NCLAT Upholds Resolution Plan Providing Contingencies being lawful [Read Order]

The National Company Law Appellate Tribunal (NCLAT) has upheld the resolution plan providing contingencies being lawful. It was found that the plan complied with the CIRP Regulations, 2016, and Section 30(2)(b) of the IBC.

Anuj Gaur & Ors., the suspended director of Som Resorts Pvt Ltd. filed the appeal. The corporate debtor company started a Project at ML – 1/9, Sector 9, Vasundhara Ghaziabad. Land of said Project has been allotted by UP Housing and Development Board (Uttar Pradesh Awas Evam Vikas Parishad).

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The project was closed by the UP Awas Evam Vikas Parishad because the entrepreneurs had not followed the approved building design. 26 homebuyers then submitted an application under section 7 of the Insolvency and Bankruptcy Code, 2016, which was accepted by the adjudicating authority on August 2, 2022, and Mr. Sumit Shukla was designated as the Interim Resolution Professional (IRP).

A revised 'Form G' was released following several CoC sessions and the election of Mr. Rabindra Kumar Mintri to replace the IRP. One of the resolution applicants was the homebuyers' association Casa Italia Social Welfare Association, which filed a resolution plan. With 100% of the CoC voting in favor, this plan was adopted in an electronic vote conducted from April 12–14, 2023.

On April 19, 2023, the RP submitted a plan approval request. After eight months, the appellant (suspended director) submitted objections via I.A. No. 459/2024. The resolution plan was authorized by the adjudicating authority on August 3, 2024, after the appellant's objections were dismissed. With the current appeals, the appellant has now contested this ruling.

According to the appellant, the Corporate Insolvency Resolution Process (CIRP) was carried out against the 2016 CIRP Regulations and the IBC. A conflict of interest arose when the CoC, which was made up entirely of homeowners, filed and approved a resolution plan through Casa Italia, their own association. More practical plans were allegedly disregarded, eligibility requirements were loosened in favor of the homebuyers' organization, and the Adjudicating Authority neglected to examine the plan as required by the Code.

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Furthermore, it was argued that the SRA had actually submitted more than four alternative plans under the pretense of a single settlement plan. The plan, which provides no practical solution, was approved by the adjudicating authorities. In response, the Respondent argued that the appellant lacked standing to contest the CoC-approved resolution plan since he was a suspended director. A new 'Form-G' was released with updated eligibility requirements after the CoC's judgment on 23.12.2022, enabling participation by homeowners' organizations with a net worth of ₹90 lakhs. This condition was satisfied by Respondent No. 2. Additionally, the RP blamed the project's closure on unlawful construction carried out by the appellant's suspended management.

Additionally, it was argued that the homebuyers were perfectly qualified to submit a resolution plan and that they, through their association, had a sincere interest in finishing the project that had stopped. The strategy suggested four workable ways to resume development with the required approvals in light of the problem of illegal construction.

Furthermore, it was argued that the appellant, a suspended director, had not previously protested the eligibility requirements or attended CoC meetings. His concerns, which were made more than eight months after the resolution plan was approved, are viewed as a last-minute attempt to postpone the CIRP.

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The New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that, resolution applicants had to have a minimum net worth of ₹90 lakhs in accordance with the eligibility requirements adopted at the fifth CoC meeting. With a net value of 93 lakhs, respondent No. 2, Casa Italia Social Welfare Association, satisfied the requirements. Consequently, it is unfounded for the appellant to assert that Respondent No. 2 was ineligible.

The tribunal found that the plan includes four alternative options to resume construction, all subject to approval by the competent authority—the Board. These options are not uncertainties but lawful contingencies designed to ensure compliance with building norms.

While dismissing the appeal, the tribunal held that the order dated 03.12.2024 rejecting I.A. 459/2025 is legally sound. The Adjudicating Authority thoroughly considered all relevant aspects, including the financial structure and the four contingencies in the resolution plan. It found that the plan complied with the CIRP Regulations, 2016, and Section 30(2)(b) of the IBC. Upon being satisfied that the plan met all statutory requirements, the Authority approved it by the same order.

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