NCLT Mumbai Bench Approves ₹47 Crore Resolution Plan for HBS Auto & Anc SEZ Pvt. Ltd.

Mumbai: The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Justice Virendrasingh G. Bisht (Retd.), Member (Judicial), and Sh. Prabhat Kumar, Member (Technical), has granted approval to the resolution plan for HBS Auto & Anc SEZ Private Limited, a corporate debtor in the business of real estate development, including SEZ projects. The order, pronounced on March 12, 2025, sanctions the plan submitted by a consortium of M/s Mahansaria Tyres Pvt. Ltd. and M/s. Lotus Ornaments Pvt. Ltd. (Successful Resolution Applicant or SRA).

The application for approval was filed by Mr. Avinash Ambikaprasad Shukla , the Resolution Professional (RP), under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016 (IBC). The resolution plan received unanimous approval (100% voting share) from the Committee of Creditors (CoC) during their 16th meeting held on January 24, 2025.

Case Background

The Corporate Insolvency Resolution Process (CIRP) against HBS Auto & Anc SEZ Pvt. Ltd. was initiated following a Section 7 application filed by SREI Equipment Finance Ltd., a financial creditor. The CIRP commenced on January 2, 2024, with Mr. Shukla initially appointed as Interim Resolution Professional and subsequently confirmed as RP.

The CIRP period saw multiple extensions, extending beyond the initial 180 days and the subsequent 270 days, ultimately requiring approval for extensions up to February 1, 2025, due to challenges in finding a suitable resolution plan that met the CoC's expectations. A fresh Expression of Interest was issued after earlier plans were not considered satisfactory.

Key Aspects of the Approved Resolution Plan

The resolution plan is valued at ₹47,08,31,231 and proposes the following distribution of funds against admitted claims:

Insolvency Resolution Process Costs: To be paid at actuals.

Secured Financial Creditors: Against admitted claims of ₹1,08,95,42,627, an amount of ₹46,00,00,000 is offered, representing approximately 42.22%.

Unsecured Financial Creditors: Against admitted claims of ₹9,98,53,782, NIL payment is offered.

Operational Creditors (Workmen & Employees): Admitted claims of ₹91,37,654 are proposed to be paid in full .

Operational Creditors (Government Dues): Admitted claims of ₹6,84,460 are proposed to be paid almost in full (₹6,84,459).

Operational Creditors (Other than Workmen/Employees): Admitted claims of ₹10,09,118 are proposed to be paid in full .

Other Creditors: Against admitted claims of ₹29,52,23,159, NIL payment is offered.

The total admitted claims amounted to ₹1,92,04,17,754, against which the total amount provided in the plan is ₹47,08,31,231, equating to roughly 24.5% of the admitted amount overall (excluding CIRP Costs). However, the significant haircuts are on secured financial creditors, unsecured financial creditors, and "Other Creditors". Operational creditors falling under workmen/employees, government dues, and others are proposed to be paid in full.

The SRAs propose to fund the plan through a combination of equity contribution (₹100 lakhs) and debt instruments (₹4,658 lakhs) from their own resources. Payments to creditors are scheduled to be made within 90 days from the Effective Date of the plan's approval.

Statutory Compliance and Reliefs Sought

The Resolution Professional confirmed that the plan complies with the mandatory requirements of Section 30(2) of the IBC and Regulation 38 of the CIRP Regulations, ensuring payment priority for CIRP costs and minimum payments to operational creditors (not less than liquidation value, and in this case, 100% for most categories) and dissenting financial creditors. The plan also addresses the management and implementation of the Corporate Debtor's affairs post-resolution.

The plan sought numerous reliefs and concessions from statutory authorities (GIDC, SEZ Authority, Income Tax, etc.) and creditors, including protection of leasehold rights, permission to deal with land parcels, extinguishment of certain pre-CIRP financial liabilities, waiver of specific taxes and penalties, and continuity of approvals and utility services.

Crucially, an undertaking was provided by the SRA regarding the waiver of damages under Section 14B of the EPF Act. While the plan sought a 100% waiver, the SRA affirmed that even if the waiver is not granted in full or in part by the Central Board, they would still implement the plan and infuse additional resources to cover any such amounts.

Tribunal's Decision and Implications

Citing the Supreme Court's judgment in K Sashidhar v. Indian Overseas Bank & Others and Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited , the NCLT reiterated its limited scope of review, focusing on compliance with Section 30(2) of the IBC. Finding that the plan met all statutory requirements and was approved by the requisite majority of the CoC, the Tribunal approved the resolution plan.

The order explicitly states that the approved plan is binding on the Corporate Debtor, its employees, members, creditors (including government authorities), guarantors, and other stakeholders. In line with the Ghanshyam Mishra principle, all claims not forming part of the approved plan stand extinguished.

However, the Tribunal added crucial riders regarding the sought reliefs and concessions:

Statutory obligations/liabilities of the Corporate Debtor are not automatically waived by the NCLT approval; they must be dealt with by appropriate authorities in accordance with the law. Any waivers sought are subject to approval by the concerned authorities, guided by the Ghanshyam Mishra judgment.

While authorities should not withhold approval/consent/extension solely due to the Corporate Debtor's insolvency or the extinguishment of pre-CIRP dues under the plan, any relief or concession is ultimately subject to the provisions of the relevant governing Act.

Specific directives were given regarding GIDC charges, SEZ approvals (subject to compliance within 6 months), ROC filings (with waiver of additional fees), tax matters (carry forward of losses subject to examination by tax authorities), compounding/condoning of non-compliances (without immediate fines/penalties), and updating ROC records.

The moratorium under Section 14 of the Code ceases to have effect from the date of the order. The RP is tasked with supervising the plan's implementation and filing quarterly status reports with the NCLT.

The approval of the plan marks a significant step in the resolution of HBS Auto & Anc SEZ Private Limited, providing a framework for the company's revival under the new management while resolving the claims of various creditors as per the terms of the approved plan and the provisions of the IBC.