Resolution Professional vs Kolon Investments Private Limited

This is an application being IA(Plan)42(AHM)2024 filed on 17.09.2024 vide Dairy No. E2379 by the Applicant/Resolution Professional of M/s. Kolon Investments Private Limited under Section 30 read with Section 31 of the Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) seeking the following reliefs;

The brief facts of this case, as available in the Resolution Plan and records, are as under (sub-paragraphs I to XLV) :-

Further, the Resolution Plan submitted by Mr. Pratik Bose provides thus:

Thus, the SRA had relinquished his rights over any recoveries that could be made from CIRP proceedings of M/s. BVM Finance Private Limited.

XL. Thus, the present application is filed before this Adjudicating Authority to seek approval of the Resolution Plan submitted by Mr. Pratik Bose for revival of the Corporate Debtor.

XLI. Further, in accordance with Section 31(1) of the Insolvency and Bankruptcy Code, 2016 the approved Resolution Plan shall be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the Resolution Plan. It is clarified that neither the Corporate Debtor nor the Resolution Applicant shall be required to make any payments over and above the amount provided for under the said Resolution Plan on and from the date of approval of the Resolution Plan.

XLII. Since the Resolution Plan results in the change in the management or control of the Corporate Debtor, according to Section 32A of the IBC, 2016, notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a Corporate Debtor for an offence committed prior to the commencement of CIRP shall cease, and the Corporate Debtor shall not be prosecuted for such an offence from the date the Resolution Plan has been approved by the Adjudicating Authority under Section 31 of the Insolvency and Bankruptcy Code, 2016 and any instrument executed by the Corporate Debtor under the Negotiable Instrument Act, 1881 including but not limited to post-dated cheques, demand promissory notes, etc. prior to the approval order passed by the Adjudicating Authority shall in no manner be the liability of the Resolution Applicant and all such instruments to be treated as null and void ab-initio.

XLIII. Furthermore, with the subscription of the Equity Shares by the Resolution Applicant and its Affiliates/ Nominees, the entire Equity Shares held by the Existing Shareholders shall stand fully extinguished as a part of this Resolution Plan.

XLIV. Further that nothing contained in this Resolution Plan shall affect the rights of the Corporate Debtor to recover any amounts due to the Corporate Debtor from any third party including any Related Parties of the Corporate Debtor, under proceedings initiated by the Corporate Debtor and there shall be no set-off of any such amounts recoverable by the Corporate Debtor against any amount paid/ payable by the Corporate Debtor or any liability discharged, satisfied or extinguished pursuant to this Resolution Plan.

XLV. The Applicant has not filed any other application concerning the subject matter of this application before any other Court including the Hon'ble Supreme Court of India.

This Adjudicating Authority vide order dated 27.11.2024 had directed the RP to place on record the RFRP and Information Memorandum and elaborate on points 7 and 8 of the clause 3.3.1 Implementation Plan on page 226 of the application. An additional affidavit was filed by the RP on 16.01.2025 vide diary no. D283 stating that:-

During the course of hearing on 28.04.2025, this Adjudicating Authority had raised the following queries/clarifications:-

- • Information on the business carried out by the CD for the previous two years prior to the admission in the CIRP and during the CIRP and what business is proposed by the Resolution Applicant; - • Audited financial accounts for two years prior to the admission of the CD in the CIRP and after that till 31.03.2025; - • List of assets on which the IRP/RP had taken control and custody thereof; - • Action taken by the RP regarding the collection of debt due to the corporate debtor; - • The number of workers and employees of the CD for each year (two years prior to the CIRP and till date afterward); - • Reasons for default in payment committed by the CD and how the same is dealt in the plan submitted by the RA; - • Whether the Resolution Plan provide for any restructuring of CD by way of merger, amalgamation and demerger; - • Whether the CD has any plant and machinery, if yes, details of major machinery. - • What is the business of the SRA and what are the plans of the SRA regarding the business of the CD; - • What is the year-wise business loss/brought forward depreciation of the CD as per last filed income tax return. - • Date of filing income tax returns of the CD for FYs 2019-2020 to 2023-2024. - • Sources of funds of the SRA.

The Applicant filed an additional affidavit on 06.05.2025 vide Inward No. D-3019, providing a response to the queries raised. The relevant portion is extracted below:

business of proposed by the Successful Resolution Applicant, it is submitted that the Successful Resolution Applicant was given to understand that the Corporate Debtor i.e., Kolon Investment Private Limited had no business operations in the F.Y.: 2022-23 and F.Y.: 2021-22 and even during the CIRP. However, the Corporate Debtor being erstwhile promoter entity of Sintex Group as well as being erstwhile NBFC, have extensive network and presence in the market. In view whereof, the Successful Resolution Applicant intends to revive the Corporate Debtor through its entrepreneurship skill and further intends to expand the business of manufacturing and financial consultancy by using the extensive network and presence of the Corporate Debtor in the market.' (An original copy of the Affidavit submitted by the SRA is marked and annexed hereto as ANNEXURE – R3). 2.Audited financial accounts for two years prior to the admission of the CD in the CIRP and after that till 31.03.2025The copies of the audited financial accounts for 2 (two) years prior to the admission of the CD in the CIRP i.e., for F.Y.:2021-22 and F.Y.:2022-23 are duly filed by the Applicant herein before this Hon'ble Adjudicating Authority by way of Additional Affidavit dated 13.01.2025 as a part of the information Memorandum. However, with regards to audited financial accounts for F.Y.: 2023-24 and F.Y.: 2024-25, it is submitted that the same are under the process of finalization with the statutory auditors of the CD. 3.List of assets on which the IRP/ RP had taken control and custody thereofIt is pertinent to submit that the CD only has Securities and Financial Assets in the form of Investments, Loans & Advances and Cash & Bank Balance. Thus, there are no other fixed or tangible assets in the books of accounts of the CD. 4.Action taken by the RP regarding collection of debt due to the corporate debtorIt is submitted that the CD had an outstanding receivable from one, M/s. BVM Finance Private Limited. However, M/s. BVM Finance Private Limited was admitted under CIRP by this Hon'ble Adjudicating Authority vide an order dated 08.02.2024. Thus, the Applicant herein had duly submitted a Claim Form for such outstanding receivable during the CIRP of M/s. BVM Finance Private Limited and the same was admitted as a related party claim. 5.The number of workers and employees of the CD for each year (two years prior to the CIRP and till date afterward)The number of workers and employees of the CD for each year are as under: YearNo of workers/employee As on 31.03.2022 NIL As on 31.03.2023 NIL As on 31.07.2024 NIL As on 31.03.2025 NIL 6.Reasons for default in payment committed by the CD and how the same is dealt in the plan submitted by the RAIt is submitted that sub-clause (n) of Clause 3.1.7.10 of the Resolution Plan duly provides as under: 'n) The Resolution Plan is feasible and viable including addressed to cause of default and Resolution Applicant and their partners having sufficient net worth to implement the Resolution Plan.' Further, in the Affidavit submitted by the SRA which is annexed hereto and marked as ANNEXURE R3, it has been stated thus: '4. Further, with regards to the reasons for default in payment committed by the Corporate Debtor and as to how the same is being dealt with by the Successful Resolution Applicant, it is submitted that the Successful Resolution Applicant was given to understand that Kolon Investments Private Limited i.e. the Corporate Debtor was erstwhile promoter entity of Sintex Industries Limited and Sintex Plastic Technology Limited. 5. That Sintex Industries Limited was a company engaged in the business of spinning and textiles having capacity of 6.6 lacs+ spindles. Whereas, Sintex Plastic Technology Limited was a company engaged in the business of manufacturing of water tanks under the name of well-known brand 'SINTEX' as well as in the business of auto sector, through its subsidiary. 6. It is submitted that Sintex Industries Limited was admitted under CIRP and was taken over by Reliance Industries Limited by way of a Resolution Plan which was approved by this Hon'ble Adjudicating Authority vide an order dated 10.02.2023. 7. Further, Sintex Plastic Technology Limited was conducting its business of manufacturing of water tanks and auto sector through its subsidiary company, namely Sintex-BAPL Limited. That even Sintex-BAPL Limited was admitted under CIRP and was taken over by the Welspun Group by way of a Resolution Plan which approved by this Hon'ble Adjudicating Authority vide an order dated 17.03.2023. Thereafter, Sintex Plastic Technology Limited was also taken over by Durgesh Infrastructure group during liquidation process and this Hon'ble Adjudicating Authority had granted various reliefs and concessions to Durgesh Infrastructure group vide an order dated 08.11.2024. 8. Subsequent to which, all the investments held by the Corporate Debtor in Sintex Industries Limited and Sintex Plastic Technology Limited were extinguished and hence, the Corporate Debtor had also started incurring losses. That on account of such losses, the Corporate Debtor was not able to survive/ cope up and was eventually admitted under CIRP by this Hon'ble Adjudicating Authority vide an order dated 23.11.2023. 9. It is submitted that the Successful Resolution Applicant is engaged in the business of providing management and financial consultancy. That the Corporate Debtor being erstwhile promoter entity of Sintex Group as well as being erstwhile NBFC, have extensive network and presence in the market. In view whereof, the Successful Resolution Applicant intends to revive the Corporate Debtor through his entrepreneurship skills and further intends to expand the business of management and financial consultancy by using the extensive network and presence of the Corporate Debtor in the market. 10. At this juncture, it is pertinent to submit that sub-clause (n) of Clause 3.1.7.10 of the Resolution Plan duly provides as under: 'n) The Resolution Plan is feasible and viable including addressed to cause of default and Resolution Applicant and its partners having sufficient net worth to implement the Resolution Plan. 11. In addition to the above, the Successful Resolution Applicant had duly addressed letter dated 05.05.2025 to the Applicant Resolution Professional in order to specifically deal with the queries raised by this Hon'ble Adjudicating Authority. That the said letter dated 05.05.2025 may be treated as a part and parcel of the Resolution Plan. (A copy of the letter dated 05.05.2025 is annexed herewith as ANNEXURE -A)' 7. Whether the Resolution Plan provide for any restructuring of CD by way of merger, amalgamation No, the Resolution Plan does not provide for any restructuring of the CD by way of merger, amalgamation or demerger and the same is confirmed by the SRA in its Affidavit which is annexed hereto and marked as ANNEXURE - R3. and demerger 8.Whether the CD has any plant and machinery, if yes, details machinery of majorNo, the CD does not have any plant and machinery in the books of account. 9.What is the business of the SRA and what are the plans of the SRA regarding the business of the CDThe said query has been addressed by the SRA in its Affidavit, which is annexed hereto and marked as ANNEXURE R3, as under: 13. With regards to the query of this Hon'ble Adjudicating Authority as to what is the business of the Successful Resolution Applicant and what are the plans of the Successful Resolution Applicant regarding the business of the Corporate Debtor, it is submitted that the Successful Resolution Applicant is a highly educated and high net worth individual having extensive experience of business activities in the field of management consultancy, international investments and Venture Capitalist. The Successful Resolution Applicant is also a co-founder of SEBI registered Alternate Investment Funds ('AIF'). Moreover, the Successful Resolution Applicant is also engaged in the business of providing management and financial consultancy. 14. It is further reiterated that the Corporate Debtor being erstwhile promoter entity of Sintex Group as well as being erstwhile NBFC, have extensive network and presence in the market. In view whereof, the Successful Resolution Applicant intends to revive the Corporate Debtor through his entrepreneurship skills and further intends to expand the business of management and financial consultancy by using the extensive network and presence of the Corporate Debtor in the market. 10.What is the year-wise business loss/ brought forwardThe details of the year-wise business loss/ brought forward depreciation of the CD as per last filed income tax return have been depreciation of the CD as per last filed income tax returnduly filed by the Applicant herein before this Hon'ble Adjudicating Authority by way of Additional Affidavit dated 13.01.2025. 11.Date of filing income tax returns of the CD for F.Y.: 2019-20 to 2023-24The date of filing of Income-tax Returns of the CD are as under: Financial YearDate of filing 2019-20 10.01.2021 2020-21 21.02.2022 2021-22 22.10.2022 2022-23 30.10.2023 2023-24 23.10.2024 12.Sources of funds of the SRAIt is submitted that the SRA had informed the Applicant herein that they will be utilizing their own funds and not the borrowed funds for reviving the CD. In addition to the above, the said query has also been dealt with by the SRA in its Affidavit, which is annexed hereto and marked as ANNEXURE R3, as follows: '15. Apropos to the query qua the sources of funds of the Successful Resolution Applicant, it is submitted that Clause 3.1.6 of the Resolution Plan provides for source of funds and mechanics of payment of funds to various creditors. It is provided that the Successful Resolution Applicant have sufficient net worth to implement the Resolution Plan. 16. Thus, it is submitted that the three partners of the Successful Resolution Applicant is having sufficient net worth to infuse adequate funds in the Corporate Debtor for reviving the business of the Corporate Debtor. 17. Moreover, the Successful Resolution Applicant undertakes that he will be utilizing their own funds and not borrowed funds for revival the Corporate Debtor. It is pertinent to submit that 25% of the Resolution Plan amount has already been deposited by the Successful Resolution Applicant in the form of performance security deposit from its own funds. The details qua the deposit of performance security are already placed on record by the Applicant Resolution Professional before this Hon'ble Adjudicating Authority.

Further, in compliance with the order dated 07.05.2025, a revised Form-H has been filed by way of additional Affidavit and Brief Synopsis through Inward No. D-3127 and D-3151 on 13.05.2025, in the revised Format prescribed by the IBBI. Information, other than discussed above and other important information, as available in this Form H, is summarised below:-

As per clause 3.1.1 of the Resolution Plan, the summary of the proposal is as under:-

In any case, the Resolution Applicant shall not be liable to pay any amount more than Total Financial Proposal i.e. INR 90,00,000 (Rupees Ninety Lakhs Only).

As per clause 3.1.3. of the Resolution Plan, the Proposal for Outstanding Debt is as under:-

As per Clause 3.3.2.2 of the Resolution Plan, the Upfront Fund Infusion in Corporate Debtor and Reduction of Current Share Capital are as under:

As per Clause 3.3.4.1 of the Resolution Plan, the Monitoring Agent is as under:-

As per Clause 3.3.4.2 of the Resolution Plan, the Board of Directors is as under:-

As per Clause 3.3.4.3 of the Resolution Plan, the Monitoring Committee is as under:-

As per Clause 3.3.4.4 of the Resolution Plan, the Supervision of Implementation of the Resolution Plan is as under:-

Information relevant to the present proceedings, as available in the audited accounts of the CD for the financial year 2021-2022, is given below (The RP provided the information based on the directions issued by this Tribunal):

- The share capital of the company as on 31.03.2022 and 31.03.2021 was Rs 125.60 Lakhs. The shares are held by Kalavati Dinesh Chandra Patel (17.20%), Anal Amit Patel (38.945), Luv Amit Patel (5.57%), Kush Amit Patel (5.67%), Chandan Infratech LLP (17.68%), and Star Line Leasing (15.04%). All the individuals are part of the promoter group, and the last two are promoter group companies. Shri Arvind Parekh and Shri Arvind Mali have signed the audited accounts of the CD as directors. - Reserves and surplus of the company as on 31.03.2022 and 31.03.2021 were Rs (42,899.68 Lakhs) and Rs (42,899.68 Lakhs) respectively. The figures indicate that the company has accumulated a business loss of Rs 428.99 crores as on 31.03.2022. The Reserves and surplus as on 31.03.2023 were Rs 10.14 Lakhs. The notes (17.6 for the Year 2022-2023) show that the Company had outstanding loans payable of Rs 427.82 crores as on 31.03.2023, related to Zep Infratech Limited & Star Line Leasing Limited. Said outstanding balances are no longer payable, which were in the nature of capital. Therefore, the same has been written back and credited to the Capital Reserve Account instead of being credited to the Profit and Loss Statement. This fact indicates that the CD had a loan payable of Rs 427.82 crores to Zep Infratech Limited; however, Zep Infratech Limited has not mentioned this matter in its Application.

- Long-term borrowings as on 31.03.2021 and 31.03.2022 were Rs.43,482.40 Lakhs and Rs.43,474.62 Lakhs respectively. These were intercorporate loans, but none of these lenders has filed claims before the RP. Who these are neither identified by the RP nor did CoC ask any questions. - Non-current investments were of Rs 715.01 Lakhs and Rs. 705.25 Lakhs respectively as on 31.03.2021 and 31.03.2022. These investments included investments in shares of BVM Finance Limited, amounting to Rs 39.81 Lakhs, on 31.03.2021 and 31.03.2022. The CD also had investments of Rs 24.63 lakhs in Zep Infratech Limited in the form of 10% non-cumulative redeemable preference shares.

- Current assets (in the form of cash, cash equivalents, and other assets were Rs 42 Lakhs and 32.33 Lakhs on 31.03.2021 and 31.03.2022, respectively. - Total revenue for the year 2011-2022 was Rs 8,000 as dividend income. Expenses during the year were of Rs 14.07 Lakhs. - The CD had significant related party transactions as noted in the audited accounts. - During the financial year 2022-2023, the share capital remained the same at Rs 125 Lakhs. - Long-term borrowings of Rs 43,471 Lakhs (from Zep Infratech Limited and Star Line Leasing Limited) have been written back, and the balance figure as on 31.03.2023 is ZERO. There is no explanation for writing back the same. This indicates that Zep Infratech had advanced loans of more than Rs 400 crores to the CD. - No salary and wages expenses in the years 2021-2022 and 2022-2023.

Sintex Power Limited granted a loan of Rs 6,50,00,000 to the Corporate Debtor in the year 2014. The name of Sintex Power Limited was changed to Sixvents Power and Engineering Limited. This company was amalgamated with Zep Infratech Limited; therefore, the loan receivable from the Corporate Debtor stood transferred in favour of and in the name of Zep Infratech Limited (the Financial Creditor). Zep Infratech and CD entered into an MOU on 01.07.2018 that provided that the loan amount of Rs 6.50 crores, along with a premium of 20%, would be payable on or before 30.06.2022. The Tribunal notes that Zep Infratech Limited and Star Line Leasing Limited had advanced a loan of Rs 434.71 crores, which was outstanding as of 31.03.2022 and was written back by CD on 31.03.2023. The reasons for writing back are not on record, and neither the RP nor the CoC of Zep Infratech Limited nor the CoC of the CD looked into this transaction. M/s Zep Infratech Limited filed an application under section 7 of the IBC, 2016, for a loan of Rs 6.50 crores, but did not include loans of more than Rs 400 crores advanced to the CD, indicating a close connection between the CD and FC. As the loan was not repaid, the FC filed application under section 7 of the IBC and the CD replied twice that, “We would like to acknowledge outstanding dues and would like to inform you that currently we are facing financial difficulties and we are not in a position to pay the debt to Zep Infratech Limited” and “the Respondent admits to having defaulted in repaying the financial debt in question”.

The RP issued Form G “Invitation for Expression of Interest for Kolon Investments Private Limited not having any business activities at Present”. The Form states that the Company does not have any fixed assets. The Company has no manufacturing operations. The Company has no material business operations in the last financial year.

The Valuation Report of one valuer, namely Nilesh R Barad, had valued security or financial assets as given below:

- The non-current asset of book value of Rs 4,13,22,382.88 was valued at Rs 43,83,427.93. - Cash & Bank Balances of Rs.12,91,108.52 were valued at Rs.12,91,083.16 (both fair and liquidation value). - Other current asset of Rs.22,01,544.62 /- were valued at Rs.1,544.62 /-.

Maitri Valuation LLP provided another valuation report. The cash and bank balance have been valued at Rs 12,91,083 (both fair and liquidation value). Investments of book value of Rs 135,428,633 have been valued at Rs 43,62,700 (fair value) and Rs 43,62 700 as Liquidation Value. The total of the fair value and liquidation value of assets is Rs 56,55,328. The Company has investments in the IDFC Real Estate Yield Fund, with a book value of Rs 44,64,614, which has been valued at Rs 43,62,700.

This Tribunal sought some clarifications vide order dated 19.06.2025. The information provided by the RP through the additional affidavit filed on 26.06.2025, to the extent helpful in taking a decision about the approval/rejection of the Plan, is given below:

- The Resolution Applicant of the case, Mr. Pratik Bose has also submitted a resolution plan for Rs 85,00,000 in the matter of Star Line Leasing Limited being C.P. (I.B.) No. 247 of 2023. - The RP has submitted that it had not issued any communication to the creditors as required by Regulation 6A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The RP has submitted that the trial balance drawn as of the date of CIRP did not show any material creditors, except for the unsecured FC, as well as the auditors of the company/CD. Both the unsecured creditors (M/s Zep Infratech Limited and M/s Rajendra M Thakkar (Ravasia) and Sons Private Limited had already submitted their claims. The auditor did not submit any claims. The RP has further submitted that there was regular verbal communication with the auditors of the CD, who had been duly made aware of the initiation of the CIRP against the CD, and even their services were also kept ongoing. The RP had also made communication with the Income Tax authorities. The RP has additionally submitted that there were no material creditors as per the last books of account of the CD, which needed to be communicated in terms of Regulation 6A. However, as discussed above, the CD has assets and liabilities of hundreds of crores.

- Both the unsecured financial creditors, who have filed their claims, and the CD are not related parties as per the provisions of section 5 (24) of the IBC, 2016. As discussed above, M/s Zep Infratech Limited, along with M/s Star Line Leasing Limited, had more than Rs 400 crores of loans due to the CD that were written back on 31.03.2023.

- As directed by this Tribunal, the RP has also provided a copy of the Information Memorandum (IM). The IM states that the last audited accounts of the CD have been prepared for FY 2022-2023. Up-to-date books of accounts are being maintained on a regular basis. The IM notes that the provisional trial balance of the current year as on the CIRP commencement date is given in Annexure. A list of creditors is given in Annexure. As per the trial balance as on 23.11.2023, the CD has no dues payable to the related party. The CD has dues receivable from BVM Finance Private Limited, a related party, of Rs 22 lakhs. The CD has no permanent employees.

- The Company was incorporated on 22.10.1993 under the name of Kolon Investments Private Limited. The primary activity of the company consisted of investing in shares of Sintex Industries Limited and Sintex Plastics Technology Limited, as both companies are under CIRP. Consequently, the investment in these shares has been written off in the books of OSPL. - The primary source of income of the Company consisted of interest income and dividend income. - Major assets of the company as on 23.11.2023 consist of loan receivable from BVM Finance Private Limited of Rs 22 lakhs and investment in the equity shares and real estate funds. Apart from this, the CD has a bank balance aggregating to Rs 13 lakhs in a few current accounts. - A copy of the trial balance as on 23.11.2023 is provided. According to this, the company has reserves and a surplus of Rs 461,64,78,794.

- A copy of claim forms received from M/s Zep Infratech Limited, and M/s Rajendra M. Thakkar and Sons Private Limited is filed. M/s Rajendra M. Thakkar and Sons Private Limited, having the address of 101, House of Grace, Padwal H, Bagle Estate Thane, 400604, provided a loan of Rs 6,50,000 only on 14.09.2023, whereas the application under section 7 was filed on 19.10.2023. - The Tribunal notes that M/s Rajendra M Thakkar and Sons Private Limited advanced loans to all four companies in which M/s Zep Infratech Limited filed applications under section 7 and also to M/s Zep Infratech Limited either in the same month in which application was filed or a month earlier and became part of the CoC in all cases. - M/s Zep Infratech Limited filed a claim of Rs 7,80,00,000 (comprising of principal of Rs 6,50,00,000 and interest of Rs 1,30,00,000). As discussed above, M/S Zep Infratech Limited and Star Line Leasing Limited had advanced a loan of more than Rs 400 crore to the CD. There is no mention of the claim about the loan.

Before adverting to the Application filed by the RP and the submitted Resolution Plan, we consider it appropriate to highlight essential facts about the case as available in the records.

- The Corporate Debtor and the Financial Creditor, M/s Zep Infratech Limited belong to the Sintex Group of cases. Major Sintex Group companies have undergone CIRP. - The Financial Creditor, namely Zep Infratech Limited, a Group company, had filed the application under section 7 of the IBC, 2016, against the CD. - Zep Infratech Limited, along with Star Line Leasing Limited, had advanced loans of more than Rs 400 crores to the CD. Still, the claim of M/S Zep Infratech Limited does not include this claim, indicating a common control or interest between the two group companies. Although RP denies a relationship, as per the provisions of Section 5(24) of the IBC, 2016. - The CD has advanced loan to a company named BVM Finance Limited, a Group company, and BVM Finance Private Limited is also undergoing CIRP. The CD may not get anything from the CIRP proceedings, being a related party. - M/s Zep Infratech Limited has filed applications under section 7 in at least three other cases (namely M/s Star Line Leasing Limited, M/s Opel Securities Limited, and M/s Gabriel Ventures India Private Limited), and all the cases are being adjudicated by this Authority.

- The above facts show that Sintex Group entities are undergoing/undergone CIRP.

- The information on various assets and liabilities as noted in the balance sheet of the CD as on 31.03.2021, 31.03.2022, and 31.03.2023 is noted in this order. Huge liabilities are running in crores, and surprisingly, none have made any claims against the CD. The CD also did not make any claims except for BVM Finance Private Limited or recover any amount.

- The CD has no business for the two years prior to the admission to the CIRP, and also not during the period of the CIRP.

- The CD has no tangible assets (no factory, no office, or other premises), and it has only financial assets, and those are valued at about Rs 56,65,692. Fair value and Liquidation value is the same. Coincidentally, two independent valuers valued the financial assets at the same value.

- The CD had no employees for two years prior to the admission of the CD in the CIRP, and also during the CIRP and at present, the CD has no employees.

- The CD was an NBFC, but its license was cancelled by the RBI in 2017. It was later a part of the promoter investment company of the Sintex Group.

- The CD has a business loss of Rs 0.45 crores, long-term capital loss of Rs 599.39 crores and short-term capital loss of Rs 3.87 crores. The Resolution Plan seeks confirmation from the Principal Commissioner of Income Tax and direction from this AA that the business loss will be allowed as set off against income under section 79 of the Income Tax Act. We also see the availability of business loss or long-term capital loss, which can potentially be considered an asset and could be utilised for tax planning by entities to reduce their tax liability. However, this asset is not valued and is not considered by the RP/CoC.

- The RA is seeking various relief and concessions, most of which do not apply to the facts of the case. For example, it is seeking a waiver of transfer fees on land leased from the Industrial Development Authority. Indicating that the RA does not have information that the CD has no land. The CoC also did not examine the relief and concessions sought in the Plan and their relevance to the actual facts of the CD but simply agreed with the claims of the RA by terming them as routine. - The RA filed a response regarding various queries raised in the form of an Affidavit, and such information was not available in the submitted Plan. Shri Pratik Bose has also filed an Affidavit on 05.05.2025 which states that we shall infuse adequate working capital funds in the Corporate Debtor and intends to revive the Corporate Debtor through our entrepreneurship skill and further intends to expand the business of management and consultancy by using the extensive network and presence of the Corporate Debtor in the market. This business plan has no link with the CD as CD does not have any employees and it does not have any extensive network. We have observed that the RAs have filed similar affidavits in three other cases in which M/s Zep Infratech Limited had filed applications under section 7 of the IBC, 2016. The claims of the Resolution Applicant are not supported by reality on the ground and lack substance. The CoC did not examine these aspects and continued to approve the resolutions with a 100% majority. It is noted that CoC comprises of M/s Zep Infratech Limited, which did not file its claim for a loan of hundreds of crores.

- The reasons for default by the CD, as stated in the additional affidavit filed by the RA, are based on the queries raised by this Tribunal to the RP. - The RA has submitted that it will use its own funds for meeting the Plan requirements and not the borrowed funds for reviving the CD. However, it has not made any provision for equity capital or working capital. The amount of Rs 90,00,000 proposed in the Plan is earmarked for payment to two financial creditors and a small portion for payment to the Income Tax Department. Shri Pratik Bose has also filed a Resolution Plan in the case of Star Line Leasing Limited, another company in which a CIRP was initiated based on an application filed by M/S Zep Infratech Limited.

The CD had assets and liabilities in hundreds of crores as on 31.03.2021, 31.03.2022, and 31.03.2023. The CoC apparently lacked sufficient knowledge of the CD's business, and it never asked any questions or raised any doubts about the transactions undertaken by the CD.

The CD was neither subjected to a forensic audit nor a transaction audit, nor were the transactions referred to an auditor for identifying preferential transactions under Section 43, undervalued transactions under Section 45, extortionate transactions under Section 50, and fraudulent transactions under Section 66 of the IBC, 2016. And on being directed by this Adjudicating Authority, an Affidavit to reply to the queries raised has been filed, and relevant information has been discussed in this order and summarised again below:

- The RP submitted that the audited financial statements for FY 2023-2024 and 2024-2025 are under the process of finalisation with the statutory auditors of the CD. - The RP states that the Resolution Plan is feasible and viable, but it has not demonstrated the basis thereof, nor has the CoC deliberated it. What is feasible and viable in the circumstances that the CD has no business operations, no employees, no offices or other tangible assets. Only financial assets are considered assets, which can be easily sold or liquidated in a short process, such as liquidation. The business of CD was to invest in the Sintex Group companies (which are group companies). There are no employees of the CD, and therefore, no knowledge of the business, customer information, or any other intangibles, except for tax losses, is available with the CD.

The RP has filed an affidavit and revised Form-H, based on the IBBI Notification No. IBBI/2025-26/GN/REG 124, dated 03.04.2025, in this Tribunal on 10.05.2025 (Inward Diary No. 3558). Additional information provided is extracted below:

- Date of initiation of CIRP- 27.11.2023 - Date of expiry of 180 days of CIRP: 21.05.2024 - The extended period of CIRP expired on 03.07.2024 - Fair value of CD is Rs 56,65,692 - Liquidation Value is Rs 56,65,692 - Resolution Plan Value Rs 90,00,000. - A total of 8 CoC meetings were held. - Form H shows that CD was part of the erstwhile promoter group entities of Sintex Industries Limited and Sintex Plastic Technology Limited. - No PUFE applications are made or pending.

Section 31 of the IBC deals with the approval of the resolution plan.

Section 31 reads as follows:

To our understanding, section 31 requires satisfaction of the Adjudicating authority on two issues:

Section 30 (2) of the IBC reads as below:

Furthermore, Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, requires the CoC to evaluate the resolution plan based on its feasibility and viability, a responsibility that appears to have been inadequately discharged in this case, as evidenced by the lack of scrutiny over the plan’s business projections and financial provisions.

As far as effective implementation is concerned, the Plan only provides for payment to the CoC members to be made within 45 days of the NCLT’s approval of the Plan. As discussed in detail in this order, the CD was part of the promoters of Sintex Group (a group investment company). Most of the Group entities have undergone CIRP and some have been liquidated. The value of the assets of the CD is about Rs 56 lakhs. With no tangible assets and no employees, the CD has become a hollow shell, except for some financial assets. There is nothing in the plan regarding running the Corporate Debtor by the RA, except for referring to its business and utilising the network of the CD, which does not exist. Therefore, the plan does not deal with the effective implementation of the Plan. In fact, the plan does not provide for the insolvency resolution of the CD or its revival. It is obvious because there is nothing in the CD except its name, business losses, and financial assets having a liquidation value of about Rs 56 lakhs. The case has the potential of misuse of the business losses and long-term capital loss for income tax purposes.

This Tribunal is fully conscious of the principle that judicial intervention by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, must be limited and restrained. As reiterated in a catena of decisions by the Hon'ble Supreme Court, including in K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com / 12 SCC 150, Committee of Creditors of Essar Steel Ltd. V. Satish Kumar Gupta 8 SCC 531, Ebix Singapore (P) Ltd v. Committee of Creditors of Educomp Solutions Ltd [2021] 130 taxmann.com 208, Vallal RCK v. Siva Industries &Holding Ltd ((2022) 9 SCC 803), the commercial wisdom of the CoC is not to be interfered with, save in exceptional circumstances. However, this Tribunal cannot remain a mute spectator where the very anchor of the insolvency resolution process, the bona fide, and the commercial judgment of the CoC - is corroded by patent arbitrariness and opacity.

Hon'ble Madras High Court in the matter of Writ Petition No. 29845 of 2022 has observed in para 52.3 as under:

The relevant facts as discussed in this order are again summarised below:

- The Corporate Debtor had hundreds of crores of assets and liabilities as on 31.03.2021, 31.03.2022, and 31.03.2023 in the balance sheet. Still, all are on paper because none filed a claim before the RP, and the RP and CoC do not adequately evaluate the assets and liabilities. - The filing of a petition under section 7 by M/s Zep Infratech Limited, coupled with the absence of claims from other significant creditors and lack of forensic audits to identify potential avoidance transactions, raises concerns about the transparency and purpose of the CIRP process, particularly in light of the immunities available under section 32A of the IBC, 2016.

- Neither the RP nor CoC recommended a forensic audit of the CD or an audit for identifying the PUFE transactions in the circumstances that the CD had transactions in hundreds of crores, including with related parties. - RP did not follow the requirements of Regulation 6A of the IBBI Regulations for CIRP as discussed above and did not identify the real creditors. - The RP has not demonstrated that it has taken steps to provide correct information along with full details of assets. The facts indicate that it was a very closed group that was aware of the CIRP proceedings. There are no IAs by the third parties. - The CD has carried forward business losses, long-term capital losses, and short-term capital losses in hundreds of crores. Though the SRA has asked for a prayer from this Adjudicating Authority to approve affording a reasonable opportunity of being heard by the jurisdictional principal commissioner of income tax in accordance with section 79 (2) of the Income Tax Act, 1961, to allow carry forward of losses of the previous year. However, these intangible assets have not been considered while valuing the CD or while submitting the Resolution Plan.

- The CD had advanced loans to various parties, and it had huge trade receivables, but the same were not taken into account by the CoC while approving the Resolution Plan amount quoted by the SRAs. - The Resolution Plan only provide for payments to the two unsecured financial creditors. - Whole money provided in the Plan will go the creditors and there is no provision for the working capital, equity capital, and for running the expenses of the CD. - There is no provision for CIRP cost as it will be met by the cash available with the CD. - The financial capacity of the RA is not convincing. He has filed a Resolution Plan in another case of M/s Star Line Leasing Limited. - The above facts raise serious doubts about the whole CIRP process initiated based on the application of Zep Infratech Limited. The entire exercise suggests an accommodation or collusive arrangement with the sole purpose of helping the CD obtain benefits, reliefs, and concessions under Section 32A of the IBC, 2016, and raises concerns about its alignment with the IBC's objective of genuine insolvency resolution.

- There is no material in the Plan underpinning the feasibility and viability of the Resolution Plan. The plan does not address the cause of default, demonstrate feasibility and viability, provide for effective implementation, or establish the RA’s capability to implement it.

The Corporate Debtor has no assets and no employees. Currently, CD is not conducting any business and is not a going concern or in operation. None will benefit, other than the two unsecured financial creditors, who constitute the CoC, from the approval of the Plan.

The RP has not filed any IA before this Tribunal regarding non-co-operation from the CD. The records indicate that the CD’s management provided the necessary documents and information to the RP, and no specific instances of non-cooperation were reported during the CIRP. The RP has neither proposed nor has an initiative been taken by the CoC for identifying the avoidance transaction. There are no accounts of the CD after 01.04.2023 and this indicates that the RP did not have the full information to be provided in the Information Memorandum. Therefore in absence of the same, the Resolution Plan submitted by the RA cannot be considered to have taken into account the full picture of the CD as on the date of submission of the Plan.

The fulcrum on which the Resolution Process under the Code proceeds is the full and correct knowledge of the affairs of the CD; however, in the present case, full information about the CD was not available. Therefore, the CoC could not be said to have exercised its commercial wisdom while approving the resolution.

Commercial wisdom of the CoC: The CoC's role is questionable, as its 100% approval of the Resolution Plan without questioning significant unclaimed liabilities, the absence of audited accounts for FY 2023-24 and 2024-25, or the plan's lack of revival strategy violates Section 30(4) of the IBC, which mandates a diligent evaluation of the plan's feasibility and viability. This arbitrary conduct, lacking prudent decision-making at arm's length, undermines the IBC's objective of maximizing value for stakeholders. The facts indicate that their decisions were motivated with the sole intention of getting the approval of this Tribunal and getting all types of benefits, reliefs and concessions available due to the approval of the plan to all involved in the transactions. There appears to be no intention to resolve the insolvency, as the CD has no ongoing business and no party is interested other than the two CoC members.

In the case of Vallal RCK v. Shiva Industries (supra) the Hon’ble Supreme Court has also held that:

In view of the facts discussed above, the CoC not only acted in a “capricious, arbitrary, irrational” manner but also approved the plans that contravene the provisions of IBC and the Regulations. In that regard, the CoC has failed to exercise its commercial wisdom in deciding on the Resolution Plan, which, in a real sense, does not take into account the ground realities of the CD and is not commercially feasible and viable. It does not lead to value maximisation from the assets of the CD.

Therefore, we are of the view that the resolution plan has no provisions for its effective implementation or resolution of the insolvency as required by Section 31 (1) of the IBC, as there is nothing in the plan except payment to CoC members and others out of plan value of Rs 90 lakhs. The entire amount goes to the stakeholders, and nothing remains for the CD, not even for the equity capital contribution.

The Tribunal would also like to mention that the underlying purpose of a resolution plan is not merely the settlement of claims but the revival of the Corporate Debtor as a going concern in a manner that is commercially viable and legally compliant. In this regard, Regulation 38(3) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, outlines key parameters that every resolution plan must comply with. The said regulation reads as under:

In the present case, upon a detailed consideration of the material on record, it is evident that the resolution plan fails to satisfy the criteria laid down in the above regulation. Further, section 30 (2) of the IBC, 2016 requires that the plan provide for the implementation and resolution of the Plan. The RA has no plans to provide a resolution to the corporate insolvency. As discussed in detail with cogent reasons, the Plan fails to meet the requirements of clauses (c), (d), (e), and (f) of Section 30(2) of the IBC, 2016.

The plan lacks financial depth and strategic clarity to justify its feasibility and viability, as it provides no working capital, equity infusion, or business projections to revive the Corporate Debtor, which has no ongoing operations, and no employees. Moreover, there is no demonstrable vision to restart the business of the CD and no capability is shown on the part of the Resolution Applicant to implement the plan. In fact, it does not provide any information on the business projections of the CD and how will it be achieved.

Thus, in substance and spirit, the resolution plan does not comply with the provisions of section 30 and 31 of the IBC, 2016 and the Regulation 38(3), and the manner in which the CoC has approved it without these essential elements being satisfied raises serious questions about the integrity of the resolution process as a whole.

The Hon'ble Supreme Court in the case of Pratap Technocrats (P) Ltd. v. Monitoring Committee of Reliance Infratel Ltd. 10 SCC 623, under the Heading: Balancing the goals and key objectives of insolvency law in paragraph 46 of the order noted that, “ since an insolvency regime cannot fully protect the interests of all parties, some of the key policy choices to be made while designing the insolvency law relate to the broad goals of the law (rescuing businesses in financial difficulty, protecting employment, protecting the interest of creditors. Encouraging the development of an entrepreneurial class) and achieving the desired balance between the specific objectives identified above.

The Hon'ble Court in paragraph 47 further notes that, “Hence, once the requirements of IBC have been fulfilled, the adjudicating authority and the appellate authority are duty-bound to abide by the discipline of the statutory provisions. It needs to be emphasised that neither the adjudicating authority nor the appellate authority have an unchartered jurisdiction in equity. The jurisdiction arises within and as a product of a statutory framework.

As discussed in this order, currently there is no business in the CD; the CD has no employees, and the creditors, other than the unsecured security creditors, have not even filed any claim, all pointing to the conclusion that the plan submitted by the RA does not meet the goals of the IBC law.

Accordingly, and in view of the discussion above, the relying on the provisions of Sections 30 and 31 (2) of IBC, 2016 and Regulation 38 as referred above, the Resolution Plan in question is hereby rejected by this Adjudicating Authority for non-compliance with Regulation 38(3)(a), (b), (c), and (e) of the CIRP Regulations, 2016, as it fails to address the cause of default, demonstrate feasibility and viability, provide for effective implementation, and establish the resolution applicant's capability to implement the plan.

The provisions under Section 33(1)(b) of the Code are reproduced below: -

The Hon'ble Supreme Court in the case of Ramkrishna Forging Ltd (supra), in paragraph 29 referred to the decisions in the cases of Innoventive Industries Ltd. v. ICICI Bank Ltd. [2017] 84 taxmann.com 320/ 1 SCC 407 and Swiss Ribbons (P) Ltd. v. Union of India [2019] 101 taxmann.com 389/4 SCC 17 in which it was explained that the Code was introduced explicitly by the Parliament for ensuring quick and time bound resolution of insolvency of corporate entities in financial trouble, by first attempting to revive the Corporate Debtor, failure whereof would entail liquidation of the corporate debtor's assets.

As a consequence, following the rejection of the resolution plan under Section 31(2) for non-compliance with statutory requirements, and given the expiry of the extended CIRP period on 03.07.2024, the Tribunal, pursuant to Section 33(1)(b), orders the liquidation of the Corporate Debtor to maximize creditor value and conclude the insolvency process. The Corporate Debtor's lack of business operations, absence of employees, and minimal tangible assets, coupled with the resolution plan's failure to propose a viable revival strategy, render liquidation the only feasible course to maximize creditor value and achieve the IBC's objective of efficient insolvency resolution.

IBBI vide its circular number Liq-12011/214/2023-IBBI/840 dated 18.07.2023 in the exercise of its powers conferred under section 34(4)(b) of the Code, had recommended that an IP other than the RP/IRP may be appointed as liquidator in all the cases where liquidator (read liquidation) order is passed henceforth.

In view of the above, it is hereby ordered as follows: -

Accordingly, IA (Plan) No. 42 of 2024 in CP(IB) No. 259 of 2023 stands dismissed and disposed of.

The Registry is also directed to send e-mail copies of the order forthwith to all the parties and their Learned Counsel for information and for taking necessary steps. Files be consigned to the record.