Hemanalini Traders vs Nexus Feeds Ltd

PER : BENCH

The present Application is filed by the Resolution Professional i.e. the Applicant herein (hereinafter referred to as the "Resolution Professional" or the "Applicant") of M/s. NEXUS FEEDS LIMITED (Corporate Debtor), under Sections 30(6) and 31 read with Regulation 39 (4) of IBBI (CIRP) Regulations 2016, seeking approval of Adjudicating Authority under section 31 of the IBBI, 2016, on the Resolution Plan submitted by SHRI G. RAMAKRISHNA REDDY, SMT G. RADHA AND SHRI MITTAPALLI BABU (Successful Resolution Applicant/SRA), as approved by the Committee of Creditors (COC) with 66.56% of voting share.

The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was commenced by this Tribunal vide order dated 04.08.2021 in CP(IB) No.389/9/HDB/2020 on an application filed by the Operational Creditor M/s. Hemanalini Traders. The Interim Resolution Professional made the public announcement on 11.08.2021 and constituted the Committee of Creditors (CoC) after verifying the claims. Subsequently, the suspended director of the Corporate Debtor filed a Company Appeal (AT)(CH)(INS) No.198 of 2021 before the Hon'ble NCLAT, which granted an interim stay on 27.08.2021; the appeal was dismissed on 16.01.2023, vacating the stay. Thereafter, the CoC, in its 3rd meeting, resolved to replace the IRP, and this Tribunal vide order dated 24.04.2023 appointed Mr. Dantu Indu Sekhar as the Resolution Professional. Pursuant to publication of Form-G on 26.02.2023, only one Resolution Plan was received from Mr. G. Ramakrishna Reddy, Ms. G. Radha and SHRI MITTAPALLI BABU (Consortium), a suspended director and MSME promoter of the Corporate Debtor.

- The CoC, in its subsequent meetings held between June 2023 and February 2025, deliberated extensively on the Resolution Plan submitted by the Promoter–Resolution Applicant. The CoC granted multiple opportunities to the Applicant to revise and enhance the plan value. - The Resolution Applicant submitted successive revised plans and clarifications, and finally, the Resolution Plan dated 22.02.2024 (read with its addenda dated 26.02.2024, 01.03.2024, 07.11.2024, 08.11.2024, 16.11.2024, and 10.12.2024) was placed before the CoC for voting.

The Plan was deliberated in the 37th meeting held on 11.03.2025 and the combined Resolution Plan submitted by Shri G. Ramakrishna Reddy, Smt. G. Radha and Shri Mittapalli Babu was approved by the CoC with 66.56% voting share on 15.03.2025, with Union Bank of India and ICICI Bank voting in favour, and State Bank of India voting against. The Letter of Intent was issued to the Successful Resolution Applicants on 17.03.2025, The SRA submitted the Performance Bank Guarantee on 26.03.2024 in compliance with the terms of the Letter of Intent. The said Performance Security was furnished in the form of four Bank Guarantees drawn on ICICI Bank, comprising three Bank Guarantees of ₹2.00 Crores each and one Bank Guarantee of ₹2.217 Crores, aggregating to the total Performance Security amount stipulated under the approved Resolution Plan.

It is noted that there are pending applications filed by the Resolution Professional reporting Undervalued Transactions under Section 45 of the Insolvency and Bankruptcy Code, 2016 for an amount of Rs. 79,77,102/-, and Fraudulent Transactions under Section 66 of the Code for an amount of Rs. 29,56,20,000/-, against the four Directors of the suspended Board of the Corporate Debtor. Amongst the said Directors, Mr. G. Ramakrishna Reddy and Mrs. G. Radha, along with Mr. Mittapalli Babu, have submitted the Joint Resolution Plan. As on date, it is informed that the Tribunal has not yet pronounced orders in the said avoidance applications. The CoC, in its 38^th meeting held on 19.03.2025, decided that all pending avoidance or fraudulent transaction applications before the Hon'ble NCLT or NCLAT shall be pursued by the Secured Creditors. The Resolution Plan accordingly provides that any recovery from such proceedings shall accrue to the Secured Financial Creditors.

The Applicant further states that the factory of the CD was given on lease to M/s Nakshatra Feeds India Private Limited from June 2019 and the lease rentals were partially paid till December 2022 and no payment were made from January 2023 except Rs. 4,00,000/-. The Joint Resolution Applicants vide their letter dated 08.11.2024 stated that the lease rentals till the date of approval of resolution plan by this Tribunal will accrue to the Secured Creditors.

Mr. G. Ramakrishna Reddy 2) Mrs G. Radha & 3) Mr. Mittapalli Babu (Successful Resolution Applicant/SRA) are individuals having sufficient business exposure in the relevant field. Mr. G. Ramakrishna Reddy and Mrs Radha are Directors of the suspended Board of M/s Nexus Feeds Limited (Corporate Debtor). The Corporate Debtor/M/s Nexus Feeds Limited being an MSME Entity as per Udyam Certificate issued by Ministry of MSME in 2021, the provisions of Section 240A of the Code applied, rendering the promoter eligible to submit a resolution plan notwithstanding the bar under Section 29A(c) and (h). Mr. Mittapalli Babu is a resident of Tirupati, Andhra Pradesh and is roped in as investment partner into the resolution of M/s Nexus Feeds by Sri G. Ramakrishna Reddy.

The COC comprised of the following Financial Creditors and distribution of voting share among them is as under:

The amounts provided for the stakeholders under the Resolution Plan I as under:

(Amount in Rs. Cr)

The SRA undertakes to distribute the Plan amount of Rs. 38,61,70,346/- (Rupees Thirty-Eight Crores Sixty-One Lakhs Seventy Thousand three hundred and Forty six only) in the following manner:

The plan also contemplates payment of approximately ₹81.25 Crores in total, out of this Rs. 38,61,70,346/- is for the resolution of the Corporate Debor and balance Rs. 42,63,29,654/- is for release of Guarantors/collateral securities. - Rs. 50 lakhs or actuals, whichever is higher. The approximate CIRP expenses to be payable by the SRA upon approval of the Resolution Plan is Rs. 1.42 crores

The Resolution Applicants propose to fund the resolution plan amount of Rs. 38,61,70,346/- by selling 03 sites belonging to the investor/Joint Resolution Applicant Sri Mittapalli Babu, located at Tirupathi, Bangalore and Mekaguda, Hyderabad peripherals valued at 38.36 crores. His net worth as per the resolution plan (as certified by M/s Rajagopal Naidu & Co. Chartered Accountants dated 10.03.2025) is Rs. 65.54 crores. Further the joint Resolution Applicants propose the following mechanism for funding Rs. 42,63,29,654/- for release of guarantors and their collateral securities through sale of assets (mortgaged to secured creditors) in a phased manner within 30 days-09 months from the date of approval of the Resolution Plan in a phased manner. It is also stated in the resolution plan that the Resolution Applicants have obtained the consent of guarantors for executing MOUs with the prospective buyers for sale of collateral securities. As per the MOU, the sale consideration will be deposited directly by the prospective buyers to the credit of Secured Financial Creditors on pro-rata basis of their claims. The Joint Resolution Applicants will be paying Rs. 38 crores through MOU route and the balance amount of Rs. 2,63,29,654/- out of their own funds in 9 months from effective date.

The time frame for sale of properties and the proposed amounts to be deposited with secured creditors as per the MOUs are furnished as below:-

It is further stated in the Resolution Plan that as standby to the above mechanism for funding the release of Guarantors/Collateral Securities, the joint Resolution Applicants have approached M/s KBK Biotech Private Limited, who have expressed their willingness to fund the release of Guarantors/Collaterals and submitted their in-principal letter dated 20.01.2024 addressed to the COC members and the same was already shared with the Resolution Professional/COC. The Resolution Applicants have further relied on the recent judgement of Hon'ble NCLAT, Delhi in the matter of M/s SVA Family Welfare Trust & Anr Vs. Ujaas Energy Ltd & Ors dated 21.08.2023, wherein it is held that personal guarantees and securities can be extinguished in the Resolution Plan of the Corporate Debtor. It is further held that the personal guarantees are security interest under the Code and all security interest can be dealt within the Resolution Plan. It is further stated in Clause 9.17 of the Plan that as all the guarantors are relatives and friends of the promoters of the Corporate Debtor, the resolution applicants are willing to get consent of all guarantors in favour of secured financial creditors to consider release of their guarantees/collateral securities.

In the above backdrop we heard Ms. M. Vazra Laxmi, Learned Counsel for the Resolution Professional and perused the records. The Resolution Professional has confirmed that the Resolution Plan meets all the requirements of Section 30(2) of the Code and Regulation 38 of the CIRP Regulations, including:

a. Payment of CIRP costs in priority;

b. Payment to Operational Creditors not less than the liquidation value;

c. Provision for management, control, and supervision of the Corporate Debtor post-approval;

d. Feasibility and viability of the plan; and

e. Due compliance with all other applicable provisions of the Code.

Compliance of Section 30 (2) of the Code, as under:

Compliance of Regulation 38 of the Regulations in the following manner:

At the outset we refer to the following judgements: -

Hon'ble Apex Court in re Sashidhar v. Indian Overseas Bank & Others (in Civil Appeal No. 10673/2018) held that

The Hon'ble Supreme Court has further held at para 35 of the above judgement that:

The Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors, held that:-

The Hon'ble Supreme Court of India, in the recent ruling in re Vallal RCK vs M/s Siva Industries and Holdings Limited & Ors, has held as under:-

According to the Applicant, from the date of commencement of CIRP to till date of filing this instant application, a total of 38 COC meetings were convened.

It if further noted that the 180 days' time limit for completion of the CIRP as per Section 12 of the Code was 30.01.2022. However, the time was extended time and again and the date of expiry of extended period of CIRP was 31.03.2025.

The Resolution Professional has also filed Form H certifying compliance and has confirmed that the plan is in accordance with the Code and Regulations.

The highlights of the resolution plan are as under:-

The Resolution Professional has further stated that, due to personal reasons, he is unable to continue as Monitoring Committee Chairman and the CoC has approved the appointment of Mr. Satyanarayana Veera Venkata Chebrolu, Insolvency Professional (IBBI Reg. No. IBBI/IPA-003/IPA-ICAI-N-00224/2019-2020/12677), as Chairman of the Monitoring Committee for implementation of the approved Resolution Plan.

According to the Resolution Professional, the said Resolution Plan complies with all the provisions of the IBC, IBBI / CIRP Regulations and does not contravene any of the provisions of the law for the time being in force and the Successful Resolution Applicant has filed an Affidavit pursuant to Section 30 (1) of the Code, confirming its eligibility under Section 29A of the code and the Resolution Professional affirms that the contents of the said Affidavit are in order.

It is noted that the Corporate Debtor is classified as MSME entity as per Udyam Certificate issued by Ministry of MSME in 2021 and the Resolution Applicants Shri G. Ramakrishna Reddy and Ms. G. Radha who are Suspended Directors and Promoters of the Corporate Debtor, along with Mr. Mittapalli Babu is roped in as investment partner into the resolution of the Corporate Debtor.

In this regard, the Adjudicating Authority observes that Section 240A(1) of the Insolvency and Bankruptcy Code, 2016 provides that the provisions of clauses (c) and (h) of Section 29A shall not apply to the resolution applicants in respect of corporate debtors classified as MSMEs. The said exemption enables the promoters of MSMEs to submit resolution plans for revival of their enterprise, notwithstanding their status as suspended directors or guarantors.

The Hon'ble Supreme Court in Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17, upheld the constitutional validity and rationale of Section 240A, recognizing the need to give special dispensation to MSME promoters for the revival of their own companies. Further, the Hon'ble NCLAT in Saravana Global Holdings Ltd. v. Bafna Pharmaceuticals Ltd., Company Appeal (AT)(Ins) No. 164 of 2019, and Ramesh Kumar v. M/s Shree Hari Ginning and Pressing Pvt. Ltd., Company Appeal (AT)(Ins) No. 97 of 2021, has held that promoters of MSMEs are eligible to submit resolution plans for their own enterprises, and that the disqualification under Section 29A(c) or (h) is inapplicable to such cases. Accordingly, this Adjudicating Authority holds that the Suspended Directors and MSME Promoters, Mr. G. Ramakrishna Reddy and Ms. G. Radha, is eligible to submit the Resolution Plan for the Corporate Debtor under Section 240A of the Code, and the same has been rightly considered by the Committee of Creditors.

This Adjudicating Authority observes that certain avoidance applications filed under Sections 45 and 66 of the Insolvency and Bankruptcy Code, 2016 are pending adjudication before this Tribunal. However, in terms of Section 26 of the Code, the pendency of such applications does not affect the continuation or approval of the Corporate Insolvency Resolution Process (CIRP) or the Resolution Plan.

The Hon'ble Supreme Court in ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta, (2018) 13 SCC 83, held that eligibility under Section 29A must be determined as on the date of submission of the resolution plan, and mere pendency of proceedings does not render an applicant ineligible. The Hon'ble Supreme Court has observed that Para: 43: "the stage of ineligibility attaches when the resolution plan is submitted by a resolution applicant" Further, "the amendment introducing the words 'at the time of submission of the resolution plan' is clarificatory, as this was always the correct interpretation as to the point of time at which disqualification will attach" Accordingly, pending avoidance or fraudulent transaction proceedings under Sections 43–66 of the Code, without any finding of guilt or disqualification having attained finality, cannot render the suspended director ineligible to submit a resolution plan.

Similarly, the Hon'ble NCLAT in RBL Bank Ltd. v. MBL Infrastructures Ltd., Company Appeal (AT)(Ins) No. 179 of 2018, and Bank of Baroda v. MBL Infrastructures Ltd., Company Appeal (AT)(Ins) No. 436 of 2018, has categorically held that the pendency of preferential or fraudulent transaction applications does not disentitle a person from submitting a resolution plan unless adjudicated and held guilty of such transactions.

This position has also been reaffirmed in CoC of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, where the Hon'ble Supreme Court emphasized that the commercial wisdom of the CoC prevails and that pending proceedings under Chapter III of the Code do not stall the resolution process.

Accordingly, the pendency of the said avoidance applications shall not impede approval of the Resolution Plan, which otherwise meets the requirements of the Code. The said proceedings shall continue independently, and any recovery or benefit arising therefrom shall be dealt with in accordance with the provisions of the approved Resolution Plan.

Therefore, the resolution plan submitted by Shri G. Ramakrishna Reddy, Ms. G. Radha and Mr. Mittapalli Babu, when tested on the touch stone of the aforesaid facts and the rulings, we are of the view that the instant resolution plan satisfies the requirements of Section 30 (2) of the Code and Regulations 37, 38, 38 (1A) and 39 (4) of the Regulations. We also find that the Resolution Applicant is eligible to submit the Resolution Plan under Section 29A of the Code.

We therefore, hereby approve the Resolution Plan submitted by Shri G. Ramakrishna Reddy, Ms. G. Radha and Mr. Mittapalli Babu ("Successful Resolution Applicant) for Rs. 81.25 crores, along with annexures, schedules forming part of the Resolution Plan annexed to the Application and order as under: -

The Resolution Plan along with addendums, annexures and schedules forming part of the plan shall be binding on the Corporate Debtor, 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 is due, guarantors and other stakeholders involved in the Resolution Plan.

All crystallized liabilities and unclaimed liabilities of the Corporate Debtor as on the date of this order shall stand extinguished on the approval of this Resolution Plan.

The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations/ liabilities of the Corporate Debtor and shall be dealt with by the appropriate Authorities in accordance with law. Any waiver sought in the Resolution Plan, shall be subject to approval by the Authorities concerned as held by Hon'ble Supreme Court in the matter of Ghanashyam Mishra & Sons Private Limited Versus Edelweiss Asset Reconstruction Company Limited in CIVIL APPEAL NO.8129 OF 2019 dated 13.04.2021.

It is hereby ordered that performance guarantees of Rs. 8,21,70,000/- furnished by the Successful Resolution Applicant shall remain as performance Guarantee till the amount proposed to be paid to the creditors under the plan, is fully paid off and the plan is fully implemented.

The Memorandum of Association (MoA) and Articles of Association (AoA) shall accordingly be amended and filed, if applicable, with the Registrar of Companies (RoC) Hyderabad for information and record. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed.

Henceforth, no creditors of the erstwhile Corporate Debtor can claim anything other than the liabilities referred to supra.

The moratorium under Section 14 of the Code shall cease to have effect from this date.

The Resolution Professional is discharged, subject to handing over records to the Monitoring Committee, which shall be headed by Mr. Satyanarayana Veera Venkata Chebrolu, Insolvency Professional, as approved by the CoC.

The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with copy of this order for information.

The Applicant shall forthwith send a copy of this order to the CoC and the Resolution Applicant.

The Registry is directed to furnish free copy to the parties as per Rule 50 of the NCLT Rules, 2016.

The Registry is directed to communicate this order to the Registrar of Companies, Hyderabad for updating the master data and also forward a copy to IBBI.

The Monitoring Committee/ Resolution Professional will submit a report to the Registry immediately after the implementation of the Plan.

Accordingly, IA No. (plan) 7/2025 is allowed and stands disposed of.

A memo dated 02.01.2026 has been filed by the Resolution Professional in the matter of M/s Nexus Feeds, seeking rectification of a typographical error in the order dated 28.11.2025 passed in IA (IBC) (Plan) No. 07/2025, whereby the Resolution Plan was approved.

We have perused the order dated 28.11.2025. It is observed that there is a typographical error at Page No. 16, Paragraph 15 (Column 12) of the Resolution Plan. At the request of the Resolution Professional, the following corrigendum to the order dated 28.11.2025 passed in IA (IBC) (Plan) No. 07/2025 in CP (IB) No. 389/9/HDB/2020 is hereby issued:

Except for the above correction, all other contents of the order dated 28.11.2025 shall remain unchanged. This corrigendum order shall be read as part and parcel of the original order dated 28.11.2025.

Accordingly, the memo stands allowed and disposed of.