Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 2763

NATIONAL COMPANY LAW TRIBUNAL
Prabhat Kumar, Member (Technical), Sushil Mahadeorao Kochey, Member (Judicial)
Ravi Sethia Resolution Professional of Morarjee Textile Limited VS
CP (IB) No. 1318 of 2022 | IA(IBC)(Plan)/45/MB/2025 | IA 2316/2025

Advocates:
For the Appellants/Petitioners: Sr. Adv. Mustafa Doctor, Adv. Akshay Petkar, Adv. Dhrupad Vaghani, Gayatri Mohite, Adv. Ashish Jha, Adv. Rahul Sarda, Adv. Tanvi Nandgaonkar
For the Respondents: Sr. Adv. Mustafa Doctor, Adv. Akshay Petkar, Adv. Dhrupad Vaghani, Adv. Gayatri Mohite, Adv. Ashish Jha

Differentiation between secured and unsecured financial creditors in a resolution plan is permissible as they form separate sub-classes, provided each sub-class receives at least its liquidation value entitlement under Section 53 of IBC.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 30(2), 30(6), 31(1), 53 - CIRP Regulations, Regulation 38 - Approval of Resolution Plan - Objection by dissenting financial creditor alleging discrimination between secured and unsecured creditors.

(B) The secured and unsecured financial creditors, though falling within the same class of financial creditors, constitute a separate sub-class. Differentiation between sub-classes is permissible provided persons falling within the sub-class are treated similarly and are paid a value equivalent to the liquidation value available for that sub-class.

Facts of the case:
The Resolution Professional filed an application under Section 30(6) of the IBC for approval of a resolution plan submitted by Shrinivas Spintex Industries Private Limited. The plan was approved by 75.61% of the Committee of Creditors. ACT Fininvest Ltd., an unsecured financial creditor holding 16.79% voting rights, objected, alleging that the plan discriminated against unsecured financial creditors by allocating only Rs. 39 Lakhs against admitted claims of Rs. 128.46 Crores, while secured creditors received approximately Rs. 130 Crores.

Findings of Court:
The Tribunal found that the average liquidation value of the corporate debtor (Rs. 140.48 crores) was less than the admitted claims of secured financial creditors (Rs. 625.03 crores). Under Section 53 of IBC, CIRP costs and amounts due to secured financial creditors are paid in priority over unsecured financial creditors, making the liquidation value for unsecured financial creditors nil. The Tribunal held that differentiation between sub-classes of financial creditors is permissible as long as each sub-class receives at least the liquidation value available to it. The plan complied with all statutory requirements under Section 30(2) of the Code.

Issues: Whether the resolution plan discriminated against unsecured financial creditors by not treating them in parity with secured financial creditors, and whether such differentiation is permissible under the IBC.

Ratio Decidendi: The Tribunal held that secured and unsecured financial creditors form separate sub-classes within the class of financial creditors, and differential treatment is permissible provided each sub-class receives at least its liquidation value entitlement. The Adjudicating Authority's role is limited to ensuring compliance with Section 30(2), and it cannot substitute its commercial wisdom for that of the CoC.

Result: Resolution plan approved. IA No. 2316 of 2025 dismissed.

Table of Content
1. background of cirp and resolution plan approval process. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14)
2. objection by dissenting financial creditor alleging discrimination. (Para 15 , 16)
3. statutory compliance and certification by resolution professional. (Para 17 , 18 , 19)
4. findings on compliance with code and regulations. (Para 20 , 21 , 22)
5. sub-classification of financial creditors and permissible differentiation. (Para 23 , 24)
6. scope of adjudicating authority's review under section 31. (Para 25 , 27 , 28)
7. reliefs and concessions sought in resolution plan. (Para 26)
8. approval of resolution plan and dismissal of objection. (Para 29 , 30 , 31)

ORDER

Per: Coram Brief Background

1. The present Application is filed by Mr. Ravi Sethia, (“Applicant/Resolution Professional”) of Morarjee Textiles Limited (“Corporate Debtor”) under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (“Code”) for seeking approval of the Resolution Plan dated 02.01.2025 r/w addendum dated 05.02.2025 and clarification dated 31.03.2025 (collectively referred to as "Resolution Plan"), submitted by Shrinivas Spintex Industries Private Limited (“Successful Resolution Applicant/SRA”) and for passing order/appropriate direction that this Tribunal may deem fit in the present matter. The Resolution Plan has been approved by 75.61% in the 22^nd CoC meeting held on 04.02.2025 and adjourned to 05.02.2025.

2. The Corporate Debtor is a Public Limited Company under the Companies Act, 1956 incorporated on 09.10.2013 bearing CIN L52322MH1995PLC090643. Its registered office is at 242, Floor-G-1, New Mahalaxmi Silk Mill, Harishchandra L Nagoankar Marg, Mathuradas Mills Compound, Lower Parel, Mumbai, Maharashtra-400013.

3. The Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor commenced upon admission of CP (IB) / 1318 (MB) 2022 filed under Section 7 of the Code by this Tribunal on 09.02.2024, wherein Mr. Ravi Sethia was appointed as the Interim Resolution Professional (“IRP”).

4. Pursuant thereto, the Applicant issued the public announcement in prescribed ‘Form A’ on 12.02.2024, in Financial Express (English & All India Edition) and Loksatta (Marathi & Maharashtra Edition) inviting claims from creditors. The Applicant, after verifying the claims of creditors received by him, constituted the Committee of Creditors (“CoC”) of the Corporate Debtor in accordance with Section 21 of the Code.

5. The first meeting of the Committee of Creditors (“CoC”) was convened on 13.03.2024. The CoC in its third meeting held on 15.05.2024 resolved to appoint the applicant as the Resolution Professional of the CD.

6. In furtherance of the CIRP, the Applicant published Form-G inviting Expressions of Interest on 01.05.2024 and subsequently published an amended Form-G on 23.05.2024 in Financial Express (English & All India Edition) and Loksatta (Marathi & Mumbai, Pune, Nashik & Nagpur Edition). Thereafter, the final list of Prospective Resolution Applicants ("PRAs") was issued on 02.07.2024, comprising 33 PRAs. The Information Memorandum, Evaluation Matrix, and Request for Resolution Plan ("RFRP") were issued to the PRAs on 02.07.2024. The last date for submission of Resolution Plans was initially fixed as 19.07.2024 as per the amended Form-G. Upon multiple requests for extension of time received from the PRAs, and having regard to the level of interest demonstrated, the CoC resolved to extend the last date for submission of Resolution Plans to 27.08.2024.

7. Three PRAs, namely: (i) Dev Land & Housing Pvt. Ltd. ("DLH"); (ii) Nirmal Ujjwal Credit Co-operative Society Ltd. ("NUCCSL"); and (iii) Shriniwas Spintex Pvt. Ltd. ("SSPL"), submitted their respective Resolution Plans along with an Earnest Money Deposit ("EMD") of Rs.5,00,00,000/- (Rupees Five Crores Only) each.

8. The said plans were opened and deliberated upon in the 7^th CoC Meeting held on 29.08.2024. After detailed discussion on the commercial aspects of the Resolution P

Click Here to Read the rest of this document

2026 Supreme(Online)(NCLT) 2763

NATIONAL COMPANY LAW TRIBUNALPrabhat Kumar, Member (Technical), Sushil Mahadeorao Kochey, Member (Judicial)Ravi Sethia Resolution Professional of Morarjee Textile Limited VSCP (IB) No. 1318 of 2022 | IA(IBC)(Plan)/45/MB/2025 | IA 2316/2025

Differentiation between secured and unsecured financial creditors in a resolution plan is permissible as they form separate sub-classes, provided each sub-class receives at least its liquidation value entitlement under Section 53 of IBC.

NATIONAL COMPANY LAW TRIBUNAL
Prabhat Kumar, Member (Technical), Sushil Mahadeorao Kochey, Member (Judicial)
Ravi Sethia Resolution Professional of Morarjee Textile Limited VS
CP (IB) No. 1318 of 2022 | IA(IBC)(Plan)/45/MB/2025 | IA 2316/2025