NCLT Approves Resolution Plan Under IBC S.30 After Re-Voting, Pulling Corporate Debtor from Brink of Liquidation - 2025-07-11

NCLT Greenlights Resolution Plan for Shri Fakirchand Enterprises After Dramatic Re-Vote Halts Liquidation

Mumbai - In a significant ruling that underscores the objective of the Insolvency and Bankruptcy Code (IBC) to revive distressed companies, the National Company Law Tribunal (NCLT), Mumbai Bench, has approved a Rs. 6.85 crore resolution plan for M/s. Shri Fakirchand Enterprises Pvt. Ltd. The bench, comprising Justice Virendrasingh G. Bisht (Retd.) and Mr. Prabhat Kumar (Technical Member), sanctioned the plan submitted by a consortium led by Jinesh K. Sancheti after a crucial re-vote by the Committee of Creditors (CoC) pulled the company back from the brink of liquidation.

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Case Background

The Corporate Insolvency Resolution Process (CIRP) for Shri Fakirchand Enterprises Pvt. Ltd. (SFEPL) was initiated on January 5, 2024, under Section 10 of the IBC. The company, which primarily holds immovable property, had acted as a corporate guarantor for Antrix Diamond Exports Pvt Ltd and defaulted on its obligations to financial creditors, including a consortium of banks. Mr. Shailesh Bhalchandra Desai was appointed as the Resolution Professional (RP).

The total admitted claims against the company stood at a staggering Rs. 846.36 crore, with financial creditors accounting for Rs. 845.49 crore.

From Failed Vote to Impending Liquidation

The RP received a resolution plan from a consortium of individuals: Jinesh K. Sancheti, Meena K. Sancheti, and Anuja J. Sancheti. After negotiations with the CoC, the final plan was put to an e-vote. However, in the initial voting that concluded on December 3, 2024, the plan secured only 55.23% of the votes, falling short of the requisite 66% majority.

Faced with a failed resolution attempt and the expiry of the CIRP timeline, the CoC passed a resolution to liquidate the corporate debtor. Consequently, the RP filed an application for liquidation (IA (Liq.) No. 6/2025).

The Turning Point: A Creditor's Change of Heart

The course of the insolvency process took a dramatic turn when, on December 30, 2024, the Bank of India—a key member of the CoC—sent an email to the RP, communicating its intent to change its earlier negative vote to a vote in favour of the resolution plan.

Citing this development and relying on the NCLAT precedent in Mr. Sharad Sanghi vs. Ms. Vandana Garg & Ors. , which allows for re-voting in exceptional circumstances, the RP filed an application seeking the Tribunal's permission for a fresh vote. The NCLT granted this request on February 18, 2025, dismissing the pending liquidation application as infructuous and paving the way for the plan's revival.

In the 17th CoC meeting held for the re-vote, the plan was successfully approved with a 69.83% majority .

Key Features of the Approved Resolution Plan

The NCLT-approved plan proposes a total payout of Rs. 6.85 crore plus CIRP costs at actuals. The distribution is structured as follows:

Financial Creditors: To receive Rs. 6.75 crore against admitted claims of Rs. 845.49 crore, resulting in a recovery of approximately 0.80%. Dissenting financial creditors will be paid their liquidation value in priority.

Operational Creditors: To receive Rs. 10 lakh against admitted claims of Rs. 87.93 lakhs, a recovery of 11.37%. Their liquidation value was determined to be NIL.

Shareholders: To receive NIL, as the liquidation value for equity is NIL.

Implementation: A Monitoring Committee, comprising the RP, a nominee of the financial creditors, and a nominee of the resolution applicant, will be formed to oversee the plan's implementation within 60 days of the effective date.

Court’s Reasoning and Final Decision

The NCLT scrutinized the plan and the RP's Form-H compliance certificate, confirming that the plan met all statutory requirements under Section 30(2) of the IBC. The Tribunal noted that the plan provided for CIRP costs, payments to operational and dissenting financial creditors as per the code's waterfall mechanism, and a clear framework for management and supervision.

Citing the Supreme Court's landmark judgment in Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited , the NCLT affirmed that upon approval, the plan becomes binding on all stakeholders, and all claims not included in the plan are extinguished. The Tribunal granted certain reliefs and concessions requested by the resolution applicant but made them subject to the provisions of applicable laws.

“In K Sashidhar v. Indian Overseas Bank & Others...the Hon’ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share...the role of the NCLT is ‘no more and no less’... The discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan ‘as approved’,” the order stated.

With this approval, the moratorium under Section 14 of the IBC ceases, and control of Shri Fakirchand Enterprises will be transferred to the successful resolution applicants, marking a fresh start for the company.