Shirpur Gold Refinery Limited vs Magicstone Traders Pvt. Ltd.

IA(PLAN)/16/2025: - The above IA(PLAN)/16/2025 is listed for pronouncement of the order. The same is pronounced in open court, vide a separate order.

This Interlocutory Application has been filed by Mr. Nilesh Rajendra Kothari, the Resolution Professional of Magicstone Traders Private Limited, (“the Applicant/ Resolution Professional”) under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (“the Code”), seeking: a) approval of the Resolution Plan submitted by M/s Subhlaxmi Investment Advisory Private Limited; b) To direct the members of CoC to contribute towards the unpaid CIRP Costs and the Liquidation Costs, in the event the Resolution Plan is rejected by this Tribunal.

The petition filed by M/s Shirpur Gold Refinery Limited (“Operational Creditor”) against M/s Magicstone Traders Private Limited (“Corporate Debtor”) was admitted by this Tribunal vide order dated 02.11.2023 under Section 9 of the Code (“admission order”), thereby initiating Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor. The said Corporate Debtor is a private company incorporated on 09.06.2016 under the provisions of the Companies Act, 1956, CIN: U74110PN2016PTC164929 and having its registered office at Office No. 1, SN. 57/3, Mayura Vihar Blg-Q, Kothrud, Pune - 411029. The Corporate Debtor is engaged in the business of construction, improvement, maintenance, development, work, management, carryout or control any building, factories, roads etc.

This Tribunal vide the said admission order, appointed one Mr. Sandeep Jawaharlal Singhal as the Interim Resolution Professional (IRP). Thereafter, the IRP published the public announcement on 04.11.2023 in prescribed ‘Form- A’ in Financial Express (English) and Loksatta (Marathi) inviting claims from the creditors of the Corporate Debtor. Accordingly, the IRP constituted the CoC based on the claims received pursuant to public announcement. The Applicant submits that the CoC consists of only Operational Creditors and no claims have been received from any Financial Creditors. The total claims received from the Operational Creditors were Rs.81,05,58,253/-.

The IRP appointed two registered valuers viz. Amandeep Kaur and M/s Kanassure Valuation Services Private Limited for valuation of Securities and Financial Assets (the 'SFA') only since the Corporate Debtor has no other assets based on the limited information and documents received from the suspended board of directors during the CIRP. The Applicant has filed an application, IA (IBC) 2184/2024, seeking information and documents from the Suspended Board of directors.

In the 1^st CoC meeting dated 09.02.2024, the members of CoC resolved to replace the said IRP and filed an application IA(IBC) 476/2024, seeking replacement of IRP which was allowed and the Applicant herein was appointed as the Resolution Professional (RP) of the Corporate Debtor.

Further, one M/s KAVA & Associates was appointed as the Transaction Auditor to carry out the transaction audit. The transaction auditor submitted the Transaction Audit Report dated 19.04.2024. Accordingly, the Applicant has filed an application, IA (IBC)4628/2024, u/s 66 of the Code.

In the 5th CoC meeting, the CoC resolved to extend the CIRP period by 90 days to enable discussion and deliberation on the Resolution Plan. Pursuant thereto, the Applicant filed IA (IBC) 2748/2024 under Section 12(2) of the Code, which was allowed by this Hon'ble Tribunal vide order dated 05.06.2024, extending the CIRP period up to 29.07.2024.

During the course of the CIRP, the erstwhile IRP published the first Form G dated 28.12.2023 in Financial Express (English) and Navrashtra (Marathi), inviting Expression of Interest (“EoI”). Multiple EoIs were received in response, which the Applicant scrutinised along with supporting documents to prepare the final list of PRAs and issue the RFRP. However, only one PRA, M/s Subhlaxmi Investment Advisory Private Limited, submitted a Resolution Plan. The said Resolution Plan was placed before the CoC for evaluation of its feasibility and viability. The PRA was invited to present the Plan in the 6th CoC meeting held on 26.04.2024. After due consideration, the CoC rejected the Plan with 100% voting share and resolved to issue a fresh Form G.

Pursuant thereto, the Applicant published the second Form G dated 29.04.2024 in Financial Express (English) and Navrashtra (Marathi), with the last date for submission of Resolution Plans fixed as 30.06.2024, which was extended from time to time in consultation with the CoC upon requests from PRAs.

Subsequent to the second Form G, only one Resolution Plan i.e. from M/s Subhlaxmi Investment Advisory Private Limited was received on 15.07.2024, which was opened and placed before the CoC in its 8th meeting held on 17.07.2024. As certain provisions of the Plan were inconsistent with the Code and CIRP Regulations, 2016 the Applicant sought a revised Plan from the SRA. In the meanwhile, the claim of one M/s PEN India Limited which was under verification, was admitted by the Applicant and accordingly the CoC was reconstituted. The Applicant filed IA(I.B.C)/3950/MB/2024, placing on record the report certifying the reconstitution of CoC. The same was taken on record vide order dated 14.08.2024. The list of reconstituted CoC members are as follows:

In the 8th meeting, the CoC resolved to further extend the CIRP period by 60 days, thereby utilising the prescribed maximum period of 330 days. The Applicant accordingly filed IA (IBC) 4380/2024, which was allowed by this Tribunal vide order dated 24.09.2024, extending the CIRP period up to 27.09.2024. The revised Plan was thereafter discussed in the 9th and 10th CoC meetings.

In the 10^th CoC meeting held on 12.09.2024, the CoC negotiated with the PRA for enhancement of the value offered to Operational Creditors, pursuant to which the SRA submitted a further revised Plan with an enhanced amount on 13.09.2024. In view of the time constraints, the said Resolution Plan submitted was put to e-voting in the same 10^th meeting, and approved by the CoC with 71.08% voting share.

E-voting was originally scheduled to remain open for 5 days, till 20.09.2024. However, since one of the CoC members, M/s Shirpur Gold Refinery Limited, was itself undergoing CIRP (since 24.06.2024), its Resolution Professional sought an extension of the e-voting timeline, being unable to unilaterally cast a vote without prior consultation with its own CoC. This resulted in an inordinate delay in casting of votes by the CoC members. Therefore, in the 11th CoC meeting, the CoC resolved to further extend the CIRP period by 45 days from 27.09.2024, to enable the CoC to vote on the Resolution Plan. The Applicant accordingly filed IA (IBC) 5217/2024, which was allowed by this Tribunal vide order dated 12.11.2024, extending the CIRP period up to 13.11.2024.

The Applicant submits that he has carried out the due-diligence as prescribed by the provisions of the Code and allied CIRP Regulations, 2016 and has issued the Compliance Certificate in prescribed 'Form H' certifying that the Resolution Plan complies with the provisions of the Code and M/s Subhlaxmi Investment Advisory Private Limited (“SRA”) is eligible to submit the Resolution Plan.

The Applicant submits that the SRA, M/s Subhlaxmi Investment Advisory Private Limited, incorporated in the year 2008, is engaged in the domain of financial services, advisory and consulting services on shares, securities, stocks, and bonds etc.

The Applicant submits that SRA has duly submitted the Earnest Money Deposit (“EMD”) of Rs. 10,00,000/- (Rupees Ten Lakhs Only) vide Bank Transfer.

The SRA has submitted an amount of Rs.3,80,000/- towards PBG, through cheque dated 13.11.2024.

The SRA has proposed an amount of Rs.35,00,000/- (Rupees Thirty-Five Lakhs Only) which shall be paid in priority to other payments proposed under the plan. It is further provided that any shortfall shall be paid by the SRA over and above the said proposed amount.

In accordance with Regulation 38(1-A) of the IBBI Rules, 2016, the statement showing the treatment given to the stakeholders as given below:

(Amount in Rs)

Regulation 39B(4) requires the Resolution Professional to submit, along with the Resolution Plan or liquidation application, a plan to meet the liquidation cost, as approved by the CoC. Accordingly, the Applicant tabled this agenda in the 10^th CoC meeting held on 12.09.2024, seeking approval of a plan to meet the liquidation cost, the Corporate Debtor's liquid assets being NIL. The CoC, however, rejected the same with 100% voting share. It is submitted that a substantial part of the CIRP Costs remains unpaid, and accordingly, in the event the present Resolution Plan is rejected, this Tribunal may direct the CoC members to contribute towards the unpaid CIRP Costs and the anticipated Liquidation Costs.

This Tribunal vide order dated 14.02.2025 directed the Applicant to ensure all the minutes of the CoC meetings, the Information Memorandum and the valuation report is placed on record. Accordingly, the Applicant via Additional Affidavit filed on 18.02.2025, placed on record inter alia the copies of Minutes of Meetings, the Information Memorandum, the Request for Resolution Plan (“RFRP”) and Form – G.

Further, on the hearing dated 06.05.2025, to a pointed query by this Tribunal as to where is the list of EoIs, List of PRAs/ Final List of PRAs, the Ld. Counsel submitted that such list was not enclosed with the IA or with the Additional Affidavit filed on 18.02.2025 and sought to file requisite compliances as are required under the Insolvency and Bankruptcy Board of India (Insolvency Resolution process for Corporate Persons) Regulations, 2016 (“CIRP Regulations, 2016”) by an Additional Affidavit. Accordingly, the Applicant filed Additional Affidavit 21.06.2025, placing on record the list of EoIs, Provisional List of PRAs and Final List of PRAs.

Furthermore, on hearing dated 10.02.2026, this Tribunal had observed that:

In compliance of the said order dated 10.02.2026, the Applicant filed an Additional Affidavit on 10.04.2026. Through the said Affidavit, the Applicant submits that:

As regards paragraphs 4 and 5 of the said Order, it is submitted that the Resolution Professional filed IA (IBC)/2184/2024 under Section 19(2) of the Code on 01.04.2024, which remains pending. Being a time-bound process required to be completed within the statutory period, the Resolution Professional was obligated to continue the CIRP notwithstanding the pendency of the said application. It is further submitted that the Resolution Professional has filed IA (IBC) 4628/2024 under Section 66 of the Code, seeking contribution of approximately Rs. 817 Crores, which application shall be pursued by the creditors for their benefit upon approval of the Resolution Plan.

We have heard the Ld. Counsel of the Applicant and perused the documents available on record.

With respect to the submission of the Applicant regarding pendency of IA/2184/2024 which was filed by the Applicant under Section 19(2) of the Code, it is observed that, this Tribunal had during the hearing dated 25.06.2026, noted that:

Further, it is noted that IA/2184/2024 was dismissed by this Tribunal vide order dated 17.08.2026. In the said order, this Tribunal has noted that although opportunity to the RP was granted to go through the documents already supplied to him by the Suspended Director and take further necessary action, the RP has not taken any action in this regard nor done anything to pursue this matter which is pending since 2 years. Therefore, this Tribunal in view of the aforesaid observation, dismissed the said IA.

In view of the aforesaid observations, it is noted that the issue pertaining to the Nil valuation, as also the failure on the part of the Resolution Professional to make any meaningful efforts to secure the requisite information from the suspended directors, remains unexplained.

When a Resolution Plan is submitted, the RP’s primary obligation under the Code is to firstly examine whether the Resolution Applicant is eligible to submit the Resolution Plan under the provisions of IBC, the CIRP Regulations, 2016 and also meets the requirements set out in the RFRP.

In this regard it is necessary to refer the provisions of Section 29A and Section 30 of the Code:

Section 29A renders a person ineligible to submit a resolution plan, along with any other person acting jointly or in concert with such person, where such person falls under the criteria stipulated under clause (a) to (j). Further, section 30 governs submission and examination of a resolution plan, requiring under sub-section (1) that a resolution applicant submit its plan along with an affidavit affirming its eligibility under Section 29A of IBC. Under sub-section (2), the Resolution Professional is duty-bound to examine every plan received to confirm, inter alia, under clause (e) that it does not contravene any provision of law for the time being in force, which necessarily includes verifying compliance with the eligibility criteria under Section 29A, and under clause (f) that it conforms to such other requirements as may be specified by the Board (IBBI). By virtue of sub-section (3), the Resolution Professional is obligated to place before the Committee of Creditors, for its approval, only those resolution plans which satisfy the conditions set out in sub-section (2); consequently, any plan submitted by a person ineligible under Section 29A, or otherwise non-compliant with law or Board specified requirements, is liable to be screened out by the Resolution Professional at the threshold itself and cannot be placed before the CoC for consideration and voting under sub-section (4).

Further reference is made to Regulation 36A(8) of the CIRP Regulations, 2016:

The above regulation enforces a duty upon the Resolution Professional to conduct due diligence based on the material on record in order to satisfy that the PRA interalia complies with the applicable provisions of Section 29A of IBC. Further, Regulation 36A(9) of CIRP Regulations, 2016 provides that the RP may seek any clarification/ additional information or document from the PRA for conducting the said due diligence under sub-regulation (8).

In the present case, the Applicant had placed on record with the Application, a copy of declaration u/s 29A submitted by the SRA. However, since the due diligence report on Section 29A prepared by the Applicant was not on record for perusal, this Tribunal in the hearing dated 17.08.2026, directed the Applicant to place on record the due diligence report on Section 29A and a certificate to that effect.

It is noteworthy that the Section 29A Compliance Report placed on record through Additional Affidavit filed on 02.09.2026, the Applicant has in conclusion stated that:

On the perusal of the said compliance report, it is noted that the Applicant has throughout the said report used the words like “indication”, “appears” “apparent” which depicts non-clarity in his decision. Moreover, the conclusion (reproduced above) of the Report also mentions that the RP is “apparently as of the date of this report and subject to the qualification herein” satisfied that the Subhlaxmi Investment Advisory Private Limited, the SRA together with its directors and connected persons, is not hit by any disqualification under Section 29A(a) to (j) of the IBC.

It is noted that the language employed in the said report reflects a qualified and equivocal conclusion, rather than a clear and definitive finding, on the question of the PRA's eligibility. Had the Applicant harboured any doubt as to the eligibility of the PRA, it was incumbent upon him to record such observations clearly and arrive at a negative finding, thereby disqualifying the PRA from submitting a Resolution Plan. It is observed, however, that notwithstanding such uncertainty as to eligibility under Section 29A, the Applicant proceeded to allow the PRA to participate in the CIRP process and submit the Resolution Plan, without arriving at a conclusive determination in this regard.

It is further noted that since only one EoI was received, the Resolution Professional, upon a finding of ineligibility under Section 29A of the Code, could have disqualified the said PRA and initiated a fresh process through re-issuance of Form-G, with the approval of the CoC. However, the Applicant neither sought additional information from the PRA to confirm its eligibility as provided in Regulation 36A(9), nor took any adverse action in this regard, despite the qualified nature of the eligibility finding recorded in his own report.

Under Regulation 36A(8) of the CIRP Regulations, 2016, it is the bounden duty of the Resolution Professional to carry out due diligence to ensure compliance with Section 29A of the Code, and to thereafter examine the Resolution Plan in terms of Section 30(2) of the Code. Section 30(2)(e) and (f) require the Resolution Professional to examine every Resolution Plan submitted to confirm that it does not contravene any provision of law for the time being in force and conforms to such other requirements as may be specified by the Board. In the present case, it is evident that the Applicant has failed to diligently discharge his duty under Regulation 36A(8) so as to establish, in clear and unequivocal terms, the eligibility of the PRA under Section 29A of the Code. The Applicant, being the Resolution Professional, has accordingly failed to comply with Regulations 36A(8) and (9) of the CIRP Regulations, 2016, and has further failed to discharge the obligations cast upon him under Section 30(2) of the Code.

In view of the foregoing, since the eligibility of the PRA under Section 29A of the Code has not been established in clear and unambiguous terms, the very foundation for consideration of the Resolution Plan stands vitiated. The Resolution Plan submitted by such PRA is, therefore, liable to be rejected on this ground alone.

Consequently, it is pertinent to refer to Section 31(2) of the Code, which provides that where the Adjudicating Authority is satisfied that the Resolution Plan does not conform to the requirements referred to in Section 31(1), it may, by an order, reject the Resolution Plan. For better reference, Section 31of the Code provides as under:

Accordingly, considering the facts and circumstances of the case and the discussion above, the Resolution Plan submitted by M/s Subhlaxmi Investment Advisory Private Limited is rejected for the reason of absence of definitive certificate of its eligibility under Section 29A of the Code, in terms of Section 31(2). Accordingly, Prayer (a) is dismissed.

The consequence of rejection of the Resolution Plan is governed by Section 33(1)(b) of the Code. The said provision reads as follows:

In view of the rejection of the Resolution Plan under Section 31(2) of the Code, and in terms of Section 33(1)(b) of the Code, this Adjudicating Authority is of the considered view that the Corporate Debtor is liable to be liquidated in accordance with the provisions of Chapter III of Part II of the Code and the applicable Regulations.

In view of the facts and circumstances and discussion hereinabove, I.A.(IBC)(Plan)/16/2025 is dismissed in above terms and stands disposed of.

The Corporate Debtor is ordered to be liquidated and the following consequential order is passed:

In respect of prayer clause (b), whereby the Applicant seeks a direction to the members of the CoC to contribute towards the unpaid CIRP Costs and Liquidation Costs, it is noted that no arguments have been made by the Ld. Counsel for the Applicant in support of the said prayer. Hence, no relief is granted in the present proceedings. However, the Applicant is at liberty to take necessary action as may be available in law, including filing a separate application for the said relief which shall be proceeded on its own merits. Accordingly, with the above direction, the prayer clause (b) stands disposed of.

The Registry is directed to forward a copy of this Order to the Insolvency and Bankruptcy Board of India (IBBI) for such action as it may deem fit with regards to the conduct of the RP.