NCLT Mumbai Approves Rite Builtec's ₹37 Crore Resolution Plan by Aspect Global Under Sec 30(6) IBC; Reaffirms Limited Judicial Review Post-CoC's Unanimous Nod - 2025-01-16

NCLT Mumbai Greenlights ₹37 Crore Resolution Plan for Rite Builtec , Emphasizes Limited Scope of Judicial Review

Mumbai, January 16, 2025 – The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Ms. Anu Jagmohan Singh (Member Technical) and Mr. Kishore Vemulapalli (Member Judicial), has approved the resolution plan submitted by Aspect Global Ventures Private Limited for Rite Builtec Private Limited. The ₹37 crore plan received unanimous approval (100% voting share) from the Committee of Creditors (CoC).

The Tribunal, in its order dated January 16, 2025, reiterated the established legal principle that its role in approving a resolution plan is limited to ensuring compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016 (IBC), once the CoC, in its commercial wisdom, has approved the plan.

Case Background: Rite Builtec 's Insolvency Journey

Rite Builtec Private Limited entered the Corporate Insolvency Resolution Process (CIRP) on August 25, 2023, following a petition filed by Piramal Capital & Housing Finance Limited (whose debt was later assigned to Omkara Assets Reconstruction Private Limited) under Section 7 of the IBC. Mr. Amit Karia was appointed as the Resolution Professional (RP).

The CIRP faced initial delays, including a 54-day stay by the National Company Law Appellate Tribunal (NCLAT) on the CoC's constitution, which was later excluded from the CIRP timeline.

The Path to Resolution

The RP, Mr. Amit Karia, detailed the resolution process:

* Expression of Interest (EoI): After multiple invitations for EoIs, including revised Form G publications, five resolution plans were ultimately considered.

* CoC Deliberations: The CoC, in its 14th meeting on October 16, 2024, approved Aspect Global Ventures Private Limited's plan with a 100% voting share.

* Plan Value: The approved plan proposes a total payout of ₹37 crore. This figure is notably above the average liquidation value of ₹24.42 crore and close to the average fair value of ₹38.89 crore determined by registered valuers.

Salient Features of the Approved Plan

The ₹37 crore resolution amount is allocated as follows:

* Insolvency Resolution Process Costs (IRPC): ₹1 crore (at actuals).

* Secured Financial Creditors: ₹36 crore against admitted claims of ₹105.36 crore (representing a 34.17% recovery on admitted claims).

* Unsecured Financial Creditors: Nil.

* Operational Creditors (including Government Dues): Nil against admitted claims of ₹5.62 crore.

* Other Creditors: Nil against admitted claims of ₹42.16 crore.

The plan outlines a timeline for implementation, including the formation of a Monitoring Committee, infusion of upfront payment, and reconstruction of the Corporate Debtor's board.

NCLT's Scrutiny and Key Considerations

Before granting approval, the NCLT sought clarification on specific aspects:

* PUFE Transactions: An application (IA 3706 of 2024) concerning potentially preferential, undervalued, fraudulent, and extortionate (PUFE) transactions amounting to approximately ₹63.92 crore is pending. The resolution plan stipulates that any recovery from these transactions will benefit the CoC, which will also bear the costs of future litigation.

* Slum Dweller Rentals: The Tribunal noted the plan's initial silence on outstanding rent arrears for slum dwellers, a condition in the Slum Rehabilitation Authority's Letter of Intent. Following the NCLT's direction, the SRA submitted an affidavit and an addendum to the plan, unconditionally undertaking to satisfy these arrears as determined by the SRA. This addendum was subsequently approved by the CoC with 100% voting share.

The RP submitted a Form-H compliance certificate, confirming the plan's adherence to IBC provisions and regulations.

Legal Principles Reaffirmed : Limited Judicial Review

The NCLT heavily relied on landmark Supreme Court judgments to define its adjudicatory role:

* K Sashidhar v. Indian Overseas Bank & Others: The Tribunal cited this case to emphasize that if the CoC approves a plan with the requisite voting share, the NCLT's role is primarily to satisfy itself that the plan meets the requirements of Section 30(2) of the IBC. The NCLT's discretion is circumscribed and limited to this scrutiny.

* CoC of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors.: This judgment was referenced to underscore that the Adjudicating Authority cannot trespass upon the commercial wisdom of the CoC and modify an approved plan. Judicial review must remain within the "four corners of section 30(2) of the Code."

The Tribunal found that the resolution plan met all requirements under Section 30(2) of the IBC and associated regulations, and was not in contravention of Section 29A (eligibility of resolution applicant).

The Verdict and Its Implications

The NCLT allowed the application (IA No. 91 of 2024) and approved the resolution plan submitted by Aspect Global Ventures Private Limited for Rite Builtec Private Limited, effective from January 16, 2025.

Key outcomes of the approval include:

* Binding Nature: The plan is binding on the Corporate Debtor, its employees, members, creditors (including government authorities), guarantors, and all stakeholders.

* Extinguishment of Claims: As per the Ghanshyam Mishra And Sons Private Limited V/S Edelweiss Asset Reconstruction Company Limited judgment, all claims not part of the resolution plan stand extinguished.

* Cessation of Moratorium: The moratorium under Section 14 of the IBC ceases from the date of approval.

* Implementation and Supervision: The RP will supervise the plan's implementation and report progress to the NCLT.

* Statutory Obligations: Approval does not waive any statutory obligations of the Corporate Debtor, which must be dealt with by appropriate authorities.

This decision marks a significant step towards the revival of Rite Builtec Private Limited and once again highlights the judiciary's deference to the commercial wisdom of the Committee of Creditors in insolvency resolution matters under the IBC.