Gujarat Industrial Development Corporation vs Zaveri & Co. Pvt. Ltd & Ors & Ors.
- Court
- National Company Law Appellate Tribunal
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH: NEW DELHI
Company Appeal (AT) (Insolvency) No. 1557 of 2023
&
IA No. 5562 of 2023
(Arising out of the Impugned Order dated 13.09.2023 passed by the
‘Adjudicating Authority’ (National Company Law Tribunal, New Delhi
Bench) in IA No. 1764 of 2021 in C.P. (IB) No. 571 (ND)/2020)
IN THE MATTER OF:
Kanwar Raj Bhagat
6 GF, Block 3 Eros Garden, Charmwood Village,
Surajkund Road, Faridabad- 121009
…Appellant
Versus
1. M/s. Gujarat hydrocarbons and
…Respondent No.1
Power Sez Limited
Having its registered office at:
22 Community Centre Basant Lok,
Vasant Vihar, New Delhi – 110057
2. M/s. Srei Infrastructure Finance Limited
Having its registered office at:
Vishwakarma, 86 C, Topsia Road (South),
Kolkata – 700046
…Respondent No.2
3. Mr. Rakesh Kumar Agarwal ,
Erstwhile Resolution Professional of M/s.
Gujarat hydrocarbons and Power Sez Limited
at 20 N.S. Road Room No. 15 Block A,
Kolkata – 700001
…Respondent No.3
4. Zaveri & Company Limited
Having its registered office at:
U-02, Upper Plaza, Swagat Building,
Near Lal Bungalow, C.G. Road,
Ahmedabad – 38006
…Respondent No.4
With
Company Appeal (AT) (Insolvency) No. 1684 of 2023
(Arising out of the impugned Orders dated 13.09.2023 passed by the
National Company Law Tribunal, New Delhi in I.A. No. 596 of 2022 in C.P.
(IB) No. 571 (ND)/2020 and 19.09.2023 passed by the National Company
Law Tribunal, New Delhi, in I.A. No. 4585 of 2021 in C.P. (IB) No. 571
(ND)/2020]
IN THE MATTER OF:
Assam Company India Limited
Having its corporate office at:
Nilhat House, 11 RN Mukherjee Road,
Kolkata- 700001, West Bengal
And its registered office at:
Greenwood Tea Estate, Dibrugarh – 786001
…Appellant
Versus
1. M/s. Gujarat hydrocarbons and
Power Sez Limited
Having its registered office at:
22 Community Centre Basant Lok,
Vasant Vihar, New Delhi – 110057
…Respondent No.1
2. M/s. Srei Infrastructure Finance Limited
Having its registered office at:
Vishwakarma, 86 C, Topsia Road (South),
Kolkata – 700046
…Respondent No.2
3. Mr. Rakesh Kumar Agarwal ,
Erstwhile Resolution Professional of M/s.
Gujarat hydrocarbons and Power Sez Limited
at 20 N.S. Road Room No. 15 Block A,
Kolkata – 700001
…Respondent No.3
4. Zaveri & Company Limited
Having its registered office at:
U-02, Upper Plaza, Swagat Building,
Near Lal Bungalow, C.G. Road,
Ahmedabad – 38006
…Respondent No.4
Present:
For Appellant : Mr. Ajay Gaggar and Mr. Shreedhar Gaggar,
Advocates
For Respondent : Mr. Raheel Patel, Mr. Himanshu Satija and Mr.
Anshul Rao, Advocates for RP.
Mr. Palash Singhai, Mr. Harshal Sareen and Ms.
Aashima Gautam, Advocates for SRA.
With
Company Appeal (AT) (Insolvency) No. 626-628 of 2025
&
I.A. No. 4475, 5530 of 2025
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 2 of 87
(Arising out of the impugned Orders dated 19.02.2025 passed by the
National Company Law Tribunal, New Delhi in I.A. No. 4585 of 2021 in CP
(IB) No. 571 of 2020 and IA No. 136 of 2022 and IA No. 5224 of 2024 in
CP (IB) no. 571 of 2020 passed by the National Company Law Tribunal,
New Delhi, in I.A. No. 4585 of 2021 in C.P. (IB) No. 571 (ND)/2020]
IN THE MATTER OF:
Gujarat Industrial Development Corporation
nd
Block No. 4, 2 Floor, Udhyog Bhavan,
Sector-11, Gandhinagar-382011
…Appellant
Versus
1. Zaveri & Co. Pvt. Ltd.
…Respondent No.1
Swagat, CG Road, Ahmedabad – 380006
2. Rakesh Kumar Agarwal
Ex-Resolution professional of Gujarat
Hydrocarbon & Power SEZ Ltd.
20 N S Road, Room No. 15, Block A,
st
1 Floor, Kolkata, West Bengal – 700001
…Respondent No.2
3. Gujarat Hydrocarbon & Power SEZ Ltd.
(Corporate Debtor)
22 Community Centre, Basant Lok,
Vasant Vihar, South Delhi, New Delhi,
Delhi, India – 110057
…Respondent No.3
4. M/s SREI Infrastructure Finance Ltd.
Y 10, Block EP, Sector V,
Salt Lake City, Kolkata 700091
…Respondent No.4
Present:
For Appellant : Mr. Virendra Ganda, Sr. Advocate with Mr. A.
Sheth, Ayandeb Mitra, Ishita Singh, Advocates.
For Respondent : Mr. Abhimanyu Bhandari and Arav Pandit,
Advocates for SREI/CoC.
Mr. Abhijeet Sinha, Sr. Advocate with Palash
Singhai, Tirth Nayak, Harshal Sareen and Aashima
Gautam, Advocates for SRA.
Mr. Raheel Patel, Himanshu Satija, Harsh Saxena
and Anshul Rao, Advocates for RP.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 3 of 87
J U D G M E N T
(Hybrid Mode)
[Per: Arun Baroka, Member (Technical)]
This judgment disposes of a cluster of connected Appeals arising out of
the Corporate Insolvency Resolution Process (“CIRP”) of M/s Gujarat
Hydrocarbons and Power SEZ Limited (“the Corporate Debtor” or “GHPSL”),
incorporated on 17.08.2007 to develop, operate and maintain a sector-specific
Special Economic Zone (“SEZ”) on leasehold land at Vilayat, Bharuch, Gujarat
(the “Demised Premises”), taken on lease from the Gujarat Industrial
Development Corporation (“GIDC”), a statutory corporation which features in
this matter simultaneously as lessor of the land, as an Operational Creditor
of the Corporate Debtor, and as the statutory regulator of GIDC-allotted
industrial land. The Demised Premises is, on the admitted case of all parties,
the sole material asset of the Corporate Debtor.
2. In these two sets of Appeals the subject matters are interconnected and
arise from the same insolvency matrix and are heard together and accordingly
we are disposing of together by this common judgment.
3. Set 1 — Company Appeal (AT)(Ins) No. 1557 of 2023 (by the suspended
director of the Corporate Debtor) and Company Appeal (AT)(Ins) No. 1684 of
2023 (by Assam Company India Limited, the corporate guarantor, through its
own Successful Resolution Applicant, BRS Ventures Investments Ltd.) —
concerns the quantum of the claim of the sole Financial Creditor, SREI
Infrastructure Finance Limited (“SREI”), admitted in this CIRP, and the
ranking of the corporate guarantor's subrogated claim.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 4 of 87
4. Set 2 — Company Appeal (AT)(Ins) Nos. 626, 627 and 628 of 2025, filed
by GIDC — concerns whether a resolution plan built upon leasehold SEZ
land, on the premise that the land stands (or will stand) de-notified for non-
SEZ industrial use, can be sustained where that de-notification has not been
completed and the plan's very feasibility is contested by the land-owning
regulator.
5. The two sets of Appeals revolve around the Corporate Insolvency
Resolution Process of the Corporate Debtor (GHPSL) and an approved
resolution plan, and for that reason they are analysed together – though each
set is analysed separately with its independent conclusions. Since the appeals
arise from the same Corporate Insolvency Resolution Process and involve
overlapping questions, they are being disposed of by this common judgment.
Brief facts and chronology
6. The Corporate Debtor availed a credit facility of ₹ 100 crores from SREI
in 2011, for which Assam Company India Limited (“ACIL”), the
holding/guarantor company, executed a corporate guarantee dated
05.01.2011. In the CIRP of ACIL before the NCLT, Guwahati Bench (CP(IB)
No. 20/GB/2017), SREI's claim of ₹ 648.80 crore was reduced by the Interim
Resolution Professional to ₹ 357.29 crore, and thereafter by the Resolution
Professional to ₹ 241.27 crore on 03.04.2018, principally on the ground that
capitalisation of penal interest is impermissible in law. SREI's challenge to
this reduction (I.A. No. 34/2018) was dismissed by the NCLT, Guwahati by
order dated 23.07.2018, which was affirmed by this Tribunal on 01.02.2019
in Company Appeal (AT)(Ins) No. 291 of 2018, this Tribunal there recording
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 5 of 87
that it expressed “no opinion” on the claim but leaving SREI at liberty to take
recourse under Section 60(6) of the Code, a liberty SREI did not avail. The
resolution plan of BRS Ventures Investments Ltd. for ACIL was approved by
the NCLT, Guwahati on 20.09.2018, under which SREI was paid ₹ 38.87
crores.
7. On SREI's application under Section 7 of the Code against the
Corporate Debtor (the principal borrower on the very same 2011 facility), CIRP
commenced by order dated 18.11.2020, and the third Respondent was
appointed Resolution Professional (“RP”). In this CIRP, SREI filed and the RP
₹
admitted a claim of 1,885.08 crores as a secured Financial Creditor — a
figure roughly 7.8 times the ₹ 241.27 crore judicially fixed and finally settled
in the ACIL CIRP barely two years earlier, on the very same debt and default.
SREI’s claim was admitted at ₹ 1,885.08 crore in GHPSL despite the earlier
ACIL determination. ACIL was admitted only as an unsecured related-party
Financial Creditor, at nil value on liquidation-value logic, notwithstanding its
payment of ₹ 38.87 crore to SREI.
8. The resolution plan of Zaveri & Co. Pvt. Ltd. was approved by the CoC
(SREI, 100% voting share) on 30.08.2021. The suspended director filed I.A.
No. 1764 of 2021 seeking correction of the admitted claim and rectification of
the Information Memorandum (“IM”); ACIL filed I.A. No. 596 of 2022 seeking
recognition as a secured Financial Creditor to the extent of ₹ 38.87 crore. Both
were dismissed by the Adjudicating Authority on 13.09.2023, with costs of
₹ 50,000 imposed on the suspended director, principally on the reasoning that
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 6 of 87
the Adjudicating Authority could not, post-CoC-approval, go into “the nitty
gritties” of a claim admitted on the strength of facts arising in a different
Corporate Debtor's CIRP. The resolution plan itself was approved on
19.09.2023 and the costs were imposed..
9. Meanwhile, GIDC — lessor of the Demised Premises and an Operational
Creditor — terminated the Lease Deed on 13.12.2021, during the subsistence
of the Section 14 moratorium, and initiated eviction proceedings under the
Gujarat Public Premises (Eviction of Unauthorised Occupants) Act, 1972.
GIDC's objections to the resolution plan (I.A. No. 136 of 2022) and its later
application (I.A. No. 5224 of 2024, seeking deferment pending the outcome of
its writ challenge) were both dismissed by the Adjudicating Authority.
10. Following a remand directed by this Appellate Tribunal on 08.08.2024
(upheld by the Hon'ble Supreme Court on 20.08.2024), GIDC's objections
were reheard and again dismissed, together with the approval of the plan, by
the composite Impugned Order dated 19.02.2025, essentially by a one-
paragraph disposal (para 10.2) holding that there was “no infirmity in the
decision of the CoC” and declining to “interfere in the decision on the
Resolution Plan taken by the CoC in their Commercial Wisdom.”
11. It is necessary to record two further, undisputed developments. First,
1
the Hon'ble Supreme Court, in BRS Ventures Investments Ltd. Vs SREI
Infrastructure Finance Ltd. & Anr. (2025) 1 SCC 456 decided on
1
BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr., 2024 INSC 548:
(2025) 1 SCC 456 decided on 23.07.2024
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 7 of 87
23.07.2024 held (i) that payment of ₹ 38.87 crore to SREI in the ACIL CIRP
did not extinguish the Corporate Debtor's liability for the balance of the debt;
(ii) that a Financial Creditor may proceed under Section 7 against the
Corporate Debtor and the corporate guarantor separately or simultaneously;
and (iii) that even where Section 140 of the Indian Contract Act, 1872 is
attracted, the surety's subrogation runs only to the extent of the amount
actually recovered by the creditor from the surety — here, ₹ 38.87 crore —
though the Court did not render an operative finding on subrogation as the
point was not pressed before it. Second, the Gujarat High Court , by judgment
dated 01.12.2025 in Gujarat Hydrocarbons and Power SEZ Limited v.
Gujarat Industrial Development Corporation & Ors. SCA No. 4937 of
2022, quashed GIDC's termination of the Lease Deed and the consequent
eviction proceedings, holding that GIDC, a statutory authority, could not
invoke the Gujarat Public Premises Act, 1972 to defeat the moratorium and
the overriding scheme of the Code under Section 238; GIDC's Letters Patent
Appeal against that judgment has also since been dismissed.
CA(AT) (Ins.) No. 1557 of 2023 and CA (AT) (Ins.) No. 1684/2023
12. Set-1 involves CA(AT) (Ins.) No. 1557 of 2023 and CA (AT) (Ins.) No. 1684
of 2023 which arise out of the Corporate Insolvency Resolution Process of M/s
Gujarat Hydrocarbons and Power SEZ Limited (“the Corporate Debtor”).
Company Appeal (AT) (Ins.) No. 1557 of 2023 is being treated as the lead
matter.
Submissions of the Appellant/ Suspended Director of GHPSL in Set 1
CA (AT) (Ins.) No. 1557 of 2023
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 8 of 87
13. Mr. Kanwar Raj Bhagat, the suspended director of the Corporate
Debtor, submits that the claim of the Financial Creditor, having been
quantified at ₹ 241.27 crore in the Corporate Insolvency Resolution Process
of the Corporate Guarantor and judicially affirmed, could not have been
admitted at ₹ 1,885.08 crores in the Corporate Insolvency Resolution Process
of the Corporate Debtor. The Resolution Professional is bound by the said
adjudication and is not vested with any adjudicatory power to enlarge a claim
already determined. The Information Memorandum, being founded upon the
said admission and upon the classification of the Corporate Guarantor as an
unsecured related party, stands vitiated, and that the Corporate Insolvency
Resolution Process is, in consequence, liable to be set aside and re-conducted
in accordance with law. The costs of ₹ 50,000/- came to be imposed upon the
Appellant without any reason being recorded. It is accordingly prayed that the
impugned order dated 13.09.2023 be set aside; that the admission of the
claim of the Financial Creditor at ₹ 1,885.08 crores be set aside; that the
Information Memorandum be rectified and the claim re-assessed; and the
Appellant be permitted to submit its claim in Form C; and that the costs of
₹ 50,000/- imposed upon it be set aside.
Submissions of the Appellant/ACIL-the Corporate Guarantor/BRS
Ventures in Set 1 - CA (AT) (Ins.) No. 1684 of 2023
14. Learned Counsel appearing for the Appellant, M/s Assam Company
India Limited, the Corporate Guarantor (represented by the successful
resolution applicant, that is, BRS Ventures Investment Limited), submits that
upon payment of a sum of ₹ 38.87 crore in discharge of its liability as surety,
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 9 of 87
it stands subrogated, by virtue of Section 140 of the Indian Contract Act,
1872, to the rights of the Financial Creditor to the extent of the said amount,
and ought accordingly to have been treated as a secured financial creditor of
the Corporate Debtor to that extent, and not as an unsecured related-party
Financial Creditor. Learned Counsel has placed reliance on the judgment of
1
the Hon’ble Supreme Court in BRS Ventures Investments Ltd. in support
of the said submission.
15. It is prayed by ACIL that it be treated as a secured Financial Creditor
of the Corporate Debtor to the extent of ₹ 38.87 crore; and, in the alternative,
that it be held entitled to a proportionate share in the amount payable under
the resolution plan to the Financial Creditors of the Corporate Debtor.
16. The claim of ₹ 1885.08 Cr filed by the Financial Creditor (Respondent
No. 2) and accepted by the erstwhile Resolution Professional (Respondent No.
3) is erroneous and inflated and ought to be set aside and the Information
Memorandum prepared by the Resolution Professional is erroneous and
incorrect and waiver of Cost imposed upon the Appellant.
Submissions of the Appellant – GIDC in Set 2 – CA (AT) (Ins.) No. 626-628
of 2025
17. In IA No. 4585 of 2021 in CP (IB) No. 571 of 2020 and IA No. 136 of
2022 and IA No. 5224 of 2024 in CP (IB) No. 571 of 2020 the Ld. NCLT has
approved the resolution plan which is based on sub plotting the leased
premises leased by the appellant to the CD. This plan was approved without
any consent /permission from the appellant, where such lease has already
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 10 of 87
come to be terminated and CD is evicted under the provisions and order of
the Gujarat Public Premises (Eviction of Unauthorised Occupants) Act, 1972.
Such position is accepted by the SRA. Further the resolution plan is not in
line with the purpose for which the lease was given to the CD being that of
SEZ purpose being that of Energy sector. Also the denotification of the SEZ
has never been effected qua the land in question, since the Development
Commissioner has never issued certificate no benefits availed certificate
and/or refund of benefit received certificate to complete the denotification
process. Further the resolution plan seeks to revive the CD by sub leasing the
land of the Appellant in piece meal as non SEZ sub plots which is not
permissible as per the terms and conditions between the Appellant and the
CD, and the approval has tantamounted to rewriting the contract between the
Appellant and the CD and resulting in violation of the law of the land.
Submissions of the Respondents/FC – SREI Finance in Set 1 CA (AT)
(Ins.) No. 1557 of 2023
18. Learned Counsel appearing for the Financial Creditor, the second
Respondent, refuting the submissions of the Appellants, submits that the
orders passed in the Corporate Insolvency Resolution Process of the Corporate
Guarantor contained an express reservation that no opinion was expressed
therein and that other proceedings would remain unaffected. It is submitted
that each Resolution Professional is required independently to verify the
claims placed before him, and that the claim of the Financial Creditor in the
Corporate Insolvency Resolution Process of the Corporate Debtor has been
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 11 of 87
correctly verified and admitted. It is submitted that the appeals are liable to
be dismissed and the approved resolution plan upheld.
Submissions of the Respondents/Resolution Professional in Set 1 CA
(AT) (Ins.) No. 1557 of 2023
19. Learned Counsel appearing for the Resolution Professional, the third
respondent, submits that a Resolution Professional is not bound by the
computation of claims made in the resolution process of a different Corporate
Debtor, and is not vested with adjudicatory power to sit in judgment over a
creditor’s proof. It is submitted that the claims were collated and verified, and
the Information Memorandum prepared, in accordance with the provisions of
the Code and the Regulations framed thereunder.
Submissions of the Respondents/Successful Resolution/Zaveri in Set 1
CA (AT) (Ins.) No. 1557 of 2023
20. Learned Counsel appearing for the Successful Resolution Applicant
submits that the resolution plan, having been approved by the Committee of
Creditors with a hundred per cent voting share and sanctioned by the
Adjudicating Authority, is binding and irrevocable; that the commercial
wisdom of the Committee of Creditors is not justiciable save upon the grounds
contemplated by Section 30(2) of the Code; and that the amount payable to
the secured Financial Creditor under the plan is fixed and is unaffected by
the quantum of the claim as admitted. It is submitted that the challenge to
the approved resolution plan is liable to be rejected.
Appraisal
[CA AT Ins No. 1557 of 2023 & 1684 of 2023]
[By ex-director of the CD & corporate guarantor]
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 12 of 87
21. Entities involved in the Appeals being dealt in here are noted as follows
for better appreciation:
Role Entity Significance
Suspended director of GHPSL;
Against impugned order dated
13.09.2023 NCLT, New Delhi
In IA-1764/ND/2021 in CP (IB)
571 (ND)/2020
Appellant
(1557/2023)
Mr. Kanwar Raj
Bhagat
Connected appeal
seeks secured-creditor status to
extent of ₹ 38.87 Cr by subrogation
Against impugned order dated
13.09.2023 NCLT, New Delhi
In I.A. Nos. 596/ND/2022 in CP
(IB) 571 (ND)/2020;
Appellant
(1684/2023)
Assam Company
India Ltd.
Gujarat
Hydrocarbons &
Power SEZ Ltd.
(GHPSL)
Principal borrower;
CIRP under CP(IB) 571(ND)/2020
before NCLT Delhi.
Corporate
Debtor (R-1)
Original lender of ₹ 100 cr (2011);
itself underwent CIRP at NCLT
Kolkata (plan approved
11.08.2023).
Financial
Creditor (R-2)
SREI Infrastructure
Finance Ltd.
Guaranteed the GHPSL loan
(Deed dt. 05.01.2011);
underwent its own CIRP at NCLT
Guwahati;
₹ 38.87 cr paid to SREI in that
CIRP.
Corporate
Guarantor
Assam Company
India Ltd. (ACIL)
RP of GHPSL;
admitted SREI's claim at ₹
1885.08 cr;
figure being challenged
Resolution
Professional
(R-3)
Mr. Rakesh Kumar
Agarwal
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 13 of 87
Role Entity Significance
Successful Resolution Applicant
for GHPSL;
plan of ₹ 135 cr approved by CoC
100% (30.08.2021).
Zaveri & Co. Pvt.
SRA
Ltd.
Lessor of the SEZ land;
objections (IA-136/2022, IA-
5224/2024)
dismissed 19.02.2025.
Gujarat Industrial
Development Corpn.
(GIDC)
Objector
below
22. We note that the appeal CA (AT) Ins No 1684 of 2023 has been filed by
the Appellant/Corporate Guarantor (BRS Ventures - SRA of ACIL) challenging
the impugned order dated 13.09.2023 passed by the Ld. NCLT, New Delhi in
I.A. Nos. 596/ND/2022 in CP (IB) 571 (ND)/2020. The appeal CA (AT) Ins No
1557 of 2023 has been filed by the Appellant/the erstwhile Director of
Respondent No. 1, challenging the same impugned order. The main grounds
for challenging the impugned order in both the appeals are similar and are
related to exaggerated claim and subrogation and are noted together as
follows:
Claim of ₹ 1885.08 Cr filed by the Financial Creditor
(Respondent No. 2-SREI) and accepted by the erstwhile
Resolution Professional (Respondent No. 3) is erroneous and
inflated and ought to be set aside.
ACIL to be treated as a Secured Financial Creditor to the
extent of ₹ 38.87 crores, and not an Unsecured Financial
Creditor by the Respondent No. 3.
The Information Memorandum prepared by the Resolution
Professional is erroneous and incorrect.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 14 of 87
23. Briefly speaking the Appellants (suspended director and ACIL/BRS
Ventures) contend that SREI's claim, having been finally and judicially fixed
at ₹ 241.27 crore in the ACIL CIRP — a determination that attained finality
upon dismissal of SREI's own challenge by the NCLT, Guwahati and by this
Tribunal — could not, on the very same debt and default, balloon to ₹ 1,885.08
crores in the CIRP of the principal borrower within a span of roughly two
years. It is also claimed that the RP, though not possessed of adjudicatory
power, was nonetheless bound to correctly collate and verify the claim in light
of that judicial determination, and that mechanical admission of an inflated,
2
unverified figure is itself a failure of the RP's statutory duty under Swiss
Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17 and is amenable to
3
correction under Axis Bank Ltd. v. Samruddhi Realty Ltd., (2023) 23
2
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17 paras 88–91 (holding that the
Resolution Professional is statutorily entrusted with receiving, collating and verifying
creditors’ claims, and may require such information, documents or evidence as are necessary
to satisfy himself regarding the existence and quantum of the claim. The verification of claims
is an integral statutory function to be undertaken in accordance with the Insolvency and
Bankruptcy Code, 2016 and the CIRP Regulations, and is intended to ensure that only duly
verified claims are taken into account during the corporate insolvency resolution process.
3
Axis Bank Ltd. v. Samruddhi Realty Ltd., (2023) 23 Comp Cas-OL 596
Para 49 and 50, “49. It is to be pointed that a "Tribunal" has the power to look behind the
judgment on which the "creditor" cements his proof with a view to decide whether the "debt"
is really and truly due. A liquidator has these, powers, while functioning in a quasi, judicial
status. As a matter of fact, the "Tribunal" and the liquidator may not look behind every
decision/judgment "as a matter of routine".
50. A "Tribunal" can interfere where the liquidator has not exercised his discretion in a bona
fide manner or he was proposing to do an act which no reasonable or prudent person will do.
A "liquidator" as an "officer of the Tribunal" is to act justly and fairly while dealing with an
individual who has an adverse claim to his own and does not stand on his right either in equity
or in law, as opined by this Tribunal.”
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 15 of 87
Comp Cas-OL 596 , which permits the Adjudicating Authority to look behind
an admitted claim.
24. Further relying on Section 140 of the Indian Contract Act, 1872 and on
BRS Ventures (supra), that ACIL, having paid ₹ 38.87 crore to SREI in
discharge of its guarantee, stands subrogated to SREI's rights as secured
Financial Creditor to that extent, and ought to have been so recognised in the
Corporate Debtor's CIRP rather than being classified as an unsecured related
party entitled to nil.
25. Further, it is claimed that the IM prepared by the RP is vitiated on two
counts — the erroneous classification of ACIL and the erroneous, inflated
admission of SREI's claim — rendering the entire CIRP arbitrary and non-
transparent and requiring the process to be set aside and re-conducted with
4
a corrected IM, relying on Bimalesh Bhardwaj v. Value Infratech India Pvt.
4
Bimalesh Bhardwaj v. Value Infratech India Pvt. Ltd., 2021 SCC OnLine NCLAT 443
Para 20. “We find that, while the CoC took a decision for going for liquidation of the Corporate
Debtor, the Appellants have challenged the very basis of constitution of CoC and fixing of
voting rights by labeling it illegal, done to provide undue and unfair advantage to Respondent
No. 4. Moreover, the Appellants have also claimed that the CoC took a decision for liquidation
without following the procedure under CIRP stipulated in the IBC. The basic reason for seeking
Resolution Plan under CIRP is to ensure that the Corporate Debtor can continue to function
as a going concern, while taking care of interests of its creditors. Liquidation is the last resort
which implies corporate death of the company. For the Corporate Insolvency Resolution
Process to result in successful resolution of the corporate Debtor, preparation of a correct
information memorandum is a must, which may result in work able resolution plans. In the
present case, we find that information memorandum was not prepared with full and correct
details of assets and liabilities of the Corporate Debtor. The RP also did not pursue his
application u/s 19(2). As a result the CoC decided to abandon the step of inviting of EOI for
Resolution Plan. Thereafter in undue haste, the CoC decided to go for liquidation of the
Corporate Debtor. Since the CoC consisted of two members - Capri Global and homebuyers -
with Respondent No. 4 being given inflated voting share, the decisions by CoC was completely
swayed by the Respondent No. 4 and its selfish interests. The decisions of CoC was a blotted
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 16 of 87
Ltd., 2021 SCC OnLine NCLAT 443 . It is also claimed that the costs of ₹ 50,000
imposed on the suspended director were imposed without recorded reasons
and are liable to be set aside.
26. GIDC in set 2 contends that it approaches this Tribunal in its dual
capacity as lessor/regulator and as Operational Creditor, and that only the
order approving the plan (I.A. 4585/2021) needs to meet the closed-list test
of Section 61(3), while the dismissal of its objection-IAs (136/2022 and
5224/2024) stand on ordinary appellate footing. It contends that the
resolution plan proceeds on the SRA's own unilateral presumption that the
SEZ stands, or will stand, de-notified, permitting conversion of the Demised
Premises to non-SEZ industrial use and its sub-plotting/sub-leasing —
without GIDC's consent, without the Development Commissioner's “no
benefits availed”/refund certificate ever having issued, and without the
Corporate Debtor's name having been formally removed from the notified-SEZ
list. It submits that Clause 3.3(v) of the Lease Deed permits a change of use
only with GIDC's “prior consent, approval or permission,” which has never
been granted, and that a resolution plan cannot rewrite that condition or
Regulation 37(j) of the CIRP Regulations cannot be stretched to authorise a
change in the very nature of the demised land's permitted use.
27. GIDC also contends that the IM did not disclose the pendency, or the
incomplete state, of the de-notification correspondence between the Corporate
one, since it was taken in the CoC, in which Respondent No. 4 was given voting right much in
excess of its real and correct share.”
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 17 of 87
Debtor, GIDC and the Development Commissioner's office, whereas the SRA's
resolution plan itself reveals detailed, non-public knowledge of that very
correspondence — correspondence dated 05.03.2024, 07.03.2024, and SRA's
own letters of 10.04.2024, 29.05.2024 and 26.07.2024 — giving rise to a
serious question of an uneven playing field among competing resolution
applicants and of suppression of material information going to the feasibility
of the plan. It submits that, as land-owner and statutory regulator, its
objections on feasibility are not ordinary commercial-wisdom grievances
27
immune from scrutiny, relying on Greater Noida v. Prabhjit Singh Soni
(2024) 6 SCC 767 , where a plan founded on statutorily regulated land was
held to require closer feasibility scrutiny and the necessary statutory
approvals, and where both the NCLT and this Tribunal were faulted for not
engaging with that dimension. It submits that the composite order's disposal
of its restored objection-IAs by a single paragraph of reference (para 10.2),
without discrete findings on the statutory-land and suppression questions,
does not meet the standard expected of objections reheard de novo pursuant
to this Tribunal's own remand.
28. Brief description of the opposition by the Respondents (SRA/Zaveri &
Co.; SREI; Resolution Professional) is that a resolution plan, once approved
by the CoC with 100% voting share and sanctioned by the Adjudicating
Authority, is binding and its commercial wisdom non-justiciable save on the
5
closed grounds of Section 30(2) and Section 61(3), relying on K. Sashidhar ;
5
K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150;
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 18 of 87
6 7 8
Essar Steel ; Kalpraj Dharamshi ; Vallal RCK ; and the recent decisions
9 10
in Independent Sugar Corpn. Ltd ., and in Piramal Capital & Housing
Finance Ltd . It is submitted that the RP is under no obligation to treat a
different Corporate Debtor's claim-computation as binding, that each RP
verifies independently, and that the fixed pay-out to SREI ( ₹ 125 crore) under
the plan is, in absolute terms, materially less than even the Appellants' own
reckoning of the correct figure ( ₹ 202.40 crore), such that any error in the
admitted quantum is not outcome-determinative and causes no prejudice.
On the SEZ question, it is claimed that Clause 3.3(v) of the Lease Deed itself
contemplates change of use, that Clause 4.1–4.3 permits sub-leasing, that
Regulation 37(j) of the CIRP Regulations permits a change in portfolio of
goods/services under a plan, that the Corporate Debtor's name does not
appear on the current notified-SEZ list, that the Development Commissioner
has filed no claim in the CIRP, and that the plan itself provides ₹ 3,06,65,250
towards stamp duty to complete the de-notification formalities, with Section
30(4) of the Code affording the SRA a further year to secure necessary
approvals post-approval. It is submitted that GIDC's objections are, in
substance, a monetary grievance seeking better-than-class treatment, having
accepted ₹ 6.14 crore under the plan; that GIDC cannot resile from its own
6
Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531;
7
Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., (2021) 10 SCC 401;
8
Vallal RCK v. Siva Industries and Holdings Ltd., (2022) 9 SCC 803;
9
Independent Sugar Corporation Ltd. v. Hindustan National Gas & Industries Ltd. (Resolution
Professional) (2025) SCC OnLine SC 181
10
Piramal Capital & Housing Finance Ltd v . 63 v. 63 Moons Technologies Ltd., reported in
(2025) 10 SCC Comp Cas 452
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 19 of 87
affidavit dated 20.05.2022 while simultaneously demanding further sums;
that the lease termination — effected during the moratorium and since
quashed by the Gujarat High Court — furnishes no ground of infeasibility;
and that the sole-CoC-member ground was neither pleaded in I.A. 136/2022
nor otherwise available, SREI's Administrator having ratified all decisions
taken.
Apex Court on co-extensive liability of the Corporate Debtor and the
corporate guarantor
29. Before formulating the points of determination in the two sets of
appeals, we would like to take up the judgment of the apex court with respect
to co-extensive liability of the Corporate Debtor and corporate guarantor,
which is crucial for this case. This case hinges upon this issue, which was
litigated before the Honourable Supreme Court, which was related to
challenge to filing of appeals against both the principal borrower and also the
corporate guarantor, and which has been now settled by the Honourable
Supreme Court. For better appreciation of the context and the import of the
judgment of the honourable apex court, it will be useful to extract the history
of litigation starting from NCLT to NCLAT and thereafter before the
honourable Supreme Court, which are extracted as below:
FC filed a petition u/s 7 of the Code against the GHPSL, being
CP (IB) No. 571 of 2020 before the NCLT New Delhi for a sum of
₹
1428.84 Crores on the basis of same set of debt and default
for which CIRP of ACIL took place.
10.02.2020
NCLT admitted the petition being CP (IB) No. 571 of 2020 and
the GHPSL was admitted into CIRP
18.11.2020
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 20 of 87
BRS Ventures Investment Ltd./SRA of ACIL preferred an appeal
against the admission order dated 18.11.2020 before the
NCLAT being CA(AT) (Ins) 1109 of 2020.
14.12.2020
Being aggrieved, by the acceptance of the RP of the claim of the
FC of the sum of ₹ 1885 Crores against the GHPSL, the
erstwhile director along with BRS Venture Investment Ltd. filed
an application being IA. No. 1764/ND/2021 in CP(IB)571(ND)/
2020 before the NCLT, New Delhi.
05.04.2021
NCLAT dismissed CA(AT) (Ins) 1109 of 2020 filed by BRS
Venture Investment Ltd.
This order was challenged before the Hon'ble Supreme Court in
Civil Appeal No. 4565 of 2021.
11.05.2021
The Hon'ble Supreme Court passed an order in Civil Appeal No.
4565 of 2021 directing that “any further orders would abide by
the final decision of this Court”.
17.09.2021
NCLT, New Delhi dismissed the IA. No. 1764/ND/2021 in CP
(IB) 571 (ND)/2020 filed by the Appellant.
13.09.2023
NCLT approved the resolution plan submitted by the Zaveri
19.09.2023
Final judgment in Civil Appeal No. 4565 of 2021 (BRS Ventures
23.07.2024
Investments Ltd (supra) passed by Hon’ble Apex Court
30. The Section 7 admission order of 18/11/2020 in CP 571/2020 against
the CD-GHPSL, was challenged by the Successful Resolution Applicant (SRA)
of the ACIL / Corporate Guarantor before this Appellate Tribunal in CA AT
(Ins) 1109/2020. This Appellate Tribunal on 11/5/2021 dismissed the appeal
and allowed the Financial Creditor to claim for the balance amount from the
principal borrower in the Section 7 Proceedings in CP 571/2020. The decision
1
of this Appellate Tribunal was challenged by BRS Ventures (supra) before
Hon’ble Supreme Court in Civil Appeal 4565/2021 . The Hon’ble Supreme
Court by its interim order dated 17th September, 2021 noted that "any further
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 21 of 87
orders would abide by the final decision of this Court" . Honourable Supreme
Court had noted the following two issues in its final judgement decided on
23.07.2024, which are noted as below:
XXX
12. Before we deal with the submissions canvassed across the Bar, we must
note the issues formulated in the impugned judgment of the NCLAT. Based on the
submissions made before it, two issues were framed, which read thus:
13. Following issues arise in this appeal for our consideration:
(i) Whether the application Under Section 7 of IBC is barred by
limitation?
(ii) Whether the second Application Under Section 7 of IBC is not
maintainable against the Corporate Debtor as for the same debt
and default, CIRP has already been taken place against the
Corporate Guarantor and the Financial Creditor has accepted the
amount in full and final settlement of all its dues?
1
31. The Hon’ble Supreme Court in BRS Ventures (supra) holds that:
“21. Under the corporate guarantee, in the facts of this case, the liability
of ACIL was to the extent of the entire amount repayable by the 2nd
respondent corporate debtor to the corporate creditor. In the CIRP of ACIL,
the appellant paid a sum of Rs. 38.87 crores only to the 1st Respondent
financial creditor. The amount was paid by the appellant on behalf of ACIL,
the corporate guarantor. For the rest of the amount payable as per the
guarantee, the 1st Respondent financial creditor had to take a haircut
because of the involuntary process by operation of law. Only the liability
of ACIL under the corporate guarantee to repay the loan to the 1st
respondent financial creditor has been extinguished on the payment of Rs.
38.87 crores. By the involuntary act of the creditor of accepting part of the
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 22 of 87
amount from the surety in the discharge of the entire liability of the surety,
even if Section 140 is attracted, it will confer on the guarantor or the
appellant the right to recover only the amount mentioned above from the
corporate debtor. The subrogation will be only to the extent of the amount
recovered by the Creditor from the surety.”
32. We observe that the Hon'ble Supreme Court of India has rendered its
1
final judgment in BRS Ventures (supra) , decided on 23.07.2024, the
operative part of which is extracted as below:
XXX
28. Hence, we summarize some of our conclusions as under:
a. Payment of the sum of Rs. 38.87 crores to the 1st Respondent-
financial creditor under the resolution plan of the corporate
guarantor-ACIL will not extinguish the liability of the 2nd
Respondent- principal borrower/corporate debtor to pay the
entire amount payable under the loan transaction after
deducting the amount paid on behalf of the corporate
guarantor in terms of its resolution plan;
b. A holding company is not the owner of the assets of its
subsidiary. Therefore, the assets of the subsidiaries cannot be
included in the resolution plan of the holding company, and
c. The financial creditor can always file separate applications
Under Section 7 of the IBC against the corporate debtor and the
corporate guarantor. The applications can be filed
simultaneously as well;
29. Thus, the view taken by NCLAT cannot be faulted. Accordingly, the
appeal is hereby dismissed with no order as to costs.
XXX
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 23 of 87
33. The above judgment of the Hon’ble Supreme Court makes it clear that
a Financial Creditor can always file a separate application under Section 7 of
the Code against the Corporate Debtor after it had filed the Section 7
proceedings against the Corporate Debtor. That too to pay the entire amount
payable under the loan transaction after deducting the amount paid on behalf
of the corporate guarantor in terms of its resolution plan.
34. In the facts of the present case, FC/R2 contends that the Appellant is
re-agitating its claim by way of this present appeal and the arguments of the
1
Appellant have already been dealt with by the Hon’ble Supreme Court in BRS
1
Ventures (supra) . We note that in BRS Ventures (supra) , the appeal was
filed before the Hon’ble Apex Court to challenge the Section 7 admission order
passed against the Principal borrower i.e. Respondent No. 1. The argument
raised by the Appellant before the Hon’ble Apex Court was that upon approval
of the resolution plan in the CIRP of the ACIL, and on payment of ₹ 38.87
crores to the Respondent No. 2/ Financial Creditor, the same constituted a
full and final settlement of the dues of the Respondent No. 2. The Hon’ble
Apex Court concluded that payment of a sum of ₹ 38.87 crores to the
Respondent No. 2/FC under the resolution plan will not extinguish the
liability of the Respondent No. 1/CD/GHPSL to pay the entire amount
payable under the loan transaction after deducting the amount paid by the
Corporate Guarantor/ Appellant in terms of the resolution plan. Thus, even
from the findings made by the Hon’ble Apex Court, it is evident that the
Respondent No. 2 is only liable to recover the remaining amount in the CIRP
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 24 of 87
of Respondent No. 1 i.e. the difference between the amount already
adjudicated by the Ld. NCLT and Ld. NCLAT i.e. ₹ 241.27 crores minus the
amount already paid in the CIRP of the Appellant i.e. ₹ 38.87 crores. Thus, we
note that the Hon’ble Apex Court has nowhere adjudicated the claim amount
of the Respondent No. 2. Similarly, while observing that the subrogation will
be to the extent of the amount recovered by the creditor from the surety i.e. ₹
38.87 crores, the Hon’ble Apex Court does not provide any finding to that
effect as the issue of subrogation had never been pressed by the SRA.
35. Thus, we find that the arguments of the Appellant as made in the
present appeal have not been decided by the Hon’ble Apex Court, and is thus
not barred by the principles of res judicata.
Points of determination
36. Having heard the counsels of both sides and also after perusal of the
material placed on record, the following points of determination emerge:
CA (AT(Ins.) No. 1557 of 2023 & 1684 of 2023 by ex-director of the
Corporate Debtor & Corporate Guarantor
I. Whether the Adjudicating Authority erred in declining to examine
the admitted claim of SREI at ₹ 1,885.08 crore, and whether that
claim, and the classification of ACIL as an unsecured related party,
vitiate the Information Memorandum;
CA (AT(Ins.) No. 626-628 of 2025 by GIDC/lessor of land
II. Whether GIDC has the locus to maintain its challenge, and whether
its objections fall within the scope of appellate scrutiny under
Section 61(3) and the ordinary appellate jurisdiction over the
dismissal of its objection-IAs;
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 25 of 87
III. Whether the resolution plan, premised on the Demised Premises
standing or becoming de-notified from SEZ to non-SEZ industrial
use, and on GIDC's consent to change of use and sub-plotting being
assumed rather than obtained, is feasible and viable within the
meaning of Section 30(2) of the Code;
IV. Whether the Impugned Order's disposal of GIDC's restored
objection-IAs by reference (para 10.2), without discrete reasons, can
be sustained; and
V. What relief and directions are called for, including as to the
recognition of the amount paid by ACIL/BRS Ventures Investments
Ltd. to SREI in the ACIL CIRP.
37. Each of these issues is being dealt with here in after.
Claim of ₹ 1885.08 Crs filed by FC & accepted by RP – erroneous &
inflated or not
38. The first point for determination, which arises from the first set of
appeals, is whether the Adjudicating Authority erred in declining to examine
the admitted claim of SREI at ₹ 1,885.08 crore, and whether that claim, and
the classification of ACIL as an unsecured related party, vitiate the
Information Memorandum. This section delves into this issue in detail.
39. The Appellants claims that the Financial Creditor has filed an
exaggerated claim of approx. ₹ 1885 crores in the CIRP proceedings of the
Corporate Debtor, i.e. Gujarat Hydro Carbons and Power SEZ Limited.
40. We find that the Impugned order dated 13.09.2023 dismissed the
applications filed by the Appellants holding that once the resolution plan was
approved by the Committee of Creditors, the Adjudication Authority could not
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 26 of 87
look into the nitty gritty involved in the CIRP of the Corporate Debtor based on
facts that were in existence earlier in the CIRP of another Corporate Debtor.
Furthermore, the Ld. Adjudicating Authority imposed costs of ₹ 50,000/-. The
relevant portion is extracted as below for better appreciation of the views of the
Adjudicating Authority:
XXX
9. We find that that there is no provision under the IBC which allows
the computation of claims done by a Resolution Professional for one
Corporate Debtor's Resolution to be binding on a completely different
Resolution Process of a different Corporate Debtor. In the present case,
the Applicant has wrongly attempted to seek directions from this
Adjudicating Authority. It is well within the ambit of IBC for reducing the
claim of the answering Respondent in the CIRP of M/ s. Assam Company
India Limited and not to exclude penal interest but to remove calculation
mistakes and errors committed by the IRP m calculating and compounding
the penal interest in the claim submitted by the answering Respondent.
10. Coming to the factual matrix of the present Application, it is a
settled law that once the Resolution Plan has been approved by the CoC,
the Adjudicating Authority can't go back to look into the nitty gritties
involved in the CIRP of the Corporate Debtor based on facts which were in
existence earlier in the CIRP of different Corporate Debtor. Therefore, this
Adjudicating Authority cannot entertain the present Application which is
devoid of merits and not sustainable. The Applicant has no locus standi to
file the present Application and is attempting to derail and delay the
present CIRP proceedings of the Corporate Debtor.
XXX
41. For better appreciation we briefly look into the filing process of the claim
by the Financial Creditor - R2 - SREI in the related Insolvency Proceedings in
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 27 of 87
the matter of ACIL, which is the Corporate Guarantor. In the CIR proceedings
of ACIL, the Respondent No. 2/FC lodged a claim of ₹ 648,80,93,833/-
(Approx. ₹ 648.80 Crores) with the Interim Resolution Professional on
14.11.2017. The claim of the Respondent No. 2 amounting to a sum of
₹ 648.80 Crores was assessed at ₹ 357.29 Crores by the Interim Resolution
Professional on 28.11.2017. In the meantime, on 12.01.2018 an order was
passed by the Hon'ble NCLT, Guwahati in CP (IB) No. 20/GB/2017 wherein,
the Interim Resolution Professional was replaced by the Resolution
Professional namely, Mr. Kannan Tiruvengadam. Thereafter on 03.04.2018
the claim of the Respondent No. 2 was further reduced to ₹ 241.27 Crores
from ₹ 357.29 Crores by the Resolution Professional.
42. Being aggrieved by the decision of the Resolution Professional to reduce
the claim of the Respondent No. 2 to ₹ 241.27 Crores, the Respondent No. 2
in July 2018 filed an application being IA. No 34/2018 in CP (IB) No.
20/GB/2017 before the Hon'ble NCLT, Guwahati challenging the decision of
the Resolution Professional. On 23.07.2018 this application challenging the
decision of the Resolution Professional was dismissed by the Ld. NCLT,
Guwahati and the decision of the Resolution Professional to reduce the claim
of the Respondent No. 2 to ₹ 241.27 Crores was upheld. NCLT – Guwahati
upheld the decision of the resolution professional to reduce the claim. We note
that with respect to the contention of the Financial Creditor that penal interest
was excluded from the claim of the creditors only for the purpose of assigning
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 28 of 87
the voting rights of individual FCs in the CoC and not for any other purpose
whatsoever, Adjudicating Authority gave a very clear finding noted as below:
XXX
31. I have considered the reply advanced by the RP in regard to the
contention of the Applicant that "penal interest was excluded from the
claim of the creditors only for the purpose of assigning the voting rights of
individual FCs in the CoC and not for any other purpose whatsoever,"
having regard to the definition of "voting share" as given in Section 5(28)
of the Code, 2016, and found reason to concur with such submission
advanced from the side of the RP. Being so, the contention of the
respondents that the term "voting share", so used in the Code of 2016,
does not contemplate different connotations for different purposes
appears to be convincing and same is accordingly accepted.
32. It may be noticed here that the decision of IRP and COC in its first
meeting to exclude the penal interest from the claims of the creditors has
not been disputed by the applicant although till the time of filing of the
present application as many as four other creditors' meetings were
conducted during the period between 28/11/2017 and 28/02/2018 but at
no point of time, the applicant found it necessary to question such
decision, adopted by COC in its first meeting held on 28.11.2016.
33. Such revelation, in the facts and circumstances, firmly serves to
show that the applicant had accepted the decision to exclude the penal
interest from the claim of the creditors wholeheartedly and that too, even
for the purpose of ascertainment of admissible claim of the creditors
including the applicant. The fact that none of the other creditors whose
penal interests were also so excluded from the claims, they had made
against the CD had ever questioned such decision of the RP/COC only
fortifies my conclusion that the trimming of penal interests from the claims
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 29 of 87
of the creditors was for all purposes including the ascertainment of legally
admissible claim of the creditors.
XXX
43. Furthermore, on the issue of the reduction in the claim of the Financial
Creditor, the Adjudicating Authority, gave the following findings:
XXX
34. Now, let us see if capitalisation of penal interest is permissible
under the law. Here, it needs to be noted that the law relating to
capitalization of penal interest is no longer res integra. In that connection,
11
one can look into Central Bank of India . For ready reference, same is
reproduced below:
"(1) Though interest can be capitalised on the analogy
that the interest falling due on the accrued date and
remaining unpaid, partakes the character of amount
advanced on that date, yet penal interest, which is charged
by way of penalty for non-payment, cannot be capitulised.
Further interest, i.e. interest on interest, whether simple,
compound or penal, cannot be claimed on the amount of
penal interest. Penal Interest cannot be capitalised. It will
be opposed to public policy."
12
35. In M. Rajeswar Rao (supra , it has again been held that the
capitalisation of penal interest is also not permissible. The relevant part is
reproduced below:
"However, 'penal interest' has to be distinguished from
'interest'. Penal interest is an extraordinary liability incurred
by a debtor on account of his being a wrong-doer by having
11
Central Bank of India Vs Ravindra and others, reported in (2001) SCC 367
12
Rajeswar Rao and others Vs. Chituri Satyam (Died) & others, reported in 2013 SCC OnLine
AP 809.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 30 of 87
committed the wrong of not making the payment when it
should have been made, in favour of the person wronged
and it is neither related with nor limited to the damages
suffered. Thus, while liability to pay interest is founded on
the doctrine of compensation, penal interest is a penalty
founded on the doctrine of penal action. Penal interest can
be charged only once for one period of default and,
therefore, penal interest cannot be permitted to be
capitalized. Further interest i.e., interest on interest,
whether simple or compound or penal cannot be claimed
on the amount of penal interest."
36. The above leaves no manner of doubt that penal Interest by
whatever name it is called cannot be allowed to be capitalized. On a
perusal of the application and other relevant documents, it is found that
the applicant herein has capitalized the penal interest. In that view of the
matter too, the decision of the IRP to exclude the penal interest in
calculating the actual claim of the creditors is found to be well founded.
XXX
44. Adjudicating Authority, after noting the above findings, had come to the
following conclusion:
XXX
The above leaves no manner of doubt that penal Interest by whatever
name it is called cannot be allowed to be capitalized. On a perusal of the
application and other relevant documents, it is found that the applicant
herein has capitalized the penal interest. In that view of the matter too,
the decision of the IRP to exclude the penal interest in calculating the
actual claim of the creditors is found to be well founded.
XXX
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 31 of 87
45. Adjudicating Authority has also gone through the loan agreement and
the deed of agreement to find out whether the terms and conditions in these
documents override the position as existing in the law and has returned the
following findings:
XXX
37. I have also noticed that referring to loan agreement 05-01-2011
and deed of guarantee dated 05-01-2011, the applicant argued that under
the loan agreement, the borrower was to pay not only the interest at the
agreed rate on the principal amount, same being 100 crores but was to pay
default interest too at the agreed rate for every default. More importantly,
the parties thereto also agreed that default interest would be capitalised.
The CD herein, being the guarantor to the due repayment of such loan as
per schedule of repayment, had unconditionally undertaken to abide by all
the conditions under which said loan was made available to the borrower
vide deed of guarantee 05-01-2011.
38. Since both the borrower and the guarantor had agreed to pay not
only the interest at the agreed rate but also agreed to pay penal interest
with provision for capitalisation of penal interest, the borrower as well as
the guarantor are bound by such terms and conditions and it is beyond the
competence of the COC, IRP or RP to ignore such a contract.
39. In other words, the agreements, aforementioned, makes it
impossible for the IRP/RP/COC to reduce the claim of the applicant from
an amount of Rs.648,80,93,833 crores as on 14.11.2017 to any lesser
amount on the date aforesaid. In support of such contention, my attention
has been drawn to the decision of Hon'ble High Court of Judicature,
Andhra Pradesh at Hyderabad in State Bank of India, Hyderabad Vs S.H
Associates, Hyderabad & others, 2011 AIR CC 2467, to contend that the
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 32 of 87
parties to a contract are bound by contractual agreement regarding the
rate of interest to be paid on the principal amount.
40. But then, it is a settled proposition of law that parties to an
agreement cannot be allowed to do something which runs counter to any
law whether statutory law or the law, made by the court. Since
capitalization of penal interest is not permissible in view of law, laid down
in Central Bank of India (supra), therefore, IRP had committed no wrong
whatsoever in excluding the penal interest (which was compounded and
capitalised) in computation of claim for the purpose of voting rights in the
meeting of the COC or for any other purpose whatsoever....
XXX
46. We find that the Adjudicating Authority has given a clear finding that
parties to an agreement cannot be allowed to do something which runs
counter to any law whether statutory law or the law, made by the court. Since
capitalization of penal interest is not permissible in view of law, laid down in
11
Central Bank of India (supra) , therefore, IRP had committed no wrong
whatsoever in excluding the penal interest (which was compounded and
capitalised) in computation of claim for the purpose of voting rights in the
meeting of the COC or for any other purpose whatsoever.
47. We note that the above decision of the Adjudicating Authority as noted
here in earlier was challenged by the Financial Creditor – R2-SREI before this
13
Appellate Tribunal in CA (AT) (Ins.) No. 291/2018 but it was dismissed by
13
CA AT INS 291/2018 dtd 01.02.2019 Prasad Gempex vs Star Agro with SREI Infra Finance vs
Kannan @ 175 APB
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 33 of 87
this Appellate Tribunal on 01.02.2019. This Appellate Tribunal had noted as
below:
“So far as the SREI Infrastructure Finance Ltd. who is aggrieved by the
decision of the Resolution Professional, it may also take steps under sub-
section (6) of Section 60 against the corporate debtor or any other party.
In this case, we make it clear that we have not expressed any opinion with
regard to the claim made by the SREI Infrastructure Finance Ltd. or the
decision as taken by the Resolution Professional.”
Thus, we find that the initial claim of the Financial Creditor/R2 during the CIRP
of the ACIL/Appellant initially stood at an inflated amount of ₹ 648.80 crores
in the year 2017, which was reduced to ₹ 357.29 crore by the IRP, and
subsequently reduced to ₹ 241.27 crores by the RP. The reduction was done as
the claim of the Financial Creditor/R2 included capitalization of penal interest.
The claim amount of the Financial Creditor/R2 being reduced to ₹ 241.27 crores
were challenged before the Ld. NCLT, Guwahati bench, which upheld the
reduction of claim the RP in its order dated 23.07.2018 which was subsequently
upheld by this Hon'ble Appellate Tribunal in its order dated 01.02.2019 passed
in CA (AT) (Ins.) No. 291/2018. Despite liberty being given to the Financial
Creditor/R2 to take steps under sub-section 6 of Section 60 against the
Corporate Debtor or any other party, it did not challenge the order dated
01.02.2019 or take any steps. Thus, the order dated 01.02.2019 had attained
finality. Against that background, the admission, within a short span of
roughly two years and on the very same facility, of a claim of ₹ 1,885.08 crore
— nearly 7.8 times the judicially settled figure called for careful verification,
not mechanical acceptance.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 34 of 87
1
48. As noted by us here in the earlier section that BRS Ventures (supra)
cleared the way for proceeding further against the principal borrower but to
be guided as per the ratio. Per the decision of the Hon’ble Supreme Court, we
note that it has not gone into the issue of the extent of the claim which was
filed by the Financial Creditor and thus the question is still open. There is
1
nothing in BRS Ventures (supra) that reopens the quantum. Hon'ble
Supreme Court there addressed maintainability of a separate Section 7
application and the principle of subrogation, and did not adjudicate, much
less enlarge, the figure of ₹ 241.27 crore.
49. In such a background in the CIR proceedings of CD-Gujarat Hydro
Carbon, the RP has to has to correctly identify the claim against the principal
borrower. The remaining quantum of claim, which has to become part of the
insolvency proceedings of the Corporate Debtor, will have to be determined
on the basis of the past determination and payment which had happened in
the earlier CIR proceedings. Moreover, the claim cannot have quantum leap
from ₹ 241 crores to ₹ 1,885 crores within a span of 3 years. And the
observation of the Adjudicating Authority that they cannot go into the nitty-
gritty is not appropriate. In fact, for this reason alone both the resolution
professional and the Adjudicating Authority will have to go into the details.
We observe that the determination of the claim of the Financial Creditor in
the CIR proceedings of the Corporate Debtor is not dependent on the
determination of the RP of the corporate guarantor alone but basis the judicial
decision which attained finality. Further because of its interlinkage in the CIR
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 35 of 87
proceedings of the principal borrower, it becomes an important determining
factor for the remaining amount of the claim. Therefore, the argument of the
Adjudicating Authority that it will not go into the nitty-gritties is
unsustainable and deserves to be set aside.
50. Particularly if an exaggerated claim is presented before the resolution
professional, it is the duty of the resolution professional to correctly determine
the claims and maintain an updated list of claims. This process cannot be
construed to be adjudication. This becomes all the more relevant in the
present proceedings where in the earlier proceedings the insolvency under
Section 7 had been initiated against the corporate guarantor Financial
Creditor/SREI. And now for the balance amount the same Financial Creditor,
SREI, is invoking Section 7 insolvency proceedings against the principal
borrower. Thus, we find that in the background of the past history of the
present case, the claim needs to be thoroughly scrutinized and more so when
the Financial Creditor/SREI has made unjustified claims, which are primarily
based on capitalization of the penal interest.
th
51. The Ld. NCLT by way of the impugned order dated 13 September,
2023, dismissed the application filed by the Appellant and further on 19th
September, 2023 approved the resolution plan submitted by the R4/Zaveri.
We further observe that this was done inspite of the fact that the Resolution
Applicant of ACIL i.e. BRS Ventures Investment Ltd. had already preferred an
appeal before the Hon’ble Supreme Court being Civil Appeal No. 4565 of 2021
th
against the order of this Hon’ble Appellate Tribunal dated 11 May, 2021 in
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 36 of 87
th
which the Hon’ble Supreme Court by its order dated 17 September, 2021
clearly stated that "any further orders would abide by the final decision of this
Court" .
52. As noted by us here earlier, despite adjudication of the claim amount to
be ₹ 241.27 crores in the CIRP of the ACIL and receipt of ₹ 38.87 crores by the
FC, the Financial Creditor/R2 filed another claim of ₹ 1885.09 crores against
the Principal Borrower in a very short period of time, which is claimed by the
Appellant to be improbable. Further the same has been accepted by the
Resolution Professional, Respondent No. 3 as a secured Financial Creditor to
₹
the tune of 1885.08 crores.
53. We find that in the impugned order IA 1764/2021 in
CP(IB)571(ND)/2020, the Adjudicating Authority, while delving into the issue
of the claims, has given the finding that
“once the Resolution Plan has been approved by the CoC, the
Adjudicating Authority can't go back to look into the nitty gritties involved
in the CIRP of the Corporate Debtor based on facts which were in
existence earlier in the CIRP of different Corporate Debtor.”
54. Such a conclusion of the Adjudicating Authority could have been fully
justified if the situation was different than what exists in the present facts
and circumstances, wherein the Financial Creditor had initially invoked
insolvency resolution proceedings under Section 7 of the Code against the
corporate guarantor and now it has also invoked the insolvency proceedings
under Section 7 against the principal borrower. We observe that the
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 37 of 87
Resolution Plan of BRS Ventures Investment Ltd. for ACIL – the holding
company /Corporate guarantor of the CD was approved by the NCLT,
th
Guwahati by an order dated 20 September, 2018, per which Respondent No.
2/ SREI was paid a sum of ₹ 38.87 Crores, which the Appellant claims were
in full and final settlement of its dues against the sum of ₹ 241.27 Crores. It
is the contention of the Appellant that inspite of receiving the sum of ₹ 38.87
Crores in full and final settlement of its dues in the CIRP of ACIL, the
Respondent No. 2/FC/SREI filed an application being CP (IB) No. 571 of 2020
under Section 7 of IBC, 2016 before the Ld. NCLT, New Delhi against the
Respondent No. 1/Gujarat Hydro Carbons and Power SEZ Limited and which
was admitted by the order dated 18th November, 2020 and the Respondent
No. 3 was appointed as the Interim Resolution Professional. During the CIRP
of the Respondent No. 1/Gujarat Hydro Carbons and Power SEZ Limited, the
Respondent No. 2 filed its claim for an amount of ₹ 1885.08 Crores on the
basis of the same set of debt and default for which CIRP of ACIL took place.
The Appellant is aggrieved by the admission of the Respondent No. 2’s claim
by the Respondent No. 3 to the tune of ₹ 1885.08 Crores filed an application
being I.A. No. 1764 of 2021 before the Ld. NCLT, New Delhi and is seeking
directions to the Respondent No. 3/ex-RP to reassess and/ or recalculate the
claim submitted by the Respondent No. 2 in light of the fact that the claim of
the Respondent No. 2 had already been admitted by the Hon'ble NCLT,
Guwahati for an amount of ₹ 241.27 Crores and a sum of ₹ 38.87 Crores had
already been paid to the Respondent No. 2 in full and final settlement of its
dues through the Resolution Plan of ACIL which was accepted by the
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 38 of 87
Respondent No. 2 and thus, the right of the Respondent No. 2 with respect to
the debt had been extinguished by virtue of Section 63 of the Indian Contract
Act, 1872.
55. Thus, we are unable to accept the Adjudicating Authority's view,
expressed in the order dated 13.09.2023, that once a resolution plan has been
approved by the CoC, it is impermissible to examine facts arising in the CIRP
of a different Corporate Debtor bearing on the same debt. That view overlooks
that this is not a case of two unconnected insolvencies; it is a single debt and
a single default, litigated first against the corporate guarantor and, for the
₹
balance, against the principal borrower. The claim of 241.27 crore was not
an informal or provisional figure; it was fixed after a reasoned adjudication by
the NCLT, Guwahati Bench (order dated 23.07.2018) — expressly disallowing
capitalisation of penal interest as opposed to public policy — which was
affirmed by this Tribunal on 01.02.2019 and thereafter attained finality, SREI
having availed no further recourse despite the liberty granted to it.
56. Furthermore, we also note that the issue relating to the extent of the
claim was already settled in the judgment of the NCLT Guwahati dated
1
23.07.2018 and was not agitated before the Hon’ble Supreme Court in Civil
Appeal No. 4565 of 2021 by the Respondents. Thus, we find that the issue
of quantum of claim was raised before NCLT and the claim amount had
crystallized in the judgment dated 23.07.2018 in IA 34/2018 in CP (IB)
20/GB/2017 of NCLT- Guhahati Bench and later on attained finality. This
judgment of NCLT had returned a finding that:
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 39 of 87
“penal interest by whatever name it is called cannot be allowed to be
capitalized. On a perusal of the application and other relevant documents,
it is found that the applicant herein has capitalized the penal interest. In
that view of the matter too, the decision of the IRP to exclude the penal
interest in calculating the actual claim of the creditors is found to be well
founded.”
57. We observe that had it been a standalone case of insolvency
proceedings, then it could have proceeded totally independently. But in this
case RP of the Corporate Debtor had to find out the remaining amount for
Section 7 proceedings against the Corporate Debtor basis a judgement which
had attained finality. Here in this case the RP was bound by the judgment of
the NCLT Guwahati, which had attained finality.
58. The argument of the Adjudicating Authority that the RP is not bound
by the decision of the RP of another Corporate Debtor is unsustainable. We
find that in the conclusion, the observations of the Adjudicating Authority
that:
“there is no provision under the IBC which allows the computation of
claims done by a Resolution Professional for one Corporate Debtor's
Resolution to be binding on a completely different Resolution Process of a
different Corporate Debtor. In the present case, the Applicant has wrongly
attempted to seek directions from this Adjudicating Authority. It is well
within the ambit of IBC for reducing the claim of the answering Respondent
in the CIRP of M/ s. Assam Company India Limited and not to exclude penal
interest but to remove calculation mistakes and errors committed by the
IRP m calculating and compounding the penal interest in the claim
submitted by the answering Respondent.”
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 40 of 87
59. This is very much against the judgment of the apex court in the case of
14
Central Bank (supra) as was cited by the Adjudicating Authority, Guwahati
Bench, in its dated 23-07-2018. Therefore, the adjudicating authority has to
go into the details of the CIR proceedings and return an appropriate finding
and it will not be appropriate to say that it need not go into the nitty-gritties
of the CIR proceedings, and thus such a finding is unsustainable.
60. We briefly look into the duties of the resolution professional and
whether they were discharged appropriately or not. While an RP possesses no
15
adjudicatory power to determine disputed questions NTPC Ltd. v. Rajiv
2
Chakraborty, Resolution Professional (supra) , the RP's duty under Swiss
Ribbons Pvt. Ltd. v. Union of India (supra) to collate, verify and correctly
determine the amount of a claim is a distinct and antecedent obligation, and
this Tribunal, and the Adjudicating Authority before it, retain the power under
16
Axis Bank Ltd. v. Samruddhi Realty (supra) to look behind a claim so
admitted where, as here, its correctness is squarely put in issue by a judicially
settled figure on the identical debt.
61. SREI’s claim had already been judicially reduced to ₹ 241.27 crore in
the ACIL CIRP, and ₹ 38.87 crore was thereafter paid under the ACIL
resolution plan. The later admission of ₹ 1,885.08 crore in GHPSL’s CIRP,
without reconciliation with that final determination, rendered the IM
materially inaccurate. We accordingly hold that the admission of SREI's claim
14
Central Bank of India Vs Ravindra and others, reported in (2001) SCC 367
15
NTPC Ltd. v. Rajiv Chakraborty, Resolution Professional (2021) 10 SCC 480
16
Axis Bank Ltd. v. Samruddhi Realty (2023) 23 Comp Cas-OL 596
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 41 of 87
at ₹ 1,885.08 crores, without reference to or reconciliation with the finally
adjudicated figure of ₹ 241.27 crore, was not a proper discharge of the RP's
verification duty, and that the correct starting point for computation of SREI's
recoverable claim against the Corporate Debtor is ₹ 241.27 crore, less credit
for the ₹ 38.87 crore already recovered by SREI in the ACIL CIRP, consistent
with the Hon'ble Supreme Court's holding in BRS Ventures (supra) that
payment by the guarantor does not extinguish the principal borrower's
liability for the balance but the creditor may recover from the borrower only
the sum remaining after such credit.
₹
Is ACIL a secured Financial Creditor to the extent of 38.87 crs paid
by ACIL to FC in the CIRP of ACIL or not
62. We observe that ACIL has been shown as an Unsecured Financial
Creditor in the CIRP of GHPSL (R1). The argument of ACIL that they are to be
treated as a Secured Financial Creditor in the CIRP of R1 to the extent of
1
₹ 38.87 crores are basis the judgment of the Hon’ble Supreme Court in BRS
Ventures (supra) wherein the judgment held that:
“Under the corporate guarantee, in the facts of this case, the liability of
ACIL was to the extent of the entire amount repayable by the 2nd
respondent corporate debtor to the corporate creditor. In the CIRP of ACIL,
the appellant paid a sum of Rs. 38.87 crores only to the 1st Respondent
financial creditor. The amount was paid by the appellant on behalf of ACIL,
the corporate guarantor. For the rest of the amount payable as per the
st
guarantee, the 1 respondent financial creditor had to take a haircut
because of the involuntary process by operation of law. Only the liability
of ACIL under the corporate guarantee to repay the loan to the 1st
respondent financial creditor has been extinguished on the payment of Rs.
38.87 crores. By the involuntary act of the creditor of accepting part of the
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 42 of 87
amount from the surety in the discharge of the entire liability of the surety,
even if Section 140 is attracted, it will confer on the guarantor or the
appellant the right to recover only the amount mentioned above from the
corporate debtor. The subrogation will be only to the extent of the amount
recovered by the Creditor from the surety.”
63. We note that in the CIRP of ACIL, the resolution plan submitted by BRS
Venture Investments Ltd (SRA) was duly approved on 20.09.2018 by the
NCLT, Guwahati, by virtue of which the SRA through ACIL had paid ₹ 38.87
Cr to the Financial Creditor, against its total claim of INR 241.27 crores.
Appellant/ACIL/SRA contends that upon such payment made by ACIL,
Section 140 of the Indian Contract Act, 1872 would squarely apply as the
rights of the Secured Financial Creditor shall stand subrogated in favour of
ACIL and ACIL would directly step into the shoes of the R2, as Secured
Financial Creditor to the extent of the amount paid to the R2 i.e. ₹ 38.87
crores. Appellant places its reliance on the judgment by the Hon’ble Supreme
1
Court in BRS Ventures (supra) wherein it has clearly held that the SRA or
ACIL has stepped into the shoes of the R2 as a Secured Financial to the extent
of an amount of ₹ 38.87 crores paid by the SRA through ACIL to the R2, and
is thus entitled to all benefits as enjoyed by the R2 to the extent of the amount
paid. Thus, by virtue of the above, ACIL claims to have become a secured
Financial Creditor to the extent of ₹ 38.87 crores paid by SRA through ACIL
to the R2 in the resolution plan ACIL.
64. The Appellant/ACIL further relies on the following Judgements:
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 43 of 87
17
Hon’ble Supreme Court in Amrit Lal Goverdhan Lalan (Dead)
wherein it was held that while a surety is not discharged merely
because the creditor grants the principal debtor time or indulgence,
the surety is discharged pro tanto under Section 141 of the Indian
Contract Act where the creditor, by negligence or otherwise, loses or
parts with the security held for the debt without the surety's
consent. The Court explained that a surety is entitled to the benefit
of every security held by the creditor, and any impairment or loss of
such security attributable to the creditor proportionately reduces the
surety's liability .
18
,
Economic Transport Organization v . Charan Spinning Mills in
this the Supreme Court held that the doctrine of subrogation,
reflected in Section 140 of the Indian Contract Act, embodies the
equitable principle that upon satisfying the guaranteed obligation or
indemnifying the assured for the entire loss, the surety or insurer is
invested with all the rights and remedies that the creditor or assured
could have enforced against the principal debtor or wrongdoer. The
Court clarified that subrogation operates by operation of law upon
full indemnification, enabling the subrogee to step into the shoes of
the original claimant, while the extent and mode of enforcement may
17
Amrit Lal Goverdhan Lalan (Dead) by his Legal Representatives vs. State Bank of Travancore, (1968) 3 SCR 724:
AIR 1968 SC 1432 (Refer Para No. 7)
18
Economic Transport Organization v. Charan Spinning Mills Private Ltd. and Another: (2010) 4 SCC 114 (refer
Para No. 20, 26 and 35)
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 44 of 87
be modified by the terms of a written subrogation or subrogation-
cum-assignment.
65. The Appellant/ACIL contends that without prejudice to the rights of
ACIL and without admitting in any manner, in case the proposition as placed
by the ACIL that the Resolution Plan submitted by the Successful Resolution
Applicant in the case of the Corporate Debtor is not set aside, ACIL should be
entitled to the proportionate share in the amount agreed to be paid by the
Successful Resolution Applicant to the Financial Creditors of the Corporate
Debtor.
66. SRA of the CIR proceedings of the CD/GHPSL, on the other hand
contends that the right of subrogation under Section 140 of the Contract Act
is attracted only when the surety pays all that it is liable for under the
guarantee and it further claims that in the present case, the resolution
applicant of ACIL paid only ₹ 38.87 Crores against an admitted liability of
₹ 241.27 Crores. Therefore, Section 140 has no application to extinguish the
Corporate Debtor's liability.
1
67. FC contends that before Honourable Supreme Court in BRS Ventures
(supra), subrogation was not pressed and the Court gave no operative finding.
They bring to our notice that ACIL is shown as an unsecured related party
and the resolution plan pays such parties nil on liquidation-value logic.
68. Appellant had separately claimed that payment of about ₹ 38.87 crores
was as per the resolution plan in the CIR Proceedings of ACIL was for full and
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 45 of 87
final settlement of the claim of about ₹ 241.27 crores but as we had noted
earlier, that argument is unsustainable and has been dismissed by us herein
earlier.
69. We further note that subrogation is dealt in Sections 140 and 141 of
the Indian Contract Act, which are extracted as below:
“Section 140. Rights of surety on payment or performance
Where a guaranteed debt has become due, or default of the principal
debtor to perform a guaranteed duty has taken place, the surety upon
payment or performance of all that he is liable for, is invested with all the
rights which the creditor had against the principal debtor.
Section 141. Surety's right to benefit of creditor's securities.
A surety is entitled to the benefit of every security which the creditor has
against the principal debtor at the time when the contract of suretyship is
entered into, whether the surety knows of the existence of such security
or not; and if the creditor loses, or, without the consent of the surety, parts
with such security, the surety is discharged to the extent of the value of
the security.”
70. Section 140 provides that where a guaranteed debt has become due and
the surety has paid or performed “all that he is liable for”, the surety is
“invested with all the rights which the creditor had against the principal
debtor” i.e. ‘stepping into the shoes’. We observe that subrogation is not a new
right the surety is contending for, but the transfer of the creditor’s existing
rights, with their incidents. Section 141 gives the surety “a right to the benefit
of every security which the creditor has against the principal debtor at the
time when the contract of suretyship is entered into.”
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 46 of 87
1
71. We observe that while delivering the judgment of BRS Ventures
(supra) , the Hon’ble Supreme Court articulated the principle but declined to
apply it operationally because it was not pressed. The Supreme Court had
noted that even if Section 140 is attracted, it will confer on the guarantor or
the Appellant the right to recover only the amount mentioned above from the
Corporate Debtor. The subrogation will be only to the extent of the amount
recovered by the Creditor from the surety.
72. Thus, in the above circumstances we find that RP needs to re-rank
ACIL’s claims as secured creditor above unsecured related parties and also
Information Memorandum (IM) and distribution require correction.
Does the erroneous Information Memorandum vitiate CIR
proceedings?
73. On the Issue of information memorandum being erroneous and
incorrect, the Appellant contends that the Information Memorandum
prepared by the Resolution Professional of the Corporate Debtor is erroneous
in two ways:
The Appellant is treated as an unsecured Financial Creditor in the
CIRP of the Respondent No. 1, whereas the Appellant was required
to be treated as a Secured Financial Creditor in the CIRP of
Respondent No. 1 to the tune of ₹ 38.87 crores;
The Financial Creditor’s claim is admitted to the tune of ₹ 1885
Crores in the CIRP of Respondent No. 1.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 47 of 87
74. The Appellant further claims that the information memorandum is the
foundation and has a pivotal role for preparation of a proper resolution plan.
In the Corporate Insolvency Resolution Process, the information
memorandum is the basic document which contains all aspects of the
Corporate Debtor that enables the resolution applicant/s to prepare the
resolution plan in accordance with the information contained in the
information memorandum and submit the same to the resolution
professional. Section 29 of the Insolvency and Bankruptcy Code, 2016
provides that the Resolution Professional shall prepare an Information
Memorandum in such form and manner which shall contain relevant
information as maybe specified by the Board for formulating a Resolution Plan
whereas Regulation 36 of the IBBI (Insolvency resolution process for corporate
persons) Regulations, 2016 clearly states the relevant information should
contain details of assets and liabilities of the Corporate Debtor, latest annual
financial statement, audited financial statement of the Corporate Debtor, list
of creditors, particulars of debt due from or to the Corporate Debtor and other
information.
75. For canvassing the importance of the correct information
memorandum, the Appellant has relied on the following judgments:
19
M/s. Avenue Realty vs. The Assistant Commissioner
Srirangam dated 14.08.2025
19
Madurai Bench of the Madras High Court in M/s. Avenue Realty (A Partnership Firm) vs.
The Assistant Commissioner Srirangam (GST Circle) & Ors . [W.P. (MD) No. 8260 of 2025,
paras 70-73]
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 48 of 87
“ 70. Reading of Section 29 of the Code read with Regulation 36 of
the 2016 Regulations reveals that a Resolution Professional (RP)
appointed has to prepare an “Information Memorandum”
containing various details of the “Corporate Debtor” so that a
Resolution Applicant who intends to submit a “Resolution Plan”
(RP) is aware of the assets and liabilities of the “Corporate Debtor”,
including the details about the “Creditors” and the amounts
claimed by them.
71. The “Information Memorandum” is required to contain the
details of the guarantees that have been given in relation to the
debts of the Corporate Debtor by other persons and the details
with regard to all material litigation and an ongoing investigation
or proceeding initiated by the Government and statutory
authorities are also required to be detailed in the information
memorandum. So also the details regarding the number of workers
and employees and liabilities of the corporate debtor towards
them and other Statutory Authorities are required to be contained
in the Information Memorandum.
72. Section 29 of the Code is reproduced below:-
“29. Preparation of information memorandum. -
(1) The resolution professional shall prepare an information
memorandum in such form and manner containing such relevant
information as may be specified by the Board for formulating a
resolution plan.
(2) The resolution professional shall provide to the resolution
applicant access to all relevant
information in physical and electronic form, provided such
resolution applicant undertakes-
(a) to comply with provisions of law for the time being in force
relating to confidentiality and insider trading;
(b) to protect any intellectual property of the corporate debtor it
may have access to; and
(c) not to share relevant information with third parties unless
clauses (a) and (b) of this sub-section are complied with.
Explanation. – For the purposes of this section,“relevant
information” means the information required by the resolution
applicant to make the resolution plan for the corporate debtor,
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 49 of 87
which shall include the financial position of the corporate debtor,
all information related to disputes by or against the corporate
debtor and any other matter pertaining to the corporate debtor as
may be specified.”
73. Thus, the Resolution Professional (RP) is required to take note
of pre-existing charges. The details contained in the Information
Memorandum is intended to equip a Resolution Applicant about
the liabilities of the Corporate Debtor to prepare a “Resolution
Plan”, which apart from satisfying a part of such liabilities would
also ensure that the Corporate Debtor is revived and made a
running establishment.”
20
Bimalesh Bhardwaj : the Hon’ble NCLAT has held that “for the
Corporate Insolvency Resolution Process to result in a successful
resolution of the Corporate Debtor, preparation of a correct
Information memorandum is a must, which may result in workable
Resolution Plans.”
76. The Appellant therefore argues that the information memorandum lays
down the path for maximization of the value of the assets of the Corporate
Debtor by providing true and correct information about the Corporate Debtor
including its financial statements which includes such amount due and
payable to the Creditors. But due to aforesaid two errors which are reflecting
in the Information Memorandum, the entire CIRP of the R1 has been
conducted in a wholly arbitrary, haphazard and non-transparent manner.
thereby causing serious prejudice to the stakeholders and defeating the
objective of maximization of value of the assets of the Corporate Debtor.
Consequently, the entire CIRP stands vitiated in law and is liable to be set
20
Bimalesh Bhardwaj & Ors. v Value Infratech India Pvt. Ltd & Ors: [2021 SCC Online NCLAT
443]
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 50 of 87
aside, with a direction for initiation of the process afresh in accordance with
law.
77. Appellant further argues that even assuming the fact that the total pay-
out in terms of the approved Resolution Plan is less than the correct amount
due and payable to the Financial Creditor i.e. ₹ 202.40 crores ( ₹ 241.27 crores-
₹ 38.87 crores), such proposition cannot be accepted as the law is well laid
down that any information memorandum which is faulty and does not
comprise of the correct assets and liabilities of the Corporate Debtor should
be set aside and the correct information memorandum is once again required
to be floated for inviting new applicants for a resolution.
78. Vehemently opposing the argument that erroneous information
memorandum vitiates the CIR proceedings, the SRA/R4 contents that such
an argument is ex facie contrary to Section 61(3) of the IBC. It is argued that
a resolution plan can be challenged only on the exhaustive grounds
enumerated in Section 61(3). Alleged discrepancies in the Information
Memorandum do not constitute any of the prescribed grounds for challenge.
Once a resolution plan is approved by the CoC and sanctioned by the
Adjudicating Authority, it is not open to the tribunal to scrutinize the
commercial wisdom of the CoC in accepting the plan. Moreover, even
assuming that the claim of SREI was somehow overstated, the Resolution Plan
proposed a payment of only ₹ 125 Crores to SREI against its admitted claim
of ₹ 1885.08 Crores. Even by the Appellant's own reckoning, the original
principal amount of the loan was ₹ 100 Crores and the outstanding balance
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 51 of 87
(as determined during the ACIL CIRP) was ₹ 241.27 Crores, which is
substantially higher than the ₹ 125 Crores being paid under the present
Resolution Plan. Therefore, even if the Appellant's argument regarding the
quantum of claim is accepted in its entirety (which is denied), it would have
no impact whatsoever on the validity or the fairness of the Resolution Plan to
any stakeholder, least of all the Appellant who is only an erstwhile director.
20
79. The Appellants lean on Bimalesh Bhardwaj v. Value Infratech
(NCLAT) that a correct IM is a 'must' for a workable plan — and on the
19
Madras High Court's Avenue Realty (2025) for the IM's pivotal role and we
find that both these judgments support the case of the Appellant.
80. The Respondents also relies on the entire commercial-wisdom
arguments and with the practical point that the secured FC's pay-out is fixed
and the unsecured related parties get Nil on liquidation-value logic, so the
alleged errors are not outcome-determinative.
81. Thus, on the issue whether the Adjudicating Authority erred in
declining to examine the admitted claim of SREI at ₹ 1,885.08 crores, and
whether that claim, and the classification of ACIL as an unsecured related
party, vitiate the Information memorandum we find that the Information
₹
Memorandum was fundamentally incorrect as SREI's claim of about 1,885
crores was admitted despite earlier judicial determination reducing the
recoverable debt. Material facts relating to the earlier ACIL CIRP and the
amount already recovered were either omitted or not properly reflected. Since
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 52 of 87
every prospective resolution applicant bases its commercial decision upon the
Information Memorandum, an IM founded on materially incorrect financial
information vitiates the entire resolution process. We also find that
exaggerated admission of SREI's claim materially distorted the CIRP. The RP
failed to discharge his statutory obligation of independent verification. The
inflated claim resulted in distorted voting dynamics and valuation.
82. The Respondents have argued that the commercial wisdom is non-
justiciable and therefore cannot be questioned. On the contrary we find that
Commercial wisdom cannot validate a plan founded upon incorrect material
information. The CoC's commercial wisdom cannot be insulated where the
commercial decision itself proceeded on incorrect foundational facts. We
observe that Judicial review would be available where Information
Memorandum is materially defective; mandatory provisions of the Code have
been violated; feasibility rests upon assumptions contrary to statutory
records; the decision-making process is fundamentally flawed. Thus, we
overrule the argument of the commercial wisdom of the committee of creditors
(COC).
83. In the above facts and circumstances, we find that the IM is vitiated
and therefore we find sufficient justification to set aside the resolution plan
and go for a fresh information memorandum and also a re-invitation of
expression of interest.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 53 of 87
Findings in CA (AT) (Ins.) No. 1557 of 2023 & 1684 of 2023
84. We find that the Information Memorandum was fundamentally
incorrect as SREI's claim of about ₹ 1,885 crores was admitted despite earlier
judicial determination reducing the recoverable debt. Material facts relating
to the earlier ACIL CIRP and the amount already recovered were either omitted
or not properly reflected. Since every prospective resolution applicant bases
its commercial decision upon the Information Memorandum, an IM founded
on materially incorrect financial information vitiates the entire resolution
process. Furthermore, exaggerated admission of SREI's claim materially
distorted the CIRP . The RP failed to discharge his statutory obligation of
independent verification. The inflated claim resulted in distorted voting
dynamics and valuation. The CoC's commercial wisdom cannot be insulated
where the commercial decision itself proceeded on incorrect foundational
facts. We also find that there has been failure to account for BRS Ventures
payment. The amount paid under ACIL CIRP through BRS Ventures ought to
have been reflected while determining SREI's outstanding entitlement and
corresponding secured creditor rights by way of subrogation also required
consideration. Failure to incorporate these facts rendered the claim register
and IM materially defective.
CA (AT(Ins.) No. 626-628 of 2025 - Another set of interrelated Appeals
filed by GIDC/lessor of land
85. Basis conclusions and findings in the above two Appeals [CA (AT) (Ins.)
No. 1557 of 2023 & 1684 of 2023], we cannot give a quietus to the issues
involved in the CIRP proceedings against the Corporate Debtor as we were
confronted with another set of appeals in which we find that there is a
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 54 of 87
commonality of the debt, two corporate insolvencies (guarantor and principal
borrower), one Financial Creditor, and one piece of leasehold land. Because
of the interrelatedness of the two sets of appeals, we have consolidated them
and now we deal with the second set of appeals. The order dated 19.02.2025
of the Adjudicating Authority, in CP (IB) No. 571/2020, is a single composite
order disposing of three interlocutory applications. We note that three Appeal
numbers CA (AT(Ins.) No. 626-628 of 2025 correspond to three Interlocutory
Applications which were disposed of as follows:
Interlocutory
How Disposed of
What it sought
application (19.02.2025)
IA 4585/2021 Approval of the SRA's
Resolution Plan
(s. 30(6) r/w s. 31, filed by the
RP)
Allowed
Plan approved
IA 136/2022 GIDC's objections to the
Resolution Plan
Dismissed
IA 5224/2024 GIDC's application to defer
plan hearing pending the
Gujarat High Court
Dismissed
86. We briefly recapitulate that the Corporate Debtor is Gujarat
Hydrocarbons and Power SEZ Limited-GHPSL, incorporated on 17.08.2007 to
develop, operate and maintain a sector-specific Special Economic Zone (SEZ)
on land at Vilayat, Bharuch, Gujarat. Its principal — effectively sole — asset
is that leasehold land (the "Demised Premises"), taken from the Appellant,
Gujarat Industrial Development Corporation ("GIDC" or "the Appellant"), a
statutory corporation acting in this matter as lessor, as an Operational
Creditor, and as regulator of the land. The Successful Resolution Applicant
(SRA) is Zaveri & Co. Pvt. Ltd. The sole Financial Creditor and sole member of
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 55 of 87
the Committee of Creditors (CoC) was SREI Infrastructure Finance Limited
(SREI), itself admitted to insolvency during this CIR proceedings.
87. Per Appellant/GIDC the resolution plan is based on sub plotting the
leased premises leased by the Appellant to the CD without any consent
/permission from the Appellant, where such lease has already come to be
terminated and CD is evicted under the provisions and order of the Gujarat
Public Premises (Eviction of Unauthorised Occupants) Act, 1972 and such
position is accepted by the SRA, and further neither is the resolution plan in
line with the purpose for which the lease was given to the CD being that of
SEZ purpose being that of Energy sector, and the denotification of the SEZ
has never been effected qua the land in question, since the Development
Commissioner has never issued certificate no benefits availed certificate
and/or refund of benefit received certificate to complete the denotification
process, and the resolution plan seeks to revive the CD by sub leasing the
land of the Appellant in piece meal as non SEZ sub plots which is not
permissible as per the terms between the Appellant and the CD, and the
approval has tantamounted to rewriting the contract between the Appellant
and the CD and resulting in violation of the law of the land.
Locus of the Appellant/GIDC as Operational Creditor
88. In this subsection we are dealing with the issue whether GIDC has the
locus to maintain its challenge-raised by the SRA, and whether its objections
fall within the scope of appellate scrutiny under Section 61(3) and the
ordinary appellate jurisdiction over the dismissal of its objection-IAs.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 56 of 87
89. The respondent-SRA questions the locus of the Appellant GIDC on the
21
ground that a resolution plan may be challenged only on the s. 61(3) grounds
and the appeal discloses none. Appellant has countered these arguments by
bringing to our notice that it is only the impugned order passed in IA 4585 of
2021, the order for approval of the resolution plan, is required to meet the
21
test of s. 61(3) of the IBC, which in the present case is being met with.
90. Appellant contends that such test does not apply in the impugned orders
passed in IA 136 of 2022 and IA 5224 of 2024 . The appeals against those
dismissals stand on ordinary appellate grounds. Basis the material placed on
record, we find sufficient grounds in to take up appeals within Section 30(2)
as well as within Section 61(3)(ii)/(iii). We find that the arguments of the
Respondents are not convincing and the Appellant has a locus to file an
appeal. This line of argument presented by the Respondent is rejected.
21
Section 61: Appeals and Appellate Authority.
61. (1) …
(2) …
(3) An appeal against an order approving a resolution plan under section 31 may be filed
on the following grounds, namely:—
(i) the approved resolution plan is in contravention of the provisions of any law for the
time being in force;
(ii) there has been material irregularity in exercise of the powers by the resolution
professional during the corporate insolvency resolution period;
(iii) the debts owed to operational creditors of the corporate debtor have not been
provided for in the resolution plan in the manner specified by the Board;
(iv) the insolvency resolution process costs have not been provided for repayment in
priority to all other debts; or
(v) the resolution plan does not comply with any other criteria specified by the Board.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 57 of 87
91. Respondent also claims that GIDC is an Operational Creditor whose
claim was frozen on admission. Its grievance is really that it wants better than
class treatment, which is more of a monetary grievance cloaked as objections.
Appellant/GIDC contends that it has objected on the grounds of
contravention of law, within section 30(2)(e) and also within section
61(3)(ii)/(iii). It further claims that they are not a collateral attack on
commercial wisdom but on the legality and the feasibility of the plan. We are
not in agreement with the line of argument presented by the Respondent and
concur with the argument of the appellant and we cannot question the locus
of the Appellant.
92. The Respondent also contends that Appellant/GIDC has no locus on
the issue of the de-notification/SEZ status and only the SEZ authorities could
raise it, and none has raised it. The appellant/GIDC, on the other hand,
contends that GIDC is not an ordinary Operational Creditor. Since the
resolution plan deploys the land which it owns and also regulates and
therefore the Appellant/GIDC definitely has the locus. We also note that the
denotification of the SEZ status has not reached finality. In such a situation
the claim of the Respondent that since the land is almost de-notified (as noted
by us here in the earlier submissions of the Respondent), GIDC has no locus
and only SEZ authorities could raise it is not a justified ground.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 58 of 87
93. We note that the judgment relied upon by the Appellant/GIDC in the
22
matter of the of the Greater Noida Industrial Development Authority v.
Prabhjit Singh Soni (see infra note 27/as discussed below in para 94 ) , in
which the Hon’ble SC held that where a resolution plan depends on assets or
approvals of a third-party statutory authority, there must be a closer
examination of plan’s feasibility. Thus, we find that the argument of the
Respondents is not sustainable on this line and GIDC, as an Operational
Creditor, has the locus.
94. Respondents rely upon various precedents and claim that commercial
wisdom is non-justiciable. The Respondents places reliance on the following
judicial precedents:
23
o Essar Steel v. Satish Kumar Gupta : Commercial
wisdom non-justiciable; review confined to s. 30(2)- cited
by AA / SRA / SREI.
24
o K. Sashidhar v. Indian Overseas Bank : AA's discretion
circumscribed by s. 31; commercial wisdom of CoC is not
22
Greater Noida v. Prabhjit Singh Soni (2024) 6 SCC 767 (Refer Para 54 and 55)
23
Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531;
67… Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a
business decision of the majority of the Committee of Creditors, has to be within the four corners of Section
30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3)
of the Code, insofar as the Appellate Tribunal is concerned. the parameters of such review having been clearly
laid down in K. Sashidhar.”
24
K. Sashidhar v. Indian Overseas Bank K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 ;
“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 per cent 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
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 59 of 87
to be interfered with, excepting the limited scope as
provided under Sections 30 and 31 of the I&B Code- cited
by AA / SRA.
25
o Kalpraj Dharamshi v. Kotak Investment : No factor
beyond ss. 30(2)/61(3); CoC wisdom paramount - cited by
SRA.
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 contravene any of the provisions of the law for the time being in force, (vi) conforms to
such other requirements as may be specified by the Board. The Board referred to is
established under Section 188 of the I&B Code. The powers and functions of the Board have
been delineated in Section 196 of the I&B Code. None of the specified functions of the
Board, directly or indirectly, pertain to regulating the manner in which the financial
creditors ought to or ought not to exercise their commercial wisdom during the voting on
the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the
financial creditors at the time of voting is bound to be a mixed baggage of variety of factors.
To wit, the feasibility and viability of the proposed resolution plan and including their
perceptions about the general capability of the resolution applicant to translate the
projected plan into a reality. The resolution applicant may have given projections backed by
normative data but still in the opinion of the dissenting financial creditors, it would not be
free from being speculative. These aspects are completely within the domain of the financial
creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B
Code.”
25
Kalpraj Dharamshi v. Kotak Investment (2021) 10 SCC 401
Para 158. “This Court has held, that it is not open to the adjudicating authority or appellate
authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the
I&B Code. It has further been held, that the commercial wisdom of CoC has been given
paramount status without any judicial intervention for ensuring completion of the stated
processes within the timelines prescribed by the I&B Code. This Court thus, in unequivocal
terms, held, that there is an intrinsic assumption, that financial creditors are fully informed
about the viability of the corporate debtor and feasibility of the proposed resolution plan.
They act on the basis of thorough examination of the proposed resolution plan and
assessment made by their team of experts. It has been held, that the opinion expressed by
CoC after due deliberations in the meetings through voting, as per voting shares, is a
collective business decision. It has been held, that the legislature has consciously not
provided any ground to challenge the "commercial wisdom" of the individual financial
creditors or their collective decision before the adjudicating authority and that the decision
of CoC's "commercial wisdom" is made non-justiciable. “
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 60 of 87
26
o Vallal RCK v. Siva Industries & Holdings Ltd., (2022)
9 SCC 803 NCLT/NCLAT cannot sit in appeal over CoC
wisdom – noted by Adjudicating Authority.
27
95. On the other hand, the Appellant places its reliance on Greater Noida
v. Prabhjit Singh Soni where a plan uses land owned by a statutory body
bound by its own regulations, feasibility demands closer scrutiny and the
necessary statutory approvals, and both NCLT and NCLAT were faulted for
not dealing with this. Even the SRA relies upon this judgment for the general
s. 30/31 scheme of the Code, but its ratio is not of assistance to the Appellant.
96. We note the judgments cited by the Respondents on the commercial
wisdom line; however, we find that they do not answer the questions relating
to fraud or the statutory land feasibility scrutiny that Greater Noida v.
Prabhjit Singh Soni (supra) carves out in the following paragraphs:
26
Vallal RCK v. Siva Industries & Holdings Ltd., (2022) 9 SCC 803 Para 24.
“When 90% and more of the creditors, in their wisdom after due deliberations, find that it
will be in the interest of all the stake-holders to permit settlement and withdraw CIRP, in
our view, the adjudicating authority or the appellate authority cannot sit in an appeal over
the commercial wisdom of CoC. The interference would be warranted only when the
adjudicating authority or the appellate authority finds the decision of the CoC to be wholly
capricious, arbitrary, irrational and de hors the provisions of the statute or the Rules.”
27
Greater Noida v. Prabhjit Singh Soni Para 26 and 27.
”26. It is thus clear that the decision of the CoC was taken after the members of the CoC,
had due deliberation to consider the pros and cons of the settlement plan and took a
decision exercising their commercial wisdom. We are therefore of the considered view that
neither the learned NCLT nor the learned NCLAT were justified in not giving due weightage
to the commercial wisdom of CoC.
27. This Court has, time and again, emphasized the need for minimal judicial interference
by NCLAT and NCLT in the framework of IBC.”
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 61 of 87
“54.3. Under Regulation 38(3) of the CIRP Regulations, 2016, a resolution
plan must, inter alia, demonstrate that:
(a) it is feasible and viable; and
(b) it has provisions for approvals required and the timeline for the same.
In the instant case, the plan conceived utilisation of land owned by the
appellant. Ordinarily, feasibility and viability of a plan are economic
decisions best left to the commercial wisdom of the CoC. However, where
the plan envisages use of land not owned by the CD but by a third party,
such as the appellant, which is a statutory body, bound by its own rules
and regulations having statutory flavour, there has to be a closer
examination of the plan's feasibility. Here, on the part of the CD there were
defaults in payment of instalments which, allegedly, resulted in raising of
demand and issuance of pre-cancellation notice. In these circumstances,
whether the resolution plan envisages necessary approvals of the
statutory authority is an important aspect on which feasibility of the plan
depends. Unfortunately, the order of approval does not envisage such
approvals. But neither NCLT nor NCLAT dealt with those aspects.”
97. Applying the above principles in the facts and circumstances of this
case we find that the Appellant is a statutory body, who is the owner of the
land and has given the land on lease. This body is bound by its own
regulations. Feasibility of a resolution plan requires closer scrutiny and
necessary statutory approvals, which in this case are lacking and therefore
there is locus for the Appellant.
98. In this background, we are unable to accept the Respondents'
contention that GIDC's grievances are, in substance, a disguised monetary
claim immune from scrutiny. GIDC appears before us in a dual capacity: as
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 62 of 87
an Operational Creditor whose claim stands admitted, and, also as the
statutory land-owning authority whose own regulations and consent are being
invoked by a resolution plan that proposes to alter the very character of use
of its land. The objection that a plan deploys land owned and regulated by a
statutory body without the necessary consequential approvals is not a
commercial-wisdom grievance as in the precedents cited in K. Sashidhar,
Essar Steel, Kalpraj Dharamshi or Vallal RCK (supra) . Herein it is a
feasibility objection of the kind this Appellate Tribunal must weigh under
28
Section 30(2)(e) and Regulation 38 (as noted herein earlier ), and one to
which Greater Noida Industrial Development Authority v. Prabhjit Singh
Soni (supra) speaks directly — where a plan is built upon land owned by a
statutory authority bound by its own regulations, feasibility “demands closer
scrutiny and the necessary statutory approvals,” and a failure to engage with
that dimension is itself appealable error. We accordingly hold that GIDC has
the locus to maintain these appeals, that its objections are not foreclosed by
the commercial-wisdom line of authority, and that the appeals against the
dismissal of I.A. 136/2022 and I.A. 5224/2024 stand on the ordinary
28
Section 30. Submission of resolution plan.
(1) A resolution applicant may submit a resolution plan 1[along with an affidavit stating
that he is eligible under section 29A] to the resolution professional prepared on the
basis of the information memorandum.
(2) The resolution professional shall examine each resolution plan received by him to
confirm that each resolution plan—
(a)
(b)
(c)
(d)
(e)
does not contravene any of the provisions of the law for the time being in force;
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 63 of 87
appellate footing GIDC claims for them, independent of, though cumulatively
reinforcing, its challenge to the approval order under Section 61(3).
99. Thus, we find that the Appellant definitely has a locus and the
objections raised by the Respondents are found to be not sustainable.
Lease termination during moratorium by the Appellant/GIDC - Can the
Resolution Plan be set aside due to termination of Lease Deed?
100. Now we delve into the issue whether GIDC's termination of the Lease
Deed on 13.12.2021 — during the s. 14 moratorium — is void or ineffective
as against the CIRP; and, if the Corporate Debtor's title to its sole asset is in
question, whether the plan can be feasible. A related sub-question is the effect
of the Gujarat High Court's judgment dated 01.12.2025 quashing the
termination, and outcome of the LPA against it (which has been decided by
the Gujarat High Court at the time of pronouncement of this judgement).
101. Respondents claims that the termination during the moratorium is per
se illegal and in the teeth of Section 14 of the court and the Adjudicating
Authority rightly so held. The Respondents bring to our notice that the
Gujarat High Court on 01-12-2025 quashed the termination and eviction and
this ground does not survive. The Appellant/GIDC cannot seek to profit from
their own wrong by terminating in breach of the code and then pleading
infeasibility from that termination. SRA contends that they are ready and
willing to implement the resolution plan regardless of the outcome of the
termination of the lease deed and claim that the Corporate Debtor continues
to exist.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 64 of 87
102. The Appellant claims that the termination question is not for the
NCLT/NCLAT. Appellant also brings to our notice that RP chose to litigate it
before the Gujarat High Court in SCA 4937/2022. In its Rejoinder Appellant
/GIDC claims that it reserved the right to cancel the allotment in its very claim
form and no protest was raised against that reservation by anyone. Therefore,
as of today, the Corporate Debtor has no right, title or interest in the land,
which stands terminated. In this situation the plan is therefore neither
feasible nor viable. Further the SRA says it will implement “irrespective of” the
High Court outcome shows the SRA is indifferent to title — underscoring
infeasibility.
103. Appellant claims that the termination of the lease deed is extraneous to
NCLT/NCLAT. Without going into this question, we find that the facts of the
matter very much go against the Appellant. We note that during the
moratorium per Section 14 of the Code during the pendency of the IBC
proceedings, the Appellant/GIDC could not have terminated the lease deed.
Furthermore, Section 238 of the Code overrides the lease termination
proceedings or eviction proceedings which were ongoing at the start of the
CIRP proceedings. This has been held by even the Gujarat High Court in the
appeal by the Respondent against the termination of the lease deed. At the
time of the arguments, the letter patent application (LPA) from the Appellant's
side/GIDC before the Gujarat High Court was pending. From a web search of
the Gujarat High Court, we find that even that has been dismissed. In such a
situation the contention of the Appellant that, since the lease has been
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 65 of 87
terminated, consequently the plan is not feasible, does not hold any ground.
Therefore, the contentions of the Appellant are rejected on this ground.
104. Thus, on this narrow point, we are unable to accept GIDC's submission
that the Corporate Debtor's title stands terminated so as to render the plan
infeasible. The termination of the Lease Deed on 13.12.2021 occurred
squarely during the subsistence of the Section 14 moratorium, and Section
238 of the Code overrides any provision of the Gujarat Public Premises
(Eviction of Unauthorised Occupants) Act, 1972 to the contrary — a position
now authoritatively confirmed by the Gujarat High Court's judgment dated
01.12.2025 quashing the termination, GIDC's Letters Patent Appeal against
which stands dismissed. GIDC cannot found an infeasibility objection on a
termination that was itself void ab initio and has since been judicially undone.
This ground fails.
Is the Affidavit filed by the SRA undertaking to pay GIDC's “legitimate
claim” binds it to make payment of entire dues
105. Now we delve into another issue which has been agitated by the
Appellant, which is that whether the SRA's letter (03.05.2022) and affidavit
(20.05.2022) — offering to pay GIDC's “legitimate” claim over and above the
plan — bind the SRA to pay GIDC's entire dues, or whether that offer lapsed
with the collapse of the contemplated withdrawal of objections; and whether
GIDC, having accepted plan payment, is bound by it.
106. The Appellant/GIDC contends that the affidavit binds the SRA to pay
the entire dues and GIDC's demand of 18.10.2023 for full payment shows it
never accepted ₹ 6.14 crore as full and final.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 66 of 87
107. The case for the Respondents (SRA/SREI) is that the offer was made in
view of a withdrawal of objections that never happened. Once GIDC refused
to withdraw and the NCLAT issued remand order dated 08.08.2024 [CA (AT)
(Ins.) No. 1648-1649/2023) and which was upheld by Honourable Supreme
Court, on 20.08.2024 (in SRA's Civil Appeals Nos. 8777–8778/2024) , the
03.05.2022 letter and 20.05.2022 affidavit have no significance. Moreover,
the Respondents claims that the offer was only for a “legitimate”/“acceptable”
amount, expressly outside the IBC. Respondents also claims that GIDC's real
grievance is a monetary one.
108. We find that the offer was made in a specific, conditional context — in
contemplation of a withdrawal of objections that did not materialise — and its
terms (“legitimate”/“acceptable”) were, on a plain reading, always outside the
four corners of the plan and incapable of converting into an unconditional
payment obligation once the contemplated withdrawal collapsed. Thus, we
find no substance in the contention of the Appellant/GIDC that the SRA's
letter dated 03.05.2022 and affidavit dated 20.05.2022, offering to pay GIDC's
“legitimate” or “acceptable” claim over and above the plan, bind the SRA to
discharge GIDC's entire demand. Thus this ground fails.
Can the Resolution Plan be set aside on the ground that the Sole CoC
member has undergone insolvency?
109. Now we delve into the issue whether the approval of the plan by a CoC
whose sole member (SREI) was itself admitted to CIRP on 08.10.2021 is
vitiated; and whether this ground can be raised at the Appellate stage at all.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 67 of 87
110. The Appellant claims that since the sole CoC member was undergoing
insolvency, therefore on this ground the plan should be set aside. The
Appellant also claims that SREI filed nothing to substantiate decisions taken
post-termination of the lease deed (13.12.2021) and initiation of eviction
proceedings and there has been no reply to the prayers in IA 5224/2024. On
the other hand, SRA/SREI contends that there are no pleadings on this in IA
136/2022 and such a ground cannot be raised belatedly. It is also brought
to our notice by the Respondent that the plan was first approved by SREI
before its own CIRP. Thereafter the Administrator (appointed on 08.10.2021)
and the RBI superseded governance ratified the authorized officers' acts. We
find that both sides have not been able to clearly canvass the arguments
specifically validating or invalidating approval by a COC whose sole member
is in CIRP. In the facts and circumstances of the case the Respondent/SREI
was being governed by the Administrator and furthermore the authorized
officer's acts were ratified by the Administrator. In such a situation the
grounds raised by the Appellant/GIDC are not sustainable and therefore the
argument canvassed by the Appellant that approval of the plan by a CoC
whose sole member (SREI) was itself admitted to CIRP on 08.10.2021 cannot
be considered to be vitiated.
111. Thus, we find that the ground that approval by a CoC whose sole
member (SREI) was itself under CIRP from 08.10.2021 is vitiated was not
specifically pleaded in I.A. 136/2022, and the record shows that decisions
were thereafter taken through and ratified by SREI's Administrator. In the
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 68 of 87
absence of any authority establishing that approval by a sole CoC member in
insolvency is per se vitiated, and given the ratification on record, we do not
find this a sustainable independent ground for disturbing the plan. Thus, this
ground raised by the Appellant also fails.
De-notification premise, feasibility, and the fraud allegation
112. In this section we deal with the issue whether the resolution plan,
premised on the demised premises standing or becoming de-notified from SEZ
to non-SEZ industrial use, and on GIDC's consent to change of use and sub-
plotting being assumed rather than obtained, is feasible and viable within the
meaning of Section 30(2) of the Code.
113. This is the heart of the matter. We note that GIDC’s Appeals, CA (AT)
(Ins) 626-628/2025 attacks the approved resolution plan on the grounds that
whether a resolution plan can provide for converting the demised SEZ
premises to non-SEZ industrial use, and for sub-plotting / sub-leasing,
without the lessor’s consent.
114. It is the claim of the SRA/R1 that the lease deed itself permits a change
29
of land use per Clause 3.3 (v) and the lease deed further allows subleasing
30
as per Clause 4.1-4.3 without further consent.
29
Clause 3.3 (v) of the Lease Deed 21.02.2008: Notwithstanding the foregoing however, the
parties herewith agree that the lessee may, during the term of this lease, seek a change of
the nature of use of the demised premises from an SEZ to any other industrial use duly
sanctioned under the applicable statutory or regulatory provisions enacted in reference
thereto, with prior consent, approval or permission of the lessor.
30
4. SUB-LEASE
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 69 of 87
115. SRA/R1 further relies on Regulation 37(j) of the CIRP Regulations,
which expressly permits a change in the portfolio of goods or services under
a plan. SRA/R1 claims that the resolution plan merely continues the
Corporate Debtors' object of developing and sub-leasing the land.
116. We observe that GIDC/Appellant, has contended in their appeal that
the change of land use is not simpliciter as clause 3.3 (v), which is relied upon
by the SRA, itself requires the lessor's/GIDC’s prior consent, approval, or
permission. Furthermore, for SEZ land the Development Commissioner's
permission is also required along with the return of availed benefits.
117. A perusal of the relevant clauses of the lease deed brings clarity and we
find that Clause 3.3 (v) permits a change of use but only on the lessor's
consent. The relevant Clause 3.3(v) is extracted as below for better
appreciation of the terms and conditions of the lease deed for the change of
use from SEZ to any other industrial use:
4.1 The Lessor herewith undertakes that the Lessee is free to make independent sub-Lease
with units within the SEZ in accordance with the SEZ Act and Rules thereunder. Lessee
shall sub-lease the parts of the Demised Premises on the terms and conditions as
finalized by the Lessee but not contravening to the Lease Deed executed with Lessor.
4.2 In the event of cancellation/surrender of plot or building or structure on Account of
the non-fulfillment of the terms and conditions of the sub-lease or any other
agreement or conditions of approval of such Units, the Lessee may offer such plots to
other Units in accordance with the provisions of applicable law.
4.3 The Lessor agrees that no administrative fee or any transfer fee shall be payable to the
Lessor by the Lessee in respect of sub-leases entered by the Lessee for giving land to
Units in SEZ area.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 70 of 87
“3.3(v) Notwithstanding the foregoing however, the Parties herewith
agree that the Lessee may during the Term of this Lease seek a change of
the nature of use of the Demised Premises from an SEZ to any other
industrial use duly sanctioned under the applicable statutory of regulatory
provisions enacted in reference thereto with prior consent, approval or
permission of the Lessor.”
118. We further note that the resolution plan makes a presumption that the
permission will be granted to convert the land from SEZ to non-SEZ. This is
apparent from the following extracts from the resolution plan, which were
brought to our notice by GIDC:
“Based on the information available on the official website of the SEZ-
INDIA, pertaining to the SEZs which are notified and operating in the
country and also pertaining to the list published for existing notified SEZ in
the country wherein the name of the Corporate Debtor is not appearing in
the list. The Development Commissioner, SEZ has also not filed any claim(s)
for any of their dues pertaining to the Corporate Debtor with the
Resolution Professional. So. the Resolution Applicant have all the good
reasons to believe that the SEZ de-notification is approved and all the dues
between the Corporate Debtor and Development Commissioner. SEZ
might have been settled at the time of de-notification.
With the de-notification of the SEZ, now the only business activity that can
be carried out by the Corporate Debtor is the development of the Demised
Premises by building the necessary infrastructure within the Demised
Premises as the anchor tenant, on-boarding the entrepreneurial units by
sub-leasing the industrial plots created & developed within the Demised
Premises as per the customized requirement for the proposed
entrepreneurs who would be occupying the units.”
[
page 306 APB: page 58-Res Plan]
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 71 of 87
119. We find that on the basis of these presumptions, the SRA has come to
its own conclusion that, with the denotification of the SEZ, the only business
activity that can be carried out by CD is the development of the demised
premises by building necessary infrastructure within the demised premises
as an anchor tenant. On the basis of the presumption of denotification, the
SRA provides its own interpretation of the lease deed and makes a proposal
in the resolution plan as follows:
“The terms of the Lease Deed also provide for the change of sector specific
usage to general industrial usage and also the terms therein also permit
the Lessee to be the developer and act as an anchor tenant for the
Demised Premises as per the prevailing regulations of the GIDC. The
Resolution Applicant envisages undertaking the development of the
Demised Premises by building the necessary infrastructure within the
Demised Premises, on-boarding the entrepreneurial units by sub-leasing
the industrial plots created & developed within the Demised Premises as
per the customized requirement for the proposed entrepreneurs who
would be occupying the units.”
29
120. We note that as per clause 3.3 (v), the change of the nature of use of
the demised premises from an SEZ to any other industrial use is possible only
with the prior consent or permission of the lessor. Even though
correspondence was going on between the Lesser, Lessee and the
Development Commissioner but it has not fructified in the grant of the
permission to the CD for use of the land from SEZ to any other industrial use.
Thus, the resolution plan cannot make a presumption that it has been
granted or it will be granted. And on that basis , SRA makes a proposal for
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 72 of 87
developing the leased area as an anchor tenant for purposes other than a
SEZ. Such a presumption, if allowed will make the plan a conditional plan.
121. To better understand the contents of the resolution plan, we need to
compare its contents with the information memorandum. The information
memorandum, which was not on record, was handed over in the open court
by the Respondents. We had gone through the information memorandum (IM)
and we do not find any disclosure of the pendency of the SEZ denotification
process or any pending application. If this information memorandum did not
have such vital information, it means that the prospective resolution
applicants would not have been aware of such relevant fact. This information
was not commonly available to all and was known only to the Corporate
Debtor and in the current scenario of the CIR Proceedings with the Resolution
Professional. It is worth noting that the Information Memorandum did not
disclose that the Corporate Debtor is trying and likely to get permission for
use other than SEZ purpose. The exchange of correspondence between the
Corporate Debtor, GIDC and Development Commissioner was not public
information. When we peruse the contents of the resolution plan of the
successful resolution applicant, inference can be drawn that it had detailed
information relating to the correspondence which was going on between the
Corporate Debtor and the GIDC and also the development commissioner's
office.
122. Such a level playing field was not available to the other prospective
resolution applicants. If the other resolution applicants had known that a
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 73 of 87
conditional resolution plan could be submitted, which allows the conversion
from SEZ to non-SEZ purposes also, then probably more people would have
applied and value maximization could have happened.
123. A perusal of the resolution plan also indicates that the information
contained in the resolution plan is much more than what was available in the
information memorandum and also in the public domain, as a lot of specific
details relating to the Corporate Debtor were contained in the resolution plan.
We are not going deep into the circumstances under which this information
was available with the SRA - whether it was exclusively available to SRA or
to the other resolution applicants or not but suffice it to say that it raises a
lot of doubts about the level playing field and the resolution process itself.
Without going into the details of excessive information available with the SRA,
we delve into the other related and important issue that if the SRA was to be
allowed for converting from SEZ to any other industrial use, it should have
been made explicit in the information memorandum for all resolution
applicants and that would have made a level playing field for others.
124. We further note that the resolution plan itself admits that the land
leased by GIDC is the only asset available with the Corporate Debtor and the
entire revival of the Corporate Debtor depends on how the said asset is used
or utilized. The relevant paragraph is extracted as below:
“This Demised Premises along-with all its rights is the only the asset
available with the Corporate Debtor and entire revival of the Corporate
Debtor depends on how the said asset is utilized and put to its best use.
With the development of industrial infrastructure facilities; the same can
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 74 of 87
generate steady revenues in the form of lease rentals if granted on sub-
lease for long term to industrial units of good repute or looking at the
current market scenario, even the Corporate Debtor has the option of
charging the entire premium amount upfront to recover the capital cost.”
125. Perusal of the Resolution Plan indicates that SRA made the resolution
plan basis visit and inspection of the project site, information available on the
official website of the SEZ-India, and its commercial analysis, and also basis
presumptions that this land can be used for any other purpose also. Thus,
we find that the resolution plan itself is based on some presumptions, which
makes it a conditional plan.
126. Another line of argument canvassed by the SRA is reliance on the
Regulation 37(j) of the CIRP Regulations, which permit a change in the
portfolio of goods or services under a plan. We have gone through the
provision and find that a change in the portfolio of goods or services is not the
same as the change of the use of the land from SEZ to any other industrial
purpose. Therefore, reliance on this regulation is misplaced and we reject
such a contention.
127. It is also brought to our notice by the Appellant that the Resolution Plan
seeks reliefs and concessions which are re-writing the lease Deed. GIDC
further claims that a plan cannot rewrite the lease. Presumptions by SRA of
change of use to non SEZ along with the approvals for reliefs and conclusions
all the more conditional.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 75 of 87
128. From the materials placed on record we find an important fact that SEZ
denotification was only granted in principle, subject to certain conditions.
Does this mean that the non-issuance of the formal notification vitiates a plan
which is premised on the land being available for non-SEZ use? Is there any
suppression/fraud on the Adjudicating Authority as GIDC alleges? Briefly
speaking Clause 2.1 of the Lease Deed records that the Demised Premises
was allotted “on an ‘as is where is' basis for the purpose of setting up an SEZ.”
29
Clause 3.3(v) permits the Lessee to “seek a change of the nature of use of the
Demised Premises from an SEZ to any other industrial use duly sanctioned
under the applicable statutory or regulatory provisions,” but only “with prior
consent, approval or permission of the Lessor.” Further that consent has
admittedly never been granted. Nor has the Development Commissioner
issued the “no benefits availed”/refund-of-benefits certificate that alone
completes the de-notification process; correspondence between the Corporate
Debtor, GIDC and the Development Commissioner's office on this very
question remained pending as recently as March–July 2024, well after the
plan had been approved by the CoC. Notwithstanding this, the resolution plan
proceeds on the SRA's own stated assumption — recorded in terms in the
plan itself — that because the Corporate Debtor does not presently appear on
the published list of notified SEZs and the Development Commissioner has
filed no claim in the CIRP, the SRA has “all the good reasons to believe that
the SEZ de-notification is approved.” On that unverified premise, the plan
proposes to develop the Demised Premises as an anchor tenant and to sub-
lease industrial plots created within it for general, non-SEZ industrial use —
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 76 of 87
activity that Clause 3.3(v) permits only with GIDC's prior consent, and that,
for SEZ land, additionally requires the Development Commissioner's formal
permission and completion of the benefits-refund process. A resolution plan
cannot proceed on a presumption of a regulatory approval that has not been
obtained, particularly where the very authority whose consent is required has,
throughout these proceedings, actively contested that presumption. To
approve such a plan is, in substance, to accept a conditional and contingent
plan as though it were unconditional, leaving the realisation of the Corporate
Debtor's sole asset hostage to a future regulatory event that GIDC — the
regulator — says will not occur. We are unable to regard reliance on
Regulation 37(j) of the CIRP Regulations (permitting a change in the “portfolio
of goods or services”). We note that a change in the sanctioned character of
use of statutorily regulated leasehold land is not a mere portfolio adjustment
within the CoC's ordinary commercial discretion. It is a matter requiring the
consent of the land-owning regulator under the very lease on which the
Corporate Debtor's existence depends.
129. We are further troubled by the disparity between the disclosures in the
Information Memorandum placed before all prospective resolution applicants
and the granular knowledge of the de-notification correspondence reflected in
the SRA's own resolution plan. The IM placed before us contains no disclosure
of the pendency, or incompleteness, of the de-notification process, nor of the
correspondence exchanged between the Corporate Debtor, GIDC and the
Development Commissioner. Yet the resolution plan submitted by the SRA
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 77 of 87
demonstrates a level of familiarity with that very correspondence that goes
well beyond what was available in the IM or in the public domain. If conversion
from SEZ to non-SEZ use, and the sub-plotting/sub-leasing that the SRA's
plan is built upon, were genuinely open possibilities, that fact — and the
existence and status of the correspondence bearing upon it — ought to have
been disclosed in the IM to all resolution applicants alike, so that a level
playing field existed for the formulation of competing plans and so that the
CoC's commercial wisdom was exercised on complete and accurate
information, consistent with the object of value maximisation. Its omission
from the IM, coupled with its evident availability to the SRA, is sufficient by
itself to vitiate the informational foundation on which the plan was invited,
evaluated and approved. We do not find it necessary, for the purposes of this
judgment, to attribute this omission to any individual; it suffices to hold, as
we do, that the Information Memorandum was materially incomplete and
inaccurate on a matter going to the very feasibility of the plan, and that a plan
invited and approved on such an Information Memorandum cannot be
sustained.
130. We accordingly hold that the resolution plan of the SRA, resting as it
does on contested presumption that the SEZ status of the Demised Premises
stands or will stand de-notified, without GIDC's consent under Clause 3.3(v)
of the Lease Deed and without the Development Commissioner's certificate, is
not a feasible or viable plan within the meaning of Section 30(2)(e) of the Code
and Regulation 38 of the CIRP Regulations; and that its approval, invited and
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 78 of 87
obtained on an Information Memorandum that did not disclose the true and
complete state of the de-notification process, cannot stand.
Costs
131. The Appellant/Corporate Guarantor brings to our notice that NCLT,
₹
New Delhi has imposed cost of 50,000/- on the Appellant without providing
any proper reason. The application being IA No. 596/ND/2022 was filed by
the Appellant in good faith before the Ld. NCLT, New Delhi to bring the facts on
record, and the Ld. NCLT, New Delhi without appreciating the same have simply
imposed the said cost without providing any formal reasons. Thus, the said cost
imposed by the Ld. NCLT, New Delhi should be waived and/ or set aside. After
having gone through the facts and circumstances of the case and also the
impugned order, we do not find sufficient grounds to impose a cost of ₹ 50,000.
As the cost was imposed without any reasons being recorded for the quantum
or the necessity thereof, and in light of our findings above, the imposition of
costs cannot be sustained and we are inclined to set aside the imposition of
cost on the Appellant/the suspended director by the order dated 13.09.2023.
Adequacy of reasons on the objection-IAs
132. Now we delve into the issue whether the composite order adequately
reasons the dismissal of IA 136/2022 and IA 5224/2024 — disposed of by
reference in para 10.2 rather than by discrete issue-by-issue findings — such
that the dismissals withstand appellate scrutiny.
133. The Appellant contends that the objection-IAs were disposed of without
engaging the specific grounds. The reasoning is by reference and not by any
finding, which was the basis for remand. On the other hand, the Respondent
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 79 of 87
(SRA/SREI) brings to our notice that the order does deal with
feasibility/viability and it holds it to be within COC's commercial wisdom. For
better appreciation of the contention of the Appellant, we extract the contents
of Para 10.2 in the impugned order dated 19.02.2025:
“We have taken a view in IA-136/2022 In (IB) - 571(ND) / 2020 filed by
Gujarat Industrial Development Corporation, Applicant under the provision
of Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 and IA-
5224/2024 In (IB)-571(ND)/2020 filed by Gujarat Industrial Development
Corporation, Applicant under the provision of Section 60(5)(c) of the
Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National
Company Law Tribunal Rules, 2016 that there is no infirmity in the decision
of the CoC and find no reason to interfere in the decision on the Resolution
Plan taken by the CoC in their Commercial Wisdom and dismissed both the
IAs (IA-136/2022 and IA-5224/2024). Therefore, the prayers in the present
IA4585/2021 survives.”
134. We find that in IA-5224/24, the prayer was to defer the hearing pending
the Gujarat High Court order and since the matter has already been disposed
of by the Gujarat High Court, therefore there is no merit in continuing with
this IA.
135. As examined by us separately, in IA 136/2022 the Appellant was raising
issues relating to the legality and feasibility of the plan and was not an attack
on the commercial wisdom. The Appellant, being the lessee and also the land
regulator, had a much better locus and sufficient justification to question the
resolution plan wherein it is being treated as an ordinary Operational Creditor
Greater Noida Industrial Development Authority v. Prabhjit Singh Soni
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 80 of 87
(supra) . The plan deploys the land which is owned and regulated by the
Appellant and therefore the commercial wisdom line which has been taken up
by the Adjudicating Authority may not be sufficient justification to ignore the
grounds raised by the Appellant in IA 136 of 2022. We further note that the
commercial wisdom line does not immunize a want of reasons. It could at best
limit the grounds of interference. We need to note that it was the duty of the
Adjudicating Authority to deal with the objections that were formally restored
and heard de nova by the NCLAT, on this Appellate Tribunal's direction of
08.08.2024. Furthermore, the judicial precedent in Greater Noida Industrial
Development Authority v. Prabhjit Singh Soni is very pertinent. We need
to note that the statutory approval aspect of the land which has been raised
herein has to be dealt with while dealing with the feasibility. Therefore, the
objection-IAs, which were restored by this Appellate Tribunal, cannot be
dismissed just by a reference. There has to be adequacy of reasons.
Can the Appellant contest the Reliefs and Concessions?
136. Appellant claims that the relief sought are very wide and contrary to the
law and a plan cannot create rights alien to it. On the other hand, the
Respondent/SRA/SREI contends that para 10.8 grants no individual relief
and each one have to be dealt “strictly as per law”. Therefore, there is nothing
to be aggrieved by and even the SRA has not appealed against these releases.
It claims that the plan as a whole is compliant and the reliefs are merely to
enable the implementation and create no extraneous rights. We observe that
this has been dealt with by the Adjudicating Authority at para 10.8, which is
extracted as below for better appreciation:
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 81 of 87
“The reliefs, concessions and waivers sought by the Successful Resolution
Applicant will be dealt with strictly as per law”
137. We observe that the Adjudicating Authority has given a very broad
waiver with respect to the treatment of the SRA's reliefs, concessions, and
waivers when it states that it to be dealt with strictly as per law. It could be
appropriate in a normal situation but in this situation, wherein the main
asset of the Corporate Debtor is land which is leased by the appellant and the
Appellant is also the regulator, it is appropriate that the objections raised by
the Appellant, particularly citing the judgment of Greater Noida Industrial
Development Authority v. Prabhjit Singh Soni (supra) should have been
dealt with appropriately.
138. The most important issue which was raised by the Appellant was with
respect to the presumption of the Respondent/SRA that denotification has
already happened and that concession will be granted. If such notification
has to be dealt with as per law and it has to be decided by the Appellant being
a regulator, then it is a resolution plan fraught with a lot of future problems
and thus not a feasible resolution plan.
Common Conclusions
139. For the reasons recorded above, we hold:
(a) that GIDC has the locus and the appeals are maintainable;
(b) that the resolution plan of Zaveri & Co. Pvt. Ltd., proceeding on
an unverified and contested presumption that the Demised
Premises stands or will stand de-notified from SEZ to non-SEZ
industrial use, without GIDC's consent as lessor and without the
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 82 of 87
Development Commissioner's certificate, is not feasible or viable
and its approval cannot be sustained;
(c) that the Information Memorandum on which the plan was invited
and evaluated was materially erroneous in overstating SREI's
claim, misclassifying ACIL's status, and omitting material
disclosures on the de-notification process;
(d) that the dismissal of GIDC's objection-IA (136/2022) by bare
reference, without discrete reasons, cannot be sustained; and
(e) that ACIL/BRS Ventures Investments Ltd. is entitled to be
recognised as a secured financial creditor of the Corporate Debtor
to the extent of ₹ 38.87 crore paid to SREI in the ACIL CIRP, and
that SREI's recoverable claim against the Corporate Debtor is to
be computed on the footing of the finally adjudicated figure of
₹ 241.27 crore, net of such credit.
140. In these circumstances, the appropriate and only just course is to set
aside the approval of the resolution plan and direct that the CIRP of the
Corporate Debtor be recommenced from the stage of a fresh invitation of
Expression of Interest, on a corrected and complete Information
Memorandum.
141. As we noted herein that the CIR proceedings have not gone ahead
smoothly, partly due to the errors which have crept into the information
memorandum and also partly due to acceptance of the exaggerated claims
and consequently defective information memorandum being published and
several other issues which we have already noted here in earlier, it would
therefore be appropriate that it is led by a fresh resolution professional.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 83 of 87
Order
142. Company Appeals (AT)(Ins) Nos. 626, 627 and 628 of 2025, filed by
Gujarat Industrial Development Corporation, are allowed as described herein.
The composite order dated 19.02.2025 is set aside in its entirety, including
the approval of the resolution plan of Zaveri & Co. Pvt. Ltd. in I.A. No. 4585
of 2021 and the dismissal of I.A. No. 136 of 2022; I.A. No. 5224 of 2024 having
been rendered academic by the decision of the Gujarat High Court, no further
orders are required thereon.
143. Company Appeal (AT)(Ins) No. 1557 of 2023 is allowed in part. The order
dated 13.09.2023 in I.A. No. 1764 of 2021 is set aside. i.e. setting aside
admission of claim of ₹ 1885.05 crores.
144. The costs of ₹ 50,000 imposed on the Appellant are set aside.
145. Company Appeal (AT)(Ins) No. 1684 of 2023 is allowed in part. The order
dated 13.09.2023 in I.A. No. 596 of 2022 is set aside to the extent it classifies
Assam Company India Limited as an unsecured related-party Financial
Creditor. It is declared and directed that Assam Company India Limited
stands subrogated to, and shall be recognised and ranked as, a secured
Financial Creditor of the Corporate Debtor to the extent of ₹ 38.87 crore paid
by it (through its resolution applicant, BRS Ventures Investments Ltd.) to
SREI Infrastructure Finance Limited in the Corporate Insolvency Resolution
Process of Assam Company India Limited.
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 84 of 87
146. The resolution plan of Zaveri & Co. Pvt. Ltd., as approved, stands set
aside and shall not be implemented further. Any steps already taken in
implementation shall abide by the directions herein, and the Resolution
Professional/CoC, as reconstituted pursuant to the directions below, shall
take an account of any part-implementation and payments made, for
adjustment in the fresh process.
147. The Adjudicating Authority/Resolution Professional shall recommence
the Corporate Insolvency Resolution Process of the Corporate Debtor from the
stage of issuance of a fresh Form G / invitation of Expression of Interest, on
the basis of a corrected and complete Information Memorandum, which shall,
without limitation:
i. correctly and completely disclose the status of the Demised
Premises as SEZ-notified land, the precise stage and status
of any de-notification correspondence or proceedings with
GIDC and the office of the Development Commissioner,
and the requirement of GIDC's prior consent under Clause
3.3(v) of the Lease Deed for any change in the nature of
use, so that all prospective resolution applicants compete
on an equal informational footing;
ii. reflect the claim of SREI Infrastructure Finance Limited
computed on the basis of the finally adjudicated figure of
₹ 241.27 crore (as fixed by the NCLT, Guwahati Bench by
order dated 23.07.2018 and affirmed by this Tribunal on
01.02.2019), net of the sum of ₹ 38.87 crore already
recovered by SREI in the corporate insolvency resolution
process of Assam Company India Limited, subject to
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 85 of 87
independent verification by the newly engaged Resolution
Professional; and
iii. reflect Assam Company India Limited as a secured
financial creditor of the Corporate Debtor to the extent of
₹ 38.87 crore, ranking pari passu with other secured
financial creditors to that extent.
148. The Adjudicating Authority shall, within two weeks of this order, issue
fresh orders and appoint a new Resolution Professional to carry the process
forward in terms of this judgment.
149. The period from the date of admission of the Corporate Debtor into CIRP
(18.11.2020) until the date of this judgment shall stand excluded for the
purpose of computing the timelines under Section 12 of the Code, and the
CIRP shall proceed afresh from the stage directed above within the timelines
prescribed by the Code and the Regulations framed thereunder, computed
from the date of this order.
150. Status quo with respect to title, possession and use of the Demised
Premises, as it stood immediately prior to the resolution plan's
implementation, shall be maintained until the Committee of Creditors is
reconstituted and appropriate directions are obtained from the Adjudicating
Authority.
151. It is clarified, for the avoidance of doubt, that our findings on the lease
termination, the SRA's affidavit dated 20.05.2022, and the sole-CoC-member
ground are affirmed against GIDC and do not survive as independent
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grounds; they are recorded here only for completeness and do not detract from
the relief granted on the grounds set out at above.
152. All IAs stand disposed of as per this order. Parties shall bear their own
costs.
[Justice N. Seshasayee]
Member (Judicial)
[Arun Baroka]
Member (Technical)
New Delhi.
August 31, 2026.
pawan
Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 87 of 87