Resolution Plan Modified Post-CoC Approval To Exclude Non-PRA Consortium Member, Upheld By NCLT Mumbai Based On CoC's Commercial Wisdom: S.30(6) IBC - 2025-08-22

NCLT Mumbai Approves ₹33.15 Crore Revival Plan for India Mega Agro Anaj; Upholds Mid-Process Correction of Applicant Consortium

Mumbai, India – The National Company Law Tribunal (NCLT), Mumbai Bench, has approved a resolution plan of ₹33.15 crore for the revival of Nanded-based food processing company, M/s India Mega Agro Anaj Limited. The judgment, delivered by a bench comprising Shri Sushil Mahadeorao Kochey (Judicial Member) and Shri Charanjeet Singh Gulati (Technical Member), brings an end to the company's Corporate Insolvency Resolution Process (CIRP) initiated by Axis Bank in November 2022.

The approved plan, submitted by Mr. Chinyya N. Dumplwar, was greenlit despite a last-minute modification to its structure after the Committee of Creditors (CoC) had already cast its vote. The Tribunal's decision underscores the primacy of the CoC's commercial wisdom and allows for procedural corrections to ensure compliance with the Insolvency and Bankruptcy Code, 2016 (IBC).

Background of the Case

M/s India Mega Agro Anaj Limited, a manufacturer of grains and biscuits, entered CIRP on November 16, 2022, following an application filed by Axis Bank under Section 7 of the IBC. The total admitted claims against the company stood at a staggering ₹375.38 crore, with secured financial creditors like Bank of Baroda, Axis Bank, and Mahindra & Mahindra Financial Services Limited accounting for ₹275.23 crore.

The insolvency process faced an early hurdle when a suspended director's appeal led to a stay by the National Company Law Appellate Tribunal (NCLAT). The stay was eventually lifted in January 2024, allowing the Resolution Professional (RP), Mr. Krishna Chamadia, to proceed.

The company’s assets were valued at a fair value of ₹38.62 crore and a liquidation value of ₹25.58 crore.

The Resolution Plan and a Procedural Hurdle

After receiving interest from six prospective resolution applicants (PRAs), two plans were ultimately submitted. The plan proposed by a consortium of Mr. Chinyya Dumpalwar and Mr. Suraj Zawar was found to be compliant and was put to a vote. On September 13, 2024, the CoC approved this plan with a 71.33% majority vote, primarily led by Bank of Baroda.

However, during the approval proceedings before the NCLT, the Bench identified a critical issue: Mr. Suraj Zawar, one of the consortium members, was not on the final list of PRAs. The Tribunal noted that a plan from a consortium including an unlisted applicant did not conform to IBC regulations.

To rectify this, the applicant's counsel submitted an affidavit confirming that Mr. Suraj Zawar would be completely excluded from the process. The plan was subsequently amended to name Mr. Chinyya N. Dumplwar as the sole resolution applicant. Consequently, the performance bank guarantee, initially furnished on behalf of Mr. Zawar, was re-submitted by Mr. Dumplwar, ensuring full compliance.

Key Precedents and Tribunal's Reasoning

The NCLT grounded its decision in the legal principles established by the Supreme Court, particularly in K Sashidhar v. Indian Overseas Bank & Others . The bench reiterated that the tribunal's role is limited to verifying that a resolution plan, once approved by the CoC's commercial wisdom, meets the mandatory requirements of Section 30(2) of the IBC.

The judgment noted:

"In view of the law laid down by Hon’ble Supreme Court, the commercial wisdom of the COC is to be given paramount importance for approval / rejection of the resolution plan. As the Resolution Plan meets the requirements of the Code and the IBBI (CIRP) Regulations, 2016 the same needs to be approved."

The Tribunal found that the modified plan, now in the sole name of Mr. Dumplwar, fulfilled all statutory compliances, including providing for CIRP costs in full, payments to operational creditors, and a clear mechanism for implementation and supervision through a Monitoring Committee.

Distribution and Final Decision

The ₹33.15 crore plan outlines the following distribution: * CIRP Costs: Paid in full (estimated at ₹42.50 lakh). * Secured Financial Creditors: Receive ₹23.98 crore against admitted claims of ₹275.23 crore (a recovery of 8.71%). * Operational Creditors (including Farmers and Govt. Dues): A total of ₹8.74 crore allocated, with farmers (both who filed and did not file claims) set to receive 50% of their dues. * Shareholders: The entire existing equity and preference share capital will be extinguished to facilitate the revival.

Approving the plan, the NCLT declared it binding on all stakeholders, including government authorities, as per the precedent set in Ghanshyam Mishra and Sons . The moratorium under Section 14 of the IBC has been lifted, and a Monitoring Committee will be formed to oversee the plan's implementation.

While the Tribunal granted reliefs related to the continuation of existing licenses and immunity from pre-CIRP offences under Section 32A of the IBC, it declined a blanket waiver of stamp duty and other statutory fees, directing the applicant to approach the relevant authorities.