2025 (7) TMI 1268 - AT - IBC

Resolution applicant can submit fresh plan after procedural irregularities in asset valuation under Regulation 27

SMV Agencies Pvt. Ltd. Versus Granite Gate Properties Pvt. Ltd. Through Its Resolution Professional and Ors.

SMV Agencies Pvt. Ltd. Versus Granite Gate Properties Pvt. Ltd. Through Its Resolution Professional and Ors. - TMI 1. ISSUES:1.1 Whether the Adjudicating Authority erred in remitting the approved Resolution Plan back to the Committee of Creditors (CoC) with liberty to decide the stage from which the Corporate Insolvency Resolution Process (CIRP) should resume, including the preparation of the Information Memorandum (IM).1.2 Whether the Resolution Plan submitted by the Successful Resolution Applicant (SRA) complied with Section 30(2) of the Insolvency and Bankruptcy Code (IBC) and applicable CIRP Regulations.1.3 Whether the non-compliance of CIRP Regulations relating to valuation-specifically the failure to obtain two valuation reports as mandated by Regulation 35-justifies fresh valuation and forensic audit of the Corporate Debtor's assets.1.4 Whether the New Okhla Industrial Development Authority (NOIDA) is to be treated as a secured creditor with attendant rights and consequences under the IBC framework.1.5 Whether the Adjudicating Authority's directions regarding replacement of the Resolution Professional (RP) and treatment of specific project assets comply with the statutory scheme.2. RULINGS / HOLDINGS:2.1 The Adjudicating Authority did not find any violation of Section 30(2) in the Resolution Plan submitted by the SRA; however, it identified irregularities in the valuation and accounting of assets, leading to the remittance of the Resolution Plan back to the CoC with liberty to decide the stage from which CIRP should resume, including the preparation of the IM.2.2 The direction to conduct a fresh valuation in accordance with Regulation 27 read with Regulation 35 of the IBBI (CIRP) Regulations, 2016, and to undertake a forensic audit of the Corporate Debtor's assets was upheld as necessary to remedy the identified irregularities.2.3 The NOIDA is to be treated as a secured creditor with all consequences, including entitlement to premium instalments, water and sewage charges, and time extension charges payable by the Corporate Debtor as CIRP costs.2.4 The present Resolution Professional was replaced with a registered Insolvency Professional Entity to conduct the CIRP afresh, and the outgoing RP was directed to extend all assistance as a professional.2.5 The 'I-Ring' project is to be treated as an asset of the Corporate Debtor, with the SRA permitted to deal with it in accordance with Regulation 37(1)(a) of the CIRP Regulations, including dealings with third parties such as Shomit Finance Limited.2.6 The appeal challenging the remittance of the Resolution Plan to the CoC for reconsideration and the liberty granted to the CoC to decide the stage of CIRP resumption was decided in conjunction with related appeals, with directions for the CoC to issue a fresh Request for Resolution Plan, allowing the SRA to submit a revised plan.3. RATIONALE:3.1 The legal framework applied includes Section 30(2) of the IBC, which mandates that a Resolution Plan must comply with specified parameters, and Regulations 27, 35, 37, and 38 of the IBBI (CIRP) Regulations, 2016, which govern valuation, information memorandum preparation, and resolution plan approval.3.2 The Adjudicating Authority relied on precedent establishing that while the commercial wisdom of the CoC is generally non-justiciable, the Authority can intervene to address shortcomings in the Resolution Plan as per statutory parameters, including sending the plan back for resubmission (as per cited Supreme Court jurisprudence).3.3 The identified breaches-disclosure of liquidation value in the Information Memorandum and valuation based on a single valuer's report-constituted non-compliance with CIRP Regulations, necessitating remedial directions for fresh valuation and forensic audit to ensure accurate asset accounting and fair creditor treatment.3.4 The timeline for CIRP completion under the IBC was emphasized, noting that the CIRP period had expired prior to approval of the Resolution Plan, thereby underscoring the importance of adherence to procedural timelines and justifying the directions for reconsideration to maintain the integrity of the insolvency process.3.5 The classification of NOIDA as a secured creditor was consistent with the Supreme Court's authoritative rulings, impacting the distribution of payments and creditor rights within the CIRP framework.3.6 The appellate authority's power to modify directions regarding CIRP conduct and resolution plan consideration was exercised to balance procedural compliance with the rights of the SRA, including permitting submission of revised plans post forensic audit and valuation.