Suraksha Realty Ltd. vs Amit Gupta Resolution Professional of Mahavir Roads and Infrastructure Pvt. Ltd. & Anr.

[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]

The present appeal has been preferred by Suraksha Realty Limited ("Appellant") under Section 61 of the Insolvency Bankruptcy Code, 2016 ("Code") against the Order dated 14.05.2024 passed in IA No. 22 of 2024 in CP (IB) NO. 2300 OF 2018 ("Impugned Order") by the National Company Law Tribunal, Mumbai Bench – I, Mumbai ("Adjudicating Authority") whereby the application filed by the Resolution Professional (RP) to Approve the Plan has been accepted.

Brief facts as reflected from the pleadings of the parties are in terms that the Appellant sanctioned loan of Rs. 60,00,00,000/- (Rupees Sixty Crores Only) to the corporate debtor (CD) and in lieu of the loan facility the Corporate Debtor is stated to have created equitable mortgage by depositing the original title deeds of the immovable property with the Appellant. In February 2015, the Appellant and the Corporate Debtor entered into a Supplementary Loan Agreement dated 18.02.2015. The Corporate Debtor defaulted in repayment of the loan in terms of the Loan Agreement read with the Supplementary Agreement dated 18.02.2015 and post-dated cheques were stated to have been issued as security under the Loan Agreement read with the Supplementary Agreement, however they were also dishonoured.

It is also reflected that the appellant filed a complaint against the Corporate Debtor and its’ directors before the Court of Magistrate at Andheri, Mumbai. However, during the pendency of same, the Corporate Debtor requested the Appellant to withdraw the complaint and modify the terms of the repayment of Loan. Accordingly, the Loan Agreement was modified and it is stated by Appellant that loan of Rs. 12,52,00,000/- (Rupees Twelve Crore Fifty-Two Lakh Only) was outstanding and payable to the Appellant on the date of execution of the Modified Loan Agreement. An addendum to the Modified Loan Agreement dated 09.02.2016 was also executed between the Appellant and the Corporate Debtor in order to additionally secure the loan granted in terms of the Modified Loan Agreement. It was agreed in between the Appellant and Corporate Debtor that the Corporate Debtor is liable to pay an outstanding of Rs. 69,97,00,000/- (Rupees Sixty-Nine Crore Ninety-Seven Lakh Only) and that the Corporate Debtor would repay the same at the rate of 18% payable monthly over 75 (seventy-five) months starting from 01.02.2016. The Corporate Debtor again failed to repay the loan facilities provided by the Appellant, as required in terms of the Loan Agreement, Supplementary Agreement, Modified Loan Agreement and Addendum.

It is further reflected that on 21.02.2019, the Ld. Adjudicating Authority admitted CD in CIRP on an application filed under Section 7 of the Code and appointed Mr. Ankur Kumar as the IRP. Appellant submitted its claim in Form C dated 25.11.2019 to the IRP of the Corporate Debtor for an amount of Rs. 109,63,47,940/- (Rupees One Hundred and Nine Crore Sixty-Three Lakh Forty-Seven Thousand Nine Hundred and Forty Only) as a secured financial creditor. The IRP, however, vide email dated 16.12.2019 admitted the claim of the Appellant only to the tune of Rs. 40,84,24,363/- (Rupees Forty Crore Eighty-Four Lakh Twenty-Four Thousand Three Hundred and Sixty-Three Only) and also categorised the Appellant as an unsecured financial creditor. In the 29th CoC meeting convened on 15.02.2022 the Appellant was treated as a Secured Financial Creditor in the books of the Corporate Debtor and in the 30th CoC meeting the Appellant was considered as a Secured Creditor. The CoC proposed to change the RP and Mr. Amit Gupta was appointed as a new RP on 13.02.2023.

It is further evident that in the 35th meeting of CoC was convened on 04.09.2023 wherein the resolution for Liquidation of Corporate Debtor was approved with 78.83% voting share and the Liquidation Application was filed by the RP before the Ld. Adjudicating Authority. On 10.10.2023 two interested Prospective Resolution Applicants (PRA) Mr. Pankaj Kikavat and Bermaco Energy Systems Limited (SRA/Respondent No. 2) filed IA No.4498 of 2023 and IA No.4500 of 2023, respectively, before the Ld. Adjudicating Authority seeking approval to submit their Resolution Plans. Accordingly, the Adjudicating Authority granted opportunity to the said PRAs to submit their Resolution Plans.

It is also reflected that in the 38^th CoC meeting convened on 23.11.2023 the Resolution Plan of Respondent No. 2 was discussed and it was asked to submit an unconditional Resolution Plan. The Resolution Plan submitted by Mr. Pankaj Kikavat the Promoter and Suspended Director of the C D was not considered because they failed to submit the EMD within the stipulated period of time. It is also stated that the charge in favour of the Appellant was registered on 14.12.2023 by the Ministry of Corporate Affairs thereby confirming its status as a secured creditor prior to submission of the revised Resolution Plan by the Respondent no. 2, which was filed on 16.12.2023 by Respondent no. 2 along with addendum to the Plan, however the Respondent no. 2 failed to categorize the Appellant as a secured creditor.

It is further reflected that Authorised Representative of Appellant pointed out at the 40^th CoC meeting convened on 20.12.2023 that the Respondent No.2 is involved in certain questionable transactions which were being prosecuted by the Enforcement Directorate (ED) and the CoC deferred the agenda for approval of Resolution Plan. The Appellant also stated to have sent a letter dated 21.12.2023 to the Respondent no. 1 to elaborate on the illegalities in the resolution plan submitted by Respondent no. 2, and also that the Respondent no. 1 had not correctly classified the Appellant as secured creditor. In the 41^st CoC meeting convened on 19.01.2024 the RP apprised the CoC members that he had appointed Bagchi & Gupta, Chartered Accounts, to verify the eligibility of the Resolution Applicant under Section 29A of the Code whereby no disqualification has been reported. Thereafter, Resolution Plan as submitted by Bermaco Energy Systems Limited was put for E-voting. RP at the said COC meeting also informed that he had been informed by the Respondent no. 2 that the proceedings under PMLA had been stayed by the Hon'ble Bombay High Court. The Appellant was thereafter sent emails to the Respondent No. 1 and members of the CoC on 24.01.2024 and 31.01.2024 protesting against the undue haste in voting on the Resolution Plan stating that the clarification provided by the Respondent no. 2 was incorrect, and submitted a memo of inquiry of the PMLA proceedings pending against the Respondent No. 2 along with the relevant orders of the PMLA Adjudicating Authority, PMLA Appellate Tribunal and the Hon'ble Bombay High Court and also that the liquidation value of the Corporate Debtor is much higher than the liquidation value provided by the RP. However, E-voting for the Resolution Plan concluded thereafter on 06.03.2024. wherein the CoC approved the plan of respondent No. 2 Bermaco Energy Systems Limited by voting percentage of 78.83%.

It is also reflected that R P filed an IA No.22 OF 2024 under Section 30(6) of Code read with Regulation 39(4) of CIRP Regulations, 2016 seeking approval of Resolution Plan dated 16.12.2023 before the Ld. Adjudicating Authority and the same was allowed vide Order dated 14.05.2024 and aggrieved by the same instant appeal has been filed by the Appellant.

We have heard Ld. Counsels for the parties and have perused the record as well the written submission’s filed by the parties.

Ld. Counsel for the Appellant submits that the Appellant has challenged the approval of the Resolution Plan primarily on the grounds of, material concealment and false information provided and given by the SRA to the CoC ,Resolution Plan not having provisions for its effective implementation in view of the order of attachment by the Enforcement Directorate, non-classification of the Appellant as a secured financial creditor and incorrect liquidation value and violation of the entitlements of the Appellant as a dissenting financial creditor and on account of other non-compliances with Section 30(2) of the Code.

It is further submitted during the pendency of the insolvency process, the Appellant came to know about the involvement of the SRA in questionable transactions, pursuant to which, the Enforcement Directorate had published a press note on 22nd September 2022, wherein the SRA and its promoters were alleged to have been involved in money laundering and It is also known that the Central Bureau of Investigation (CBI) registered an FIR on 07.02.2022 for commission of offences under Section 420 and 120-B of the Indian Penal Code, 1860 (“IPC”) read with Prevention of Corruption Act, 1988 against ABG Shipyard Ltd. and its directors and other unknown persons and ED also registered ECIR against ABG Shipyard Ltd. and other connected individuals and entities for causing loss of about INR 22,842 Crores to a consortium of banks.

It is further submitted that The ED under Section 3 of the Prevention of Money Laundering Act, 2002 (“PMLA”) attached certain properties related to the said criminal activity and found money trail from group companies of ABGSL to the SRA and subsequently, assets of the SRA and its promoters of the amount of more than INR 19 Crore were attached. The said order was subsequently confirmed by the PMLA Adjudicating Authority.

It is further submitted that the PMLA Appellate Tribunal, while dismissing the interim stay application moved by the SRA, in its order dated 3 August 2023, prima facie held that the SRA is part of organized crime and involved in money laundering. The matter was taken before the Hon’ble High Court of Bombay by filing Criminal Appeal no. 879 of 2023 wherein only the eviction of the SRA was directed not to be proceeded with and there was no stay on the order of the PMLA Appellate Tribunal and during the pendency of the said proceedings, the SRA and its promoters had argued before the Hon’ble High Court of Bombay that the writ would be maintainable on the criminal side and not on the civil side which was affirmed by the Hon’ble High Court of Bombay vide judgment dated 02.12.2024, however here a different stand is being taken by the SRA by pleading that proceedings of attachment under PMLA are civil proceedings. However, the said Writ was subsequently withdrawn vide order dated 19.12.2025 to pursue the appeal before the Hon’ble PMLA Appellate Tribunal.

It is also submitted that the Appellant pointed out to the CoC in its 40th meeting held on 20.12.2023 about the nature of transactions the SRA is involved in and that the same are currently pending investigation – a fact which had been concealed by the SRA in its Resolution Plan. In pursuance of the same, the CoC deferred the agenda for the approval of the Resolution Plan and a detailed letter was also sent by the Appellant on 21.12.2023 highlighting the involvement of the SRA in the ED case. Subsequently in the 41^st meeting of the CoC held on 19.01.2024 the RP apprised the CoC on the basis of a report submitted by Bagchi & Gupta, Chartered Accounts pertaining to the eligibility of the Resolution Applicant under Section 29A of the Code contending that the SRA is eligible to submit their resolution plan. However, the said report does not even refer to the alleged antecedents of the SRA nor to the pending investigations against the same but is only confined to eligibility under Section 29A of the Code.

It is also submitted that wrong information was given by the SRA pertaining to the order passed by the Hon’ble High Court of Bombay as in pursuance of the order, only the eviction of the SRA was not to be proceeded with and there was no stay on the order of attachment made under the PMLA. In this regard Appellant also wrote an email dated 24.01.2024 to the RP and the CoC and submitted a memo of enquiry stating the details of the alleged criminal antecedents of the SRA, details of the pending investigation and litigation and the misrepresentation of the order of the Hon’ble High Court of Bombay. Another email was also sent to the RP and the CoC on 31.01.2024 whereby Appellant again pointed out the misrepresentation and concealment made by the SRA in the 42^nd meeting of the COC which were not addressed/clarified by the RP and the resolution plan of the SRA was approved by the CoC by 78.83% voting share with the Appellant dissenting.

It is further submitted that the SRA was required by the RFRP to clarify and share details of any criminal proceedings, investigations, inquiries, etc., which have been commenced or are pending against the Resolution Applicant or with regard to any connected persons, however the SRA in appendix submitted along with the Resolution Plan provided wrong information by writing “No” indicating no such proceedings/investigations/enquiries etc. are pending on the date and the same which is contrary to the record and amounts to material concealment in the light of the observations contained in the press release of the ED and the orders of the PMLA Authority and Appellate Authority. Regulation 39(1)(c) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) is also highlighted in order to show that the SRA was mandated to provide an undertaking that every information provided in connection with or in the resolution plan is true and correct and discovery of false information and record at any time will render the Resolution Applicant ineligible to continue in the CIRP, forfeit any refundable deposit and would also attract penal action under the Code.

It is further submitted that the aforesaid regulation is mandatory in nature and clearly provides for the penal consequences as affirmed in Gaurav Katiyar vs. Nisus Finance and Investment Managers LLP & Ors. CA (AT) (Ins) No. 963-965 of 2024 wherein it has been held that Regulation 39(1)(c) stipulates that discovery of false information and record at any time will render the applicant ineligible to continue in CIRP. It is respectfully submitted that the said judgment squarely applies to the present case.

It is further submitted that the present misrepresentation cannot be deemed to be a mere infraction/immaterial declaration, but goes to the issue of the effective implementation of the Resolution Plan as the source of funds runs the risk of being tainted and thus prone to attachment in future and having regard to the scheme of the Code an SRA with alleged criminal antecedents and prima facie involved in money laundering and organized crime should not be allowed to be part of the resolution of the Corporate Debtor. In this regard it is submitted that provision under Regulation 39(1)(c) is distinct from Section 29A of the Code as the latter is applicable to the threshold for determination of ‘eligibility’ at the time of submission of the plan, while Regulation 39(1)(c) would be applicable after submission of plan to ensure that the sanctity of a CIRP is not violated.

It is further submitted that contention of the SRA that the proceedings of attachment of property in PMLA case are civil proceeding is patently false and could not be accepted in the background of their own admission that these are criminal proceedings. Reliance has been placed on the law laid down by the Hon’ble Supreme Court in the case of Vijay Madan Lal Choudhary & Ors. vs. Union of India & Ors. (2023) 12 SCC 1.

It is further submitted that even if the CoC had considered and deliberated on the issue of false declaration by the SRA, the same cannot be within the purview of its commercial wisdom as the CoC cannot bypass the statutory consequences provided under Regulation 39(1)(c) and moreover no clarification provided by the Appellant except communication of the misrepresented “stay order” and the CoC proceeded on the incorrect information that the proceedings had been stayed and no details/clarification was ever provided, thus any acts taken in pursuance of the same cannot be deemed to the commercial wisdom of the CoC. A Resolution Applicant’s eligibility under section 29A of the Code would not absolve contravention of other requirements under law including compliance of Regulation 39(1)(c) of the CIRP Regulations. Reliance gas been placed on the law laid down by the Hon’ble Supreme Court in the case of M/s. Lamba Exports Pvt. Ltd. v. M/s. Dhir Global Industries Pvt. Ltd. and Ors. 2026 SCC Online SC and CoC of Essar Steel India Limited vs. Satish Kumar Gupta & Ors. Civil Appeal no. 8766-8767 of 2019.

It is further submitted that the Hon’ble Supreme Court in the case of Independent Sugar Corporation Ltd. vs. Girish Sriram Juneja & Ors. 2025 SCC Online SC 181 has held that after the feasibility and viability is considered by the CoC, there exists a further requirement of the effective implementation of a resolution plan which has to be satisfied by the Adjudicating Authority as a threshold criterion as per Section 31 of the IBC which is independent of commercial and Regulation 38 of CIRP Regulations,2016 also mandate that the resolution plan should provide for its effective implementation. However, in this case the resolution plan proceeds on material concealment of the attachment details of the SRA without considering whether the SRA is capable of implementing the present resolution plan in view of the same.

It is also submitted that the Appellant’s charge over the assets of the Corporate Debtor, arising from the equitable mortgage created by deposit of title deeds on 06.12.2014 was registered with the Ministry of Corporate Affairs on 14.12.2023, i.e. prior to the submission of the revised Resolution Plan dated 16.12.2023. Despite the registered charge being within the knowledge of both the Respondents, the Resolution Plan does not treat the Appellant as a secured financial creditor, contrary to Section 30(2)(b) read with Section 53 of the Code and upon correct classification of the Appellant as a secured financial creditor, the entire distribution matrix under the Resolution Plan would change, and the plan is therefore liable to be rejected or remanded to the CoC.

It is further submitted that the liquidation values ascribed by the two registered valuers deviated by more than 25% for particular asset classes (INR 52.78 crore as against INR 35.04 crore), whereupon the Respondent No. 1 was bound to appoint a third valuer under the CIRP Regulations. Despite the issue being specifically raised by the Appellant at the 42nd meeting of the CoC and by email dated 31.01.2024, no third valuer was appointed. Appreciating assets (land) have been undervalued while depreciating assets have been overvalued, thereby artificially depressing the liquidation value of the Corporate Debtor to the benefit of the SRA. Further, the value of the Resolution Plan has been misrepresented as INR 60 crore whereas the true plan value is only INR 39.80 crore, the balance being attributable to future liabilities towards invocation of bank guarantees of Bank of India which cannot form part of the plan value. The plan value is thus lower than the liquidation value of the Corporate Debtor and the Resolution Plan is liable to be rejected on this ground alone.

Ld. Counsel for the Appellant has relied on following judicial precedents: -

Gaurav Katiyar vs. Nisus Finance and Investment Managers LLP & Ors., CA (AT) (Ins) No. 963-965 of 2024.

Vijay Madan Lal Choudhary & Ors. vs. Union of India & Ors. (2023) 12 SCC 1.

Independent Sugar Corporation Ltd. vs. Girish Sriram Juneja & Ors., 2025 SCC Online SC 181.

Committee of Creditors of Essar Steel India Ltd. Through Authorised Signatory vs. Satish Kumar Gupta & Ors., Civil Appeal No. 8766-8767 of 2019.

M/s. Lamba Exports Pvt. Ltd. vs. M/s Dhir Global Industries Pvt. Ltd. and Ors., (2026) SCC Online SC 459.

Bermaco Energy Systems Ltd. vs. Directorate of Enforcement & Anr., Criminal Appeal No. 879 of 2023, decided on 02.12.2024.

Bermaco Energy Systems Ltd. vs. Directorate of Enforcement & Anr., Criminal Appeal No. 879 of 2023, decided on 19.12.2024.

Viren Vinod Ahuja vs. Directorate of Enforcement, FPA-PMLA-5869-71/AHD/2023.

Ld. Counsel for the Respondent No. 1/RP of Mahaveer Roads and Infrastructure Pvt. Ltd. (CD) submits that the appellant has concealed from this Appellate Tribunal that on 03.02.2020 Suraksha ARC had submitted a resolution plan for Rs. 22.40 Crore and in the 25^th meeting of the CoC this resolution plan was rejected by 85.11% of the CoC and the Respondent No. 1 was appointed as the RP at the 30^th meeting of the CoC held on 13.02.2023.

It is further submitted that after a decision taken by the CoC to liquidate the CD on 04.09.2023 in 35^th meeting of the CoC two resolution applicants Pankaj Kikavat and Bermaco Energy Systems Ltd. filed two IA's 4498-4500 of 2023 seeking consideration of their resolution plans which were allowed in the 40^th and 41^st meeting of the CoC. It was during the 40^th and 41^st meeting of the CoC, the CoC members were apprised of the verification of the Respondent No. 2 eligibility under Section 29 A of the Code regarding any past criminal convictions and in the e-voting of the resolution plan the resolution plan of the SRA was approved by a voting percentage of 78.83% and an IA moved by the RP for approval of this plan was also allowed by the adjudicating authority vide order dated 14.05.2024.

It is further submitted that appellant has relied on provisional attachment orders and orders of the PMLA Appellate Tribunal in order to show that the non-disclosure of these proceedings is violation of RFRP and Regulation 39 (1) (c) of the CIRP regulations, 2016, however it is only under Section 29 A (d) of the Code a person, who has been convicted in the manner provided therein could be disqualified from submitting a plan and therefore the SRA was not disqualified from presenting Resolution Plan. More over the CoC was aware of the underlying proceedings against the SRA and discussed the same during 41^st meeting of the CoC and thereafter Bagchi and Gupta CA were appointed to consider the eligibility of SRA and as per their report the resolution applicant is eligible as he has not been convicted for any offence and in 40^th and 41^st meeting of the CoC this issue was considered.

It is further submitted that the SRA has submitted an affidavit dated 25.10.2023, under Section 29 A of the code to demonstrate its bona fide. The object and purpose of Regulation 39 is to ensure that the resolution applicant acts in a bona fide manner and Section 31 of the Code which prescribes the approval of the resolution plan only restricts the adjudicating authority to satisfy itself that plan approved by the CoC meets the requirement under Section 30 (2) of the Code.

It is further submitted that the resolution applicant had neither provided any false information nor has the CoC discovered any such information and the CoC was cognizant of the proceedings and after discussing the same consciously approved the plan in its commercial wisdom. More over the delegated legislation which is procedural in nature cannot enlarge the scope of substantive law i.e. Section 29 A of the Code. Reliance in this regard has been placed on Shreedhar C. Shetty vs. Additional Collector and Competent Authority and Ors. (2020) 9 SCC 537.

It is further submitted that the provisional attachment and its confirmation in PMLA are in the nature of civil proceedings and cannot be equated with Section 29 A (d), which requires conviction and the only object of provisional attachment under the PMLA is similar to the attachment before judgment in civil procedure which is only to preserve the property. Reliance is placed on DBS Bank vs. Ruchi Soya (2024) 3 SCC 752.

Ld. Counsel for the Respondent No. 2 submits that the whole foundation of the appeal preferred by the Appellant is based on the presumption that mere existence of proceedings under PMLA or the registration of an FIR is sufficient to render the resolution applicant ineligible under Section 29A of the Code. However, such a proposition finds no support either from the language of the various principles enshrined in the Insolvency and Bankruptcy Code, 2015, nor from any precedent. It is an admitted case of the Appellant that the SRA or its director has never been convicted of any offence.

It is further submitted that the Appellant has fundamentally misconstrued Section 29A by equating pending proceedings with ineligibility under Section 29A which contemplates a conviction wherever such disqualification is sought to be invoked, and that no such conviction existed as on the date of approval of the Resolution Plan. Mere proceedings resulting in a provisional attachment order issued under Section 5 of the Prevention of Money Laundering Act may not be sufficient to debar the Appellant as such, proceedings are preventive in nature, and the whole purpose of these proceedings is to preserve the property pending adjudication. By any stretch of imagination, the same may not be sufficient to infer the guilt of any person, more so, when the Hon’ble Bombay High Court has granted interim protection in favour of the respondent No. 2 by directing that the Enforcement Directorate would not act upon the eviction notices during the pendency of the proceedings.

It is further submitted that the Insolvency and Bankruptcy Code does not provide that every person whose assets are provisionally attached becomes ineligible to submit a resolution plan. Had the Parliament intended to create such a disqualification, it would have expressly said so and therefore the courts cannot add in Section 29A, which was not intended by the Parliament. Mere recording of FIR neither records guilt nor constitutes proof of commission of an offence and the same cannot result in disqualification of the appellant as a resolution applicant and the FIR relied on by the applicant is such that respondent No. 2 is not even named in the same. Neither respondent No. 2 nor its directors are shown to be persons against whom investigation has been initiated in the state proceedings. No charge sheet has been placed on record, and no cognizance order has been produced which may suggest that the prosecution against respondent No. 2 has started.

It is further submitted that when the appellant first raised the issue during the 40th meeting of the CoC, the resolution professional did not summarily reject the objection. He deferred consideration of the resolution plan, sought independent verification, and thereafter placed the issue before Bagchi and Gupta, the chartered accountant specially appointed to see the eligibility under Section 29A of the Code. After examining the material, the chartered accountant concluded that no disqualification under Section 29A may be attached to the resolution applicant. That report was thereafter placed before every financial creditor during the 41st meeting of the COC. The resolution professional informed the CoC that proceedings concerning attachment were pending before the Hon'ble High Court, and also that interim protection had been granted and that respondent No. 2 continued to remain eligible under Section 29A. Thus, it could not be said that the CoC has not considered this aspect of the matter in detail and when the CoC has taken a decision considering the issue highlighted by the appellant, the appellant cannot raise a finger on the commercial wisdom of the CoC.

It is further submitted that the appellant's reliance upon Regulation 39(1)(c) of the CIRP Regulation is wholly misconceived and deserves to be rejected at the threshold. As no such ground has ever been pleaded in the Memorandum of Appeal, the appeal neither alleges any violation of Regulation 39(1)(c) nor there is any structural foundation in support thereof. Regulation 39 nowhere provides that an approved resolution plan shall stand vitiated merely because an undertaking is subsequently alleged to have been breached. A delegated legislation cannot create substantive rights or consequences which the parent statute itself does not envisage. Therefore, Regulation 39 must be read harmoniously with Sections 29A, 30, and 31 of the Code, and cannot be interpreted so as to create an additional ground for setting aside an approved resolution plan.

It is further submitted that it is not a case where the COC was unaware of the alleged PMLA attachment proceedings or where any material information was concealed from it. To the contrary, the CoC was fully aware of every allegation relied upon by the appellant, and a conscious decision has been taken by the CoC considering all aspects of the matter and the same could not be doubted.

It is further submitted that what the CoC itself cannot do directly could not be permitted to be achieved indirectly by one dissenting financial creditor i.e. the appellant. Once the Resolution Plan has been approved by the requisite majority and thereafter comes to be approved by the Ld. Adjudicating Authority under Section 31 of the Code, the collective commercial decision and the commercial wisdom of the COC, which has attained finality, may not be subject to the judicial review as contemplated under Section 61 of the Code.

It is further submitted that an alleged breach of an undertaking furnished by the Resolution Applicant could not entitle the Appellant to seek annulment of the Resolution Plan. The undertaking contemplated under Section 39 is furnished to the resolution professional as part of the insolvency process. Whether such undertaking has been breached and the consequences it may follow is not a matter falling within the private domain of an individual member of the COC. The grievance of the appellant is to be seen in the background of the collective decision taken by the COC. Instant Appeal is nothing but an attempt by a dissenting financial creditor to reopen and disapprove a resolution plan after having participated in every stage of the CIRP with full knowledge of all material facts. Such an attempt strikes at the certainty, finality, and commercial wisdom of the COC, which constitute the very foundation of the Code and therefore deserve to be dismissed with cost.

It is also submitted that the entire basis of the appeal filed by the Appellant rests upon the assertion that Respondent No. 2 allegedly concealed material facts from the COC and consequently procured approval of the resolution plan in violation of Regulation 39(1)(c) of the CIRP Regulations. However, this allegation is not merely incorrect but is directly contradicted by the record maintained by the RP, the minutes of the Committee of Creditors, the email correspondence exchanged between Respondent No. 1 and Respondent No. 2, the independent verification undertaken by the Resolution Professional, the reports submitted by the chartered accountants appointed by the Resolution Professional and the successive clarifications submitted by the respondent No.2. It can be inferred from the established facts that all the allegations which have been alleged by the appellant have been debated, considered, and taken into consideration by the COC while taking the decision of approval of the resolution plan submitted by the respondent No. 2.

It is further submitted that the present appeal has not been instituted bona fide and is a calculated attempt by a dissatisfied financial creditor to frustrate the successful resolution of the corporate debtor after having failed to secure a commercially favourable outcome during the CIRP. The Appellant has raised identical issues before the COC, asking the COC to reject the Resolution Plan of the Respondent, and when failed, now seeks to re-agitate the very same issues under the guise of an Appeal, which is contrary to settled principles governing insolvency jurisprudence and deserves no indulgence from this Appellant Tribunal.

It is also submitted that the record establishes that the appellant was not an uninformed creditor as it participated in each meeting of the COC, sought repeated clarifications from respondent number two, questioned the resolution professional regarding the eligibility of respondent number two under Section 29A of the Code, raised issues concerning the alleged proceedings before the Directorate of Enforcement, and participated in discussions regarding the source of funds. It deliberated upon the revised resolution plans and ultimately exercised its voting right after every material fact was placed before the COC. Therefore, the appellant was fully aware of every circumstance which it now seeks to portray as having been suppressed.

It is further submitted that the bona fide of the Appellant is under the shadow, as it has been widely reported that investigative agencies have initiated proceedings concerning alleged diversion of funds in relation to the Suraksha group, including registration of an FIR and a complaint by the ED in connection with the JP matter. A look-out circular has also been issued in an alleged bank-linked fraud. First of all, these proceedings are not relied upon as proof of the allegations reported, but only to demonstrate that the appellant, while seeking to disqualify Respondent No. 2 on the basis of pending proceedings and allegations, itself stands associated with entities that have become the subject matter of serious investigative scrutiny. Therefore, the appellant cannot be permitted to selectively rely upon mere allegations against respondent No. 2 while simultaneously expecting this appellate tribunal to disregard reported proceedings concerning its own group.

Ld. Counsel for the Respondent No.2 has relied on following judicial precedents: -

Kalpraj Dharamshi and Anr. vs. Kotak Investment Advisors Ltd. & Anr., [(2021) 10 SCC 401].

Ghanashyam Mishra and Sons Pvt. Ltd. through Authorised Signatory vs. Edelweiss Asset Reconstruction Company Ltd. Through the director & Ors. [Civil Appeal No. 8129 of 2019]

Ebix Singapore Pvt. Ltd. vs. CoC of Educomp Solutions Ltd. & Anr. (2022) 2 SCC 401.

Essar (India) Ltd. vs. Prabhat Technologies (India) Ltd. [CA (AT) (Ins) No. 183 of 2024]

Deccan Value Investors L.P. and Anr. vs. Dinkar Venkatasubramanian and Anr. [2024 SCC Online SC 4075]

S.M. Kamal Pasha and Anr. vs. S. Rajendran, Resolution Professional of TD Toll Road Pvt. Ltd. & Ors. [CA (AT) (Ins) No. 211 of 2026]

Karad Urban Cooperative Bank Ltd. vs. Swwapnil Bhingardevay and Ors. [(2020) 9 SCC 729]

Bhagwani Bai vs. Life Insurance Corporation of India, Jabalpur [1983 SCC Online MP 10]

- (ix) Harjas Rai Makhija (D) Thr. Lrs. Vs. Pushparani Jain & Anr. [(2017) 2 SCC 797] - (x) Lalita vs. Vishwanath & Ors. [2025 INSC 173] - (xi) Nisar Alia vs. State of Uttar Pradesh [1957 SCC Online SC 42] - (xii) Bachhaj Nahar vs. Nilima Mandal & Anr. [Civil Appeal Nos. 5798-5799 of 2008] - (xiii) Srinivas Raghavendrarao Desai (Dead) by Lrs. Vs. V. Kumar Vamanrao @ Alok and Ors. [2024 INSC 165] - (xiv) Deepak Parkash vs. Sunil Kumar [2014 (1) Him. L.R. 654] - (xv) Rajiv Chakraborty Resolution Professional of EIEL vs. Directorate of Enforcement [2022 SCC Online Del 3703] - (xvi) Directorate of Enforcement vs. Manoj Kumar Agarwal [SCC Online NCLAT 121] - (xvii) Om Prakash & Ors. vs. Gian Chand & Ors. [2014 SCC Online HP 2537] - (xviii) Shridhar C. Shetty (Deceased) Through Legal Representatives vs. Additional Collector and Competent Authority and Ors. [(2020) 9 SCC 537].

Ld. Counsel for the Respondent No.3 submits that it is an admitted position that the issue regarding the alleged ED/PMLA proceedings was raised by the Appellant for the first time during the 40^th CoC Meeting held on 20.12.2023. Consequently, the agenda to put the Resolution Plan of the SRA to vote was deferred, so that allegations raised by the Appellant can be duly examined. It was thereafter on 21.12.2023, the Appellant addressed a letter stating that SRA’s assets are attached by PMLA and the plan of the SRA is barred by Section 29A of the IBC. Simultaneously, the Appellant objected of its treatment as an unsecured creditor. However on 21.12.2023, the RP addressed an email to the SRA seeking clarifications regarding the eligibility of the SRA, In response, the SRA furnished detailed clarifications vide letter dated 26.12.2023 and e-mail dated 28.12.2023 explaining the status of the PMLA proceedings and further stated that the Hon’ble Bombay HC vide order dated 09.08.2023 has accepted the statement made by the Counsel of ED and stayed further action qua Notice of Eviction issued by the ED, thereafter, a Third-Party Chartered Accountant, namely Bagchi & Gupta, was appointed to examine the eligibility of the SRA to submit the Resolution Plan and on 17.01.2024, the Report was submitted by the CA observing that the SRA is eligible under Section 29A.

It is further submitted that the aforesaid report of the CA, along with the objections raised by the Appellant, the clarifications furnished by the SRA, and the order passed by the Hon’ble Bombay High Court, was placed before the CoC during the 41st CoC meeting held on 19.01.2024 and the CoC deliberated upon the issue regarding the eligibility of the SRA and also on the feasibility & viability of the Resolution Plan and considered all relevant material before taking the decision on the Resolution Plan and after being fully aware of all relevant facts took a decision in its commercial wisdom.

It is further submitted that there is no violation of Regulation 39(1)(c) of the CIRP Regulations and the FIR dated 07.02.2022 was registered by CBI against ABG Shipyard Ltd. and its directors and certain unknown persons. However, neither the SRA nor any of its directors were named as accused in the said FIR.

It is further submitted that the answer given against the query in Appendix-9 pertains to the existence of “any criminal proceedings, investigations, enquiries, etc.”. A plain and grammatical reading of this query indicates that the adjective “criminal” has to be read with the entire series that follows, namely “proceedings”, “investigations” and “enquiries”. The query is therefore concerned with criminal proceedings or criminal investigations and not every civil, regulatory or enforcement action. However, in the present case, the Appellant has failed to place on record any complaint, prosecution, conviction or finding of guilt recorded by any competent criminal court against the SRA or its directors. Moreover, attachment proceedings under Sections 5 and 8 of the PMLA are of civil in nature and do not amount to a finding of criminal guilt. Thus, there is no false statement and wilful concealment in terms of Regulation 39(1)(c) of the CIRP Regulations, as no criminal proceedings are placed on record by the Appellant [Reliance placed on Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 (Para 369, 370 and 382.26)].

It is further submitted that Regulation 39(1)(c) uses the expression “false information and record” and merely “incomplete” or “incorrect” information inadvertently given by the Resolution Applicant may not be deemed its violation and the same cannot be equated with furnishing false information within the meaning of Regulation 39(1)(c).

It is submitted that neither the IBC nor the CIRP Regulations require a Resolution Applicant to disclose every pending civil, criminal, regulatory or enforcement proceeding and there is no provision under the IBC or the CIRP Regulations that mandates that every query or disclosure sought under the RFRP must be answered in a particular manner, failing which the Resolution Plan would be rendered invalid. The reliance placed by the Appellant on Gaurav Katiyar v. Nisus Finance & Investment Managers LLP, CA(AT)(Ins.) No. 963-965, NCLAT New Delhi, is misplaced and distinguishable on facts.

It is further submitted that the allegations pertaining to violation of Regulation 39(1)(c) are founded on the very same facts and allegations which were earlier relied upon by the Appellant to question the eligibility of the SRA under Section 29A and on due examination, the SRA was found eligible under Section 29A.

It is further submitted that mere breach of Regulation 39(1)(c) of the CIRP Regulations does not ipso facto vitiate the resolution process, unless such breach qualifies as a material irregularity. Reliance has been placed Dorni Vinimoy Private Limited v. Rachna Anchalia Resolution Professional of Imperial Tubes Private Limited & Ors., CA(AT)(Ins.) No. 411/2025, NCLAT. In the present case, all the relevant facts concerning the alleged PMLA proceedings were admittedly placed before the CoC and considered prior to voting and the Appellant has failed to demonstrate any prejudice, distortion, non-transparency or adverse impact on the commercial wisdom of the CoC due to the alleged non-disclosure.

It is also submitted that the Resolution Plan envisages paying a total amount of Rs. 60.16 Cr. (out of which Rs. 41 Cr. is towards payment of creditors and Rs. 19.16 Cr. towards the Bank Guarantee extended by BOI) and the SRA in Clause 6 has mentioned the source of funds. The said clause provides that the SRA would utilise internal sources to fund the amount proposed. The SRA would also infuse funds by availing debt from the Banks/ FIs or Inter-Corporate Loans/ Deposit. The SRA further proposed to raise finance from a NBFC, namely, Renaissance Fiscal Services Pvt. Ltd. towards which a letter of interest is received by the Resolution Applicant, a copy of which is annexed as Exhibit to the Plan.

It is also submitted that attachment orders relied upon by the Appellant itself show that the aggregate value of the attached properties is approximately Rs. 19.16 Cr. Out of the said amount, properties valued at Rs. 3.69 Cr. belong to the SRA, whereas the remaining attached properties belong to the directors of the SRA.

It is submitted that IBC does not require the RP and the CoC to undertake an endless enquiry into the ultimate source of funds proposed to be infused by the Resolution Applicant and once the source of funds is disclosed and the feasibility and viability of the Resolution Plan are examined, the requirements of the IBC are satisfied and the forensic scrutiny is not required.

It is further submitted that erstwhile RP appointed two registered valuers in terms of Regulation 27 of the CIRP Regulations2016 and the two valuers provided their respective valuation reports and determined the fair value and liquidation value of the Corporate Debtor. The issue regarding variation in the valuation reports was raised during the 41st CoC Meeting and the CoC deliberated upon the issue and decided to proceed with the existing valuation, considering the advanced stage of the CIRP and time bound process. Regulation 35(1)(b) of the CIRP Regulations provides that if the 2 valuation reports are significantly different, the RP may appoint a third valuer upon receipt of a proposal from the CoC. The use of the term “may” in the provision indicates that the appointment of a third valuer is not mandatory but rather left to the discretion of the RP and the CoC. Hon’ble Supreme Court in the case Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467 (Para 28 & 29) has held that it is not mandatory for a resolution applicant to match the liquidation value arrived at in the manner provided in Regulation 35.

It is further submitted that the Appellant had filed its claim as a secured Financial Creditor. However, upon verification, the Resolution Professional admitted the claim as that of an unsecured Financial Creditor. Aggrieved by the aforesaid treatment, the Appellant filed I.A. No. 318 of 2021 before the Ld. NCLT seeking recognition as a secured Financial Creditor. The said IA was decided by the Ld. NCLT vide order dated 01.11.2023. The said order passed by the Ld. NCLT is presently under challenge before this Appellate Tribunal in CA (AT) (Ins.) No. 42 of 2024 filed by Respondent No. 3. Accordingly, the issue relating to the Appellant’s status as a secured Financial Creditor is sub judice and has not attained finality.

Having heard Ld. Counsel for the parties and having perused the record, it is reflected that So far as the objections raised by learned counsel for the appellant pertaining to the non-recognition of the appellant as secured financial creditor, suffice is to recall that the appellant had filed an IA No. 318 of 2021 before the Ld. Adjudicating Authority seeking recognition as a secured financial creditor and the said IA was decided vide order dated 1^st November 2023 and the order passed by the Ld. Adjudicating Authority has been challenged by the Respondent No.3 by filing an appeal before this Appellate Tribunal being CA (AT) (Ins) No. 42 of 2024 which is pending. Thus, the issue of the Appellant being a Secured Financial Creditor or not, is sub judice.

Perusal of the record would reveal that there are certain facts in this appeal which appear to be admitted to the parties. The corporate debtor was inducted into the CIRP vide order dated 21/2/2019 passed by the Ld. Adjudicating Authority on 21/2/2019 under Section 7 of the Court, and Mr. Ankur Kumar was appointed as the IRP and in pursuance of the public announcement made by the IRP, the applicant submitted its claim in Form C on 25-11-2019 with regard to an amount of ₹1,09,63,47,940/- as secured financial creditor of the corporate debtor.

The IRP by way of email dated 16/12/2019 admitted the claim of the appellant to the tune of Rs. 40,84,24,363/-and categorized the appellant as unsecured financial creditor. In the 35^th meeting of the CoC, convened on 4/9/2023, the resolution for liquidation of the CD was passed with 78.83%, and the liquidation application was also filed by the RP before the Learned Adjudicating Authority. In the meantime, two interested prospective resolution applicants, namely Mr. Pankaj Kikawat and Barmaco Energy Systems Limited filed IA No. 4498 of 2023 and IA No. 4500 of 2023, respectively, seeking approval to submit the Resolution Plans and vide order dated 25/10/2023, Learned Adjudicating Authority granted opportunity to them to file the resolution plan. The plan was submitted by Mr. Pankaj Kikawat, the promoter and suspended director of the CD, however, the same could not be considered because the EMD was not deposited. The plan of the Respondent No. 2 was discussed in the 38^th CoC meeting convened on 23-11-2023, and he was directed to submit an unconditional resolution plan. The revised resolution plan along with the addendum was submitted by the Respondent No. 2.

It is further reflected that the authorized representative of the Appellant pointed out in the 40^th CoC meeting convened on 20/12/2023 that Respondent No. 2 is involved in certain questionable transactions which were being prosecuted by the Enforcement Directorate (ED). Thus, the agenda was deferred by the COC. The appellant also sent a letter dated 21/12/2023 to the RP with regard to the Resolution Plan submitted by the Respondent No. 2, and also indicating that the RP has not classified the appellant as secured creditor. The 41^st CoC meeting was convened on 19-1-2024. The RP informed the CoC that he has appointed Baghchi and Gupta to verify the eligibility of the resolution applicant under Section 29A of the Code. No disqualification with regard to the Section 29A of the Code was reported by the Chartered Accountants. It is also informed in this COC meeting that the proceedings under the PMLA have been stayed by the Hon’ble Bombay High Court. However, an email was written by the appellant on 24/01/2024 to the RP and members of the COC, whereby certain documentation pertaining to the proceedings under PMLA against respondent number two were submitted. Another email was written by the Appellant on 31/01/2024 raising certain objections with regard to the proposed resolution plan submitted by the respondent No. 2. The E-Voting on the Resolution Plan was concluded on 6^th March 2024, wherein the Plan of Respondent No. 2 was approved with a voting percentage of 78.83%. The Resolution Professional has filed an IA No. 22/2024 under Section 30(6) of the Code read with Regulation 39(4) of the CIRP Regulation 2016, seeking approval of the Resolution Plan dated 16-12-2023 before the Learned Adjudicating Authority and the same was allowed vide order dated 14-05-2024 (impugned order).

The foremost submission of the applicant is that the respondent No. 2/SRA, has concealed its criminal antecedent in the undertaking filed by it under Regulation 39(1) (C) of the C.I.R.P. Regulation 2016, on the day of filing the undertaking, SRA and its promoters have been alleged to be involved in money laundering. The Central Bureau of Investigation registered an FIR on 7/2/2022 for commission of offenses under Section 420 and 120 of the Indian Penal Code, 1860 read with the Prevention of Corruption Act, 1988, against ABG Shipyard Limited and its directors and other unknown persons. Based on this investigation, the ED also registered an ECIR bearing ECIR No. 11 of 2022 against ABG Shipyard Limited and other connected individuals and entities for causing a loss of above Rs. 22,842 crores to a consortium of banks.

It is further the case of the appellant that, under relevant provisions of the Prevention of Money Laundering Act, 2002 (PMLA), certain properties of SRA and its promoters were attached by Provisional Attachment Order No. 08/2022 dated 21-09-2022. The said order was subsequently confirmed by the PMLA Adjudicating Authority vide order dated 14th March 2023. On an appeal preferred before the Appellate Tribunal of the PMLA, the Stay Application moved by the SRA was dismissed on 03-08-2023. It was observed that the SRA is a part of organized crime and involved in money laundering, wherein proceeds of crime of ABG Shipyard and Group Companies were taken by the SRA and its promoters. The order dated 3/8/2023 passed by the Appellate Tribunal was further challenged before the Hon’ble High Court of Bombay by filing Criminal Appeal No. 879 of 2023, the eviction of the SRA was stayed. Thus, it is argued that since the SRA, in pursuance of the requirement of the RFRP, was under obligation to clarify and share details of any criminal proceedings, investigations, inquiries, etc., commenced or pending against it or against any connected persons, material information has been concealed by the SRA in the undertaking filed under Regulation 39(1)(c) of the CIRP Regulation 2016 and the appellant had become disqualified and his plan should not have been considered by the CoC. However, despite the objections raised and materials supplied by the Appellant, the plan submitted by the SRA has been passed by the COC and approved by the and adjudicating authority, and the same was liable to be rejected.

It is also the case of the appellant that the concealment of the criminal proceedings by not giving correct information as provided under Regulation 39(1)(c) of the CIRP Regulation 2016 was affecting the eligibility of the SRA, and in view of Regulation 39(1)(c), the SRA should have been disqualified from submitting any resolution plans and if the resolution plan was submitted, the same should have been rejected by the CoC as well as by the learned adjudicating Authority.

While the case of the respondent No. 2 and 3, SRA and financial creditor, respectively, is that it is an admitted case of the appellant that neither the SRA nor any of its directors has suffered a conviction attracting disqualification contemplated under Section 29A of the Code. This is sufficient to demonstrate that the appeal is an attempt to enlarge the scope of Section 29A beyond what the Parliament has consciously enacted.

It's also the case of the respondents that the provisions provided under Regulation 39(1)(c) of the CIRP Regulations 2016 could not be equated with Section 29A of the Code and proceeding of attachment under relevant provisions of the PMLA may not attract any disqualification provided under Section 29A of the Code.

It is also the case of the respondents that the attachment proceedings may not be equated with any criminal proceedings, as the same is only with regard to the attachment and could not be attached with any culpability unless and until any charge sheet or complaint has been filed by the ED against the SRA.

It is also highlighted by Ld. Counsel for the Respondents that the FIR relied on by the Appellant is pertaining to the transactions involving Varddraj Cement Limited and ABG Shipyard Limited and mere registration of an FIR neither records nor constitutes proof of commission of an offence and so far as FIR is concerned, the SRA is not named therein as an accused.

It has been also argued before us that it is not a case where the issues with regard to criminal proceedings allegedly pending against the SRA were raised by the appellant and were not considered by the CoC. When, for the first time, this issue was raised by the appellant in the court meeting of the CoC, the same was taken seriously and Bagchi and Gupta, chartered accountants, were appointed to examine the eligibility of the SRA under Section 29A of the Code and after examining the material, the chartered accountants have submitted a report and concluded that no disqualification under Section 29A is attracted with regard to SRA. Thereafter, the CoC has deliberated on the issue and has taken a conscious decision, in pursuance of its commercial wisdom, to approve the resolution plan submitted by SRA / Respondent No. 2. Thus, the commercial wisdom of the CoC cannot be questioned by the appellant, who had voted against the plan in the CoC meeting and has filed this appeal to derail the insolvency resolution process.

Much thrust has been given by the Learned Counsel for the appellant on Regulation 39(1)(c) of the CIRP Regulations 2016, and for convenience, the same is reproduced as under: -

Perusal of this regulation would reveal that a prospective resolution applicant may submit a resolution plan prepared in accordance with the Code and Regulations to the Resolution Professional within the time given in RFRP. He will have to file an affidavit stating its eligibility under Section 29A of the Code and also an undertaking that every information and reports provided in connection with or in the resolution plan are true and correct. Discovery of false information and record at any time will render the prospective resolution applicant ineligible to continue in the insolvency resolution process, and the EMD deposited by said resolution applicant would also be forfeited. It will further attract penalty under the Code.

Perusal of the resolution plan submitted by the Respondent No. 2, SRA, would reveal that the following information was provided, which has been highlighted by the appellant.

Thus, admittedly, in reply to the query as to whether there are any criminal proceedings, investigations, inquiries, etc., commenced or pending against the resolution applicant and/or any connected person, the answer has been given by the SRA, as: No.

Perusal of the Resolution Plan would also reveal that it has been mentioned therein that, in compliance with Regulation 39(1)(c), the resolution applicant also undertakes that every information and records provided in connection with or in the resolution plan are true and correct. Discovery of false information and record at any time will render it ineligible to continue in the corporate insolvency resolution process and will be subject to any refundable deposit and attract penal action under the Code.

The appellant has brought on record the copy of the order of the Adjudicating Authority confirming the provisional attachment order, Wherein the name of the SRA is appearing at serial no. 14, and of its directors Viren Vinod Ahuja and Kabir Viren Ahuja appearing at serial no. 15 and 16 and certain properties of the SRA and Director Viren Vinod Ahuja are shown to have been attached. The copy of order dated 3^rd August 2023 passed by the Appellate Tribunal of the PMLA has also been brought on record, whereby the stay application filed by the Director, Viren Vinod Ahuja, Kabir Viren Ahuja, and Barmaco Energy Systems Limited, filed in the Appeal, was dismissed. It is also mentioned in this order that a huge amount was rotated in an illegal manner through associated companies in an organized manner, the value of the attached properties after the order of adjudicating authority is only a sum of ₹2,041 Crore out of the properties worth ₹2,747 Crore, as against the proceeds of crime of ₹22,842 Crore. It is also mentioned therein that facts are sufficient to prima facie show that appellant is part of the organized crime.

The Order of the Hon’ble High Court of Judicature at Bombay, passed in Criminal Appeal No. 879 of 2023, dated 9^th August 2023, has also been placed on record, which shows that a statement was given by the counsel for the Enforcement Directorate that they will not act upon the eviction notice till the next date, and his statement was accepted.

Both parties have relied on the law laid down by the Hon’ble Supreme Court in Vijay Madan Lal Choudhary & Ors. vs. Union of India & Ors. (2023) 12 SCC 1 to buttress their point for and against the submission that the proceedings of attachment before the adjudicating authority created under PMLA or appellate Forum are or not criminal proceedings.

Hon'ble Supreme Court in Vijay Madan Lal Choudhury and others vs Union of India and others (2023)12 Supreme Court cases1 in paragraph number 370 has opined that the fact that such a ECIR has not been recorded does not come in the way of the authorities referring to Section 48 of the PML Act to commence an inquiry, investigation, and initiation of civil action for attachment of property being proceeds of crime by following the prescribed procedure in that regard and on the basis of it, it has been argued by Ld. Counsel for the SRA that the proceeding of attachment of the properties under PMLA is civil proceeding, while Ld. Counsel for the Appellant has placed its reliance on the order passed by the Honourable Bombay High Court in criminal appeal wherein he SRA has stated before the Bombay High Court that the proceeding would lie on the criminal side. Relevant Paragraphs of the aforesaid Vijay Madan Lal Choudhury (Supra) are reproduced as under: -

We, at the outset, are of the view that in the aforesaid paragraphs of Vijay Madan Lal Chaudhary (supra), the Hon’ble Supreme Court has referred to the nature of the action pertaining to the attachment of property with regard to the proceeds of crime as a civil action (As the attachment and Confiscation of properties are civil process) but simultaneously it should also be remembered that the attachment under PMLA is done for the properties which prima facie appears to be the proceeds of the crime, subject to the final adjudication by the competent Criminal Court in the trial, thus it could not be construed that the attachment of the property under the relevant provisions of the PMLA Act would be having civil consequences. Rather, the Hon’ble Supreme Court has emphasized that even if the ECIR has not been recorded, the same may not be a hurdle for commencement of inquiry or investigation, so far as initiation of process of attachment of property, being proceeds of crime, is concerned. Thus, the procedure of attachment of property (which appears to be the proceeds of crime) is an action having civil nature, but the same cannot be construed as having civil consequences as the same is being done with regard to the properties, which according to the ED, are proceeds of some crime (offence) defined in the schedule appended with the PMLA. Therefore, the action of attachment of the property of a person under the relevant provisions of the PMLA may not be termed as having civil consequences. It would be proper to say that, though the action of attachment is of civil in nature, it would have criminal consequences and attachment is with regard to the properties which prima facie appears to be proceeds of crime.

We also notice that the legislature, in its wisdom, has enacted Section 29A of the Code, which apart from other, also provides that no person shall be eligible to submit a Resolution Plan if such a person or any other person acting jointly or in concert with such person has been convicted for any offence punishable with imprisonment for two years or more under any Act specified under the 12^th Schedule, or for seven years or more under any other law for the time being in force. It is further provided in the Proviso appended with section 29A(d) that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment.

Thus, it is evident that the legislature, in its wisdom, has also provided that a person, either alone or acting jointly or in concert with any other person, who is convicted in the manner provided under Section 29A(d), may not be eligible for submitting a resolution plan. However, such a person would be eligible to submit a Resolution Plan after two years of his release from imprisonment. Thus, it shows that even a convicted person, if he has undergone full imprisonment, may be eligible for submitting a Resolution Plan after the expiry of a period of two years from the date of his release from the prison.

Therefore, in our considered opinion, the pendency of any criminal proceedings or investigation against a prospective resolution applicant may not be a ground to debar him from presenting a Resolution Plan. However, it would be the CoC to assess the viability and credibility of such Resolution Applicant and Plan by exercising its commercial wisdom. But the sole fact that some inquiry, investigation, or proceedings have been initiated against a person would not be sufficient to brand him ineligible from submitting the resolution plan. In this regard Section 29A is to be harmoniously construed with Regulation 39 (1) (c) of CIRP Regulations, 2016.

We also notice that though the SRA in the resolution plan has given the answer to the query pertaining to the pendency of any criminal proceedings, inquiry, investigation, etc. in negative, however, when this matter was brought to the knowledge of the CoC, the CoC deliberated on this issue, a chartered accountant was also appointed to assess the eligibility of the SRA and when the chartered accountant has given a clean chit, the matter was further deliberated by the CoC and after being satisfied with regard to the eligibility and credentials of the SRA and the feasibility of the resolution plan, the same was approved by the CoC.

Perusal of the minutes of the 37th meeting of the CoC held on 27th October 2023 would reveal that the RP had apprised the CoC about the orders dated 10 October 2023 passed in interlocutory applications No. 4498 of 2023 and No. 4500 of 2023 by the prospective resolution applicants, namely Mr. Pankaj Kikawat and Barmaco Energy Systems Limited and also that the Ld. Adjudicating Authority has directed the resolution applicants to submit their plans by 25^th October 2023. The resolution plans submitted by the above prospective resolution applicants were opened and discussed. The RP was directed to confirm as to whether the plan submitted by the Resolution Applicant/Respondent No. 2 is compliant with Section 29A of the Code. The RP in pursuance of the same appears to have written an email to Respondent No. 2 on 27-10-2023.

Perusal of the minutes of the 38^th meeting of the CoC held on 23^rd November 2023 would reveal that the authorized representative of the appellant has raised the issue of the order dated 11/11/2023 passed by the Ld. Adjudicating Authority in favour of the Appellant, recognizing their charge against the property and recognizing them as a secured creditor. Further, the Adjudicating Authority has directed the Regional Director to register the charge, for which they have already filed an application. It is also highlighted that in the resolution plan which was being discussed, they have treated the appellant as unsecured creditor. In this meeting, the plans were further discussed, and some directions were given by the CoC. In pursuance of the discussion held in the 38^th meeting of the CoC, the Respondent No. 2 provided the revised resolution plan with necessary modifications.

In the 40^th meeting of the CoC held on 20^th December 2023, the RP informed the CoC that the decision with regard to the Appellant of its treatment as secured creditor or not, has been taken into consideration by the Resolution Applicant. The CoC further discussed the feasibility and viability of the Resolution Plan received by the Respondent No. 2. At this point, the representative from the appellant informed that the resolution applicant is involved in certain questionable transactions, which were highlighted by the Enforcement Directorate in the case of ABG Shipyard Limited. In the press release of 22 September 2022, ED named the Resolution Applicant and promoter of the Resolution Applicant, stating that they are not only involved in the scam but their assets are also attached. He further stated that these facts were not brought to their knowledge until now by the resolution applicant, and they would want to know the details of these transactions and the status of the ongoing investigation. It is also reflected in this meeting at item number 9 the liquidation of the CD was also discussed, and it was resolved that if the plan is not approved, the liquidation of the CD may be initiated. This agenda item was passed by a voting percentage of 78.83%. The appellant significantly voted against liquidation of the CD in this meeting.

On 21-12-23, the appellant wrote a letter to Respondent No. 1 raising serious concerns on the resolution plan submitted by the respondent No. 2 highlighting the involvement of the Resolution Applicant in the proceedings of Enforcement Directorate (ED), and also that the resolution applicant is not eligible under Section 29A of the Code. The Respondent No. 2 on 26-12-2023 has responded via email to the RP, informing that the Hon’ble High Court of Bombay has granted interim relief to it. It has also contended that no such order has been passed that hampers the ability of the resolution applicant to submit the resolution plan. It has also contended that the said objections raised by the applicant were without any basis. On 5/1/2024, the Respondent No. 2 received an email from the RP calling upon it to provide additional details to assess eligibility under Section 29A of the Code. It was on 9/1/2024, the Respondent No. 2 responded to the email dated January 5, 2024, and provided all the details.

The 41st meeting of the CoC was held on 19th January 2024. In the report submitted by Chartered Accountants Baghchi and Gupta, it was discussed that the clean chit has been given to the Respondent No. 2. It was informed by the RP that the respondent No. 2 has provided clarification pursuant to the press release by the Enforcement Directorate. They have stated that they have filed an application (writ petition) and have been granted an ad interim stay by the order of the Hon'ble High Court till the next date of hearing. Since no order has been passed by the ED, the said matter is pending adjudication. The auditor has not disqualified the resolution applicant under Section 29A of the Code. The members of the CoC also discussed the eligibility of the resolution applicant under Section 29A of the Code. The CoC in this meeting also discussed the feasibility and viability of the Resolution Plan submitted by the Respondent No. 2.

The Appellant appears to have sent another email to the RP on 24-01-2024 and apprehended that the source of funds may be tainted and that the PRA has been actively concealing material information from the CoC and the RP. The Appellant further highlighted that there is some undue haste in voting on its resolution plan, which might result in violation of the Code. Response was sent by the resolution applicant to the RP by stating that there is no order of conviction against the Respondent No. 2 or any charge sheet filed by the ED in the PMLA proceedings and also that there is no embargo or bar under Section 29A on the resolution applicant to submit the Resolution Plan of the corporate debtor, if any criminal legal proceedings or investigation is being carried out against the resolution applicant.

The 42^nd meeting of the COC was held on 26^th February 2024 wherein the report submitted by the chartered accountants Bagchi and Gupta, giving clean chit to the resolution applicant under Section 29A, was accepted and the resolution plan of the respondent No. 2 was also approved with the majority of 78.83% voting share.

Ld. Counsel for the appellant has relied on Gaurav Katiyar Vs. Nisus Finance and Investment Managers LLP & Ors CA (AT) (Ins) 963-965 of 2024 wherein this tribunal has opined as under:

Relying on above law it is submitted that the compliance of Regulation 39 of IBBI CIRP Regulations is mandatory, which has not been complied by the SRA.

Respondent No. 2 has relied on Bhagwani Bai v. Life Insurance Corporation of India, Jabalpur, 1983 SCC OnLine MP 10 and Harjas Rai Makhija v. Pushparani Jain, (2017) 2 SCC 797 to show that on every misrepresentation or concealment of a fact, the contract cannot be avoided merely on trivial and inconsequential misstatement or non-disclosure. The ratio laid down in Lalita v. Vishwanath, 2025 SCC OnLine SC 370 and Nisar Ali v. State of U.P., (1957) 1 SCC 350 has also been relied to show that the first information report is not by itself a substantive piece of evidence and the statement made therein cannot be considered as evidence unless it falls within the purview of Section 32 of the Evidence Act.

The reliance of the Respondent No. 2 is also on Era Infra Engineering Ltd. (Resolution Professional) v. Enforcement Directorate, (2022) 7 HCC (Del) 38 and on Enforcement Directorate v. M.K. Agarwal, (2022) 235 Comp Cas 402 in order to show that the proceedings of attachment are civil in nature is of no use in view of the law laid down by the Hon’ble Supreme Court in Vijay Madan Lal Chaudhry (Supra).

Respondent No. 3 has also relied on Dorni Vinimoy (P) Ltd. V. Rachna Anchalia, 2025 SCC Online NCLAT 1678, in order to buttress his point that mere breach of a regulation by itself would not render the insolvency process vitiated ipso facto if the same has not resulted in material irregularity and the duty of Ld. Adjudicating Authority as well as of this Appellate Tribunal is to assess the impact of this violation. The relevant part of this judgment is reproduced as under: -

(emphasis supplied)

Thus, from the conjoint reading of the aforesaid precedents it would emerge that even if the information pertaining to aforesaid attachment proceedings were not furnished by the SRA the sole act of not furnishing the required information would not be itself sufficient to assume that the whole CIR process has been polluted, rather the duty of the Adjudicating Authority is/was to assess the impact of such violation taking a holistic view of the matter.

The aforesaid sequence of events would clearly reflect that, though the resolution applicant SRA has not stated anything with regard to the pendency of any criminal proceedings or attachment proceedings under PMLA, in the resolution plan (in compliance with Regulation 39(1)(c) of the CIRP Regulations 2016), this matter was brought to the knowledge of the CoC by the Appellant and the CoC discussed it in depth and thereafter appointed a chartered accountant to assess the eligibility of the SRA under Section 29A of the Code.

It was only when the report submitted by the chartered accountant has been accepted by the COC, the plan of the Respondent No. 2 was approved. Thus, it is not a case where the CoC, without discussing the proceedings pending against the SRA, has approved the plan submitted by it. Rather, it is a case where the CoC has vigorously discussed the proceedings pending against the resolution applicant and thereafter has taken a conscious decision in its commercial wisdom to approve the plan of the respondent No. 2/SRA, even after getting knowledge of the pendency of the ED proceedings against it. As we have already discussed, the pendency of criminal proceeding, either of investigation or even at the stage of trial, may not be a bar for a resolution applicant to submit the resolution plan under Section 29A of the Code and it is only on account of conviction in the manner provided therein, he may be found ineligible from submitting any resolution plan, which is not a case with the Respondent No. 2.

Now, we will have to see as to whether the CoC, in its commercial wisdom, can approve the resolution plan submitted by the resolution applicant (SRA) against whom criminal proceedings are pending and whose properties have also been attached under PMLA or whether the Ld. Adjudicating Authority or this Appellate Tribunal would be justified in interfering with the commercial wisdom of the COC by exercising the power of judicial review. Learned counsel for the appellant has relied on the law laid down by the Hon’ble Supreme Court in Lamba Exports Private Limited versus Deer Global Industries Private Limited and others, reported in 2026 SCC Online SC 459. In paragraph number 12 of the report, it has been highlighted that the primacy of commercial wisdom does not mean that every action taken in the insolvency process is altogether immune from scrutiny in every situation. Where a challenge is laid in an appropriate proceeding on a legally sustainable foundation, such as history, legality, or a judicial infirmity, the matter would naturally be considered in accordance with law.

The extent of powers and jurisdiction of the Ld. Adjudicating Authority or this appellate tribunal, so far as the same are concerned with the interference in the commercial wisdom of the CoC, for the purpose of approval or non-approval of the resolution plan, is now no more res integra and the same has been set at rest by catena of judgments passed by the Hon’ble Supreme Court as well as by this appellate tribunal.

Section 31 of the code provides as under:

Relevant part of Section 30 of the code is also reproduced as under;

Section 32 of the Code provides as under:

Regulation 38 of the CIRP Regulations, 2016 is also relevant and reproduced as under:

Ld. Counsel for the Respondent No.3 has relied on Kalpraj Dharamshi v. Kotak Investment Advisors Limited, 2021 SCC Online SC 204, relevant part of the same is reproduced as under: -

Thereafter the Apex Court after considering the ratio of K. Sashidhar and ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta and the relevant provisions of the I&B Code observed as under: -

(emphasis supplied)

In another case relied on by Ld. Counsel for Respondent No. 3 i.e. Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467, Hon’ble Supreme Court reminded about the extent of judicial review in plan approval cases as under: -

Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited, 2021 SCC ONLINE SC 313 held as under: -

The Hon’ble Supreme Court again in Deccan Value Investors L.P. v. Metalyst Forgings Ltd. (Resolution Professional), (2026) 6 SCC 624 Opined as follows:

The Hon'ble Supreme Court again in Karad Urban Coop. Bank Ltd. v. Swwapnil Bhingardevay, (2020) 9 SCC 729 Opined that the question of viability and feasibility, is to be left to the commercial wisdom of CoC and the same cannot be lightly interfered with by the Tribunal, in view of the law laid down by this Court in Essar Steel (India) Ltd. and K. Sashidhar.

In K. Sashidhar Vs. Indian Overseas Bank & Ors. (2019) ibclaw.in 08 SC it was provided that the provisions investing jurisdiction and authority in the NCLT or NCLAT has not made the commercial decision exercised by the CoC justiciable. This position is evident from the limited grounds specified for instituting an appeal that too against an order “approving a resolution plan” under Section 31, that First the approved resolution plan is in contravention of the provisions of any law for the time being in force. Second, there has been material irregularity in exercise of powers “by the resolution professional” during the corporate insolvency resolution period. Third, the debts owed to operational creditors have not been provided for in the resolution plan in the prescribed manner. Fourth, the insolvency resolution plan costs have not been provided for repayment in priority to all other debts. Fifth, the resolution plan does not comply with any other criteria specified by the Board. Significantly, the matters or grounds (be it under Section 30(2) or under Section 61(3) of the Code) are regarding testing the validity of the “approved” resolution plan by the CoC; and not for approving the resolution plan which has been disapproved or deemed to have been rejected by the CoC in exercise of its business decision.

Therefore, the limited judicial review available to the Adjudicating Authority and NCLAT, which cannot eclipse the business decision of the majority of the CoC, has to be within the four corners of Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as this Appellate Tribunal is concerned. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the CoC, the limited judicial review available is to see that the CoC has taken into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process, that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. It is only if the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been complied, it may send a resolution plan back to the CoC to re-submit such plan after satisfying the aforesaid parameters. Therefore, the reasons given by the CoC while approving a resolution plan may thus be looked into by the Adjudicating Authority only from this point of view, and once it is satisfied that the CoC has paid attention to these key features, it must then pass the resolution plan.

It is also highlighted in K. Shashidhar (Supra) that there is vital difference between the jurisdiction of the High Court under Section 392 of the Companies Act, 1956 and the jurisdiction of the Adjudicating Authority under the Code that must be kept in mind when the Adjudicating Authority is to decide on whether a resolution plan passes muster under the Code. When this distinction is kept in mind, it is clear that there is no residual jurisdiction not to approve a resolution plan on the ground that it is unfair or unjust to a class of creditors, so long as the interest of each class has been looked into and taken care of.

In Kalyani Transco vs. Bhushan Power & Steel Ltd., [(2025) ibclaw.in 388 SC] : 2025 SCC OnLine SC 2093 while discussing the power of judicial review vested in NCLT or NCLAT it is opined that the legislature purposefully did not include to challenge the commercial wisdom exercised by the CoC and a challenge cannot be raised against the decision making of the CoC unless and until the grounds for challenge as given in the Code are satisfied and any interference in the paramount objective of the CoC of exercising its commercial wisdom would amount to the Court rewriting the law and going against the very objectives of the IBC.

In Pratap Technocrats Private Ltd. vs. Monitoring Committee of Reliance Infratel Limited, [(2021) ibclaw.in 148 SC] : (2021) 10 SCC 623 it is categorically held as follows:

Perusal of the Resolution plan will reveal that the COC at the time of approval of plan by it was constituted and also the manner in which COC members have acted at the time of approval of Resolution Plan. The same is shown as under;

1- Bank of India, 54.53% voting share, Voted for Plan. 2- UCO Bank, 12.75% voting share, Voted for Plan. 3- Bank of Baroda, 11.55% voting share, Voted for Plan. 4- Suraksha Realty Limited, 15.52% voting share, Dissented 5- Panoramic Construction Pvt. Ltd, 5.49% voting share, Dissented 6- Kashyab Rajesh Shah, 0.03% voting share, Abstained 7- Rima Rajesh Shah, 0.03 % voting share, Abstained 8- Smita R Dak, 0.03 % voting share, Abstained 9- Dhanraj K Shah (HUF), 0.02 % voting share, Abstained 10- Usha Gulabchand Jain, 0.02 % voting share, Abstained 11- Shahrokh R. Tavakkuli, 0.03% voting share, Abstained

The Resolution plan would further reveal that it provides the SRA would utilize the internal sources to fund the amount proposed. The SRA shall also infuse funds by availing debt from the Banks/ Financial Institutions or Inter Corporate Loans/Deposit and it proposes to raise finance from Renaissance Fiscal Services Pvt. Ltd., a non-banking financial corporation, towards which a letter of interest is received by the Successful Resolution Applicant.

It is further revealed that Amount of upfront payment to Financial Creditors and Operational Creditors and Unpaid CIRP Cost (upfront cash recovery) is to be paid within 30 days from effective date as Rs. 11,00,00,000 and balance repayment obligations to Secured payment) - Within 1 year from effective date 30,00,00,000 + 19,16,00,000 towards Bank Guarantee and thus total Payment offered in the Resolution Plan is 60,16,00,000.

Significantly the treatment for Appellant (Suraksha Realty Ltd) is given in terms that the Resolution Professional has provided the Resolution Applicant with a copy of Order dated 1 November 2023 passed in Interlocutory Application No. 318 of 2021, and of 6 and 7 December 2023 passed in Interlocutory Application No. 5559 of 2023 by the Adjudicating Authority in relation to Suraksha Realty Limited's claim of being a Secured Financial Creditor of the Corporate Debtor. It is clarified that the total financial commitment under this Resolution Plan will remain unchanged, irrespective of Suraksha Realty Limited's position on the Corporate Debtor's Committee of Creditors. It is expressly clarified that should Suraksha Realty Limited's claim be admitted as a Secured Financial Creditor either (i) before approval of this Resolution Plan by the Committee of Creditors; (ii) after approval by the Committee of Creditors and prior to the Adjudicating Authority's approval; or (iii) after approval by the Adjudicating Authority, the distribution proposed under this Resolution Plan shall stand automatically modified and will be divided amongst the Secured Financial Creditors as on the date of submission of this Resolution Plan, as stated above, and Suraksha Realty Limited, in proportion to their respective inter se claims, in the manner to be decided and settled by the Secured Financial Creditors of the Corporate Debtor.

It is reflected that in case the Appellant is finally declared as secured financial creditor its position would be at par with the other secured financial creditors. Therefore, the apprehension of the appellant has also been adequately addressed in the Resolution plan. Thus, no illegality appears in the appraisal of the Ld. Adjudicating Authority with regard to the treatment of the Appellant in the plan.

Hon'ble Supreme Court in recently in Torrent Power Ltd. v. Ashish Arjunkumar Rathi and Ors., (2026) ibclaw.in 109 SC held as under: -

Therefore, it is evident that neither this Appellate Tribunal nor Adjudicating Authority can sit over the resolution Plan approved by the COC, as a court of appeal and the limited jurisdiction which is available is to ensure statutory compliances as provided in Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, so far, this Appellate Tribunal is concerned.

Having considered the above stated facts, circumstances and the legal position we do not find any good ground to interfere in the impugned judgment. Resultantly the Appeal being devoid of force is dismissed.

There is no order as to costs.

Pending IAs are also disposed of.