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NCLT Chandigarh Rules Suspended Directors Cannot Raise Proxy Grievances on Behalf of Homebuyers
The , delivered a significant ruling on , firmly rejecting an attempt by suspended directors to challenge a resolution plan approved by the . The Bench, comprising Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal, dismissed I.A. No.1064 of 2025 filed by Vinod Bagai and Virender Bagai—promoters, shareholders, and suspended directors of —holding that they “cannot make on behalf of the homebuyers or seek reconsideration of the commercial assessment of the CoC.”
Can Suspended Directors Speak for Homebuyers? NCLT Says No
The applicants had alleged that the entire Corporate Insolvency Resolution Process (CIRP) was vitiated because the homebuyers were inadequately represented—claiming the absence of a formally appointed deprived them of meaningful participation. They also challenged the valuation of assets, the admission of ’s claim at ₹238.64 crore, and the alteration of the evaluation matrix after resolution plans were submitted.
The Tribunal, however, zeroed in on the preliminary issue of . Citing the ’s decision in , the Bench observed that once powers of the board are suspended under , suspended directors have a limited role—participating in CoC meetings to provide information, not to veto or litigate commercial decisions. The application was found to be an impermissible attempt by outsiders to challenge the unanimous .
Homebuyer Representation: Not as Dark as Alleged
Addressing the core grievance about homebuyer representation, the Bench dismantled the applicants’ narrative strand by strand. The record showed that the homebuyers had elected an , Prashant Gupta, in September 2024. A subsequent regulatory amendment—the , effective —explicitly allowed the selected insolvency professional to act as an interim representative with full rights and duties while the formal appointment application was pending.
The Tribunal noted that the IAR conducted five detailed consultation meetings with homebuyers, sharing observation sheets, evaluation matrices, and financial addendums via a Virtual Data Room. “The homebuyers cast their electronic votes, and the Interim AR cast the collective vote of the class (41.41%) in accordance with the majority decision,” the order stated. “The argument that there was no representation for the homebuyers is therefore legally and factually incorrect, and is rejected outrightly.”
Valuation and Claim Challenges Fall Short
The applicants had also assailed the fair value of ₹347.75 crore and liquidation value of ₹294.99 crore, arguing that the Bank itself had earlier valued the project at over ₹600 crore. The Tribunal dismissed this comparison, noting that valuations under the CIRP Regulations are conducted by for a specific purpose and timeline. A private valuation obtained later by an interested party could not substitute the statutory process.
Similarly, the challenge to the Bank’s admitted claim failed because the applicants neither objected when the list of creditors was published nor demonstrated any causal link between the alleged overstatement and the plan approval, which secured a unanimous 100% vote from the CoC.
Inability to Establish
The Bench concluded that the applicants failed to show any or that would warrant annulling the CIRP or rejecting the resolution plan. The delay in formal confirmation of the AR did not invalidate the CoC’s decisions, and the objections concerning valuation, Pocket-B land, and the Bank’s claim did not establish a case for interference.
Key Observations from the Judgment - “In any event, once the homebuyers as a class have voted in favor of the Resolution Plan with a 100% , individual homebuyers or third-party promoters are from challenging the collective decision.” - “The Applicants cannot make on behalf of the homebuyers or seek reconsideration of the commercial assessment of the CoC merely by virtue of being former promoters, suspended directors or shareholders.” - “A as shareholders does not give them an independent right to require the CoC to adopt a particular valuation or prefer one Resolution Plan over another.”
Final Decision and Implications
The Tribunal dismissed I.A. No.1064 of 2025, subject to any order by the in a pending appeal filed by . The ruling reinforces the principle that only the CoC’s commercial wisdom governs plan approval, and suspended directors cannot use to stall or reopen approved resolution plans. This decision provides clarity and finality to the CIRP of Samar Estates Private Limited, paving the way for implementation of the resolution plan that promises ₹520.89 crore investment, delivery of homes within fifteen months, and payment to all creditors.
