para 15 , 16 , 17 , 18 , 19 , 20)
5. monitoring committee and implementation supervision (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30)
6. performance security compliance dispute (Para 31 , 32 , 33 , 34 , 35 , 36 , 37)
7. rfrp mandatory terms binding on coc (Para 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46)
8. resolution plan rejected for process violation (Para 47 , 48 , 49)

ORDER

1. This Interlocutory Application, filed on 11.04.2025 by Mr. Krishna Chamadia, Resolution Professional of M/s Rajesh Construction Company Private Limited, is presented under Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016 and Regulation 39(4) of the CIRP Regulations, 2016, seeking approval of the Resolution Plan dated 04.03.2025 submitted by Rihaan Enterprises; a declaration that, upon approval, the Resolution Plan shall be binding on the Corporate Debtor, its employees, members/shareholders, creditors, guarantors and all other stakeholders; grant of the benefit of Section 32A of the Code by recognizing acquisition of the Corporate Debtor on a clean-slate basis with cessation of liability for offences committed prior to commencement of CIRP; and for such other reliefs as this Hon’ble Tribunal may deem fit in the facts and circumstances of the case. Brief Facts

2. The Corporate Insolvency Resolution Process (CIRP) of S V Distributors Private Limited (the Corporate Debtor) was initiated by this Tribunal vide order dated 19.07.2024 in CP (IB) No. 434 of 2024 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”). Pursuant to the said order, the Applicant caused a Public Announcement to be issued on 17.09.2024 in compliance with Sections 13 and 15 of the Code read with Regulation 6 of the CIRP Regulations, 2016, inviting submission of claims from all creditors. The last date for submission of claims was 10.10.2024; however, an additional period of 30 days was granted for submission of proof of claims, extending the timeline from 11.10.2024 to 09.11.2024.

3. Mr. Manoj Kumar Agarwal, the Interim Resolution Professional (IRP), thereafter filed I.A. No. 4768 of 2024 on 16.08.2024 seeking approval for constitution of the Committee of Creditors (CoC) of the Corporate Debtor. The said application was allowed by this Tribunal vide order dated 15.10.2024, pursuant to which the Committee of Creditors of the Corporate Debtor was duly constituted, the details whereof are reproduced hereunder.

4. In 2^nd CoC meeting held on 10.09.2024, publication of Form G approving eligibility criteria for Prospective Resolution Applicants (PRAs) with detailed invitation for EOI was decided.

5. In the 3^rd Committee of Creditors (CoC) held on 03.10.2024, the Applicant was appointed as the Resolution Professional (RP) of the Corporate Debtor with a 100% majority vote and discussion on preparation of Information Memorandum (IM) was noted. Thereby, the Applicant was appointed as the RP of the Corporate Debtor vide order dated 14.10.2024.

6. Form G inviting the Expression of Interests (EOIs) were first published on 17.09.2024 with the last date for submission on 10.10.2024. Revised Form G was published on 11.10.2024 with last date for submission of EOI was 09.11.2024. Thereby, the Applicant received EOIs from 7 PRAs and duly conducted verification of the EOIs received and published a provisional list of PRAs as on 09.11.2024 circulated on 14.11.2024. The final list of PRAs was published on 24.11.2024. The final list is as follows:

7. The Information Memorandum (IM) was placed before the Committee of Creditors (CoC) on 11.11.2024 and was thereafter shared with the Prospective Resolution Applicants (PRAs) on 26.11.2024. In the 4th meeting of the CoC held on 14.11.20

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2026 Supreme(Online)(NCLT) 194

NATIONAL COMPANY LAW TRIBUNALMohan Prasad Tiwari, Member (Judicial), Charanjeet Singh Gulati, Member (Technical)Krishna Chamadia – AppellantVersusS V Distributors Private Limited – RespondentIA(PLAN)/47/2025|C.P. (IB)/434(MB)2024

Resolution plan rejected for furnishing performance security only on infusion amount, not total plan value as mandated by unamended RFRP; post facto CoC decisions cannot cure process deviation, ensuring transparency and equal treatment.

NATIONAL COMPANY LAW TRIBUNAL
Mohan Prasad Tiwari, Member (Judicial), Charanjeet Singh Gulati, Member (Technical)
Krishna Chamadia – Appellant
Versus
S V Distributors Private Limited – Respondent
IA(PLAN)/47/2025|C.P. (IB)/434(MB)2024