Sps Steels Rolling Mills Limited vs Indian Overseas Bank And Others & Ors.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Comp. App. (AT) (Ins) No. 352 of 2024

(Arising out of the Order dated 21.12.2023 passed by the National Company
Law Tribunal, Kolkata Bench, in I.A. (IB) No. 501/KB/2022 and I.A. (IB)
No. 500/KB/2022 in C.P. (IB) No. 595/KB/2017

IN THE MATTER OF:
SPS Steels Rolling Mills Limited
Registered Office At 701, 7th
Floor, Diamond Prestige, 41A, AJC
Bose Road, Kolkata, Pin-700017,
West Bengal






…Appellant

Versus


Central Bank of India
Corporate Office at Chander Mukhi Nariman Point
Mumbai- 400021
Branch Office at Corporate Finance Branch First
Floor, 33, Netaji Subhas Road, Kolkata 700001





…Respondent

Present:
For Appellant Mr. Anup Kumar, Ms. Achint Priya, Ms. Arshi
Hayat & Ms. Neha Jaiswal, Advocates
For Respondent Mr. Brijesh Kumar Tamber, Mr. Prateek
Kushwaha, Mr. Aryan Data & Ms. Arani
Mukherjee, Advocates, Mr. Chandra Prakash,
Advocate





Page 1 of 29

With

Comp. App. (AT) (Ins) No. 353 of 2024

IN THE MATTER OF:
SPS Steels Rolling Mills Limited
Registered Office At 701, 7th
Floor, Diamond Prestige, 41A, AJC
Bose Road, Kolkata, Pin-700017,
West Bengal






…Appellant

Versus


1. Indian Overseas Bank
th
Head Office At 6 Floor Annex Building, 763, Anna
Salai, Chennai-600002, Tamil Nadu
Branch Office At: P-35 India, Exchange Place,
Kolkata-700001





…Respondent No. 1






…Respondent No. 2




.... Respondent No. 3
2. Assistant Commissioner of Customs
(Apprising Group 7Z (EPCG)
Office at Customs House, 15/1 Strand Road, Kolkata-
700001 Being Beneficiaries of Three Bank
Guarantees

3. Director General of Foreign Trade
Having Its Office At 4, Esplanade East, Kolkata-
700069, Beneficiary of One of Bank Guarantees

Present:
For Appellant Mr. Anup Kumar, Ms. Achint Priya, Ms. Arshi
Hayat & Ms. Neha Jaiswal, Advocates
For Respondent Mr. Chandra Prakash, Advocate



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J U D G E M E N T
(19.03.2026)

NARESH SALECHA, MEMBER (TECHNICAL)
1. There are two appeals containing Comp. App (AT) (Ins) No. 352 of 2024
and Comp. App (AT) (Ins.) No. 353 of 2024 filed by the Appellant i.e. SPS Steels
Rolling Mills Limited, who is the Corporate Debtor under section 61 of the
Insolvency and Bankruptcy Code, 2016, [‘Code’] assailing the order dated
21.12.2023 [‘Impugned Order’] passed by the National Company Law
Tribunal, Kolkata Bench [‘Adjudicating Authority’] in I.A(IB)
No.501/KB/2022 and in I.A(IB) No.500/KB/2022 in C.P. (IB) No. 595/KB/2017.
In Comp. App (AT) (Ins) No. 352 of 2024, Central Bank of India, is the sole
Respondent herein.
In Comp. App (AT) (Ins) No. 353 of 2024, Indian Overseas Bank, who is
the Answering Respondent, is the Respondent No. 1 herein.
Assistant Commissioner of Customs and Director General of Foreign
Trade, are the Respondent No. 2 and Respondent No. 3, herein
2. It is the case of the Appellant that on 24.08.2017, Allahabad Bank filed
C.P.(IB) No.595/KB/2017 before the Adjudicating Authority, under Section 7 of
the Code, seeking initiation of Corporate Insolvency Resolution Process (CIRP)
against the Corporate Debtor, SPS Steels Rolling Mills Ltd. The Adjudicating
Authority admitted the application on 22.12.2017 and a public announcement was
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issued on 28.12.2017 calling for claims from the creditors of the Corporate
Debtor.
3. The Appellant submitted that the Appellant, i.e. Shakambhari Ispat and
Power Limited, the Successful Resolution Applicant (SRA), submitted its
Resolution Plan on 09.05.2018. The Committee of Creditors (CoC) approved the
Resolution Plan and the Adjudicating Authority approved the same on
08.04.2019 in CA(IB) No.871/KB/2018. It is the case of the Appellant that upon
full implementation of the Resolution Plan, including payment of Rs.32.50 Crores
by the SRA to the Central Bank of India in full and final satisfaction of its claims,
and the provided in the Resolution Plan has also been paid to Indian Overseas
Bank. The Appellant, as the SRA, took over the management, properties and
assets of the Corporate Debtor on or about 11.04.2019.
4. It is submitted that in March 2020, the Appellant discovered that the
Corporate Debtor held Fixed Deposit Receipts (FDRs) with two separate banks
which had neither been disclosed nor claimed during the CIRP. In Comp. App
(AT) (Ins) No. 352 of 2024, FDR were lying with Central Bank of India and had
been adjusted by Central Bank of India towards its own dues post-implementation
of the Resolution Plan. In Comp. App (AT) (Ins) No. 353 of 2024, FDRs
aggregating Rs.1,30,00,000/- were lying with the Indian Overseas Bank as
margin money against Bank Guarantees issued by it. The Appellant requested
both banks to release the proceeds in its favour. The Indian Overseas Bank
released only Rs.79,24,041/- on 18.06.2021 but did not release the balance
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amount of approximately Rs.50,75,959/- and later raised disputes regarding
discharge of the Bank Guarantees.
5. The Appellant stated that it was constrained to file CA(IB)
No.500/KB/2021 against Central Bank of India and CA(IB) No.501/KB/2021
and against the Indian Overseas Bank under Section 60(5) of the Code seeking
directions to both Banks to credit the amount of respective FDR proceeds together
with interest at commercial rates, however, the Adjudicating Authority, by the
common impugned order dated 21.12.2023, dismissed both I.A.(IB)
No.500/KB/2021 and I.A.(IB) No.501/KB/2021 and directed the Appellant to
refund of the entire FDR proceeds (including the sum of Rs.79,24,041/- already
received from Indian Overseas Bank) along with applicable interest. The
Adjudicating Authority also directed the matter to be placed before the erstwhile
Committee of Creditors for distribution as per their commercial wisdom.
6. The Appellant stated that said FDRs had been deposited by the Corporate
Debtor with the Bank as margin against issuance of Bank Guarantees in favour
of statutory authorities at the instance of the corporate debtor in connection with
the business operations. The Appellant stated that the said Bank Guarantees were
issued before for commencement of the CIRP and since then all such Bank
guarantees have expired. The Appellant hence requested the Respondent Banks
that said FDRs may be liquated and the corresponding amount with commercial
interest may be returned to the corporate debtor, which is now under the
management and control of the Appellant.
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7. The Appellant stated that the Central Bank of India and Indian Overseas
Bank were members of CoC, who has already received their dues as provided in
the approved Resolution Plan towards absolute satisfaction of all their claim in
respect of the corporate debtor in terms of the Resolution Plan. Thus, the
Resolution Plan has been fully implemented and the Appellant has made the
complete payment as contemplated/mentioned in its resolution plan.
8. It is also the case of the Appellant that the Adjudicating Authority failed to
consider that admittedly the FDRs lying with the respondent Banks were in the
name of the Corporate Debtor (SPS, Steel Rolling Mills Ltd.) Thus, there was no
need for the Adjudicating Authority to direct the respondent banks to refund the
Corporate Debtors’ FDRs along with rate of interest applicable to the FDRs and
place it before the erstwhile CoC of the Corporate Ddebtor, since there was no
such application either by the Respondent Banks or by erstwhile CoC or by any
of the creditors.
9. The Appellant submitted that FDRs of the Corporate Debtor lying with the
Respondent Banks are assets of the Corporate Debtor and now as these are assets
of the Appellant as it stepped into the shoes of Corporate Debtor after
implementation of the resolution plan. The Appellant elaborated that the effects
of the successful resolution post CIRP is that the Corporate Debtor becomes a
clean slate with respect to its liabilities, however the Assets of the Corporate
Debtor remains with it, albeit, with the new management as can be inferred from
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the decision of the Hon’ble Supreme Court in “Ghanashyam Mishra & Sons Pvt
Ltd Vs Edelweiss ARC (2021) 9 SCC 657.
10. Concluding the arguments, the Appellant requested this Appellate Tribunal
to allow his appeal and set aside the Impugned Order.
11. On the other hand, both the Respondent Banks denied the averments of the
Appellant as misleading and baseless.
12. The Respondent Banks submitted that they were the financial creditors of
the Corporate Debtor, against whom the total admitted claims of Financial
Creditors were of Rs. 391.79 crores which was settled by the Appellant, on the
basis of the assets and liabilities mentioned in the Information Memorandum.
The Respondent Banks pleaded that the Appellant, being Successful Resolution
Applicant, has submitted its Resolution Plan based on the information of assets
and liabilities as mentioned in the Information Memorandum and the CoC after
considering the viability and feasibility of the Resolution Plan has approved the
same.
13. It is the case of the Respondent Banks that the Appellant being Successful
Resolution Applicant have discovered new assets which were not the part of the
Information Memorandum and subsequently of the Resolution Plan.
14. The Central Bank of India submitted that the Appellant paid only Rs. 32.50
crores and further allotment of shares of very minimal value. Central Bank of
India also stated that they were making the payments of the interest amount to the
Corporate Debtor prior to the commencement of the CIRP and after the
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commencement of the CIRP in FY 2018-19 and in FY 2019-20, TDS on the above
deposits were deducted and remitted during FY 2018-19 and FY 2019-20.
15. The Respondent Banks further submitted that since the said FDR's were
not made part of the assets of the Corporate Debtor in the Information
Memorandum and discovered by the Appellant only after the approval of the
Resolution Plan, the Answering Respondents have transferred the amount in the
CC loan account of the Corporate Debtor as per the terms of the sanction.
16. The Respondent Banks also stated that the Appellant, vide his letters
ordered the Respondent Banks for the closure of the FDR account. The
Respondent Banks replied to the Appellant and provided the information
pertinent to the deposits and also intimated that deposits stand adjusted towards
settlement of Bank dues as the said FDRs were not made part of list of assets in
the Information Memorandum, therefore the same has been adjusted as per the
terms of sanction.
17. The Respondent Banks conceded that no burden of new claims can be
passed upon the Successful Resolution Applicant, however, if there are any newly
discovered assets discovered later, then the same also has to be considered in
similar way by applying the same principles on the assets side as applicable to
the liability side.
18. The Respondent Banks castigated the conduct of the Appellant who failed
to do the due diligence and now after discovering about the new assets of the
Corporate Debtor in a form of FDR has come out with a case to enrich itself
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without protecting the interest of the Creditors who have taken huge haircut at the
time of approving the Resolution Plan.
19. The Respondent Banks submitted that the feasibility and viability of the
Resolution Plan was tested by the Financial Creditors forming part of the CoC
considering all aspects including Information Memorandum, Request for
Resolution Plan documents (RFRP), fair market value & liquidation value,
negotiations etc. based on which Adjudicating Authority granted the approval of
the Resolution Plan. The Respondent Banks argued that in the present case since
the said FDRs were not the part of the Information memorandum and the
negotiation during the CoC meetings, the Appellant cannot claim right on the said
FDRs due to deficiency in preparing the Information Memorandum or not
production of information by the Resolution Professional.
20. The Respondent Banks stated that the said FDRs are akin to the contingent
assets of the Corporate Debtor and the resolution plan of the Appellant is silent
on how the contingent assets has to be dealt with. In the absence of any specific
clause pertaining to the contingent assets, the Appellant has no right to lodge
claim on the said FDRs.
21. The Respondent Banks submitted that the Respondent banks forming a part
of the CoC, have been put by the Appellant to get paid with huge haircut. On the
other hand, the Appellant has an annual turnover of about Rs. 3,000 crores, in
view thereof, the claim of the Appellant should not be considered.
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22. Concluding the arguments, the Respondent Banks requested this
Appellate Tribunal to dismiss the Appeal.

Findings
23. We find that the only issue involved in both appeals is as to who would
own the assets of the Corporate Debtor, which have not been part of the
information memorandum.
24. We have noted from submissions that FDRs of the Corporate Debtor
(SPS Steels Rolling Mills Ltd) were made in lieu of margin money for the
Bank Guarantees (BGs) issued by Indian Overseas Bank and Central Bank
of India between 2005 to 2013 and 2012 to 2014 respectively. We have also
been informed that all the BGs expired between 2009 to 24.08.2017 and the
said FDRs of the Corporate Debtor were not part of the Information
Memorandum. We also note that the Appellant i.e., Shakambhari Ispat and
Power Limited was approved as SRA under Section 31 of the Code and since
then, the Appellant has said to have implemented the Resolution Plan and
paid the due amount against the final settlement of their admitted claims and
took over the assets and management of the Corporate Debtor.
25. We also note that there is no dispute amongst the parties including
Respondent Banks that, the Appellant, after implementation of the approved
resolution plan, has stepped into the shoes of the Corporate Debtor and took
over management of the Corporate Debtor. The only difference of opinion
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is regarding the effects of the successful resolution of the Corporate Debtor
post CIRP, i.e. whether in such case, any newly found assets of the Corporate
Debtor, remains with its new management or belong to the erstwhile CoC.
26. The Appellant has interpreted the decision of “ Ghanashyam Mishra
& Sons Pvt Ltd Vs Edelweiss ARC (2021) 9 SCC 657 and noted that as per
Para-102 of the aforesaid decision, claim against the Corporate Debtor is
extinguished once a resolution plan is duly approved by Adjudicating
Authority u/s 31(1) of the Code but pleaded that same is not applicable to the
aspects of later discovered assets of the Corporate Debtor.
27. As regard the issue of the Margin money to be treated as part of asset
of the corporate debtor, we find that this issue had been examined and dealt
by this Appellate Tribunal in the case of Indian Overseas Bank vs. Arvind
Kumar [(2020) SCC OnLine NCLAT 666 ]. It was held that “The ‘margin
money’ is the contribution on the part of the borrower who seeks ‘Bank
Guarantee’. The said margin money remains with the Bank, as long as the
Bank Guarantee is alive. If the Bank Guarantee expires without being
invoked, then the margin money reverse back to the borrower, and in case
the bank guarantee is invoked by the beneficiary, the margin money goes
towards payment of bank guarantee to the beneficiary, and nothing remains
with the financial institutions, which can be reversed to the Corporate
Debtor.”
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We are bound to accept above ratio of this Appellate Tribunal on the issue of
Margin Monies belong to Corporate Debtor and not to Banks.
28. We observe that the Adjudicating Authority has taken the view that if the
information memorandum contained the details of FDRs, the resolution plan
would have been enhanced and accordingly all the creditors of the Corporate
Debtor would have been paid, on the basis of enhanced value and therefore the
Appellant is not entitled to get the proceeds of the FDRs lying with the
Respondent Banks. The Adjudicating authority further held that the amount the
Appellant has already received from Indian Overseas Bank i.e. Rs. 79,24,041/-
will have to be refunded by the Appellant along with Interest as applicable to the
FDRs. The Adjudicating Authority further observed that the Respondent Banks
have made full claim of their dues before Resolution Professional during CIRP
without adjusting the Fixed deposits amounts lying with them and their claims
were settled as per the Resolution plan. Therefore, even the Respondent Banks
are not entitled to retain the balance amount and will have to refund it along with
rate of Interest applicable to the FDR, and the matter to be placed before the
erstwhile members of the CoC of Corporate Debtor, and the distribution of this
amount is decided by them in the CoC meeting which will include the respondent
Bank as well.
29. As noted earlier, the issue is regarding the assets which has not been
mentioned in the information memorandum. The Respondent Banks have
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pleaded empathetically that the SRA will have right only over the assets
mentioned in the information memorandum or the Resolution Plan. Further
assets not mentioned in the information memorandum cannot be treated as the
assets of the Corporate Debtor. In this connection, we refer to Regulation 36
IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
regarding information memorandum which reads as under: -
Regulation 36: Information memorandum.
(1) Subject to sub-regulation (4), the resolution professional
shall submit the information memorandum in electronic form
to each member of the committee [on or before the ninety-
fifth day from the insolvency commencement date [, and its
subsequent updates thereof]]
(2) [The information memorandum shall highlight the key
selling propositions and contain all relevant information
which serves as a comprehensive document conveying
significant information about the corporate debtor including
its operations, financial statements, to the prospective
resolution applicant and shall contain the following details
of the corporate debtor]
[(a) assets and liabilities [including contingent
liabilities ] with such description, as on the insolvency
commencement date, as are generally necessary for
ascertaining their [values;]
[(aa) Details of receivables of the corporate debtor, including
trade receivables, inter-corporate receivables, and
receivables arising under any contract;
(ab) Details of joint development agreements and other
similar collaboration or co-development arrangements,
including rights, obligations, and interests of the corporate
debtor arising thereunder;
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(ac) Details of assets which are under attachment by
enforcement agencies, including particulars of the assets
attached, the authority which has attached and the status of
such proceedings;]
Explanation : ‘Description’ includes the details such as date
of acquisition, cost of acquisition, remaining useful life,
identification number, depreciation charged, book
10
value, [geographical coordinates of fixed assets] and any
other relevant details.]
(b) the latest annual financial statements;
(c) audited financial statements of the corporate debtor for
the last two financial years and provisional financial
statements for the current financial year made up to a
date not earlier than fourteen days from the date of the
application;
(d) a list of creditors containing the names of creditors, the
amounts claimed by them, the amount of their claims
admitted and the security interest, if any, in respect of such
claims;
(e) particulars of a debt due from or to the corporate debtor
with respect to related parties;
(f) details of guarantees that have been given in relation to
the debts of the corporate debtor by other persons, specifying
which of the guarantors is a related party;
(g) the names and addresses of the members or partners
holding at least one per cent stake in the corporate debtor
along with the size of stake;
(h) details of all material litigation and an ongoing
investigation or proceeding initiated by Government and
statutory authorities;
[(ha) details of all identified avoidance transactions, if any,
under Chapter III or fraudulent or wrongful trading under
Chapter VI of Part II of the Code and subsequent filings
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before Adjudicating Authority, as referred under sub-
regulation (3A) of regulation 35A;]
(i) the number of workers and employees and liabilities of the
corporate debtor towards them;
[[(j) company overview including snapshot of business
performance, key contracts, key investment highlights and
other factors which bring out the value as a going concern
over and above the assets of the corporate debtor such as
brought forward losses in the income tax returns, input credit
of GST, key employees, key customers, supply chain linkages,
utility connections and other pre-existing facilities [;]
[(ja) details of all allottees, including their names, amounts
due, and units allotted, whose claims are either reflecting in
the books of accounts of the corporate debtor or in the
records of the Real Estate Regulatory Authority as
established under the Real Estate (Regulation and
Development) Act, 2016 (16 of 2016), but have not submitted
their claims to the resolution professional;]
(k) Details of business evolution, industry overview and key
growth drivers in case of a corporate debtor having book
value of total assets exceeding one hundred crores rupees as
per the last available financial statements [;]]]
[(ka) fair value:
Provided that the committee may decide not to disclose the
fair value if, for reasons to be recorded in writing, it considers
such non-disclosure to be beneficial for the resolution
process[; and]]
(l) other information, which the resolution professional
deems relevant to the committee.
(3) A member of the committee may request the resolution
professional for further information of the nature described
in this Regulation and the resolution professional shall
provide such information to all members within reasonable
time if such information has a bearing on the resolution plan.
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[(3A) The creditors shall provide to the resolution
professional the latest financial statements and other relevant
financial information of the corporate debtor available with
them.]
[(4) The resolution professional shall share the information
memorandum after receiving an undertaking from a member
of the committee [] to the effect that such member or *
resolution applicant shall maintain confidentiality of the
information and shall not use such information to cause an
undue gain or undue loss to itself or any other person and
comply with the requirements under sub-section (2) of section
29.]
30. From above, it becomes clear that the purpose of information
memorandum is to highlight key proposition and is required to contain all
relevant information to act as a comprehensive document for guidance of the
resolution applicant. The idea behind the information memorandum is to make
the prospective Resolution Applicant aware about the financial health along with
operational environment of the Corporate Debtor so that the prospective
Resolution Applicant can submit its resolution plan accordingly.
31. We further note that Regulation 36(2)(a) clearly mentions that the assets
and liability including contingent liabilities as on with such description as an
insolvency commencement date, as are generally necessary for asserting their
values, should be mentioned. Similarly, Regulation 36(2) (aa) also stipulate that
details of receivables of the Corporate Debtor including trade receivables, inter
corporate receivables and receivables arising under any contact, should also be
mentioned. We further find that the explanation given under Regulation 36(2)
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provides that description includes the details such as date of acquisition, cost of
acquisition, remaining useful life, depreciation, book value, geographical
coordinate of fixed assets and other relevant details. Regulation 36 also provides
for inclusion of latest financial statements and audited financial statements of the
Corporate Debtor for last two financial years. Similarly, Regulation 36(2)(l)
stipulates to include other information, which the Resolution Professional deems
relevant.
32. From above, we note that information memorandum is supposed to
contain the details of assets and liabilities as far as possible. We further observe
that the word “contingent liability” has been added in Regulation 36(2)(a),
however, the word “contingent assets” has not been mentioned anywhere.
33. In this connection, we observe that the word “contingent liabilities” are
mentioned since details of contingent liabilities may be available and are
required to be mentioned in the annual financial statement of the Corporate
Debtor. By very nature, the contingent liabilities arise from past events that may
or may not require an outflow of resources of the Corporate Debtor. Hence, these
are not recognised as financial statement but disclose in notes to the accounts
based on the principle of conservatism.
34. Interestingly, the word “contingent assets” conspicuously do not find any
place in Regulation 36. The contingent assets are possible assets arising from
past events whose existence may be confirmed at later date by uncertain further
events. It is observed that on the same analogy these contingent assets are also
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not generally not recognised in the financial statement to avoid recognising
income that may never happen.
35. In the present case, undisputedly the FDRs were lying with the
Respondent Banks i.e., Central Bank of India and Indian Overseas Bank, which
were created in the name of the Corporate Debtor long back, when bank
guarantee were required to be obtained by the Corporate Debtor and these FDR
were created as margin money. Typically, these FDRs should have been
considered by the Resolution Professional, however, no explanation exists or
have been produced before us, indicating why these FDRs were not accounted
for information memorandum.
36. We note that the Resolution Plan has since been implemented and due
payment to the creditors have been made. Whatever, the reasons the FDRs
continued with the Respondent banks. We intend to agree with the Adjudicating
Authority that the Resolution Banks have not lodged their claims based on these
FDRs before the Resolution Professional and hence, the Respondent Banks
cannot claim their rights on such FDRs post approval of Resolution Plan.
However, we do not find ourselves aligned to the reasoning of the Adjudicating
Authority regarding not treating these FDRs as the assets of the Corporate
Debtor.
37. It needs to be appreciated that the Corporate Debtor may hold large
number of physical as well as financial assets. Sometimes, due to many reasons
some of such physical assets or even financial assets, might have been skipped
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from the Resolution Professional and therefore, same might not have been
mentioned in the information memorandum.
38. Therefore, the question arises whether such omission of mention of assets
prejudice the right of the SRA like the Appellant herein, to have its claim over
such assets. It may also happen that sometime the assets may be found in the
premises of the Corporate Debtor which may be discovered physically later and
do not find place in the information memorandum. It cannot be the case that the
assets discovered later by the SRA, post approval of the Resolution Plan should
never become the property of the Corporate Debtor and should be returned to the
erstwhile members of CoC.
39. At this stage, we also take into consideration relevant regulation
pertaining to Resolution Plan, which reads as under: -
Regulation 37: Resolution plan.
[ 37. A resolution plan shall provide for the measures, as may
be necessary, for insolvency resolution of the corporate
debtor for maximization of value of its assets, including but
not limited to the following: -
(a) transfer of all or part of the assets of the corporate debtor
to one or more persons;
(b) sale of all or part of the assets whether subject to any
security interest or not;
[(ba) restructuring of the corporate debtor, by way of merger,
amalgamation and demerger;]
(c) the substantial acquisition of shares of the corporate
debtor, or the merger or consolidation of the corporate debtor
with one or more persons;
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[(ca) cancellation or delisting of any shares of the corporate
debtor, if applicable;]
(d) satisfaction or modification of any security interest;
(e) curing or waiving of any breach of the terms of any debt
due from the corporate debtor;
(f) reduction in the amount payable to the creditors;
(g) extension of a maturity date or a change in interest rate
or other terms of a debt due from the corporate debtor;
(h) amendment of the constitutional documents of the
corporate debtor;
(i) issuance of securities of the corporate debtor, for cash,
property, securities, or in exchange for claims or interests, or
other appropriate purpose;
(j) change in portfolio of goods or services produced or
rendered by the corporate debtor;
(k) change in technology used by the corporate debtor; and
(l) obtaining necessary approvals from the Central and State
Governments and other authorities.]
[(m) sale of one or more assets of corporate debtor to one or
more successful resolution applicants submitting resolution
plans for such assets; and manner of dealing with remaining
assets.]
Regulation 38: Mandatory contents of the resolution plan.
38. [[(1) The amount payable under a resolution plan –
(a) to the operational creditors shall be paid in priority over
financial creditors; and
(b) to the financial creditors, who have a right to vote under
sub-section (2) of section 21 and did not vote in favour of the
resolution plan, shall be paid in priority over financial
creditors who voted in favour of the [plan:]]]
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[Provided that where a resolution plan provides for payment
in stages, the financial creditors who did not vote in favour
of the resolution plan shall be paid at least pro rata and in
priority over financial creditors who voted in favour of the
plan, in each stage.]
[(1A) A resolution plan shall include a statement as to how it
has dealt with the interests of all stakeholders, including
financial creditors and operational creditors, of the
corporate debtor.]
[(1B) A resolution plan shall include a statement giving
details if the resolution applicant or any of its related parties
has failed to implement or contributed to the failure of
implementation of any other resolution plan approved by the
Adjudicating Authority at any time in the past.]
(2) A resolution plan shall provide:
(a) the term of the plan and its implementation schedule;
(b) the management and control of the business of the
corporate debtor during its term; and
(c) adequate means for supervising its implementation.
[(d) provides for the manner in which proceedings in respect
of avoidance transactions, if any, under Chapter III or
fraudulent or wrongful trading under Chapter VI of Part II of
the Code, will be pursued after the approval of the resolution
plan and the manner in which the proceeds, if any, from such
proceedings shall be distributed:
Provided that this clause shall not apply to any resolution
plan that has been submitted to the Adjudicating Authority
under sub-section (6) of section 30 on or before the date of
commencement of the Insolvency and Bankruptcy Board of
India (Insolvency Resolution Process for Corporate Persons)
(Second Amendment) Regulations, 2022.]
[(2A) A resolution plan shall not provide for assignment of
any avoidance transactions under Chapter III or fraudulent
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or wrongful trading under Chapter VI of Part II of the Code
that were not:
(a) disclosed in the information memorandum; and
(b) intimated to all prospective resolution applicants under
sub-regulation (3A) of regulation 35A before the last date for
submission of resolution plans:
Provided that this sub-regulation shall not apply to any
resolution plan that has been submitted to the Adjudicating
Authority under sub-section (6) of section 30 on or before the
date of commencement of the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Corporate
Persons) (Fifth Amendment) Regulations, 2025.]
[[(3) A resolution plan shall demonstrate that –
(a) it addresses the cause of default;
(b) it is feasible and viable;
(c) it has provisions for its effective implementation;
(d) it has provisions for approvals required and the timeline
for the same; and
(e) the resolution applicant has the capability to implement
the resolution plan.]]
[(3A) Every resolution plan shall include:
(a) a statement of beneficial-ownership, in a format to
be notified through circular by the Board, covering details of
all natural persons who ultimately owns or controls the
resolution applicant, together with the shareholding structure
and jurisdiction of each intermediate entity; and
(b) an affidavit, in a format specified by the Board, that the
resolution applicant is eligible/not eligible for the benefit
of section 32A.]
[[(4) (a) The committee shall consider setting up a
monitoring committee for monitoring and supervising the
implementation of the resolution plan.
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(b) The monitoring committee may consist of the resolution
professional or any other insolvency professional, or any
other person, including representatives of the committee and
representatives of resolution applicant(s), as its members:
Provided that where the resolution professional is proposed
to be part of the monitoring committee, the monthly fee
payable to him shall not exceed the monthly fee received by
him during the corporate insolvency resolution process.
(c) The monitoring committee shall submit quarterly reports
to the Adjudicating Authority regarding the status of
implementation of resolution plan.]]

Regulation 39: Approval of resolution plan.
39. [(1) A prospective resolution applicant in the final list
may submit resolution plan or plans prepared in accordance
with the Code and these regulations to the resolution
professional electronically within the time given in the
request for resolution plans under regulation 36B along with
(a) an affidavit stating that it is eligible under section 29A to
submit resolution plans;
(b) []; and *
(c) an undertaking by the prospective resolution applicant
that every information and records 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 applicant ineligible to continue in the corporate
insolvency resolution process, forfeit any refundable deposit,
and attract penal action under the Code.
[(1A) The resolution professional may, if envisaged in the
request for resolution plan-
(a) allow modification of the resolution plan received under
sub-regulation (1), but not more than once; or
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(b) use a challenge mechanism to enable resolution
applicants to improve their plans.
(1B) The committee shall not consider any resolution plan-
(a) received after the time as specified by the committee
under regulation 36B; or
(b) received from a person who does not appear in the final
list of prospective resolution applicants; or
(c) does not comply with the provisions of sub-section (2)
of section 30 and sub-regulation (1).]]
[(2) The resolution professional shall submit to the committee
all resolution plans [] along with the details of [non-*
compliant plans and] following transactions, if any,
observed, found or determined by him:-
(a) preferential transactions under section 43;
(b) undervalued transactions under section 45;
(c) extortionate credit transactions under section 50; and
(d) fraudulent transactions under section 66,
and the orders, if any, of the adjudicating authority in respect
of such transactions.]
[[(3) The committee shall-
(a) evaluate the resolution plans received under sub-
regulation (2) [which comply with the requirements of the
Code and regulations made thereunder,] as per evaluation
matrix;
(b) record its deliberations on the feasibility and viability of
each resolution plan; and
(c) vote on all such resolution plans simultaneously.
(3A) Where only one resolution plan is put to vote, it shall be
considered approved if it receives requisite votes.
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(3B) Where two or more resolution plans are put to vote
simultaneously, the resolution plan, which receives the
highest votes, but not less than requisite votes, shall be
considered as approved:
Provided that where two or more resolution plans receive
equal votes, but not less than requisite votes, the committee
shall approve any one of them, as per the tie-breaker formula
announced before voting:
Provided further that where none of the resolution plans
receives requisite votes, the committee shall again vote on the
resolution plan that received the highest votes, subject to the
timelines under the Code.
9
[(4) The resolution professional shall endeavour to submit
the resolution plan approved by the committee to the
Adjudicating Authority at least fifteen days before the
maximum period for completion of corporate insolvency
resolution process under section 12, along with a compliance
10 11
certificate in [Form H of the [Schedule-I] and the
evidence of receipt of performance security required under
sub-regulation (4A) of regulation 36B]].
(5) The resolution professional shall forthwith send a copy of
the order of the Adjudicating Authority approving or
rejecting a resolution plan to the participants and the
resolution applicant.
12
[(5A) The resolution professional shall, within fifteen days
of the order of the Adjudicating Authority approving
a resolution plan, intimate each claimant, the principle or
formulae, as the case may be, for payment of debts
under such resolution plan:

Provided that this sub-regulation shall apply to every
corporate insolvency resolution process ongoing
and commencing on or after the date of commencement of the
Insolvency and Bankruptcy Board of India
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(Insolvency Resolution Process for Corporate Persons)
(Fifth Amendment) Regulations, 2020;]
(6) A provision in a resolution plan which would otherwise
require the consent of the members or partners of the
corporate debtor, as the case may be, under the terms of the
constitutional documents of the corporate debtor,
shareholders’ agreement, joint venture agreement or
other document of a similar nature, shall take effect
notwithstanding that such consent has not been obtained.
(7) No proceedings shall be initiated against the interim
resolution professional or the resolution professional, as the
case may be, for any actions of the corporate debtor, prior to
the insolvency commencement date.
(8) A person in charge of the management or control of the
business and operations of the corporate debtor after a
resolution plan is approved by the Adjudicating Authority,
may make an application to the Adjudicating Authority for an
order seeking the assistance of the local district
administration in implementing the terms of a resolution
plan.
[(9) A creditor, who is aggrieved by non-implementation of a
resolution plan approved under sub-section (1) of section 31,
may apply to the Adjudicating Authority for directions.]

40. From above, we do not find any specific provision which binds the
Resolution Applicant to submit details of assets being taken over. We have
noted that the Respondent Banks have pleaded that the Appellant did not include
such FDRs in its Resolution Plan nor was part of negotiation with erstwhile CoC,
hence the Appellant cannot claim proceeds of these FDRs. We find that in above
quoted regulations regarding Resolution Plan, no such stipulation has been made
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that SRA is bound to give such specific details of the assets being taken over.
The Appellant gave its Resolution Plan based on the information memorandum
prepared by the Resolution Professional. It is also observed that in information
memorandum there was no clause that any assets not mentioned in the
information memorandum will not be passed on the Appellant being the SRA,
or in other words such assets will be given to Erstwhile CoC. In view of this,
we do not find merit in the argument of the Respondent Banks on this aspect.
41. We find merit it the logic of the Appellant that the ratio of the Ghanshyam
Mishra (Supra) is applicable on the liability side for extinguishment of claims
against the Corporate Debtor for the simple reason that the Corporate Debtor
cannot be saddled with uncertain liabilities arising in future. However, the same
principal may not be applicable to the assets which may come to the notice of
the Corporate Debtor post approval of the Resolution Plan.
42. We are of the view that once a resolution plan is approved by the
Adjudicating Authority under Section 31(1) of the Code the claims as provided
in the approved resolution plan shall stand frozen and will be binding on all the
stakeholders having interest. We rely upon the judgement passed by the Hon'ble
Apex Court in Ghanashyam Mishra and Sons Private Limited v. Edelweiss
Asset Reconstruction Company Limited reported in (2021) 9 SCC 657 :
"95. In the result, we answer the questions framed by us as
under:
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(i) That once a resolution plan is duly approved by the
Adjudicating Authority Under Sub-section (1) of Section 31,
the claims as provided in the resolution plan shall stand
frozen and will be binding on the Corporate Debtor and its
employees, members, creditors, including the Central
Government, any State Government or any local authority,
guarantors and other stakeholders. On the date of approval
of resolution plan by the Adjudicating Authority, all such
claims, which are not a part of resolution plan, shall stand
extinguished and no person will be entitled to initiate or
continue any proceedings in respect to a claim, which is not
part of the resolution plan;
(ii) 2019 amendment to Section 31 of the I&B Code is
clarificatory and declaratory in nature and therefore will be
effective from the date on which I&B Code has come into
effect;
(iii) Consequently, all the dues including the statutory dues
owed to the Central Government, any State Government or
any local authority, if not part of the resolution plan, shall
stand extinguished and no proceedings in respect of such
dues for the period prior to the date on which the
Adjudicating Authority grants its approval Under Section 31
could be continued."
43. In the present appeals, we note that the FDRs were created by the
Corporate Debtor as margin money for the purpose of bank guarantees,
which have already been expired. Logically, such FDRs could not have
become property of the Respondent banks and rather can be viewed as assets
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of the Corporate Debtor. We hold that the Respondent Banks have no right
to "adjust" such balance after the Resolution Plan has been fully
implemented.
44. The Respondent Banks have raised an apprehension that fraud may be
committed in future, if the assets of the Corporate Debtor, not part of the
information memorandum, are given to the SRA. In this connection, the
Appellant pleaded that the said argument is speculative and dehors the settled
principal of law which states that the fraud vitiates all solemn acts. We find
merit in the arguments. We also hold that if such frauds are deliberately
committed to defraud creditors, these cannot be sustained at any stage.
45. In view of above detailed discussions, we find merit in the appeals. The
Appeals succeed and the impugned order is set aside. The matter is remanded
back to the Adjudicating Authority to decide in accordance with the law. Parties
are directed to appear before the Adjudicating Authority on 06/04/2026. No
order as to cost. I.A., if any, are closed.

[Justice Mohammad Faiz Alam Khan]
Member (Judicial)


[Naresh Salecha]
Member (Technical)
Sim
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