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Judgment
09.07.2025: These three appeals have been filed challenging the same order dated 03.06.2025 passed by NCLT, Mumbai Bench, Court IV in IA No.2297 of 2025. The Application 2297 of 2025 was filed by the Resolution Professional seeking extension of 45 days beyond 465 days from 28.04.2025 to 11.06.2025. By the impugned order the said application was rejected. Aggrieved by which order the majority Financial Creditor, Resolution Professional as well as the Successful Resolution Applicant have come up in these appeals.
We have heard learned counsel appearing for the JM Financial (majority Financial Creditor), learned counsel for the Resolution Professional and learned counsel for Successful Resolution Application, who have filed the Appeals. We have also heard Shri Gaurav Mitra, learned counsel appearing for Aurum Commercials LLP and two others having 6.6% voting share. Learned counsel for the JM Financial submits that they have authorisation from Motilal Oswal Trustee Co. Ltd., and total vote share is about 69%.
The CIRP of the Corporate Debtor - Spenta Enclave Pvt. Ltd. could not be completed even after expiry of 330 days, the Adjudicating Authority has granted extension / exclusion for four times, last extension being granted on 17.03.2025, by which 90 days’ extension was granted after excluding certain period from 28.01.2025 to 27.04.2025. A resolution plan in the CIRP of the Corporate Debtor, which is a real estate company having homebuyers and slum dwellers, was considered and approved by the CoC on 15.03.2024. After the application was filed for approval of the resolution plan, the Adjudicating Authority vide order dated 17.01.2025 remanded the resolution plan back to the CoC for re-consideration on certain aspects. After the plan was remanded, the CoC held its 18th meeting on 28.01.2025 in which decision was taken for seeking extension for 90 days from 27.01.2025, which was granted by the Adjudicating Authority on 17.03.2025. Resolution Applicant submitted letter to the Resolution Professional in compliance with order dated 17.01.2025 clarifying the objection in respect of Clause 4.4 of the revised resolution plan. On 15.04.2025, 19th CoC meeting was convened, where the Resolution Professional presented the clarification letter, in which meeting the CoC authorised the Resolution Professional to file an application for seeking 5th extension for 45 days from 28.04.2025 till 11.06.2025. On 13.05.2025, 20th meeting of CoC was convened, where resolution plan r/w addendum and clarification was decided to be placed for voting. The voting on the Resolution Plan commenced on 13.05.2025 and concluded on 22.05.2025. In the voting the resolution plan was approved by 92.87% vote share. Application for extension came for consideration on 03.06.2025 and has been rejected. Aggrieved by which order these appeals have been filed.
Learned counsel for the Appellant submits that after the fourth extension granted by the Adjudicating Authority on 17.03.2025, the time for CIRP was there till 27.04.2025 and in the meeting convened on 15.04.2025, the Resolution Applicant submitted clarification and further time was decided to be sought by authorising the Resolution Professional for filing application for 45 days’ time to complete the voting process and before the application can come for consideration on 03.06.2025, the voting has concluded and plan has already approved. Application IA No.2297 of 2025 was filed on 21.04.2025 giving all details pertaining to the steps taken by the CoC after the order of remand dated 17.01.2025 (details set out in Para 7.18 of Company Appeal (AT) (Insolvency) No. 953 of 2025 - Resolution Professional’s Appeal). It is submitted that it is true that extension beyond 330 days is granted only in exceptional circumstances and present is a case where the Adjudicating Authority itself on satisfying, extended period till 27.04.2025, hence, within 27.04.2025, the CoC held meeting and considered the clarifications received from the Resolution Applicant. It is submitted that in the application IA No.2297 of 2025 all details were mentioned but the Adjudicating Authority without adverting to the contents of the application rejected the application. The Adjudicating Authority in Para 6 has observed that “there appears to be no chance of resolving the matter within this timeframe also.”. It is submitted that on 03.06.2025, no order was pronounced in the Court and in fact, order was uploaded on 24.06.2025. and only on 25.06.2025 Appellants can know of the above order.
Shri Gaurav Mitra, learned counsel appearing for Aurum Commercials LLP submits that there were no exceptional circumstances so as to grant any further extension and the Adjudicating Authority has rightly rejected the application praying for 45 days’ extension. It is submitted that after remand on 17.01.2025, the CoC did not take urgent steps to complete the process and conclude voting.
We have considered the submissions of learned counsel for the parties and perused the record.
The impugned order in Para 4 itself notices the last extension granted on 17.03.2025 till 27.04.2025. Before the expiry of last extension, the CoC has held its meeting on 15.04.2025, minutes of which meeting has been brought on the record by the Appellant – JM Financial at page 182 of its appeal (Company Appeal (AT) (Ins.) No.952 of 2025). The minutes take note of the steps taken in the CIRP including current status of the Corporate Debtor. The CoC in its meeting dated 15.04.2025 resolved to vote on the plan. The CoC also considered the clarification letter dated 11.04.2025 in respect of the concerns raised by the NCLT by order dated 17.01.2025, which is noted as Item No.8 and Item No.9 notes the methodology and manner of voting (page 196-198 of Company Appeal (AT) (Ins.) No.952 of 2025), which is as follows:
“8.TO CONSIDER CLARIFICATION LETTER DATED 11-04-2025 RECEIVED FROM THE SRA IN RESPECT OF CONCERNS RAISED BY HON'BLE NCLT VIDE ITS ORDER DATED 17-01-2025:
The clarification letter received from SRA (Annexed as Annexure 1 to the minutes) was placed by the Chairman before CoC. The RP shared hard copy of the aforesaid letter with the members physically present in the meeting and the contents of the clarification letter were shared online with all the members present through video conferencing. The contents of the letter dated 11-04-2025 is summarized below:
a)The SRA has explained that clause 4.4 of the Resolution Plan is an enabling clause and does not make plan as contingent in nature. However, they are ready to withdraw this clause.
b)Regarding the sanction letters for the borrowing proposed in the resolution plan, the SRA clarified that in the resolution plan they have proposed borrowing of Rs. 224.37 crores for successful implementation of the resolution plan. The SRA shared two sanction letters for the total amount of Rs. 225 Crores –
(i)Fresh Sanction letter JMFARC/KG/FY25/0801, dated 12th February 2025 from JM Financial Asset Reconstruction Company Limited regarding sanction of Rs.150 Crores facilities to the SRA
(ii)Signed Term Sheet dated 11th April 2025 from Kothari Products Limited amounting ti Rs. 75 Crores.
c)The SRA has also shared an email dated 4th February 2025, received from SWAMIH Fund (Mr. Shardul Kanvinde, Analyst) whereby they have informed the SRA that upon satisfactory completion of due diligence process and subsequent approval by the funds internal committee, a final sanction term sheet will be issued.
The RP requested views from the CoC regarding the clarification letter shared by the SRA.
Aria Commercials LLP ("Aria") and Aurum Commercials LLP ("Aurum") were of the view that the email by SWAMIH is an eyewash. Secondly, they asked whether Kothari Products Limited ("KPL") is getting anything in the resolution Plan. Whether there is any deal that has happened between KPL, JM Financials and SRA now that they are sanctioning funds despite the fact that they are not getting anything in the Resolution Plan. Their view is that the Term Sheet from KPL is suspicious.
Thirdly the representatives of Aria and Aurum was of the view that JM Financials Credit Facility to the CD is like evergreening. They suggested the RP to write to RBI regarding the same.
The RP informed representatives of Aria and Aurum that the clarification letter received from the SRA has been placed before CoC for their consideration and would not like to comment on the sanction process of Institutions. The RP further informed that the sanction letters shared by SRA for Rs. 225 Crores are from two of the CoC members hence the same can be checked with the COC members about the nature of the sanctions. The RP further clarified that he would be guided by the collective wisdom of CoC members and shall act in compliance with the provisions of the Code. Then, RP requested the views of other CoC members.
Mr. Himanshu Shah from IDBI Trustee was of the view that there is nothing suspicious regarding KPL Term Sheet. It's a commercial call from KPL and in case they are ready to lend for revival of the corporate debtor then we should not have any objections. Mr. Ashit from Aurum countered Mr. Himanshu Shah that how does he not see any suspicion in the Term Sheet of KPL and why are they not objecting to it. This was strongly objected to by Mr. Himanshu Shah and he informed that if KPL is ready to infuse funds post approval of the resolution plan for revival of the corporate debtor, there should not be any objection by anyone.
At this point the RP intervened and informed that all the CoC members are presenting their views on the clarification letter, which will be properly recorded and based on collective CoC decision, the RP would place the agenda of Resolution Plan reconsideration for voting.
Thereafter, the RP requested views from other CoC members.
Mr. Devang Thakkar, representative of Home Buyer, was of the view that till the home buyers are benefitting he would not go into questioning the wisdom of KPL. However, he would place the same before the home buyers to take a call.
JM Financial ARC representative requested RP to share the copy of clarification letter to be reviewed by their competent authority.
The RP took note of the same and informed CoC members that same would be put for voting in the next CoC meeting.”
“9. THE METHODOLOGY AND MANNER OF VOTING:
Post the start date for e-voting as per the discussion in the meeting of the Committee of creditor the AR shall announce the voting window, following instructions to be followed for E-voting:
WEBSITE LINK TO VOTE: The participating members in the voting should log on to the voting website https://dovote.dcirrus.io:443/web/vote/polls during the voting period.
LOGIN by OTP: Enter your email id, kindly ensure you use the same email id as notified the IRP for e-voting.
You will receive an INVITE e-mail from D'Cirrus on the registered email.
PASSWORD: Enter your email id and click on submit button. Your unique OTP (One Time Password) would be delivered on your registered email. Once you enter the OTP click on the confidentiality agreement button and submit you will be logged in to voting platform
VOTING: Once logged in, you would go to votes and click on it. Here you will see the voting from the M/s. Spenta Enclave Private Limited listed. You would be taken to the voting page.
OPTIONS: On the voting page, you will see all the items to be voted upon. Against each item, the following options would be available:
Yes No Abstain
CONFIRMATION: After selecting the option, click on SUBMIT. You will receive a THANK YOU message on the screen. This is confirmation that your vote has been recorded and also receives a confirmation note on registered email and mobile.
The Chairman then informed the members that minutes of the meeting shall be circulated to all the members of the committee within 48 hours of the conclusion of the meeting. The Chairman further apprised that the resolution will be put for voting via platform provided by D’Cirrus.
The Chairman asked the CoC members about their decision on period of voting window. After deliberations the CoC decided that E-voting lines for home buyers shall start from 06:00 PM IST on Wednesday, April 18, 2025 and the same will be concluded at 02:30 PM IST on Friday April 18, 2025. The authorized representative shall vote on behalf of the class of allottees post analyzing their votes
The E-voting for other CoC members & Authorized Representative shall start from 06:00 PM IST on Wednesday April 16, 2023 and the same will be concluded at 06:00 PM IST on Friday April 18, 2025.
There were no further comments on the said matter and the said Item was considered as noted and confirmed.”
From the subsequent minutes it is reflected that the CoC again met on 13.05.2025, which records that voting to take place from 13.05.2025 till 22.05.2025. Report on the result of the e-voting was also submitted on 22.05.2025 (at page 256 of the paper book), which indicate that Item No.3 was approved by 92.87% vote share. It is on the record that the application which was filed on 21.04.2025 for extension, details of minutes of meeting held on 15.04.2025 with annexures were already been mentioned.
Present is a case where Resolution Plan was remanded by the Adjudicating Authority on 17.01.2025 and thereafter within the time extended by the Adjudicating Authority i.e. 27.04.2025 decision was taken for voting on the plan, what was left was voting itself, hence, extension was prayed for 45 days, which application was filed on 21.04.2025. The application filed for extension came for consideration on 03.06.2025, by which time voting was already completed and plan was approved. No order was pronounced on 03.06.2025, hence, the parties were not aware what order Court has passed and order could only be uploaded on 24.06.2025.
The submission raised by Shri Gaurav Mitra is that there were no exceptional circumstances on which the Adjudicating Authority could allow the application for 45 days’ extension, as 465 days has already elapsed.
There can be no dispute that 465 days was already elapsed, which was noted by the Adjudicating Authority while granting extension on 17.03.2025. No one can raise the issue with regard to period extended upto 27.04.2025, only issue which requires consideration is that before expiry of the period whether any substantial steps were taken for resolution of the Corporate Debtor. It is clear from the materials on record that before the impugned order could be passed, e-voting on the plan has been completed and plan has been approved. It is case of all the parties that no order was pronounced in the Court and the parties could not know what order Court has passed, hence, subsequent events upto 03.06.2025 could not be placed before the Adjudicating Authority.
In view of all the facts and materials which have been brought on the record by the Appellants and Resolution Professional, majority Financial Creditor and Successful Resolution Profession all being aggrieved of the order, we are of the view that extension as prayed, in special facts of the present case, require consideration. The Adjudicating Authority without adverting to the pleadings in the application has rejected the application observing that there appears to be no chance of resolving the matter within this timeframe, whereas the matter has already been resolved before 03.06.2025, when the order was passed.
It is submitted that application for approval of Resolution Plan has been filed on 10.06.2025, which has been numbered as IA-(Plan)73/2025.
In view of the aforesaid, we set aside the impugned order dated 03.06.2025 and allow application IA No.2297 of 2025 granting extension of 45 days. Plan approval application - IA-(Plan)73/2025 having already being filed, the Adjudicating Authority shall proceed to consider the plan approval application at an early date in accordance with law. All the Appeals are disposed of accordingly.