TaxTMI 
TaxTMI 
2026 (3) TMI 1253
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....can Impex Private Limited (Corporate Debtor) was approved, despite serious objections regarding his statutory ineligibility under Section 29A of the Code. 2. The Appellant contends that the impugned order has been passed without proper judicial scrutiny of material facts relating to Respondent No.1's status as promoter and director of CAN Enterprises Private Limited, a company already undergoing CIRP before the Hon'ble NCLT, Mumbai Bench, and whose admission order has attained finality up to the Hon'ble Supreme Court. The Appeal therefore arises out of alleged suppression of material facts, misrepresentation before the Adjudicating Authority, and non- consideration of mandatory statutory disqualifications. Brief facts of the case 3. The brief facts of the case are as given below: i. CIRP against Afcan Impex Private Limited/ Corporate Debtor commenced pursuant to admission of a Section 7 petition filed by the Bank of Maharashtra. Ld. NCLT, Ahmedabad Bench (Adjudicating Authority), vide order dated 17.02.2021 admitted the petition CP (IB) No. 289/2020 and appointed Mr. Nitin Narang (Respondent No.2) as IRP, who was later confirmed as RP. ii. Form G was publ....
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....IA/766/(AHM)/2021, approved the Resolution Plan submitted by Respondent No.1 while recording that the alleged settlement proposal had been rejected by the Appellant and that proceedings pending before NCLT Mumbai had no adverse consequence on approval of the plan. ix. The Appellant asserts that the approval of the Resolution Plan was granted without independent adjudication of Respondent No.1's eligibility under Section 29A, without verification of actual status of CIRP proceedings of CAN Enterprises Private Limited, and despite pendency of liquidation proceedings therein. 4. The appellant had filed a petition under Section 9 of the Code against CAN Enterprises Pvt. Ltd. in which Respondent No.1 was one of the promoter-director of the company. It is relevant to state the facts relating to this particular case as the appellant has relied on this case to argue that the Respondent No.1/SRA was ineligible under Section 29A of the Code to submit the resolution plan in CP (IB) No. 289(AHM) of 2020. The brief details of the said CIRP proceedings are given below: i. The Corporate Insolvency Resolution Process (CIRP) against CAN Enterprises Private Limited was initiated....
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....nt to the Apex Court order, the Resolution Professional restored the claim of the Appellant vide email dated 06.01.2025. Respondent No.1 thereafter addressed a letter dated 05.03.2025 to the RP offering settlement of the entire claim, which proposal was rejected by the Appellant vide email dated 10.03.2025. viii. An application being IA No. 1586 of 2025 was thereafter filed by Respondent No.1 before the Hon'ble NCLT, Mumbai Bench seeking directions to record settlement and stay CIRP, which application remains pending. ix. In view of abnormal delay in the CIRP, the Appellant filed an application under Section 33 of the Code seeking liquidation of CAN Enterprises Private Limited, which application is also pending before the Hon'ble NCLT, Mumbai Bench. 5. The appellant submits that the Respondent No.1 was, at all relevant times, promoter and director of CAN Enterprises Private Limited undergoing CIRP since 27.01.2020. The present Appeal therefore arises from the alleged failure of the Adjudicating Authority to examine statutory ineligibility, suppression of material developments, and exercise of jurisdiction in conformity with Sections 29A, 30 and 31 of the Insolv....
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....on filed by the Appellant against CAN Enterprises Pvt. Ltd., Respondent No. 1 has persistently adopted every conceivable tactic to obstruct and derail the CIRP. It is submitted that Respondent No. 1 initially challenged the admission order before this Appellate Tribunal, which was dismissed by an order dated 19.01.2021. Thereafter, he approached the Hon'ble Supreme Court, however, there also the proceedings were dismissed as withdrawn on 10.03.2021. This constituted the first round of challenge and demonstrates his consistent attempt to frustrate the CIRP. 10. Ld. Counsel submits that upon failing to obtain relief through judicial scrutiny, Respondent No. 1 fraudulently inducted M/s. Paton Construction as a Financial Creditor in the CIRP of CAN Enterprises Pvt. Ltd. Acting in collusion with the said Financial Creditor, voting rights were arbitrarily exercised to appoint a new Resolution Professional. Thereafter, in clear connivance with the newly appointed Resolution Professional, the Appellant's claim as an Operational Creditor, the very foundation upon which CIRP was admitted, was illegally rejected. 11. It is further submitted that the illegal rejection of the Appellant's ....
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....ending before the Hon'ble NCLT, Mumbai, approved the Resolution Plan. The Adjudicating Authority recorded that the RA had already made a proposal for payment of the entire claim of the Appellant and that the Appellant rejected it with mala fide intention. Ld. Counsel submits that this finding is contrary to the record. The alleged settlement application remains pending adjudication before the Hon'ble NCLT, Mumbai. The Appellant cannot be saddled with adverse findings rendered in proceedings to which it was not a party. 15. It is further submitted that Respondent No. 1, despite being disqualified under Section 164(2)(a) of the Companies Act, 2013 read with Section 29A(e) of the IBC, has persistently indulged in calculated and mala fide misrepresentation before judicial forums. Such conduct constitutes a gross abuse of the process of law and vitiates the entire approval of the Resolution Plan. 16. Ld. Counsel submits that although the Appellant was not a formal party before the Ld. NCLT, Ahmedabad, it is a settled position of law that the expression "person aggrieved" under Sections 61 and 62 of the IBC is of wide import and cannot be narrowly construed. The right of appeal is ....
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.... Limited.' Submissions of Respondent No.1 (Mr. Naresh Sevantilal Shah/ SRA) 20. In his initial submissions, Ld. Counsel for R1 states that the Appellant is admittedly not a creditor of Afcan Impex Pvt. Ltd. It is an Operational Creditor of CAN Enterprises Pvt. Ltd. which is a completely separate corporate debtor undergoing CIRP before NCLT Mumbai. The Appellant has no admitted claim, no financial stake, and no status in the Afcan Impex CIRP proceedings. Section 61 of the IBC permits appeal only by a "person aggrieved" meaning a person with direct legal interest in the impugned order. A creditor in one CIRP cannot challenge resolution plans in unrelated CIRPs on speculative grounds. The IBC is a self-contained code, creditors in one proceeding cannot interfere in another proceeding, where they have no stake. The Appellant's claimed grievance is entirely collateral. 21. Ld. Counsel states that Being Promoter/Related Party of Company Under CIRP is Not Per Se a ground of ineligibility. The Section 29A(c) of the Code requires that the person have an account classified as NPA in accordance with RBI guidelines. Mere pendency of CIRP proceedings against a related company does ....
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....made repeated bona fide settlement offers. 25. He submits that Respondent No. 1, in complete good faith and with genuine intent to settle all dues in the CAN Enterprises CIRP, offered to pay 100% of the Appellant's entire admitted claim of Rs. 1.97 Crores plus all CIRP costs. as evidenced by: (a) Letter dated 05.03.2025 addressed to the Resolution Professional of CAN Emerprises Pvt. Ltd. offering settlement of the claim in its entirety; (b) I.A No. 1586/2025 filed before NCLT Mumbai formalizing the settlement proposal and seeking directions to accept payment and close CIRP proceedings; (c) NCLT Mumbai Order dated 10.12.2025 which records that Corporate Debtor reiterated willingness to pay Rs. 1.97 Crores to Malharshanti + CIRP Costs + Rs. 1 lakh to Financial Creditor. 26. Ld. Counsel states that despite being offered full 100% payment, the Appellant vide email dated 10.03.2025 rejected the settlement without any justifiable reason whatsoever. The Hon'ble NCLT Ahmedabad itself specifically recorded in Para 20 of the impugned order that the Appellant rejected Respondent No. 1's proposal with "mala fide intentions". 27. It is the submission ....
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....standi, and constituting an abuse of process; (b) Impose heavy costs on the Appellant for filing a frivolous and vexatious appeal with ulterior motives and for misusing the legal process to arm-twist Respondent No. 1 after rejecting a 100% settlement offer in a separate proceeding Submissions of Respondent No.2/ Resolution Professional 33. In his preliminary submissions, Ld. Counsel for R2 states that the Appellant is not a shareholder or creditor or any stakeholder of Afcan Impex Pvt. Ltd. It is an Operational Creditor of CAN Enterprises Pvt. Ltd. a completely separate entity. Section 61 of the IBC confers right of appeal only on a "person aggrieved" by an order of the Adjudicating Authority. The concept of "person aggrieved" requires direct and legal aggrievement, not remote or speculative injury. The Appellant has no admitted claim in the Afcan Impex CIRP. Its grievance is collateral-arising from the alleged involvement of the SRA in a separate CIRP. The IBC is a self-contained code; creditors in one CIRP cannot interfere in another CIRP on speculative grounds. 34. Ld. Counsel states that being Promoter/Related Party of Company Under CIRP is not per se a ground....
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....ll compliance with Section 30(2) of IBC. The Appellant's challenge would amount to unsettling an order already confirmed by this Tribunal. 39. He states that the Appellant is a "wait-and-watch" litigant seeking to derail a successfully implemented resolution. Having failed to participate before the Adjudicating Authority, they cannot now challenge a Plan that has already received the seal of approval from both the CoC and this Hon'ble Appellate Tribunal. 40. In light of the above, R2 prays that this Tribunal may be pleased to dismiss the present Appeal with exemplary costs. Analysis and findings 41. We have heard learned counsel for the parties at length and carefully perused the record. The issues that arise for determination in this case are: (i) Whether the appellant has locus to maintain the present Appeal challenging the order dated 30.09.2025 approving the Resolution Plan of Afcan Impex Pvt. Ltd., and (ii) whether the impugned order suffers from any illegality on account of the alleged ineligibility of Respondent No.1 under Section 29A of the Insolvency and Bankruptcy Code, 2016 or alleged suppression of material facts. 42. The Appella....
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....N Enterprises Pvt. Ltd., which are entirely separate proceedings involving a different corporate debtor. 46. The Respondents further submit that the Resolution Plan submitted by Respondent No.1 was duly considered and approved by the Committee of Creditors with 100% voting share after evaluating its feasibility and viability. It is contended that the Adjudicating Authority, while approving the Resolution Plan, examined the relevant material on record and was satisfied that the plan met the requirements prescribed under Section 30(2) of the Code. According to the Respondents, the mere pendency of CIRP proceedings against another company where Respondent No.1 was a promoter does not automatically attract disqualification under Section 29A of the Code. It is further submitted that Respondent No.1 had indeed made a settlement proposal dated 05.03.2025 offering payment of the entire claim of the Appellant, which the Appellant rejected on 10.03.2025. The letter dated 05.03.2025 of the Respondent No.1 is extracted below: 47. It is their submission that the issues related to another company under CIRP are being brought to these proceedings by a party which has not taken part in the p....
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....al rights or interests of the person invoking the appellate jurisdiction. 51. The matter relating to who can be person aggrieved in a CIRP proceeding was examined by Hon'ble Supreme Court in a bench headed by Hon'ble CJI in [Civil Appeal No. 9986 of 2024] GLAS Trust Company LLC Versus BYJU Raveendran & Ors. [2024 INSC 811]. The relevant Paras 73, 74 and 75 of the Judgment are extracted below: "73. The counsel for the respondents sought to argue that the appellant does not have the locus to maintain the present proceedings before this Court. They contend that in a case for settlement between the Corporate Debtor and the second respondent, there is no scope for hearing any other creditors, such as the appellant. We do not find merit in this submission 74. Section 62 of the IBC governs statutory appeals to the Supreme Court from the orders of the NCLAT. The provision reads as follows: "62. Appeal to Supreme Court - (1) Any person aggrieved by an order of the National Company Law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such order under this Code within forty- five days from the date of receipt of such ....
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....Ltd., in which the Appellant admittedly had no role and he did not participate in the CIRP proceedings at any stage, before the Adjudicating Authority. The Appellant has not demonstrated that it was a Financial or Operational creditor; Probable Resolution Applicant (PRA); Resolution Professional (RP); or any other participant in the CIRP process, who could be classified as stakeholder in the CIRP process of Afcan Impex Pvt. Ltd. 54. The appellant is admittedly an Operational Creditor in the CIRP of CAN Enterprises Pvt. Ltd., which is a separate corporate debtor undergoing independent insolvency proceedings before NCLT Mumbai. The grievance raised by the Appellant essentially relates to the conduct of Respondent No.1 in the CIRP proceedings of CAN Enterprises Pvt. Ltd., including disputes relating to settlement proposals and pending applications before NCLT Mumbai. 55. In view of the above factual matrix, we see that the appellant has not been able to establish any relation with the CIRP proceedings of Afcan Impex and is not a stakeholder in any capacity in these proceedings. Therefore, he cannot be considered as a 'person aggrieved' in accordance with Section 61 of the Code. ....
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....ed and decided before entertaining the Appeal? II. Whether the Two Member Bench judgement of Chennai Bench dated 24.05.2023 in Company Appeal (AT) (CHY) (INS) No.130 of 2023 in IA Nos 439, 440 and 441/2023, Trimex Industries Pvt Ltd Vs Bhuvan Madan, RP of Sathavahana Ispat Ltd & Anr holding that there is no requirement for filing an application for leave to appeal lays down current law? 13. At the very outset we may clarify that since reference has been made only to answer aforesaid two questions, it would not be appropriate for us to record anything on the point as to whether appellant in the present appeal is aggrieved person or not. Such questions are always open to be examined by the concerned Bench. Of course, Mr PH Arvindh Pandian, learned senior counsel besides arguing that there is no need for asking a third party to file leave application to file appeal, he tried to persuade that the appellant is aggrieved person, we are not in a position to record any observation on this issue in view of terms of reference to this Bench." It can be seen from the para 1 of the Judgment Trimex supra that it arose in a different context. The reference before the Tr....
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....o which one is legally entitled in order to make one "a person aggrieved." Again a person is aggrieved if a legal burden is imposed on him. The meaning of the words "a person aggrieved" is sometimes given a restricted meaning in certain statutes which provide remedies for the protection of private legal rights. The restricted meaning requires denial or deprivation of legal rights. A more liberal approach is required in the back ground of statutes which do not deal with property rights but deal with professional conduct and morality. The role of the Bar Council under the Advocates Act is comparable to the role of a guardian in professional ethics. The words "persons aggrieved" in Sections 37 and 38 of the Act are of wide import and should not be subjected to a restricted interpretation of possession or denial of legal rights or burdens or financial interests. The test is whether the words "person aggrieved" include "a person who has a genuine grievance because an order has been made which pre judicially affects his interests." It has, therefore, to be found out whether the Bar Council has a grievance in respect of an order or decision affecting the professional conduct and etiquette....
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....or legal stake in the CIRP of Afcan Impex Pvt. Ltd. Therefore, the broader interpretation adopted in the context of the Competition Act cannot be applied to the present proceedings under the Insolvency and Bankruptcy Code. (v) Lastly, the Appellant has relied upon the observations of the Hon'ble Supreme Court in 'Vishnu Vardhan v. State of Uttar Pradesh and Ors.' [MANU/SC/0967/2025] to contend that procedural rules should be interpreted in a manner that promotes justice. However, the said judgment arose in a different context involving issues relating to the doctrine of merger, allegations of fraud, and disputes concerning land acquisition compensation. The Hon'ble Supreme Court interfered in view of the peculiar circumstances of that case and the potential prejudice arising from strict application of procedural doctrines. The present case does not involve any such exceptional circumstances. The Appellant has not demonstrated any fraud in the resolution process of Afcan Impex Pvt. Ltd. or any issue of public importance. Therefore, the observations made in the said judgment do not apply to the facts of the present case. 57. Based on the factual matrix of the cas....
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.... not apply in relation to a connected person referred to in clause (iii) of Explanation I;]" 59. The appellant has relied upon Section 29A (c) and Section 29A (e) of the Code to argue that the Respondent No.1/SRA is covered by these two sub-sections of Section 29A and is therefore barred from submitting the resolution plan. 60. A plain reading of Section 29A does not support such a proposition. The provision enumerates specific disqualifications which must be satisfied before a person can be rendered ineligible to submit a resolution plan. In particular, Section 29A(c) requires that the person concerned must have an account classified as a Non-Performing Asset in accordance with the guidelines of the Reserve Bank of India, and that such default must remain unpaid for the prescribed period. The language of the provision clearly links ineligibility to the existence of a financial default leading to NPA classification. 61. The provision does not state that mere association with another corporate debtor undergoing CIRP would automatically render a person ineligible. The Appellant has not placed any material to show that any account of Respondent No.1 or of CAN Enterprises Pvt.....
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....n or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so. [Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment.] (3) A private company may by its articles provide for any disqualifications for appointment as a director in addition to those specified in sub-sections (1) and (2): [Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall continue to apply even if the appeal or petition has been filed against the order of conviction or disqualification.]" 63. The appellant has relied upon Section 164 (2) (a) and 164 (2) (b) of the Companies Act, 2013 to argue that in accordance with these provisions the Respondent No.1 is disqualified to act as Director of company and therefore ineligible to submit the resolution plan in accor....
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....cannot be sustained. 67. Another aspect which needs to be examined is the conduct of the Appellant in the proceedings before the Adjudicating Authority. We now consider whether the Appellant, having not participated before the NCLT Ahmedabad, can raise these grounds for the first time in the present Appeal. The Appellant admittedly did not appear or participate in the proceedings relating to approval of the Resolution Plan. The objections now sought to be raised in the present Appeal, particularly the allegation of ineligibility under Section 29A, were never raised before the Adjudicating Authority. It is a settled principle that new grounds cannot be permitted to be raised for the first time in appellate proceedings. 68. The Chennai Bench of this Appellate Tribunal in 'Anish Lawrence v. Renahan Vamakesan (NCLAT Chennai)' [CA AT (CH) (INS) No. 377 OF 2023]. held that new grounds cannot be raised for the first time in appellate proceedings, if they were not urged before the Adjudicating Authority. In the present case, the Appellant did not raise any objection before the Adjudicating Authority in the CIRP proceedings of Afcan Impex Pvt. Ltd., which continued from 2021 to 2025. ....
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....very objective of timely resolution contemplated under the Code. 72. In view of the above discussion, we are of the considered view that the Appellant has failed to establish that it is a 'person aggrieved' within the meaning of Section 61 of the Code in relation to the impugned order approving the Resolution Plan of Afcan Impex Pvt. Ltd. Even on merits the Appellant has failed to demonstrate that Respondent No.1 was ineligible under Section 29A of the Code or that the impugned order suffers from any legal infirmity. 73. Accordingly, the present Appeal is not maintainable and is dismissed. Pending I.As, if any, are closed. There would be no order as to costs. ============= Document 1 307 ANNEXURE - 9 STRICTLY WITHOUT PREJUDICE 05.03.2025 From, Naresh Sevantilal Shah & Chara Naresh Shah (Promoters/ &Members of Suspended Board of Directors) 103/C, Thosar House, Hanumun Cross Road No. 1. Near Shiv Leela Hotel, Vile Parle (Bast), Mumbai-400057 Mob: - 9820069337 To. Mr. Manish Jaju Resolution Professional (IBBI/IPA-001/IP-P00034/2016-2017/10087) CAN Enterprises Pvt. Ltd. D 502 Neelkanth Business Park, Vidyavihar West, Mumbai 400086 Mob: - 9819433452 tirp.....