TaxTMI 
TaxTMI 
2026 (5) TMI 1678
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....ith IA/1451/(AHM)2025 and IA/62(AHM)2026 in C.P. (IB/61(AHM)2025. By the impugned order, the Adjudicating Authority has rejected IA(Plan)19(AHM) 2025 by issuing various directions, IA/1451/(AHM)2025 and IA/62(AHM)2026 were accordingly disposed of. Company Appeal (AT) (Ins.) No.512 of 2026 has been filed by Resolution Professional ("RP") challenging the impugned order, whereas Company Appeal (AT) (Ins.) No.513 of 2026 has been filed by Successful Resolution Applicant, whose Resolution Plan was approved by 100% by the Committee of Creditors ("CoC") in its 6th CoC Meeting held on 12.11.2025. The Adjudicating Authority by the impugned order after rejecting the Plan approval application, restored the CIRP at the stage of issuance of Form-G. The RP was replaced and a direction was issued to complete the CIRP within 90 days. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) The Corporate Debtor ("CD") Aldiam Motors Pvt. Ltd. had obtained financial facilities from IDBI Bank Ltd. ("IDBI Bank") The facilities were taken by the CD against the mortgage of the immovable property to the Financial Creditor. (ii) The CD failed to adhere to the....
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....the Resolution Plan, Successful Resolution Applicant ("SRA") deposited the performance security and the RP filed Plan approval application IA(Plan)19(AHM) 2025 for approval of Resolution Plan. (vii) The Adjudicating Authority on 21.11.2025 directed the RP to furnish certain additional information and to obtain declaration under Section 29A from the SRA as well as from its all partners separately. The RP filed two additional affidavits in compliance of the directions of the Adjudicating Authority. The SRA has also submitted an affidavit of declaration. The State Tax Department was also issued notice, which filed its reply explaining its claim of GVAT as well as GST, which was admitted by the RP as secured Operational Creditor. (viii) Claro Energy (Respondent No.4 to the Appeal) filed an IA/1451/(AHM)2025 seeking a direction to RP to clarify the position of the assets and declare the related parties as ineligible under Section 29A of the IBC. Certain other prayers were made. In the application, the Claro Energy raised the issue regarding the assets of the CD. The application filed by Claro Energy Ltd. was objected by the RP by filing a reply. (ix) Claro Ene....
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....was granted. The RP was replaced. IA/1451/(AHM)2025 and IA/62(AHM)2026 were also disposed of in view of the observations that they did not survive for further consideration. Aggrieved by the above order, these two Appeal(s) have been filed. 3. We have heard Shri Krishnendu Datta, learned Senior Counsel appearing for the RP; Shri Abhijeet Sinha, learned Senior Counsel appearing for SRA; Shri Sandeep Bajaj, learned Counsel appearing for Claro Energy (Respondent No.4); and Shri Anand Varma, learned Counsel appearing for the CoC. 4. Shri Krishnendu Datta, learned Senior Counsel appearing for the RP submitted that the Adjudicating Authority committed error in rejecting the Plan approval application, which was approved with 100% vote share of CoC. The CIRP was conducted in accordance with the IBC and CIRP Regulations. All relevant information was included in the Information Memorandum for information of all Resolution Applicants. The access to virtual data room was made available to all Resolution Applicants. The CD was in possession of Plot No.986/32 along with its plant & machinery, which possession was taken by the IDBI Bank in pursuance of the SARFAESI proceedings initiated by ....
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....aro Energy, who is an unsuccessful Resolution Applicant cannot be heard in objecting to the Resolution Plan, which was in accordance with law. 5. Shri Abhijeet Sinha, learned Senior Counsel appearing for the SRA in support of the Appeal submits that SRA was not a related party to the CD. In the year 2022 OTS proposal of Aster Motors was approved and to fund the OTS amount, Vipul Shah sold the Aster Motors Pvt. Ltd. to Anand Bharatkumar Shah, partner of SRA. Anand Bharatkumar Shah does not have any relation with Vipul Shah, Mayank Shah and Anand Lal Shah of the CD. The RP had obtained a Report regarding eligibility of all Resolution Applicants and Report was received that all Resolution Applicants are 29A compliant. After the order of the Adjudicating Authority in the Plan approval application, an additional affidavit was filed by the RP and SRA regarding their ineligibility under Section 29A. In any view of the matter, the Adjudicating Authority having found SRA not ineligible under Section 29A, the question cannot be raised by Claro Energy, who is unsuccessful Resolution Applicant. It is submitted that SRA has the same information regarding the CD as available in the public dom....
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.... the Resolution Plan and does not consider it appropriate to revisit or recommence the CIRP in the facts of the present case. Learned Counsel for the CoC submitted that this Tribunal may allow the Appeal(s) and grant approval of the Resolution Plan submitted by SRA. 7. Shri Sandeep Bajaj, learned Counsel appearing for Claro Energy (Respondent No.4 in the Appeal) opposing the submissions of learned Counsel for the Appellant(s) submits that CIRP has not been conducted in transparent manner. The CD has ownership rights of Plot No.686/31 with respect to which title documents were on the record. The said Plot No.986/31 is in possession of another sister Company of the CD i.e. Aster Motors, which is a related party. The RP did not take any steps to take possession of Plot No.986/31 in the CIRP, where the RP is obliged under Section 18(1)(f) and Section 25 to take possession of the assets owned by the CD. It is submitted that there being no access to the Plot No.986/31, the valuation was made without even physical visit or inspection of the Plot owned by the CD. The Valuer has submitted a Report with respect to Plot No.986/32 by substantial discounting its value. It is submitted that t....
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....ith the provisions of the Code and the CIRP Regulations? (ii) Whether the allegations regarding the association between Meghdoot Leisure LLP, Survi Infraspace LLP and Aster Motors Private Limited give rise to any issue affecting eligibility under Section 29A of Code or otherwise impacting the integrity of the resolution process? (iii) Whether the Resolution Professional was justified in treating the Resolution Plan submitted by Claro Energy Limited as non- compliant and declaring the same as non-responsive, and whether the concerns raised by the said Applicant regarding the assets of the Corporate Debtor were appropriately addressed during the CIRP process? (iv) Whether the Resolution Plan submitted by Meghdoot Leisure LLP, though approved by* the Committee of Creditors with 100 percent voting share, satisfies the requirements of Section 30(2) of the Code and is liable to be approved under Section 31 of the Code?" 10. We need to first notice the decision of the Adjudicating Authority on Issue Nos. (II) and (III). Issue No.(II) was regarding the eligibility under Section 29A of the SRA. Under Issue No.(II), the Adjudicating Authority noticed the content....
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....ave considered plot no 986/31 as disputed property. Since sorting out dispute, post CIRP is likely to take time, cost and risk, therefore, we have applied 30% discount on market value of land & building to arrive at fair value. '' 12. We may also add that 6th CoC Meeting held on 28.10.2025, the CoC resolved to vote on the Resolution Plan. It was noted that Plan of Claro Energy is non-compliant. Reasons were noted by the CoC in its 6th Meeting held on 28.10.2025. the Adjudicating Authority has approved the decision and opinion of the RP/CoC that the Plan of Claro Energy is non-compliant. 13. Now, we come to Issue No.(I), on which Adjudicating Authority has made various concerns regarding overall transparency of the CIRP. The Adjudicating Authority while considering Issue No.(I) itself has noted the fact that in the 1st CoC Meeting the issue was brought before the CoC that although Title Deeds of Plot No.986/31 continued to remain with the secured creditor (IDBI) in relation to the financial facilities availed by the CD, the physical possession of the said Plot had been handed over to the Aster Motors Pvt. Ltd. after settlement of its dues pursuant to OTS. The aforesaid....
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.... of the RP as noted in 3rd CoC Meeting held on 06.08.2025 in Item No.C-4 is as follows: "Chairman informed that during his visit to Vadodara on 11th July 2025, RP took physical possession of sole immovable property, owned by the Corporate Debtor, located at Plot No. 986/32, GIDC Industrial Estate, Village Makarpura, Gujarat (as per assignment deed & conveyance deed plot no. is 986/31) from IDBI Bank Ltd, which was having possession thereof under SECURITISATION ACT." 15. The facts of the case reveal that it is the IDBI Bank, which is 100% of the CoC, had security interest in both the Plots i.e. Plot No.986/31 and 986/32. Both the plots were initially owned by the CD and Plot No.986/32 was transferred in the year 2022 in favour of Aster Motors. The IDBI has security interest in both the Plots, and it is the IDBI, which has given possession of Plot No.986/31 to the Aster Motors and possession of Plot No.986/32 was with the IDBI Bank, which was handed over to the RP, treating it to be the assets of the CD. The RFRP, which was approved by the CoC contained a Clause in 1.10(e), which provided that transfer of the assets of the Company shall be "as is where is", "as is what it....
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....to use available cash & bank balance including accrued interest on FDR, if any, available on the said date for the benefit of creditors, as it may deem appropriate, in addition to amount offered for creditors in approved resolution plan. It is clarified that the Successful Resolution Applicant shall be responsible to follow up all avoidance transaction application (if any) filed by the Resolution Professional during CIRP. After approval of Resolution Plan, unless discussed and agreed differently by CoC during negotiation, as a part of resolution plan, Successful Resolution Applicant will have to share entire net proceeds after netting off Cost incurred in connection therewith, with creditors in proportion of their unsettled claim amount in accordance with the priority given in Section 53 of the Code." 16. We also need to notice the Evaluation Matrix as approved by the CoC in its 2nd Meeting, where the details of Plot No.986/31 and 986/32 were mentioned. It is useful to notice that in the 2nd CoC Meeting, which was held on 23.06.2025, the Evaluation Matrix as proposed was noticed as follows: "Item No.C-2 : To approve Evaluation Matrix (EM) and Request for Resolutio....
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....e. plot no. 32. IDBI bank extended loan on the security of remaining plot no -31 and accordingly charge no 10582569 was created on plot 31, in favour of IDBI bank. Recently, a confusion has arisen about the number of the plot sold by corporate debtor and number of plot retained by it. The above position would be disclosed in Information Memorandum. Further, in RFRP, it would be stated that Immovable assets will be handed over to successful resolution applicant, on as it where it is basis and neither CoC nor RP will be responsible to resolve above issue, if remains pending on approval date." On query, chairman explained the committee about the rationale for proposing EMD and performance guarantee amount After some discussion, Chairman placed the following resolution for the consideration and approval of CoC. "RESOLVED THAT pursuant to Regulation 36B(1) of IBBI (Resolution Process for Corporate Persons) Regulations, 2016, Evaluation Matrix, a copy of which duly initiated by the Chairman, for the purpose of identification was placed on the table of the meeting, for evaluation of resolution plan(s) received for Corporate Debtor, be and is hereby approved."....
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....unning a Hyundai car showroom and service station and the valuation contained the valuation, not only of the land, rather the structure, plant & machinery also. Valuation of Plot No.986/32 indicate that it was not just the land, rather it has a structure indicating that showroom was being run. The mismatch of title of possession with regard to Plot No.986/31 and 986/32 was clearly provided in the Information Memorandum, which was issued by the RP under the heading "Details of Land & Building". In Clause 3.3, the 'details of land & building' has been mentioned, which is as follows: "Details of Land & Building Corporate Debtor owns a leasehold immovable property situated at Plot No. 986/3 1, GIDC Industrial Estate, Village Makarpura, District Vadodara, Gujarat, admeasuring approximately 3,990.48 square meters, along with a constructed structure/shed thereon. Original lease for the aforesaid immovable property was granted by the Gujarat Industrial Development Corporation (GIDC) in favour of M/s LMP Motors Private Limited through Lease Deed dated 25th September 1998 (registered on 28th September 1998) for a period of 99 years with a right of renewal for another 99 yea....
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.... stored at some outside place is given in annexed Annexure -IV. As per physical inspection of furniture and tool withdrawn and stored at outside place, most of furniture and fixture have been damaged due to flooding at storage place. The corporate debtor does not have any other immovable assets, plant & machinery I furniture & fixture I other assets except as disclosed in Annexure Ill & IV respectively. Since directors have not made available detailed fixed assets register, therefore, complete description including date of acquisition. cost of acquisition, remaining useful life, identification number, book value etc. are not available. Since, taking over of possession of aforesaid premises by IDBI Bank. no verification of assets has been carried out and therefore. no details about physical condition of respective assets and their functionality is available. Further details of current assets / liabilities can be gathered from provisional financial statements as on CIRP commencement date i.e. 06th May 2025, annexed as Annexure "V"." 20. Clause 3.5 of the Information Memorandum reads as follows: "3.5 Details of outstanding charg....
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.... in the present matter." 23. The observation of the Adjudicating Authority that there is possibility of informational asymmetry among the bidders, is wholly erroneous and without any foundation. The Information Memorandum captured entire facts and situation of the CD, its assets, title and possession. The access to virtual data room was available to all Resolution Applicants, which was noted by the CoC in its Minutes. When all Resolution Applicants were provided access to virtual data room and Information Memorandum in detail has indicated the Title and possession of the CD with respect to Plots and it is also noted that IDBI has itself has handed over possession of Plot No.986/32 to the RP, after initiation of CIRP and RFRP itself contemplated transfer to SRA of the on 'as is where is' basis and the CIRP proceeded treating the Plot No.986/32 as the asset, which was in possession of the RP and which was valued, the submission of the Claro Energy that actual asset, i.e. Plot No.986/31 was not provided to the Valuers is of no consequence, since RP was in possession of Plot No.986/32, which was handed over by the IDBI to the RP, treating it to the assets of the CD. Hence, the said ....
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....cial intervention even here. 12.1 It has been the consistent view of this Court that the commercial wisdom of the CoC cannot be interfered with by the NCLT, the NCLAT or this Court as was held in K. Sashidhar vs. Indian Overseas Bank, (2019) 12 SCC 150 as under: "55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not cont....
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....dom exercised by the CoC. This makes a challenge to the same non - justiciable. It has been further held that 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. 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. 180. We are therefore of the opinion that in the present matter as well, the CoC exercised its commercial wisdom while approving the Resolution Plan whereby the Appellant - Jaldhi was classified as a contingent creditor and such a decision is deemed to be non - justiciable by this Court in view of K. Sashidhar (supra) which has been subsequently followed in a catena of judgments. The NCLT, and the NCLAT have also approved the Resolution Plan, and in light of the settled principle of law, we find no question of law being raised by the Appellant - Jaldhi and therefore, the appeal filed by it is liable to be dismissed." (underlining by us) 12.3 We note the observations in Essar Steel India Limited, clarifying that once the NCLT is....
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....ommercial wisdom. Nor is there a residual equity based jurisdiction in the adjudicating authority or the appellate authority to interfere in this decision, so long as it is otherwise in conformity with the provisions of IBC and the Regulations under the enactment." (Underlining by us) 12.5 The issue is no longer res integra, the law having been settled that the commercial wisdom of the CoC enjoys primacy and cannot be supplanted by judicial review. Neither the NCLT, nor the NCLAT nor even this Court is empowered to substitute its assessment in place of the commercial decision arrived at by a requisite majority of the CoC." 26. With regard to unsuccessful Resolution Applicant, the Hon'ble Supreme Court has also made observation in Paragraph 13, 13.1, 13.2. Further, in Paragraphs 14.1, 14.2 and 14.3, the Hon'ble Supreme Court laid down following: "14. Before parting, we wish to add a few words of caution. The IBC represents a conscious legislative choice to privilege speed, certainty, and creditor-driven decision-making over exhaustive judicial scrutiny. Experience shows that unsuccessful bidders will always try to spin commercial decisions of the CoC as proce....
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....ted under the RFRP, which invited Resolution Applicants to submit their Plan on the basis of terms and conditions of the RFRP. There were four compliant Resolution Plans, which were up for consideration. The Plan of Claro Energy was non-compliant and was not put for voting. No other Resolution Applicant has raised any grievance, except Claro Energy, whose Plan was non-responsive. We are of the view that observations and grounds on the basis of which Adjudicating Authority has rejected the application for Plan approval, are not covered within the limited jurisdictional review, which is conferred to the Adjudicating Authority to interfere with the commercial wisdom of the CoC. The fact that IDBI Bank has 100% vote share in the CoC and it has security interest in both the Plots of the CD, which were in possession of Aster Motors and the possession of the Plot was given by IDBI Bank itself to the RP treating it to be the asset of the CD. The object and purpose of the IBC is insolvency resolution of the corporate person in a time bound manner for maximization of value of assets of such persons. When the CIRP is conducted under the directions of the 100% CoC, it cannot be said that RP ha....