NCLT Orders Rectification of Ankit Metal's Information Memorandum & RP Replacement Citing Gross Asset Non-Disclosure (IBC Sec 60(5), Reg 36) - 2025-05-24

NCLT Cracks Down on Asset Misrepresentation in Ankit Metal CIRP: Orders IM Rectification, RP Replacement

Kolkata, West Bengal – April 09, 2025 – The National Company Law Tribunal (NCLT), Kolkata Bench, delivered a significant order today in the ongoing Corporate Insolvency Resolution Process (CIRP) of Ankit Metal & Power Limited, mandating a comprehensive rectification of the company's Information Memorandum (IM) due to major discrepancies in asset disclosure. The Bench, comprising Hon’ble Member (Judicial) Smt. Bidisha Banerjee and Hon’ble Member (Technical) Cmdr. Siddharth Mishra, also directed the replacement of the Resolution Professional (RP), Mr. Sanjeev Kumar Jalan , citing concerns over his conduct, and extended the CIRP timeline by 60 days to facilitate a fair and transparent process.

The ruling came in response to applications filed by Amit Metaliks Ltd. (a high-profile bidder) and Jai Shree Steels Private Limited , who raised serious grievances about inaccuracies in the asset details provided by the RP.

Case Background: Discrepancies Surface in Ankit Metal 's Assets

Ankit Metal & Power Limited is currently undergoing CIRP, initiated by Assets Care & Reconstruction Enterprise Limited. The core contention revolved around the IM prepared by RP Sanjeev Kumar Jalan , which bidders alleged, significantly understated the actual land area and operational footprint of the corporate debtor's integrated steel plant.

Amit Metaliks Ltd. , which emerged as the highest bidder after multiple rounds of a Swiss challenge process, discovered that the IM stated the plant site spread over 93 acres. However, a physical inspection and subsequent disclosures revealed the actual occupied area to be approximately 141.264 acres. Crucially, this larger area included land leased from Sarita Steel & Power Limited (itself under CIRP) and parcels owned by third parties under verbal agreements, upon which essential parts of Ankit Metal 's plant, like the power plant and rolling mills, were situated.

Applicants' Stance: Demand for Transparency and Fair Process

Amit Metaliks Ltd. (IA (I.B.C) - 453/KB/2025) , represented by Senior Advocate Mr. Abhrajit Mitra, argued that the IM was "incorrect and should be rectified before any further bidding is allowed." They highlighted that:

* The RP's IM was misleading as it didn't reflect the true extent of the plant's operational area.

* A lease deed for 10.49 acres from Sarita Steel & Power Ltd. within Ankit Metal 's plant site was discovered late in the process.

* The non-disclosure of the full 141.264 acres, and the complex ownership/lease structure, critically impacted valuation and the resolution process.

Jai Shree Steels Private Limited (I.A. (IB) No. 504/KB/2025) , argued by Senior Advocate Mr. Ratnanko Banerji, sought a stay on the CIRP and, significantly, the consolidation of the CIRPs of Ankit Metal & Power Limited and Sarita Steel & Power Limited. They contended that:

* The properties of the two corporate debtors were interlinked and demarcation was problematic.

* Consolidation would lead to value maximization, citing precedents like Radico Khaitan Ltd. vs. BT and FC Pvt. Ltd.

* The 330-day CIRP timeline is directory, not mandatory, allowing for extensions in complex cases (citing Essar Steel ).

Arguments from the RP and Committee of Creditors (CoC)

The Resolution Professional, Mr. Sanjeev Kumar Jalan , initially defended the IM, stating it was prepared with transparency and that bidders should conduct their own due diligence. He claimed the full extent of the land (141.264 acres) was disclosed by the suspended board only during the hearings and lacked complete documentation for parts of it. However, during the hearing on March 25, 2025, counsel for the RP submitted that he would be bound by the Tribunal's directions.

The Committee of Creditors (CoC) of Ankit Metal , represented by Senior Advocate Mr. Joy Saha, challenged the locus standi of the applicant bidders, citing the Supreme Court's judgment in ArcelorMittal India Private v. Satish Kumar Gupta which states a resolution applicant has no vested right that their plan be considered. The CoC also argued that under Section 18(f) of the IBC, the RP can only take control of assets owned by the corporate debtor, implying that lands not directly owned couldn't be fully included in the IM as assets for resolution in the same manner.

NCLT's Findings: "Deliberate Omission or Non-Disclosure" by RP

The Tribunal, after perusing records and hearing extensive arguments, found significant merit in the applicants' concerns. An affidavit from Mr. Subham Bhagat , a suspended director of Ankit Metal , confirmed the factory's operation on a much larger parcel of 141.264 acres, comprising:

* 81.150 acres registered to Ankit Metal & Power Ltd.

* 10.490 acres leased from Sarita Steel & Power Ltd.

* 35.010 acres belonging to third parties (reportedly via verbal agreements).

* Another plot of 14.614 acres within the same area.

The NCLT observed that critical infrastructure was located on these additionally disclosed lands. The judgment noted: > "Therefore, the information memo which indicates availability of a factory on 93 acres land does not project the true and correct picture. In fact, a proper disclosure may fetch a higher value, and the RP ought to have taken great care to correctly indicate the assets of the corporate debtor available for the resolution process." (Para 14)

The Tribunal expressed its dismay at the RP's handling of the asset disclosure: > "We have noted the deliberate omission or non- disclosure of the factory area, by the RP who ought to have conducted a proper survey first." (Para 37)

The NCLT underscored the importance of Regulation 36 of the IBBI (CIRP) Regulations, 2016, and Section 29 of the IBC, which mandate comprehensive and accurate disclosure in the IM to enable prospective resolution applicants to make informed decisions.

Regarding the prayer for consolidation, the NCLT stated: > "Without detailed examination of the facts and each parameter as in Videocon (Supra) and Radico (Supra), it would be too early to hold that the parameters are met and hence consolidation may achieve value maximization or early resolution. Hence, we leave it to the wisdom of the CoC to take a call on the consolidation of the two CIRPs..." (Para 42)

NCLT's Directions for Course Correction

To ensure a fair and value-maximizing resolution, the NCLT issued the following key directions:

IM Rectification: The Information Memorandum must be rectified to provide a "full and fair disclosure of the assets of the Corporate Debtor, with appropriate demarcation of leasehold and freehold land... and lands belonging to third parties including that of Sarita Steel over which the factory has been permitted to be set up." (Para 39)

Land Survey: A land survey is to be conducted at the earliest to ascertain the correct extent of land, factory premises, and location of plant and machinery.

Revised Bid Process: The bid process shall be further conducted and concluded after the IM rectification. This entire exercise is to be completed within six weeks.

CIRP Extension: The application by the RP (I.A. (IB) No. 545/KB/2025) for extension of the CIRP timeline was allowed by 60 days from the date of the order.

Replacement of Resolution Professional: Critically, the NCLT directed the replacement of RP Mr. Sanjeev Kumar Jalan within one week, citing his conduct. "In the event, the CoC is not able to replace the RP, we would appoint an RP... For the purpose, we direct the I.A. (IB) No. 524/KB/2025 to be listed on 22nd April 2025." (Para 44)

Implications of the Order

This NCLT order underscores the paramount importance of transparency and accuracy in the CIRP, particularly concerning the Information Memorandum, which forms the bedrock for resolution plans. It serves as a stern reminder to Resolution Professionals of their statutory duties regarding due diligence and comprehensive disclosure. The decision to replace the RP highlights the Tribunal's willingness to intervene decisively when the integrity of the process is compromised. Furthermore, while leaving the complex decision of CIRP consolidation to the CoC's commercial wisdom, the order ensures that the groundwork for any future bidding is based on accurate and complete information, aiming to maximize asset value for all stakeholders.