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Judgment
Per: Ms. Reeta Kohli, Judicial Member
The instant Application bearing IA (IBC) No. 3/JPR/2024 has been filed under Section 65 of the Code read with Rule 11 of the NCLT Rules, 2016 by Resolution Professional ('Applicant') against Mrs. Saroj Gupta ('Respondent') inter-alia seeking the following reliefs:-
"I. To allow the instant application and decide whether the Respondent has filed the Section 7 Application for purposes other than resolution of insolvency of the Corporate Debtor.
II. To pass any other order/direction as this Hon'ble Tribunal may deem fit in the interest of justice, equity, and conscience."
The main Petition bearing CP No. (IB) – 297/7/JPR/2019 was filed by Mrs. Saroj Gupta ('Financial Creditor') against the Corporate Debtor, Astha Buildhome Developers Private Limited ('Corporate Debtor'), under Section 7 of the Insolvency and Bankruptcy Code, 2016 ('IBC'/'the Code'). The said Petition was allowed by this Adjudicating Authority vide its Order dated 09.10.2022 and the Corporate Insolvency Resolution Process ('CIRP') was initiated against the Corporate Debtor.
As per the instant Application bearing IA (IBC) No. 3/JPR/2024 and the additional affidavit dated 06.02.2024 filed by the Applicant to bring on additional facts and documents on record, the facts which led to filing of the instant Application are as follows:-
In February 2014, The Corporate Debtor approached Mrs Saroj Gupta (i.e., the Respondent) seeking financial assistance amounting to Rs. 15,75,000/- (Rupees Fifteen Lakh Seventy-Five Thousand Only) at 14% per annum interest, which was disbursed by the Respondent by issuing three cheques drawn on State Bank Bikaner & Jaipur, Mansarovar Branch bearing account no. 51003109212. Upon failure to repay the aforesaid financial assistance, the Respondent sent a Legal Notice dated 12.05.2018 to Corporate Debtor demanding repayment of the dues.
Thereafter, the Respondent filed the Section 7 Petition seeking initiation of CIRP of the Corporate Debtor claiming to resolve the state of insolvency of the Corporate Debtor. The CIRP was commenced against the Corporate Debtor vide order dated 09.12.2022.
Shortly after initiation of CIRP, the suspended management preferred, an appeal challenging the validity of ex-parte Order initiating CIRP in the case of Corporate Debtor. However, the said appeal was dismissed by the Hon'ble NCLAT vide order dated 05.04.2023 for want of prosecution since no one was present before the Appellate Tribunal to contest the said appeal filed by the suspended management.
Meanwhile, the Applicant herein ('Resolution Professional'/ 'RP') made public announcement of CIRP of Corporate Debtor in Form-A inviting claims from the creditors/stakeholders of the Corporate Debtor. In view of same the Applicant requested the Respondent to file her claim under the CIRP of Corporate Debtor to which the Respondent vide email dated 24.12.2022 replied that she was unable to file claim since her lawyer was out of the town. 3.5 Thereafter, the Applicant made various representations to the Respondent vide email dated 30.12.2022, 03.03.2022, 07.03.2023, 05.04.2023, 13.04.2023, 06.07.2023, 02.08.2023, and 11.12.2023 requesting the Respondent to file her claim. In addition to the aforesaid emails, the Applicant even offered his assistance to the Respondent as may be required by her in filing the claim under CIRP of the Corporate Debtor but, the Respondent displayed no sign of co-operation and till date, she has not filed her claim. 3.6 In the meantime, two of the applications bearing IA No. 434 of 2023 and IA No. 441 of 2023 were filed before this Adjudicating Authority wherein, the Respondent (i.e., Mrs. Saroj Gupta) was impleaded as a necessary party to the application to which the Respondent has not filed any reply till date.
The aforesaid conduct of the Respondent raises serious concern in relation to her genuineness as a financial creditor of the Corporate Debtor. Non-filing of claim with the Applicant despite triggering the CIRP projects that the Respondent had initiated the CIRP for purposes other than resolution of the insolvency of the Corporate Debtor. 3.8 Further, the Applicant submitted that the ill-intent of the Respondent is evident from the fact that the Respondent is a shareholder and allottee of the Corporate Debtor however; the Respondent chose not to bring this fact to the knowledge of this Adjudicating Authority at the time of adjudication of the Section 7 Application, based on which CIRP of the Corporate Debtor was initiated. 3.9 A bare perusal of the 'List of Shareholding annexed to FORM MGT-7 (Annual Return)' would reveal that the Respondent is a shareholder of the Corporate Debtor and the same raises a serious doubt as to dubious nature of the Section 7 Application filed by the Respondent. 3.10 In addition to the above, the Applicant contended that the email dated 24.12.2022 as discussed in the foregoing paragraphs, was sent from the Gmail account of one Mr. O. P. Gupta and it is surprising to note that the List of Shareholding of the Corporate Debtor finds mention of one "Mr. Om Prakash Gupta".
In view of the aforesaid fact & circumstances of the case, the Applicant filed the instant Application under Section 65 of the Code to put check on the possibility and probability of law being abused.
As per the additional affidavit dated 06.02.2024 filed by the Applicant, the Applicant received an email dated 03.01.2024 vide which the Respondent filed her claim under Form - C along with supporting documents under the CIRP of the Corporate Debtor. The said claim was filed within 3 days from filing of the application under Section 65 of the Code.
Upon receipt of the claim from the Respondent, the Applicant verified the claim filed under Form-C with ledger statement prepared and provided by the suspended management of the Corporate Debtor wherein, it was also found that the outstanding amount of Rs. 23,39,218/- has been shown to be adjusted as an advance for flat no. 809 of Aasha Coral Residency in the year 2019. Further, the Applicant came across allotment letter dated 07.01.2019 vide which flat no. 809 of Aasha Coral Residency was allotted in favour of Mrs. Saroj Gupta (i.e., the Respondent herein). A copy of the ledger statement provided by suspended management and the allotment letter dated 07.01.2019 is annexed to the additional affidavit dated 06.02.2024 as Annexure – 5 and Annexure – 6 respectively.
In view of the above, the Applicant vide his email dated 04.01.2024 sought clarification from the Respondent regarding ownership of flat no. 809 situated at Aasha Coral Residency. The Respondent, vide email dated 06.01.2024 replied that she is totally unaware of the transaction/agreement/sale of any flat as shown in the ledger statement submitted by the suspended management of the Corporate Debtor. Further, the Respondent denied having agreed verbally or signed any agreement for alleged sale of flat no. 809 situated at Aasha Coral Residency.
In relation to the said claim of the Respondent, the Applicant sought clarification from the suspended management of the Corporate Debtor. In its response, the suspended management submitted that the flat 809 in Aastha Coral Residency was initially sold to one Mr. Nand Kishore Pujari as per agreement dated 17.03.2016 however, the construction of said flat could not be completed by 2020 therefore Mr. Nand Kishore Pujari surrendered the said flat and requested from suspended management to give possession ready flat in some other real estate project. Thereafter, the said flat was offered to the Respondent against her loan reflecting in the books of account of the Corporate Debtor however, the Respondent rejected the proposal, and no agreement was executed in relation to the same. Consequently, Mr. Nand Kishore Pujari remained owner of said flat no 809 in Aastha Coral Residency. A copy of the email exchange took place between the Applicant and Suspended Management is annexed to the additional affidavit dated 06.02.2024 and marked as Annexure - 9 (Colly).
The Applicant submitted that once the Respondent rejected to accept proposal of flat 809 in Aastha Coral Residency as against her outstanding loan owed by the Corporate Debtor, the satisfaction of loan due to the Respondent in the books of account of the Corporate Debtor, cannot be held to be valid discharge of debt by the CD. It is the case of the Applicant that a frivolous ledger was prepared to suggest that the payment obligation owed by Corporate Debtor to Mrs Saroj Gupta/Respondent has been discharged.
The Respondent in its Reply submitted the following:-
The CIRP against the Corporate Debtor was duly initiated vide order dated 09.12.2022 upon satisfaction of existence of debt and default in favour of the Respondent/Financial Creditor. The Respondent had advanced a financial loan of Rs. 15,75,000/- to the Corporate Debtor, which was acknowledged by the Corporate Debtor through ledger accounts, confirmation statements, and TDS deductions.
It was further submitted that the Respondent could not immediately file her claim in the CIRP proceedings due to bona fide reasons, including advanced age 70 years, severe medical ailments, prolonged medical condition, and lack of technological familiarity. The Respondent was also dependent on assistance from her son, namely, Mr. O.P. Gupta and legal counsel, who were not always available during the relevant period, leading to delay in communication and filing.
It was specifically submitted that upon being made aware of the requirement, the Respondent promptly took steps and filed her claim, which has already been marked as acceptable by the Resolution Professional, thereby rendering the present Application infructuous and academic in nature.
The Respondent denied that she was a shareholder or allottee of the Corporate Debtor. It was submitted that no such allotment was ever made or accepted by the Respondent, and the alleged entries in corporate records are disputed. The Respondent has already clarified the same through email dated 24.01.2024.
It was further submitted that the allegation regarding alleged concealment of shareholding was irrelevant and has no bearing on the maintainability of the Section 7 Petition, particularly in view of settled law that a Financial Creditor does not lose locus merely due to any alleged association, and in any case, the Respondent disputes such allegation in entirety.
The reliance placed by the Applicant RP on alleged non-filing of claim or alleged non-cooperation was wholly misconceived, as the delay, if any, was neither intentional nor deliberate but was due to unavoidable medical and personal circumstances beyond the control of the Respondent.
The Respondent submitted that the provisions of Regulation 12 and 13 of the CIRP Regulations, 2016 clearly permit submission of claims even after the initial deadline and up to the stage of collation and verification. The Respondent has acted strictly within the framework of law and has not violated any statutory provision.
Further, the Respondent denied the allegations of mala fide intent, collusion, or fraudulent initiation of proceedings for being baseless, presumptive, and without any supporting evidence. It is the case of the Respondent that the present Application has been filed only to delay and derail legitimate claim proceedings of the Respondent.
It was submitted that the Respondent's claim has already been considered and marked as acceptable for inclusion before the Committee of Creditors, and therefore no prejudice was caused to any party. Consequently, continuation of the present Application serves no legal purpose and was liable to be dismissed. The Respondent has placed reliance on the judgment of the Hon'ble NCLAT in Satish Chand Gupta Vs. Servel India Private Limited (MANU/NL/0024/2021).
The Respondent also submitted that the present Application under Section 65 was an abuse of process of law, devoid of merit, and liable to be dismissed with costs.
We have heard the arguments advanced by the parties in the present Application bearing IA No. 03/JPR/2024 and perused the documents presented. The moot point of law which arises for our consideration in the instant matter is whether the CIRP of the Corporate Debtor was initiated fraudulently or with malicious intent within the meaning of Section 65 of the Code.
At this juncture, this Adjudicating Authority considers it appropriate to look into the Section 65 of the Code. The same is reproduced hereunder:-
"Section 65: Fraudulent or malicious initiation of proceedings.
(1)If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.
(2)If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees.
(3)If any person initiates the pre-packaged insolvency resolution process—
(a)fraudulently or with malicious intent for any purpose other than for the resolution of insolvency; or
(b)with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.
From a bare pursual of the Section 65, the key ingredients of the same can be enumerated as follows:
Fraudulent or Malicious Initiation: The provision applies when insolvency proceedings are initiated with fraudulent or malicious intent rather than for resolving genuine financial distress.
Fraud is Wrongful Gain or Wrongful Loss: The Petitioner initiating must have done so with the intention of securing an undue advantage (wrongful gain) or causing harm to another party (wrongful loss).
The Hon'ble Supreme Court in West Bengal State Electricity Board Vs. Dilip Kumar Ray, Civil Appeal 5188 of 2006 dated 24th November 2006, defined the term 'malicious'. The extracts of the Judgement are reproduced below:
"Malice means in law wrongful intention. It includes any intent which the law deems wrongful, and which therefore serves as a ground of liability. Any act done with such an intent is, in the language of the law, malicious, and this legal usage has etymology in its favour. The Latin militia means badness, physical or moral – wickedness in disposition or in conduct – not specifically or exclusively ill-will or malevolence; hence the malice of English law, including all forms of evil purpose, design, intent, or motive. But intent is of two kinds, being either immediate or ulterior, the ulterior intent being commonly distinguished as the motive. The term malice is applied in law to both these forms of intent, and the result is a somewhat puzzling ambiguity which requires careful notice. when we say that an act is done maliciously, we mean one of the two distinct things. We mean either that it is done intentionally, or that it is done with some wrongful motive."
Further, the Hon'ble NCLAT in Monotrone Leasing Pvt. Ltd. Vs. PM Cold Storage Pvt. Ltd., [2020] ibclaw.in 21 NCLAT, reaffirmed this principle. holding that a petition under Sections 7, 9, or 10 of the IBC cannot be rejected solely on the ground of lack of intent for resolution, unless there is explicit documentary proof of fraudulent or malicious intent.
"34.Section 65 of the Code provides for penal action for initiating Insolvency Resolution Process with a fraudulent or malicious intent or for any purpose other than the resolution. However, the same cannot be construed to mean that if a petition is filed under Section 7, 9, or 10 of the Code without any malicious or fraudulent intent, then also such a petition can be rejected by the Adjudicating Authority on the ground that the intent of the Applicant/Petitioner was not resolution for Corporate Insolvency Resolution Process. As the proceedings under IBC are summary in nature, it is difficult to determine the intent of the Applicant filing an application under Section 7, 9, or 10 of the Code unless shown explicitly by way of documentary evidence. This situation may arise in specific instances where a petition is filed under IBC specifically with a fraudulent or malicious intent."
In the instant case, the Application under Section 65 of the Code has been filed on the following grounds:-
The Financial Creditor, namely, Mrs. Saroj Gupta was also a shareholder of a Corporate Debtor and the Adjudicating Authority passed an ex-parte CIRP order as no one represented Corporate Debtor before the Adjudicating Authority;
An appeal was filed by suspended board challenging the validity of ex-parte CIRP order, however, the said appeal was dismissed for want of prosecution.
Mrs. Saroj Gupta who initiated CIRP has not filed her claim despite various reminders.
At this juncture, it is pertinent to mention Section 11 of the Code which lists the persons not entitled to make an application initiate CIRP. For ease of reference, Section 11 of the Code is reproduced hereunder:-
"Section 11: Persons not entitled to make application.
11.The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely:—
(a)a corporate debtor undergoing a corporate insolvency resolution process or a pre-packaged insolvency resolution process; or
(aa)a financial creditor or an operational creditor of a corporate debtor undergoing a pre-packaged insolvency resolution process; or
(b)a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or
(ba)a corporate debtor in respect of whom a resolution plan has been approved under Chapter III-A, twelve months preceding the date of making of the application; or
(c)a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under this Chapter; or
(d)a corporate debtor in respect of whom a liquidation order has been made.
Explanation I.—For the purposes of this section, a corporate debtor includes a corporate applicant in respect of such corporate debtor.
Explanation II.- For the purposes of this section, it is hereby clarified that nothing in this section shall prevent a corporate debtor referred to in clauses (a) to (d) from initiating corporate insolvency resolution process against another corporate debtor."
In view of Section 11 of the Code, there is no bar on the Financial Creditor to file a petition seeking initiation of CIRP of the corporate debtor when the Financial Creditor is a shareholder of the corporate debtor.
Further, the Financial Creditor in the instant Petition does not even qualify as a related party to the Corporate Debtor as envisaged under sub-Section 24 of Section 5 of the Code. Moreover, the claim filed by the Financial Creditor’s was rejected to be admitted by the CoC in its 17th meeting dated 29.04.2025.
Based on the above findings and discussions, even though the conduct of the Financial Creditor, i.e., Mrs. Saroj Gupta seems to be suspicious on the basis of non-filing of claim for approximately two years, the Applicant has failed to produce any explicit documentary proof of fraudulent or malicious intent on the part of the Financial Creditor. None of the elements under Section 65 of the Code have been established by the Applicant against the Financial Creditor.
Accordingly, the IA No. 3/JPR/2024 stands dismissed for being devoid of merit.
In view of the foregoing finding and dismissal of the application filed under Section 65 of the Code, no impediment survives for consideration of the Plan filed under Section 30(6) of the Code bearing IA (IBC) Plan No. 5/JPR/2025.
IA (IBC) Plan No. 5/JPR/2025
The present Application bearing IA (IBC) (Plan) 5/JPR/2025 is filed by Prashant Agrawal (‘Applicant’/ ‘RP’), Resolution Professional of Aastha Buildhome Developers Private Limited (‘Corporate Debtor’), under Section 30(6) and Section 31 of the Insolvency and Bankruptcy Code, 2016 ('Code') read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ('CIRP Regulations') seeking approval of the Resolution Plan submitted by the Aastha Flat Buyer Association.
It is stated that the Company Petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ('Code') for initiation of Corporate Insolvency Resolution Process ('CIRP') against Aastha Buildhome Developers Private Limited ('Corporate Debtor'), and the same was admitted by this Adjudicating Authority vide Order dated 09.12.2022. Mr. Prashant Agrawal was appointed as Interim Resolution Professional ('IRP'). Further, the CoC appointed the Applicant as Resolution Professional ('RP') to manage the affairs of the Corporate Debtor during the subsistence of its CIRP.
Subsequently, the Applicant made a public announcement of the initiation of CIRP vide newspaper publications dated 12.12.2022 and 22.12.2022, and the same was duly uploaded on the IBBI website. Upon verification and collation of claims, the Applicant prepared the list of creditors and duly constituted the Committee of Creditors ('CoC'). The Applicant filed a report bearing IA No. 24/JPR/2023 regarding the constitution of the CoC, which was taken on record by this Adjudicating Authority vide Order dated 13.01.2023.
Further, the Applicant published Form-G on 07.02.2023 inviting Expressions of Interest ('EOIs') from prospective resolution applicants ('PRAs'). However, the said Form-G was withdrawn as the necessary resolution regarding the eligibility criteria of PRAs was not passed by the CoC. Thereafter, in the 3rd CoC meeting held on 25.04.2023, the CoC with 69.63% voting approved the fresh issuance of Form-G, PRA criteria, Evaluation Matrix, and Request for Resolution Plan ('RFRP').
Consequently, the Applicant published the second Form-G on 06.05.2023, pursuant to which 5 PRAs expressed their interest (namely Mr. Harsha Vardhan Reddy, Mr. Amrit Kumar Agarwal, Mr. Kapil Mantri, M/s One City Infrastructure Pvt. Ltd., and M/s Krishna Builder). However, no resolution plan was received by the last date of submission, i.e., 06.04.2023.
Thereafter, a third Form-G was published on 01.09.2023, pursuant to which 5 PRAs submitted EOIs (namely Mr. Umesh Garg, Mr. Anuj Goyal, M/s Nakshatra Asset Ventures Ltd., M/s Galactico Corporate Services Ltd., and M/s Aspect Global Ventures Pvt. Ltd.), but no resolution plan was received by the deadline of 01.11.2023.
The Applicant has stated that with respect to the CIRP timeline under Section 12 of the Code, the initial 180-day period expired on 07.06.2023. however, this Adjudicating Authority vide Order dated 29.05.2023 in IA No. 292/JPR/2024 granted an extension of 90 days up to 05.09.2023. Further, vide Order dated 12.10.2023 in IA No. 112/JPR/2023, a period of 250 days (04.02.2023 to 12.10.2023) was excluded from the CIRP timeline, extending the fresh completion date to 13.05.2024. As no resolution plan was received prior to the expiry of the CIRP period, the Applicant placed an agenda for liquidation under Section 33 in the 9th CoC meeting; however, the CoC directed the RP to seek further exclusion of time.
It is submitted that as the CIRP period had expired without further extension and no plan had been received, the Applicant filed IA No. 488/JPR/2023 seeking directions to initiate liquidation. However, this Adjudicating Authority vide Order dated 22.01.2025, permitted the Applicant to file a liquidation application, pursuant to which IA (IBC) (Liq) No. 01/JPR/2025 was filed. On the same date, vide Order in IA No. 02/JPR/2024, this Adjudicating Authority directed the CoC to pay approved CIRP costs of Rs. 18.21 lakhs and convene a meeting within 15 days to ratify unapproved CIRP expenses.
Subsequent to the aforementioned orders, the Suspended Director vide email dated 28.01.2025 and the Aastha Flat Buyer Association vide emails dated 04.02.2025, 10.02.2025, and 21.02.2025 expressed their willingness to submit Resolution Plans. The Applicant received resolution plans from the Suspended Director on 07.02.2025 and from the Aastha Flat Buyers' Association on 17.03.2025. In the 17th CoC meeting held on 29.04.2025, both plans were placed for discussion and voting.
Upon conclusion of the voting process in the 17th CoC meeting, the Resolution Plan submitted by the Aastha Flat Buyers' Association was approved by the CoC in its commercial wisdom with a 95.81% voting share, whereas the plan of Mr. Naresh Agarwal (Suspended Director) was rejected with a 95.81% voting share against it.
Subsequently, in the 18th CoC meeting held on 29.05.2025, the CoC passed Agenda Item No. 9 directing the RP to file the present application seeking approval of the Resolution Plan submitted by the Aastha Flat Buyers' Association. It is submitted that the members of the Aastha Flat Buyers' Association collectively constitute approximately 86.01% of the voting share in the CoC and have submitted this plan specifically for the revival of the real estate project named 'Aastha Coral Residency' to prevent liquidation and protect allottee interests.
The brief contours of the approved Resolution Plan of the Successful Resolution Applicant namely, Aastha Flat Buyers' Association, as highlighted by the Applicant are reproduced hereunder:
A. FINANCIAL ASPECTS OF RESOLUTION PLAN
(As per Sr. No. 6.3 of Plan)
SN PARTICULARS AMOUNT 1 Project completion cost estimated by the valuer, including an additional escalation of 15% for inflation and cost increase over time 4,68,05,000/-
Phase Tasks Time Frame from NCLT Approval Responsible Parties Phase 1: Initial Setup -Execution of Escrow Agreement - transfer of ownership rights & POA to AFBA -Due diligence of the unsold inventory by the Monitoring Committee 1 Month RP, Astha Flat buyers Association ("AFBA")AFBA B. IMPLEMENTATION PERIOD OF THE RESOLUTION PLAN
(As per Sr. No. 6.3 of Plan)
Phase Tasks Time Frame from NCLT Approval Responsible Parties Phase 1: Initial Setup -Execution of Escrow Agreement - transfer of ownership rights & POA to AFBA -Due diligence of the unsold inventory by the Monitoring Committee 1 Month RP, Astha Flat buyers Association ("AFBA")AFBA
Phase 2: Financial Arrangements Collection of Contribution from Homebuyers Activation of Interim Finance if required 1–2 Months AFBA, Homebuyers, Interim Financiers Phase 3: Infrastructure Development Road Construction Structural Testing Lift & Water Supply Work Begins Sale of Unsold inventory by the Monitoring Committee 2–4 Months AFBA, Vendors, Contractors Phase 4: Construction & Quality Control Homebuyers oversee vendor selection & construction Completion of pending structural work Project Monitoring Committee reports progress to NCLT 4–6 Months AFBA Phase 5: Final Payments & Registration Registry & Possession of Flats for compliant homebuyers Sale of remaining Unsold Units (if any) 6–7 Months AFBA, Homebuyers, RP
Phase 6: Final Approvals & Handover Obtain Occupation Certificate & Completion Certificate • Resolve Government & Statutory Dues • Final Handover of Flats • Close Escrow Account & Distribute Surplus (if any) 7–8 Months AFBA, RP, Regulatory Authorities C. COMPLIANCE STATUS REPORT
| Provision | Compliance |
|---|---|
| Section 30(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A to the resolution professional prepared on the basis of information memorandum. | Yes, the Resolution Applicant has submitted an affidavit under section 29A of the Code, 2016 regarding its eligibility to submit the Resolution Plan. (Annexure - 14) |
| Section 30(2)(a) Provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor. | Yes, the Resolution Plan under Clause 4.3, 4.4, 4.6, 4.7 provides payment of CIRP expenses (approved and unapproved). |
| Section 30(2)(b) — Part 1 Provides for the payment of debts of operational creditors in such | No, the plan does not provide for any payments to financial creditors, operational creditors, or any other |
| manner as may be specified by the Board which shall not be less than: (i) Liquidation value under section 53; or (ii) Amount payable under section 53(1) priority, whichever is higher. | stakeholders by the resolution applicant (Clause 4). The sole focus is on reviving the incomplete stalled Aastha Coral Residency through homebuyer contributions and self-sustaining financial mechanisms. |
| Section 30(2)(b) — Part 2 Provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid in liquidation. | As per the list of Creditors dated 10.04.2025, there are no financial creditors except for homebuyers themselves. The plan under Clause 6.9(d) provides that the Suspended Management/Director is solely responsible to clear liabilities related to Piramal Capital & Housing Finance Ltd (erstwhile DHFL) or other secured creditors. AFBA and Homebuyers will not be responsible. |
| Section 30(2)(c) Provides for the management of the affairs of the corporate debtor after approval of the resolution plan. | The Resolution Applicant is not acquiring the entire Corporate Debtor and does not seek ownership or control. Under Clause 6 & 6.12, upon NCLT approval, a Monitoring Committee will be constituted (comprising AFBA office bearers, CoC nominees, and the Resolution Professional) to oversee and facilitate project completion. |
| Section 30(2)(d) | Yes, the Resolution Plan provides for implementation. |
| Provides for the implementation and supervision of the resolution plan. | and supervision via a Monitoring Committee (minimum 5 members: 2 AFBA, 2 CoC, 1 Chairperson). The committee may utilize homebuyer expertise, constitute sub-committees, or assign an independent project manager to oversee execution. |
| Section 30(2)(e) Does not contravene any of the provisions of the law for the time being in force. | Statement: Plan states it does not contravene law. Observation: However, the plan currently contravenes CIRP Regulations 36A(6), 38(3), 39(1), and 39(1B). Modifications are necessary to address these and ensure full compliance. |
| Section 30(2)(f) Conforms to such other requirements as may be specified by the Board. | Requires modifications to address noted contraventions and ensure compliance with Section 30(2)(b) and specified CIRP Regulations. |
| Regulation 37(a) Transfer of all or part of the assets of the corporate debtor to one or more persons. | Clause 6.5(a): Land and buildings of Aastha Coral Residency shall be transferred to the Aastha Flat Buyers' Association (AFBA) upon NCLT approval. |
| Regulation 37(b) Sale of all or part of the assets whether subject to any security interest or not. | Clause 6.5(c): The Resolution Applicant will have sole power to resale flats and execute sale deeds. Piramal Housing Finance shall not create any hindrance. |
| Regulation 37(ba) | Clause 6.5(a): Land and buildings transferred to AFBA upon approval. |
| Restructuring of the corporate debtor, by way of merger, amalgamation, and demerger. | |
| Regulation 37(c) Substantial acquisition of shares / merger / consolidation with one or more persons. | Not Applicable. |
| Regulation 37(ca) Cancellation or delisting of any shares of the corporate debtor. | Not Applicable. |
| Regulation 37(d) Satisfaction or modification of any security interest. | Clause 6.5(b): Suspended director remains solely responsible for Piramal claim settlement. All mortgages/security interests on Aastha Coral Residency preventing registration shall stand annulled upon NCLT approval. |
| Regulation 37(e) Curing or waiving of any breach of the terms of any debt due from the corporate debtor. | Not Applicable. |
| Regulation 37(f) Reduction in the amount payable to the creditors. | No payments provided to creditors by the resolution applicant under Clause 4. Focus is strictly on project completion. |
| Regulation 37(g) Extension of a maturity date or a change in interest rate or other terms of a debt. | Clause 6.5(b): Suspended director remains solely responsible for Piramal settlement; AFBA/Homebuyers carry no liability. |
| Regulation 37(h) Amendment of constitutional documents of the corporate debtor. | Not Applicable. |
| Regulation 37(i) | Not Applicable. |
| Issuance of securities of the corporate debtor for cash, property, or claims. | |
| Regulation 37(j) Change in portfolio of goods or services. | Not Applicable. |
| Regulation 37(k) Change in technology used by the corporate debtor. | Not Applicable. |
| Regulation 37(l) Obtaining necessary approvals from Central/State Governments and other authorities. | Clause 6.8: Requests NCLT waiver of GST applicability for project revival since AFBA is a self-managed, non-commercial homebuyer entity. |
| Regulation 37(m) Sale of assets to successful resolution applicants and manner of dealing with remaining assets. | Provided under Clause 6.5(c). |
| Regulation 38(1)(a) Operational creditors paid in priority over financial creditors. | No payments provided to financial/operational creditors by the Resolution Applicant. |
| Regulation 38(1)(b) Non-voting financial creditors paid in priority over voting financial creditors. | Clause 6.9(d): Suspended Director solely liable for Piramal/secured creditor liabilities; AFBA/Homebuyers carry no liability. |
| Regulation 38(1A) Inclusion of a statement on dealing with interests of all stakeholders. | Clause 6.7: Funds from unsold inventory and SFIO/PUFE recoveries will first complete the project; any surplus will be distributed to homebuyers pro-rata. |
| Regulation 38(1B) Details regarding past failure in implementing any approved resolution plan. | Not Applicable / Disclosed. |
| Regulation 38(2)(a) Term of the plan and implementation schedule. | Yes. Term proposed as "upon the approval of the resolution plan by the Hon'ble NCLT." |
| Regulation 38(2)(b) Management and control of the business during its term. | Yes. Constitutes a Monitoring Committee to supervise completion. |
| Regulation 38(2)(c) Adequate means for supervising implementation. | Yes. Supervision managed post-approval via the Monitoring Committee. |
| Regulation 38(2)(d) Treatment of avoidance/fraudulent transaction proceeds (Chapters III & VI). | Yes (Clause 6.7): Recoveries from SFIO/PUFE applied first to project completion, then distributed pro-rata to homebuyers. |
| Regulation 38(3)(a) Demonstrates it addresses cause of default. | Provided in Clause 10. |
| Regulation 38(3)(b) Demonstrates plan is feasible and viable. | Deemed feasible and viable by the CoC in their commercial wisdom (Clause 10). |
| Regulation 38(3)(c) Demonstrates provisions for effective implementation. | Provided in Clause 10. |
| Regulation 38(3)(d) Demonstrates timeline and provisions for required approvals. | Yes, provided in Clause 10. |
| Regulation 38(3)(e) Demonstrates capability of resolution applicant to implement plan. | Yes, Resolution Applicant (AFBA) has the capability. |
| Regulations 39(1) Submission within timeline with: (a) Sec 29A Affidavit (c) Truthfulness Undertaking | Submitted by AFBA on behalf of CoC with consent letters. Note: AFBA is not on the final PRA list (Form G published 01.09.2023). • Sec 29A Affidavit: Attached (Annexure-14) • Undertaking: Attached (Annexure-15) |
| Regulations 39(1A) Plan modifications allowed max once / Challenge mechanism. | (a) Plan modified as per changes suggested by applicant in 17th CoC meeting. (b) Not applicable. |
| Regulations 39(1B) Non-consideration of late plans or plans from non-listed PRAs. | AFBA is not listed on Form G (01.09.2023), but plan reflects homebuyer consensus. NCLT may evaluate adherence and viability irrespective of omission from PRA list. |
| Regulations 39(2) Reporting of preferential, undervalued, extortionate, or fraudulent transactions. | Clause 6.7: SFIO/PUFE recoveries allocated to project completion and pro-rata surplus distribution to homebuyers. |
| Regulations 39(3) Comparative analysis of plans received (Financial & Timeline). | 1. Financial Proposal: • Naresh Agrawal Plan: Rs. 20,00,000 upfront. • AFBA Plan: Rs. 61,655,903 upfront. 2. Project Timeline: • Naresh Agrawal Plan: 12 months. • AFBA Plan: 8 months (faster completion). |
Further, the Resolution Applicant has submitted the requisite Affidavit in compliance with Regulation 39(1) of the CIRP Regulations, confirming its eligibility under Section 29A of the Code. The Applicant has also prepared the Compliance Certificate in Form H in accordance with Regulation 39(4) of the CIRP Regulations,
It is submitted that the Resolution Plan partially satisfies the mandatory contents prescribed under Regulation 38 of the CIRP Regulations. In accordance with sub-regulation (4) of Regulation 38, the Resolution Plan duly demonstrates that:
It appropriately addresses the underlying cause of default;
It is feasible and viable in the context of the Corporate Debtor's business and financial position;
It contains adequate provisions for its effective implementation;
It lays down the requisite approvals to be obtained along with the timeline for securing such approvals; and;
The Resolution Applicant possesses the necessary capability, resources, and competence to implement the resolution plan.
The Applicant stated that the Resolution Plan submitted by Aastha Flat Buyers' Association of limited to one real estate project only i.e., Aastha Coral Residency and apart from construction of aforesaid residential real estate project the plan does not deal claims of other creditors of the Corporate Debtor.
We have perused all the documents filed and carefully considered the submissions of the learned counsels for the Parties. Before proceeding further, it is incumbent to analyse that whether the Resolution Plan submitted by Aastha Flat Buyers' Association satisfies the mandatory requirements of the Code.
To address the aforementioned issue, it is relevant to refer to Section 30 of the Code, 2016 and the same is reproduced hereunder:
30. Submission of resolution plan
(1)A resolution applicant may submit a resolution plan [along with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on the basis of the information memorandum.
(2)The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan--
(a)provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the [payment] of other debts of the corporate debtor;
(b)provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than--
(i)the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or
(ii)the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor.
Explanation 1.--For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors.
Explanation 2.-- For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor—
(i)where a resolution plan has not been approved or rejected by the Adjudicating Authority;
(ii)where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or
(iii)where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;]
(c)provides for the management of the affairs of the Corporate debtor after approval of the resolution plan;
(d)the implementation and supervision of the resolution plan;
(e)does not contravene any of the provisions of the law for the time being in force;
(f)conforms to such other requirements as may be specified by the Board.
[Explanation.-- For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law];
(3)The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2).
(4)The committee of creditors may approve a resolution plan by a vote of not less than 6[sixty-six] per cent. of voting share of the financial creditors, after considering its feasibility and viability, 7[the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor] and such other requirements as may be specified by the Board:
Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017(Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it:
Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A:
Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section.]
Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.
(5)The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered:
Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor.
(6)The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority."
Further, besides the requirements prescribed in Section 30 (2) of the Code, the Resolution Plan shall also comply with Regulation 38 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ('CIRP Regulations') which deals with mandatory contents of the Resolution Plan. For ease of reference, Regulation 38 of CIRP Regulations is reproduced hereunder: -
"38.Mandatory contents of the Resolution Plan.
...
(3). A resolution plan shall demonstrate that –
(a)it addresses the cause of default;
(b)it is feasible and viable;
(c)it has provisions for its effective implementation;
(d)it has provisions for approvals required and the timeline for the same; and
(e)the resolution applicant has the capability to implement the resolution plan."
However, the scope of jurisdiction of the Adjudicating Authority concerning approval or rejection of the Resolution Plan under Section 31 of IBC is no more Res-integra. The Hon'ble Apex Court in the recent Judgment dated 12.02.2024 in the case of Greater Noida Industrial Development Authority v Prabhjit Singh Soni and Anr, (2024) ibclaw.in 53 SC, has observed as under:
“28.Once the plan is approved by the COC, the RP has to submit it for approval of the Adjudicating Authority. As per sub-section (1) of Section 31 of the IBC, if the Adjudicating Authority is satisfied that the resolution plan as approved by the COC under sub-section (4) of Section 30 meets the requirements of sub-section (2) of Section 30, it has to approve the resolution plan. On its approval, the plan becomes binding on the CD 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. But where the Adjudicating Authority is satisfied that the resolution plan does not conform to the requirements referred to in subsection (1), it may, in exercise of power under sub-section (2) of Section 31, by an order, reject the resolution plan.”
Thus, the position of law is well settled that while considering a Resolution Plan, the Adjudicating Authority has to ensure that the Resolution Plan complies with the mandatory requirements prescribed under Section 30(2)(a) to (f) and failing which the Adjudicating Authority will not have any discretion but to reject the Resolution Plan as per Section 31(2) of the Code. Therefore, the instant Resolution Plan has to be tested on mandatory requirements prescribed under Section 30(2) of the Code and Regulation 38 of the CIRP Regulations.
Firstly, the scope of Resolution Plan is limited as same is corroborated from Clause 6 of the Resolution Plan, which is reproduced hereunder:
"The Resolution Plan is being submitted by Astha Flat buyers Association ("AFBA") an association of Coral Residency, solely for the revival and completion of Astha Coral Residency, (which is project of Corporate Debtor) further in the same clause it is stated that: -
Limited scope of the Plan: -
a. The Resolution Applicant is not acquiring the entire Corporate Debtor and does not seek ownership or control over it.
b. This plan is restricted only to the completion and revival of Astha Coral Residency.
c. Responsibilities of completing any other project would be sole responsibility of the suspended director."
A bare perusal of the aforementioned clause 6 of the plan reveals that it is conditional, contingent, and selective in nature. The CIRP in the instant case has been initiated against the Corporate Debtor i.e., Astha Buildhome Developers Pvt. Ltd. The Successful Resolution Applicant has explicitly carved out a limited scope by seeking to revive only a single project namely, 'Aastha Coral Residency' while disowning any responsibility for the Corporate Debtor as a whole or its other liabilities. However, as per brief background of the CIRP as provided under Clause 5.7 of the Plan, there are additional 3 more unsecured creditors in class (homebuyers) of the Corporate Debtor namely, Aastha Imperial, Aastha Sez View, K.R. Residency. Hence, under the scheme of the Code, 2016 read with Regulation 38 of the CIRP Regulations, a resolution plan must offer a complete, absolute, and binding resolution for the Corporate Debtor rather than a conditional or fragmented proposal. A plan which selectively resolves one project leaving the treatment of the remaining projects, assets, liabilities of the Stakeholders of the Corporate Debtor outside the resolution framework cannot be approved unless such treatment is shown to conform to the Code and CIRP Regulations. A plan that hinges on contingencies such as isolating specific assets violates the mandatory statutory framework under Section 30(2) of the Code and CIRP Regulations.
Further, the details of capital infusion in the Resolution Plan as per Clause 6.9 is reproduced hereunder:
"6.9Details of Capital Infusion Under the Resolution Plan
(a)Details of Capital Infusion
| Source of Capital Infusion | Amount | Remark |
|---|---|---|
| Homebuyers' Contribution | Rs. 3,66,34,398/- | ○To be collected within 30 days from the date of resolution plan approval by NCLT ○In case any homebuyer fails to make the payment for their flat upon approval of the resolution plan, a grace period of 30 days will be provided to them to complete the payment ○In case any creditor/homebuyer wishes to cancel their flat after the approval of the Resolution Plan, a surrender deed would be signed and |
| handed over to the Resolution Applicant (AFBA). ○In both the cases, non-payment of the pending dues on resolution plan approval date or willful surrender of the flat by the creditor/homebuyer, the principal amount of their respective flay shall be paid to them on the completion of the project or sale of their flats, whichever is later. | ||
| Additional Project completion cost | Rs. 2,21,99,172/- | ○Any short fall in the project completion cost will be borne by the Home Buyers on per sq. feet basis. Such additional cost may range between 155 to 165 per sq. feet on best estimated basis (additional cost divided by approximate available sq. feet) to ensure quality of work. The additional cost burden on the home buyers may reduce based on funds generated out of sale of unsold inventory and recoveries under SFIO. |
| Sale of unsold units | To be determined | ○Additional revenue generation post-due diligence. |
| Interim Finance | To be arranged by Monitoring Committee- in support with affluent Home Buyers. | ○Support for contingency and completion costs. |
The source of capital infusion as aforementioned reveals that, firstly, there is no upfront source of funds. Secondly, it is only subsequent to the approval of the plan by the Adjudicating Authority that Homebuyers will contribute funds to the tune of Rs. 3,66,34,398/-. Thirdly, the realization of revenue from unsold units remains completely undetermined. Further, it is stated that additional cost burden on the home buyers may reduce based on funds generated recoveries under SFIO and PUFE.
The Resolution Applicant has failed to show any upfront, guaranteed, or independent capital infusion of its own, leaving the entire financial blueprint speculative, uncertain, and dependent on third-party performance. Such a conditional, speculative, and fragmented financing mechanism fails to satisfy the mandatory requirements of Section 30(2) of the Code read with Regulation 38 of the CIRP Regulations, which require a resolution plan to provide a definite, viable, and binding scheme for implementation with clear, non-contingent sources of funds.
The Regulation 38(3)(a) of the CIRP Regulations makes it mandatory for a Resolution Plan to address the cause of default. The SRA in Clause 10 of the Resolution Plan has addressed the 'cause of Default' and 'feasibility and viability' in following manner and same is reproduced hereunder:
"It addresses the cause of default- The default occurred due to mismanagement and fund siphoning by the suspended promoter. PUFE Transactions worth 24.41 Cr identified for legal recovery. Plan ensures project completion using homebuyers' contribution & legal recoveries.
It is feasible and viable- Structured financial plan: Rs. 3.66 Cr. From homebuyers + proceeds from sale of unsold inventory + recover from SFIO investigation + short fall contribution, if any, from the homebuyers."
A plain reading of the aforementioned extract reveals that the Resolution Plan fails to properly address the cause of default or establish its feasibility and viability as mandated by Regulation 38(3) of the CIRP Regulations. Instead, the SRA has merely made generalized and open-ended assertions without offering concrete specifics. An SRA cannot circumvent mandatory regulatory requirements through vague statements. Significantly, the Plan remains silent on the actual mechanism or strategy through which the SRA intends to achieve the overhauling of the Corporate Debtor's assets.
At this juncture, it is pertinent to mention that in the judgment titled Nimai Gautam Shah (RP) v. Raj Radhe Finance Ltd. and Ors. (2026) ibclaw.in 537 NCLAT, the Hon'ble NCLAT provided a three-point approach for the Adjudicating Authority to examine a Resolution Plan for its approval. The relevant extract of the aforementioned judgment is reproduced hereunder:-
"17.The foregoing makes possible to suggest a three-point approach:
a)Firstly, when an Adjudicating Authority examines a Resolution Plan for its approval, it may be appropriate for it to first ascertain if the CoC-RP have discharged their statutory responsibilities consistent with statutory provisions. Here, it should not be ignored that if the CoC is seen to have played their role within the statutory space that offers it the freedom of commercial choice, then the choice so made may not be interfered with as it falls within the realm of commercial wisdom of the CoC.
b)Secondly, if any irregularity is alleged or found, then to examine whether any violation or breach of statutory provisions, which necessarily include the Regulations, constitute material irregularity.
c)Then arises the last aspect. Beyond the visible statutory compliance, if there exist any tangible facts which on a logical analysis indicate that there may exist a case for statutory fraud or misuse of the Code which mars the integrity of the insolvency process, then an Adjudicating Authority has every right to probe the same.”
The aforementioned three-point approach suggested by the Hon’ble NCLAT provides that the Adjudicating Authority should first check whether the CoC and Resolution Professional have properly followed their statutory duties, while respecting the CoC’s commercial decisions. Further, if any irregularity is found, the Adjudicating Authority should then see whether it amounts to a serious violation of the Code or the Regulations. Finally, even if there appears to be compliance with the law, the Authority can still examine the matter further if there are facts suggesting fraud, misuse of the insolvency process, or any conduct that affects its fairness and integrity.
In the instant case, it is pertinent to note that the RP had initially filed an application under Section 65 of the Code against the Financial Creditor in the year 2024. Thereafter, the RP himself filed an application bearing IA No. 394/JPR/2025 under Rule 11 of the NCLT Rules, seeking his discharge from the duties of RP in the instant matter. Despite the aforesaid circumstances, the RP subsequently filed the instant Resolution Plan bearing IA (IBC) Plan No. 5/JPR/2026. It is a matter of serious concern that the RP himself admitted before the Adjudicating Authority that the Plan submitted by him was a non-compliant plan and that he had placed the same for approval only because it had been approved by the Committee of Creditors and he was under a mandate to present it before the Adjudicating Authority. In these peculiar circumstances, the conduct of the RP is inconsistent with the professional standards of competence, diligence, and independence expected from an Insolvency Professional under the Code of Conduct governing Insolvency Professionals. Such conduct raises serious concerns regarding the feasibility, viability, and compliance of the Resolution Plan placed before the Adjudicating Authority for approval.
In view of the judgment passed in Nimai Gautam Shah (RP) v. Raj Radhe Finance Ltd. and Ors. (Supra), the facts of the instant case squarely attract the three-point approach in the following manner:-
a. First, the Adjudicating Authority is required to examine whether the RP and the CoC have properly discharged their statutory duties. In the present case, serious concerns arise from the RP's own conduct, particularly as he had earlier filed an application under Section 65 of the Code against the Financial Creditor, subsequently sought his discharge from the proceedings, and yet later filed the instant Resolution Plan for approval.
b. Further, in the instant case, the Corporate Debtor i.e., Aastha Buildhome Developers Pvt. Ltd. was admitted into CIRP whereas the Resolution Plan submitted by the RP is a plan for the resolution of only one of the several projects of the Corporate Debtor.
c. Second, the RP himself admitted that the Plan was non-compliant, but nevertheless placed it before the Adjudicating Authority solely because it had been approved by the CoC. This raises a direct question as to whether the statutory requirements governing the submission and approval of the Resolution Plan were duly complied with.
d. Third, these circumstances go beyond a mere question of commercial wisdom, as the RP's conduct and the submission of a plan admittedly known to be non-compliant raise serious concerns regarding the appropriate and intended purpose of the insolvency process and the integrity of the proceedings. Thus, the present facts fit squarely within all three aspects of the said approach.
e. Furthermore, in the present case, even the following fundamental tenets of a valid and compliant Resolution Plan have not been satisfied: -
- Non-compliance with Section 30(2)(a) of the Code: Under Section 30(2)(a), the Resolution Professional is required to examine each Resolution Plan and confirm that it provides for payment of the insolvency resolution process costs in the manner specified by the Board, in priority to the payment of other debts of the Corporate Debtor. In the instant case, the Resolution Professional has failed to examine and establish whether the Resolution Plan makes proper and complete provision for the CIRP costs and accords the statutory priority mandated under Section 30(2)(a).
Mere forwarding or placing of the Resolution Plan before the Committee of Creditors cannot substitute the independent statutory scrutiny required to be undertaken by the Resolution Professional under Section 30(2).
- Non-compliance with Section 30(2)(b) of the Code: Section 30(2)(b) requires the Resolution Professional to examine whether the Resolution Plan provides for payment of debts of operational creditors in accordance with the minimum entitlement and manner prescribed under the Code. The Resolution Professional was required to independently verify whether the treatment and proposed payments to operational creditors satisfy the requirements of Section 30(2)(b), read with the applicable provisions of Regulation 38.
In the absence of such proper examination and confirmation, the statutory obligation cast upon the Resolution Professional under Section 30(2)(b) cannot be regarded as having been duly discharged.
- Regulation 39(2) of the CIRP Regulations: Duty of the Resolution Professional: Regulation 39(2) specifically requires the Resolution Professional to examine each Resolution Plan received to confirm whether the Plan, inter alia, meets the requirements of Section 30(2) of the Code. The Resolution Professional is statutorily required to examine the Plan and ascertain its compliance with Section 30(2).
Where the Resolution Plan suffers from deficiencies under Section 30(2)(a) and (b), but is nevertheless placed before the CoC without such deficiencies being appropriately identified or cured, the requirements of Regulation 39(2) cannot be said to have been duly fulfilled. The Resolution Professional ought to have identified such non-compliance before placing the Plan before the Committee of Creditors.
- Regulation 38(3): Feasibility and effective implementation
Regulation 38(3)(a), (b), (c) and (e) further requires the Resolution Plan to demonstrate that it addresses the cause of default; is feasible and viable; contains provisions for its effective implementation; and contains provisions regarding necessary approvals and the timeline for obtaining them. Non-compliance with these requirements is particularly relevant while determining whether the Resolution Professional conducted the scrutiny expected under Section 30(2) and Regulation 39(2).
In the view of the foregoing discussions, the instant Resolution Plan is not feasible and deserves to be rejected in light of the judgment in the case of Nimai Gautam Shah (RP) v. Raj Radhe Finance Ltd. and Ors. (Supra).
Since the instant Resolution Plan stands rejected, the Adjudicating Authority is left with no other option but to order the Corporate Debtor to go under liquidation in terms of the provision of Section 33(1) of the Code, which is reproduced as follows: -
"33. Initiation of liquidation. —
(1)Where the Adjudicating Authority, —
(a)before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under section 12 or the fast-track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub-section (6) of section 30; or
(b)rejects the resolution plan under section 31 for the non-compliance of the requirements specified therein, it shall—
(i)pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;
(ii)issue a public announcement stating that the corporate debtor is in liquidation; and
(iii)require such order to be sent to the authority with which the corporate debtor is registered."
Thus, guided by the Judgment of the Hon'ble Apex Court and Hon'ble NCLAT and in view of Section 33(1)(b) of the Code, we deem it appropriate to initiate liquidation proceedings of the Corporate Debtor to maximize creditor value and conclude the insolvency process.
In view of the above, it is hereby ordered as follows: -
The Corporate Debtor Aastha Buildhome Developers Private Limited is admitted into liquidation in terms of the Section 33(1)(b) of the Insolvency and Bankruptcy Code, 2016, to be conducted in accordance with Chapter III of the Code and the IBBI (Liquidation Process) Regulations, from the date of this Order.
In terms of Section 34(4)(a) we deem it appropriate to appoint Ms. Pratibha Khandelwal having registration no. IBBI/IPA-002/IP-N00031/2016-2017/10068 (email: cspratibhak@gmail.com) as the Liquidator of the Corporate Debtor i.e., Aastha Buildhome Developers Private Limited.
The Moratorium declared under Section 14 of the Code shall cease to have effect from the date of the order of liquidation.
A fresh moratorium under Section 33(5) of the Code is declared, prohibiting the institution of suits or proceedings against the Corporate Debtor, except as provided under the Code, effective from the date of this Order until the completion of the liquidation process.
The Liquidator shall make every endeavour to take charge of the Corporate Debtor's assets, books, and records forthwith and perform all duties as prescribed under Section 35 to 50 of the Code and the IBBI (Liquidation Process) Regulations, 2016.
The Liquidator is directed to file a preliminary report within 30 days of this Order, as per Regulation 13 of the IBBI (Liquidation Process) Regulations, 2016 and submit the same to the committee of creditors constituted under Section 21 of the Code.
The Liquidator so appointed shall complete the liquidation process as per the provisions of the Code r/w the IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
All the powers of the Board of Directors, Key Managerial Persons, and the partner of the Corporate Debtor, as the case may be, hereafter cease to exist. All these powers henceforth vest with the Liquidator.
The Creditor, as well as the Personnel of the Corporate Debtor, including the suspended management, are directed to extend all cooperation to the Liquidator as required by him in managing the liquidation process of the Corporate Debtor in terms of Section 19 of the Code.
The Liquidator will charge fees for the conduct of the liquidation proceedings in proportion to the value of the liquidation estate assets as specified by IBBI and same shall be paid to the Liquidator from the proceeds of the liquidation estate in terms of Section 53 of the Code.
This Liquidation order shall be deemed to be notice of discharge to the officers, employees, and workmen of the Corporate Debtor except to the extent of the business of the Corporate Debtor to be continued during the liquidation process by the Liquidator.
This Adjudicating Authority directs the Liquidator to issue a public announcement stating that the Corporate Debtor is in liquidation. The Liquidator will also serve a copy of this order to the various Government Departments such as Income Tax, GST, VAT, EPFO, and all financial and other creditors etc., who are likely to have any claim upon the Corporate Debtor so that the authorities concerned are informed of the liquidation order timely.
The present Resolution Professional is directed to hand over the relevant documents and control of the Corporate Debtor to the newly appointed liquidator within a period of 3 days from the date of passing of this Order.
The Registry is directed to communicate this order to the concerned parties in all the Interlocutory Application, Registrar of the Companies, IBBI, the Resolution Professional, the SRA, and the Liquidator within 3 days of passing of the order.
Liberty is granted to the Liquidator to approach this Tribunal for any further directions or clarifications as may be required during the liquidation process.
Accordingly, IA (IBC) Plan No. 05/JPR/2025 stands dismissed and disposed of.
The Registry is also directed to send e-mail copies of the order forthwith to all the parties/ their Learned Counsel for information and for taking necessary steps.
Accordingly, IA No. 3/JPR/2024 and IA (IBC) Plan No. 5/JPR/2025 are rejected and disposed of.
In view of the order of commencement of liquidation, the applications bearing IA No. 662/JPR/2023 and IA No. 474/JPR/2024, seeking admission of claims, have become infructuous and are directed to be placed afresh before the Liquidator for consideration in accordance with law. Hence, IA No. 662/JPR/2023 and IA No. 474/JPR/2024 are disposed of.
Further, the Assistant Registrar, Jaipur shall ensure compliance to the directions given to the Registry in Para 51 and Para 53 of the Order failing which necessary action will be taken against the Assistant Registrar, Jaipur.