National Company Law Appellate Tribunal
Rare Asset Reconstruction Limited & Anr vs Rohit Mehra & Ors on 25 September, 2025
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Ins.) No. 1670- 1672 of 2024
IN THE MATTER OF:
Committee of Creditors of Rajesh Business and ...Appellant
Leisure Hotels Pvt. Ltd. Through its Member, ICICI
Bank Ltd.
Versus
1. Rajesh Business and Leisure Hotels Pvt. Ltd. ....Respondent No.1
Through Its Resolution Professional Mr. Rohit
Mehra
2. Sankalp Recreation Pvt Ltd ....Respondent No.2
3. Rajesh Patel ....Respondent No.3
4. Harish Patel ....Respondent No.4
5. Priyal Patel ....Respondent No.5
6. Rajesh Hospitality Pvt Ltd ....Respondent No.6
7. Rajesh Lifespaces Pvt Ltd ....Respondent No.7
8. Rajesh Investments ....Respondent No.8
9. Rare Asset Reconstruction Limited ....Respondent No.9
10. Check-Inn Hotels Pvt Ltd ....Respondent No.10
Present:
For Appellant : Mr. Sunil Fernandes, Sr. Advocate, Mr. Abhirup
Dasgupta, Ms. Ishaan Duggal, Ms. Ruchi Goyal,
Advocates.
For Respondents : Mr. Arun Kathpalia, Sr. Advocate, Ms. Shweta Dubey,
Ms. Kanishka Prasad, Advocates for R-1.
Mr. Kartikey Bhatt and Mr. Akshay Luthra, Advocates
for R-2.
Mr. Krishnendu Datta, Sr. Advocate, Mr. Chitranshul
A. Sinha, Mr. Sagar Bansal, Ms. Ayushi Bansal,
Mr. Shivam Shorewala, Ms. Rakshita Bhargava,
Advocates for R- 9 & 10.
Cont'd..../
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Mr. Rohit Gupta, Ms. Aakashi Lodha, Ms. Nishtha
Jindal, Advocates for R-3 to 8.
With
Company Appeal (AT) (Ins.) No. 1675- 1677 of 2024
IN THE MATTER OF:
1. Rare Asset Reconstruction Ltd. ...Appellant No.1
2. Check-Inn Hotel Private Limited ...Appellant No.2
Versus
1. Rohit Ramesh Mehra, ....Respondent No.1
Resolution Professional of Rajesh Business and
Leisure Hotels Private Limited
2. The Committee of Creditors of Rajesh Business ....Respondent No.2
and Leisure Hotels Private Limited Through ICICI
Bank Limited
3. Sankalp Recreation Private Limited ....Respondent No.3
4. Rajesh Patel ....Respondent No.4
5. Harish Patel ....Respondent No.5
6. Priyal Patel ....Respondent No.6
7. Rajesh Hospitality Private Limited ....Respondent No.7
8. Rajesh Lifespaces Private Limited ....Respondent No.8
9. Rajesh Investments ....Respondent No.9
Present:
For Appellant : Mr. Krishnendu Datta, Sr. Advocate, Mr. Chitranshul
A. Sinha, Mr. Sagar Bansal, Ms. Ayushi Bansal,
Mr. Shivam Shorewala, Ms. Rakshita Bhargava,
Advocates.
For Respondents : Mr. Abhirup Dasgupta, Ms. Ishaan Duggal, Ms. Ruchi
Goyal, Advocates for CoC/R-2.
Mr. Kartikey Bhatt and Mr. Akshay Luthra, Advocates
for R-3.
Mr. Arun Kathpalia, Sr. Advocate, Ms. Shweta Dubey,
Ms. Kanishka Prasad, Advocates for R-1.
Mr. Rohit Gupta, Ms. Aakashi Lodha, Ms. Nishtha
Jindal, Advocates for R-4 to 9.
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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With
Company Appeal (AT) (Ins.) No. 1780 - 1782 of 2024
IN THE MATTER OF:
Rajesh Business and Leisure
Hotels Pvt. Ltd. ....Appellant
Through its Resolution Professional Rohit Mehra
Versus
1. Rajesh Patel ....Respondent No.1
2. Harish Patel ....Respondent No.2
3. Priyal Patel ....Respondent No.3
4. Rajesh Hospitality Pvt. Ltd. ....Respondent No.4
5. Rajesh Lifespaces Pvt. Ltd. ....Respondent No.5
6. Rajesh Investments ....Respondent No.6
7. Sankalp Recreation Pvt. Ltd. (unsuccessful ....Respondent No.7
resolution applicant)
8. Committee of Creditors of Rajesh Business and ....Respondent No.8
Leisure Hotels Pvt. Ltd.
through ICICI Bank Ltd. (Lead Bank)
9. Rare Asset Reconstruction Ltd. ....Respondent No.9
10. Check-Inn Hotels Pvt. Ltd. ....Respondent No.10
Present:
For Appellant: Mr. Arun Kathpalia, Sr. Advocate, Ms. Shweta Dubey and
Ms. Kanishka Prasad, Advocates.
For Respondents: Mr. Krishnendu Datta, Sr. Advocate, Mr. Chitranshul A.
Sinha, Mr. Sagar Bansal, Ms. Ayushi Bansal, Mr. Shivam
Shorewala and Ms. Rakshita Bhargava, Advocates for
R- 9, 10.
Mr. Abhirup Das Gupta, Mr. Ishaan Duggal and Ms. Ruchi
Goyal, Advocates for R-8/CoC.
Mr. Rohit Gupta, Ms. Aakashi Lodha and Ms. Nishtha
Jindal, Advocates for R-1 to R-6.
Mr. Kartikey Bhatt and Mr. Akshay Luthra, Advocates
for R-7.
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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J U D G M EN T
(25th September, 2025)
INDEVAR PANDEY, MEMBER (T)
The present set of appeals arise from the order dated 10.07.2024
passed by the National Company Law Tribunal, Mumbai Bench-II
(Adjudicating Authority), in I.A. No. 1085 of 2023; I.A. No. 1466 of 2023; and
I.A. No. 1478 of 2023 in CP (IB) 1171/MB/2021. By the said order, the
Adjudicating Authority rejected the application filed by the Shri Rohit Mehra,
Resolution Professional of Rajesh Business and Leisure Hotels Pvt. Ltd.
(Corporate Debtor) seeking approval of the Resolution Plan under Section
30(6) read with Section 31(1) of the Insolvency and Bankruptcy Code, 2016
(hereinafter the 'Code') and partly allowed the applications filed by the
unsuccessful resolution applicant and the suspended board of
directors/promoters of the Corporate Debtor. Aggrieved by the rejection of
the Resolution Plan and the observations regarding alleged irregularities in
the Corporate Insolvency Resolution Process ("CIRP"), these appeals have
been filed by the Committee of Creditors (CoC) through its lead member ICICI
Bank; Resolution Applicants Rare Asset Reconstruction Ltd. and Check Inn
Hotels Pvt. Ltd., whose plan was approved by the CoC; and Resolution
Professional Shri Rohit Mehra on behalf of the CD under Section 61(1) of the
Code.
2. I.A. No. 1085 of 2023 was filed on 12.03.2023 by the Resolution
Professional (RP) under Section 31 of the Code seeking approval of Resolution
Plan of Corporate Debtor (CD)/ Rajesh Business and Leisure Hotels Pvt. Ltd.
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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IA No. 1466 of 2023 was filed on 11.04.2023 by Sankalp Recreation Private
Ltd., the Resolution Applicant, whose plan was rejected. He was opposing
the approval of the Resolution plan submitted by the consortium of Rare
Asset Reconstruction Ltd. and Check Inn Hotels Pvt. Ltd. on the grounds
that there have been material irregularities in conduct of the CIRP. IA No.
1478 of 2023 was filed on 18.04.2023 by Sh. Rajesh Patel and 5 others, who
were the original promoters, directors and shareholders of the Corporate
Debtor. They were also Financial Creditors of the Corporate Debtor. They
filed the application challenging the proposal for approval of Resolution Plan
submitted by RP on the grounds of material irregularity.
3. We may at this stage note that there are three sets of connected
appeals before us, viz., Company Appeal (AT) (Insolvency) No. 1670-1672 of
2024 filed by the Committee of Creditors; Company Appeal (AT) (Insolvency)
No. 1675-1677 of 2024 filed by Rare Asset Reconstruction Ltd. and Check-
Inn Hotels Pvt. Ltd., and Company Appeal (AT) (Insolvency) No. 1780-1782
of 2024 filed by the Resolution Professional on behalf of the CD. All three
appeals arise from the common impugned order dated 10.07.2024 passed by
the Adjudicating Authority (NCLT, Mumbai Bench-II). For convenience of
reference, we treat Company Appeal (AT) (Insolvency) No. 1670-1672 of 2024,
filed by the Committee of Creditors, as the lead matter as all three seek the
same relief viz setting aside of the impugned order and approval of Resolution
plan approved by the CoC.
Brief facts of the case (Comp. App. (AT) (Ins.) No. 1780 of 2024):
4. The brief facts of the case are as follows:
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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i. ICICI Bank Ltd. (Financial Creditor) filed Company Petition (IB) No.
1171/MB/2021 before the Adjudicating Authority under Section 7 of
the Insolvency and Bankruptcy Code, 2016 against Rajesh Business
and Leisure Hotels Pvt. Ltd. (Corporate Debtor). The petition for
initiating Corporate Insolvency Resolution Process (CIRP) was
admitted on 20.04.2022, and Mr. Rohit Mehra was appointed as
Interim Resolution Professional (IRP). He was subsequently
confirmed as the Resolution Professional (RP) in the 1st CoC meeting
held on 20.05.2022.
ii. The Committee of Creditors (CoC) of the Corporate Debtor was
constituted on 11.05.2022, with the following voting shares: ICICI
Bank - 53.37%, Union Bank of India - 20.61%, and Bank of Baroda
- 26.02%. In total, 14 CoC meetings were held during the CIRP till
approval of the Resolution Plan.
iii. The RP invited Expression of Interest (EOI) for resolution of CD and
the revised Form-G was published on 22.07.2022. Vide the said
revised Form G, the last date for submission of EOIs was extended
to 02.08.2022 and that of Resolution Plans to 16.09.2022. A
provisional list of Prospective Resolution Applicants (PRAs) was
published on 12.08.2022.
iv. In the 5th CoC meeting held on 12.08.2022, the CoC approved
issuance of the Request for Resolution Plan (RFRP) and the
Evaluation Matrix, both issued by the RP on 17.08.2022. The RFRP
allowed PRAs to form consortiums after submission of EOIs.
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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v. The final list of PRAs was released on 27.08.2022, which included
Rare Asset Reconstruction Ltd. and Shree Naman Developers Pvt.
Ltd.
vi. By the last date for submission of resolution plans i.e., 25.11.2022,
six Resolution Applicants (RAs) submitted their plans. In the 9th CoC
meeting held on 28.11.2022, the RP apprised members that six plans
had been received. These were opened, discussed, and placed before
the CoC.
vii. Copies of the resolution plans were provided to the suspended
directors (Respondents No. 1 to 3) on 20.12.2022.
viii. On 09.02.2023, in the 13th CoC meeting, a challenge process was
conducted between the RAs. It lasted 13 rounds late into the night,
and only one RA remained at the end.
ix. The RP issued notice for the 14th CoC meeting on 22.02.2023. In the
meeting held on 24.02.2023, revised plans were presented and
discussed in detail with CoC members and the suspended directors.
Clarifications were also given on issues such as induction of
consortium members.
x. On 27.02.2023, copies of the revised plans were supplied to the
suspended directors.
xi. E-voting on the resolution plans commenced on 01.03.2023 and
concluded on 10.03.2023. The plan of Rare Asset Reconstruction Ltd.
(Respondent No. 9) in consortium with Check-Inn Hotels Pvt. Ltd.
(Respondent No. 10) was approved with 100% CoC voting share.
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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xii. The RP thereafter filed I.A. No. 1085 of 2023 seeking approval of the
Resolution Plan under Section 30(6) read with Section 31(1) of the
Code.
xiii. The RP on 15.03.2023, informed Respondent No. 2 (Sankalp
Recreation Pvt. Ltd.) that its plan had not been approved, and refund
of the bid bond deposit of ₹5 crores would be processed. On
18.03.2023, the bid bond deposit of ₹5 crores was refunded and
accepted by Respondent No. 2.
xiv. On 12.04.2023, Respondent No. 2/ Sankalp Recreation Pvt. Ltd. filed
I.A. No. 1466 of 2023 before NCLT objecting to approval of the
Resolution Plan.
xv. Respondents No. 3 to 8 (Rajesh Patel & Ors. - suspended
board/promoters) also filed I.A. No. 1478 of 2023 on 18.04.2023
objecting to the Resolution Plan.
xvi. After hearing all sides, the NCLT by its Impugned Order dated
10.07.2024 rejected I.A. No. 1085 of 2023 and partly allowed I.A. Nos.
1466 and 1478. The Tribunal held that:
a) The Resolution Plan did not meet requirements of Section 30(2) of
the Code read with Regulations 36A and 39 of the CIRP
Regulations.
b) There was material irregularity in non-furnishing of the
Resolution Plan to the erstwhile directors.
xvii. Accordingly, these sets of appeals have been filed by the Committee
of Creditors; the selected Resolution Applicant and the RP under
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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Section 61(1) of the Code before this Tribunal, challenging rejection
of the approved Resolution Plan and the findings of irregularity.
Submissions of the Appellant - Committee of Creditors (CoC)
5. Sh. Sunil Fernandes, Ld. Sr. Counsel for the Appellant gave a brief
background and stated that Company Appeal (AT)(INS) Nos. 1670-1672 of
2024 have been preferred by the Committee of Creditors of Rajesh Business
and Leisure Hotels Pvt. Ltd. through its member ICICI Bank Ltd. Learned
Counsel points out that in addition to the present appeals, Comp App
(AT)(INS) Nos. 1675-1677 of 2024 have been filed by Rare Asset
Reconstruction Limited and Check-Inn Hotels Private Limited, who form the
Successful Resolution Applicant ("SRA"/Consortium of Rare and Check-Inn).
Further, Comp App (AT)(INS) Nos. 1780-1782 of 2024 have been filed by the
Resolution Professional of the Corporate Debtor. All these appeals arise out
of a common order dated 10.07.2024 ("Impugned Order") passed by the
Learned Adjudicating Authority (NCLT, Mumbai). By the said Impugned
Order, (a) IA No. 1085 of 2023 filed by the Resolution Professional seeking
approval of the Resolution Plan was dismissed, (b) IA No. 1466 of 2023 filed
by Sankalp Recreation Private Limited, an unsuccessful Resolution
Applicant, was partially allowed, and (c) IA No. 1478 of 2023 filed by the
suspended directors and related party Financial Creditors was also partially
allowed.
6. Ld. Sr. Counsel for the Appellant further submits that the objections
earlier raised by the suspended directors have since been withdrawn, and
this fact has been duly recorded by this Hon'ble Tribunal on 08.09.2025.
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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Accordingly, the Appellant confines its present submissions to two aspects
only: first, the validity of the Resolution Plan approved by the CoC with 100%
voting share, and second, the legality of the objections raised by the
unsuccessful Resolution Applicant, Sankalp Recreation Private Limited, in
IA No. 1466 of 2023.
7. During the CIRP process of the CD, the RP appointed two registered
valuers to determine the Fair Value and Liquidation Value of the Corporate
Debtor. On 20.04.2022, the Fair Value was determined at INR 429.09 crores
and the Liquidation Value at INR 277.09 crores.
8. Learned Sr. Counsel submits that on 29.06.2022, an Invitation for
Expression of Interest was published, containing Clause 8.10 which
categorically stipulated that no change of Lead Member would be permitted
post submission of EOI except with CoC's approval. Thereafter, on
18.07.2022, in the 4th CoC meeting, the RP obtained approval for
publication of revised Form G and extension of EOI timelines. Pursuant
thereto, on 22.07.2022, the revised Form G was issued fixing 02.08.2022 as
the last date for submission of EOI and 16.09.2022 as the last date for
submission of resolution plans.
9. Learned Counsel further submits that on 12.08.2022, the provisional
list of Prospective Resolution Applicants (PRA) was published which included
Rare ARC at Serial No. 15 and Shree Naman Developers Pvt. Ltd. at Serial
No. 22. On the same date, in the 5th CoC meeting, the issuance of RFRP and
Evaluation Matrix was approved, and on 17.08.2022, the RP duly issued the
same. Thereafter, on 27.08.2022, the final list of PRAs was published
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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containing Rare ARC at Serial No. 15 and Shree Naman Developers Pvt. Ltd.
at Serial No. 21.
10. Learned Sr. Counsel points out that on 12.09.2022, in the 6th CoC
meeting, timelines for submission of plans were extended till 17.10.2022. On
11.10.2022, the Adjudicating Authority further extended the CIRP period by
90 days from 17.10.2022. Rare ARC submitted its original Resolution Plan
on 25.11.2022. On 28.11.2022, in the 9th CoC meeting, it was recorded that
6 PRAs had submitted resolution plans.
11. Learned Sr. Counsel states that in the 10th CoC meeting held on
16.12.2022, the RP apprised members about the need for further extension
and presented details of all resolution applicants. On 20.12.2022, the
original plan of Rare ARC was shared with ex-promoters. On 23.12.2022, in
the 11th CoC meeting, resolution applicants gave presentations. On
04.01.2023, the Adjudicating Authority further extended the CIRP period by
60 days till 16.03.2023. On 09.02.2023, a Challenge Process was conducted.
12. Learned Sr. Counsel highlights that on 17.02.2023, Rare ARC entered
into a consortium agreement with Check-Inn Hotels Pvt. Ltd. (a wholly owned
subsidiary/SPV of Shree Naman Developers Pvt. Ltd., already in the final list
of PRAs). On the same day, the revised Resolution Plan was submitted
identifying Check-Inn as the strategic investor. On 24.02.2023, in the 14th
CoC meeting, all plans were discussed, and the consortium plan was
approved for voting.
13. Learned Sr. Counsel further submits that on 27.02.2023, Sankalp
attempted to enhance its offer by email; however, this was after conclusion
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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of the challenge process where the Rare ARC was the winner. The revised
plans were shared with ex-promoters, and during voting between 01.03.2023
to 10.03.2023, the consortium of Rare and Check-Inn secured unanimous
100% approval. Accordingly, on 10.03.2023, Letter of Intent was issued and
PBG of INR 30 crores was furnished by the Rare Consortium.
14. Learned Sr. Counsel submits that on 12.03.2023, IA No. 1085 of 2023
was filed by the RP for approval of the plan. Thereafter, Sankalp vide email
dated 14.03.2023 sought refund of its Bid Bond deposit of INR 5 crores,
which was returned on 18.03.2023. Despite this, Sankalp filed IA No. 1466
of 2023 on 12.04.2023 challenging the approved plan. Ex-promoters also
filed IA No. 1478 of 2023 on 18.04.2023.
15. Learned Counsel for the Appellant submits that Rare ARC's original
plan had contemplated the presence of a strategic investor for implementing
the plan, except acquisition of debt. This structure is commonplace and
compliant with the Code. On 14.12.2022, the CoC directed Rare ARC to
specifically identify the strategic investor. Consequently, in its revised plan
dated 17.02.2023, Rare ARC identified Check-Inn Hotels Pvt. Ltd., a wholly
owned subsidiary of Shree Naman Developers (which was itself in the final
list of PRAs). Check-Inn was introduced as a strategic investor to carry out
functions that an ARC cannot perform under law. The consortium agreement
expressly recorded Rare ARC as Lead Member and Check-Inn as Strategic
Investor.
16. Learned Sr. Counsel submits that this plan was duly approved by the
CoC with 100% votes in its 14th meeting, in exercise of its commercial
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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wisdom, consistent with Clause 15(1)(xi) of RFRP and supported by
precedents such as Kalpraj Dharamshi v. Kotak Investment Advisories Ltd.
(2021) 10 SCC 401 and Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta
(2019) 2 SCC 1.
17. Learned Sr. Counsel further submits that Clause 15(1)(xi) of RFRP
specifically permits PRAs to combine their plans and form a consortium.
Therefore, the consortium of Rare ARC with Check-Inn Hotels was validly
constituted and approved, and there was no violation of Regulation 36A or
39(1B) of the CIRP Regulations.
18. Learned Sr. Counsel stresses that the final list of PRAs included Rare
ARC and Shree Naman Developers Pvt. Ltd. Check-Inn being an SPV of Shree
Naman must be considered part of the same economic entity, as recognized
in Titagarh Firema Adler S.P.A. v. NMRCL (2017) 7 SCC 486 and CRRC
Corporation v. Metro Link Express (2017) 8 SCC 282.
19. Learned Sr. Counsel lastly submits that no objection was ever raised
when a plan of Rockwood Hotels was considered with Artek Surfin Chemicals
Ltd., even though ROI was filed only by Rockwood.
20. Learned Sr. Counsel for the Appellant submits that law is well-settled
that an unsuccessful resolution applicant has no vested right to approval of
its plan and cannot question the commercial wisdom of the CoC. Such an
entity is not an "aggrieved person" under Section 61. Reliance is placed on
Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1, M.K.
Rajagopalan v. S. Rajendran, RP, Vasan Healthcare Pvt. Ltd. (2023 SCC
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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OnLine NCLAT 8390), and Sarda Energy and Mineral Ltd. v. Ashish
Arjunkumar Rathi (CA(AT)(Ins) No. 1395-1397 of 2023).
21. Learned Counsel further submits that Sankalp itself sought refund of
its bid bond on 14.03.2023 and received the refund on 18.03.2023, thereby
acknowledging that it was no longer in contention. Having accepted the
refund, Sankalp was estopped from raising any subsequent objection. Its
challenge through IA 1466 of 2023 is thus devoid of locus and is not
maintainable.
22. In light of the above, Learned Counsel for the Appellant respectfully
prays that this Tribunal may be pleased to:
Set aside the Impugned Order dated 10.07.2024 passed by the Ld.
NCLT, Mumbai; and
Approve the Resolution Plan submitted by the Consortium of Rare ARC
Ltd. and Check-Inn Hotels Pvt. Ltd., as the same has been
unanimously approved by 100% CoC voting share and suffers from no
infirmity.
Submissions of the Appellant - Rare Asset
23. Sh. Krishnendu Datta, Ld. Sr. Counsel for the Appellant submits that
the Learned Adjudicating Authority has erred in holding that the Appellant
was disqualified under Section 29A of the Insolvency and Bankruptcy Code,
2016 ("IBC"). It is specifically contended that the Appellant, Rare Asset
Reconstruction Limited, is a duly registered Asset Reconstruction Company
under the SARFAESI Act and is in the business of acquiring non-performing
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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assets. By its very nature, the business of an ARC involves acquisition of
stressed assets, and therefore, the mere fact of such acquisition cannot
render the Appellant ineligible. The Hon'ble Supreme Court, in ArcelorMittal
India Pvt. Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1, has clarified that
eligibility under Section 29A must be tested strictly against the statutory
parameters and cannot be presumed. The Appellant meets all statutory
requirements, and the conclusion of ineligibility is not only erroneous but
contrary to law.
24. Ld. Sr. Counsel further submitted that the finding of the Learned
Adjudicating Authority alleging collusion between the Appellant and the
erstwhile promoters of the Corporate Debtor is wholly unfounded. No
material evidence was placed on record to substantiate such an allegation.
The Appellant has acted strictly in accordance with law and has no
relationship whatsoever with the promoters of Corporate Debtor. The
Appellant's resolution plan was framed after due diligence and in compliance
with all regulatory requirements. It is a settled principle, as reiterated by the
Hon'ble Supreme Court in Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4
SCC 17, that resolution applicants must be encouraged in order to ensure
revival of the corporate debtor, and speculative allegations of collusion
without proof ought not to be a ground to disqualify a bona fide applicant.
25. Ld. Sr. Counsel further submits that the Learned Adjudicating
Authority exceeded its jurisdiction by disregarding the considered
commercial wisdom of the Committee of Creditors ("CoC"). The resolution
plan of the Appellant Consortium was approved by 100% voting of the CoC,
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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after due deliberations spread across several meetings. It is now well-settled
by the Hon'ble Supreme Court in K. Sashidhar v. Indian Overseas Bank
(2019) 12 SCC 150 and in Committee of Creditors of Essar Steel India Ltd. v.
Satish Kumar Gupta (2019) 16 SCC 479, that the Adjudicating Authority's
jurisdiction under Section 31 is confined to a limited review of compliance
under Section 30(2) of the IBC. By sitting in appeal over the CoC's decision,
the Adjudicating Authority has undermined the statutory scheme and the
settled principle that the CoC is best placed to evaluate feasibility and
viability.
26. Ld. Sr. Counsel respectfully contends that the Adjudicating Authority
misapplied Regulation 38 by holding that the Appellant's plan failed to
adequately provide for operational creditors. In reality, the resolution plan
makes explicit provision for operational creditors, ensuring they are paid in
priority to financial creditors in accordance with Section 30(2)(b) of the IBC.
The plan also guarantees that operational creditors receive at least the
liquidation value, which is the statutory minimum requirement. Beyond this
minimum threshold, the distribution mechanism falls entirely within the
CoC's domain, as held in Essar Steel (supra). Therefore, the finding of non-
compliance with Regulation 38 is factually and legally erroneous.
27. Ld. Sr. Counsel further submits that the Learned Adjudicating
Authority committed a grave error by entertaining and relying upon
objections raised by unsuccessful resolution applicant, such as Sankalp
Recreation Pvt. Ltd. The law is settled that once the CoC has approved a
resolution plan, unsuccessful applicants have no locus standi to question
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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that decision. This has been affirmed by the Hon'ble Supreme Court in
ArcelorMittal (supra) and in Maharashtra Seamless Ltd. v. Padmanabhan
Venkatesh (2020) 11 SCC 467. The Adjudicating Authority's reliance on such
objections is in direct contravention of settled jurisprudence, thereby
vitiating the impugned order.
28. The Appellant's counsel submits that the Learned Adjudicating
Authority wrongly concluded that the Appellant's resolution plan lacked
feasibility and viability. This conclusion disregards the fact that the plan was
proposed by a consortium of Rare Asset Reconstruction Limited and Check-
Inn Hotels Pvt. Ltd., both entities with proven financial capability and
experience in the hospitality and asset reconstruction sectors. The plan was
supported by performance guarantees, carefully structured financing, and
fully in compliance with regulatory requirements. The CoC, consisting of
leading financial institutions such as ICICI Bank, Union Bank, and Bank of
Baroda, after thorough scrutiny, expressed satisfaction as to the feasibility
and viability of the plan. The Adjudicating Authority therefore had no
jurisdiction to substitute its own assessment for that of the CoC.
29. Ld. Sr. Counsel argued that the finding that the Appellant's resolution
plan contravened existing law under Section 30(2)(e) of the IBC is wholly
baseless. The plan was framed in strict conformity with applicable legal
provisions and was certified as compliant by the Resolution Professional.
Neither the Resolution Professional nor the CoC found any contravention of
law, and the Adjudicating Authority has not identified any specific legal
provision that is allegedly breached. Vague and general observations cannot
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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form the basis of rejecting a duly approved plan. Thus, the finding under
Section 30(2)(e) is unsustainable.
30. Finally, Ld. Sr. Counsel submitted that the impugned order is contrary
to the binding precedents of the Hon'ble Supreme Court, particularly K.
Sashidhar (supra), Essar Steel (supra), and ArcelorMittal (supra). Each of
these judgments restricts the jurisdiction of the Adjudicating Authority to
verifying compliance with Section 30(2), and prohibits interference with the
CoC's commercial decision. By overruling the CoC's decision and
entertaining extraneous objections, the Adjudicating Authority has acted in
violation of binding law. The impugned order, therefore, deserves to be set
aside in its entirety.
Submission of the Appellant - Resolution Professional
31. Sh. Arun Kathpalia, Learned Sr. Counsel for the Appellant, Rajesh
Business and Leisure Hotels Pvt. Ltd., through its Resolution Professional,
most respectfully submits that the impugned order dated 10.07.2024 passed
by the Learned Adjudicating Authority, NCLT Mumbai Bench-II, suffers from
material errors of law and fact. The order has failed to appreciate the correct
legal position under the Code as well as the CIRP Regulations.
32. The Learned Sr. Counsel for the Appellant submits, on the first issue
concerning the alleged violation of Section 30(2) of the Code and Regulations
36A and 39(1B) of the CIRP Regulations, that the Adjudicating Authority
erred in holding that the Resolution Plan submitted by RARE ARC in
consortium with Check-Inn Hotels Pvt. Ltd. contravenes statutory
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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provisions. It is submitted that every requirement of law was complied with:
the Resolution Plan was vetted by the Resolution Professional under Section
30(2), circulated to the CoC, and thereafter approved by the CoC with 100%
voting share, the highest possible mandate under the Code. The Counsel
further submits that the finding of violation of Regulation 36A is unfounded,
as the Revised Form-G was duly published on 22.07.2022 inviting EOIs in a
transparent manner, and a provisional and final list of PRAs was prepared,
which included both RARE ARC and Shree Naman Developers. With regard
to Regulation 39(1B), the Counsel submits that the challenge mechanism
was duly held on 09.02.2023 in the 13th CoC meeting, which ran through 13
rounds of bidding until only one Resolution Applicant remained. Thus, the
process was conducted in full compliance with the regulation.
33. The Learned Sr. Counsel for the Appellant further submits, on the
issue of alleged "ineligibility" of RARE ARC under Section 29A, that such a
finding is erroneous in law. RARE ARC is a regulated Asset Reconstruction
Company registered under Section 3 of the SARFAESI Act, 2002, and is
expressly permitted under the Code and RBI Guidelines to participate in the
CIRP, either independently or in consortium. It is pointed out that Section
29A eligibility checks and CIBIL verifications were carried out at the PRA
stage, and documents annexed at Annexure A-12 of the Appeal confirm that
neither RARE ARC nor its consortium partner is disqualified. The Counsel
submits that the Adjudicating Authority disregarded these statutory checks
and presumed ineligibility without evidence, rendering the finding perverse
in law.
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34. The Learned Sr. Counsel for the Appellant also submits, with respect
to the alleged "material irregularity" of not furnishing the Resolution Plan to
the suspended Board of Directors, that the finding of the Adjudicating
Authority is contrary to record. The Counsel relies on evidence to
demonstrate that on 20.12.2022, copies of resolution plans were supplied to
Respondents No.3 to 5 (erstwhile directors), and on 27.02.2023, revised
resolution plans were again provided. Further, notices of CoC meetings,
including the 14th CoC meeting, were duly served. Thus, there is no
irregularity, as the suspended directors were at all times informed and in
receipt of draft as well as revised plans. The Counsel submits that the
Adjudicating Authority failed to consider this documentary evidence.
35. The Learned Sr. Counsel for the Appellant further submits, on the
sanctity of the commercial wisdom of the CoC, that the law is settled by the
Hon'ble Supreme Court in K. Sashidhar v. Indian Overseas Bank (2019) 12
SCC 150 and Essar Steel (2019) 16 SCC 479, wherein it is held that the
Adjudicating Authority cannot substitute or sit in appeal over the
commercial wisdom of the CoC once compliance with Section 30(2) is shown.
In the instant case, the plan was approved with 100% voting share, reflecting
complete consensus of the financial creditors. The Counsel submits that by
rejecting such a unanimously approved plan, the Adjudicating Authority has
exceeded its jurisdiction under Section 31.
36. The Learned Sr. Counsel for the RP also submits that the direction of
the Adjudicating Authority to re-run the CIRP is wholly unsustainable. It is
urged that such a direction amounts to reopening the process after
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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completion of the challenge mechanism, evaluation of plans, and unanimous
approval by the CoC. This undermines the finality of the process, defeats the
time-bound objective of the Code under Section 12, and causes irreparable
prejudice to both creditors and the Corporate Debtor. The Counsel further
submits that the order grants an unintended advantage to the unsuccessful
Resolution Applicant (Respondent No. 2), who is being allowed a second
opportunity despite having lost in a transparent and fair challenge process.
37. The Learned Counsel for the Appellant finally submits that the
impugned order has caused serious prejudice to the stakeholders. The CoC
has already approved a viable and feasible plan, and prolongation of the CIRP
will only deplete the value of assets, escalate CIRP costs, and jeopardise the
revival prospects of the Corporate Debtor. The Counsel submits that the
CIRP has been conducted in a transparent, lawful, and time-bound manner,
in strict conformity with the Code and Regulations, and that no irregularity
has occurred warranting rejection of the Resolution Plan.
38. In light of the above submissions, the Learned Counsel for the
Appellant most respectfully prays that this Hon'ble Tribunal may be pleased
to:
a) set aside the impugned order dated 10.07.2024 passed by the Learned
Adjudicating Authority, NCLT Mumbai Bench-II in I.A. No. 1085 of
2023, I.A. No. 1466 of 2023, and I.A. No. 1478 of 2023;
b) approve the Resolution Plan submitted by RARE Asset Reconstruction
Limited in consortium with Check-Inn Hotels Pvt. Ltd., as approved by
the Committee of Creditors with 100% voting share; and
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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c) pass such other order(s) as this Hon'ble Tribunal may deem fit and
proper in the facts and circumstances of the case.
Submissions of the Respondent No. 2 / Sankalp Recreation Pvt. Ltd.
39. Sh. Kartikey Bhatt, Learned counsel for Respondent No. 2 submits
that by the Impugned Order dated 10.07.2024 passed in CP (IB) No.
1171/MB/2018, the Hon'ble National Company Law Tribunal, Mumbai has
rightly rejected IA No. 1085/2023 filed by the Resolution Professional
seeking approval of the Resolution Plan submitted by the consortium of
RARE - Check Inn, while partly allowing IA No. 1466/2023 filed by
Respondent No. 2 and IA No. 1478/2023 filed by the ex-promoters under
Section 60(5) of the Insolvency and Bankruptcy Code, 2016. Learned counsel
points out that the Tribunal, upon careful examination, has recorded clear
findings holding that the plan of RARE - Check Inn was contrary to statutory
provisions and could not have been considered at all.
40. Learned counsel for Respondent No. 2 emphasizes that the NCLT
categorically held that Regulation 39(1B) prohibits any plan from being
considered if the applicant is not part of the Final List of Prospective
Resolution Applicants. Since Check Inn Hotels Pvt. Ltd. never formed part of
the Final List, the plan of RARE - Check Inn was barred in law. Further, the
Tribunal has found that reliance on Clause 15(1)(ix) of the RFRP was
misconceived as the CoC never approved Check Inn's induction before
consideration of its plan, but rather considered both matters simultaneously.
Additionally, the Tribunal clarified that inclusion of a parent company in the
final list does not automatically extend to its subsidiaries, each of which
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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requires independent eligibility checks. The Tribunal concluded that the
mandatory CIRP Regulations cannot be bypassed under the guise of
commercial wisdom or value maximisation, and that even an unsuccessful
resolution applicant is entitled to challenge a resolution plan if it contravenes
the law or suffers from material irregularities.
41. Learned counsel further submits that pursuant to the Invitation for
Expression of Interest dated 29.06.2022, 27 EOIs were received, and the
provisional list of PRAs was published on 12.08.2022. Thereafter, the RFRP
was issued on 17.08.2022. Clause 15(xi) of the RFRP permitted the CoC to
allow change in composition of a consortium or permit PRAs to combine
plans and submit one common plan.
42. Learned counsel highlights that the Final List of PRAs was published
on 27.08.2022, consisting of 26 eligible PRAs, which included inter alia the
consortium of Respondent No. 2 and Globe Ecologistics Pvt. Ltd., RARE Asset
Reconstruction Ltd., and Shree Naman Developers Pvt. Ltd. Importantly,
RARE submitted its plan individually and not in consortium, while Check
Inn Hotels Pvt. Ltd. was never part of the Final List of PRAs.
43. Ld. Counsel points out that six plans were eventually received,
including those of RARE and Sankalp-GEPL (Respondent No. 2 consortium).
During the online challenge process held on 09.02.2023, Sankalp-GEPL
emerged as the highest bidder with NPV of Rs. 490 Crores, later revising its
plan on 17.02.2023 to Rs. 530 Crores, supported by financial documents.
Respondent No. 2, vide emails dated 27.02.2023 and 16.03.2023, further
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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offered to make upfront payment of Rs. 490 Crores within 90 days and then
within 60 days, thereby strengthening its financial proposal.
44. Learned counsel submits that belatedly, RARE submitted a revised
plan dated 17.02.2023 in consortium with Check Inn for Rs. 479.14 Crores,
thereby giving Check Inn a backdoor entry despite its exclusion from the
Final List. On 24.02.2023, in the 14th CoC meeting, the plan was considered
along with the proposal for induction of Check Inn. Thereafter, the CoC
approved the RARE-Check Inn plan on 10.03.2023.
45. Learned counsel for Respondent No. 2 submits that under Section
30(2) of the Code, a resolution plan cannot contravene any provision of law
or the regulations framed by IBBI. Regulation 39(1B)(b) expressly prohibits
consideration of a plan submitted by any person not appearing in the Final
List of PRAs. This safeguard ensures fairness, transparency and prevents
unverified, last-minute entrants. Hence, the CoC could not have legally
considered or approved the RARE-Check Inn plan. Reliance is placed on
judicial precedents including Jindal Power Ltd. v. Dhiren S. Shah (2024 SCC
OnLine NCLAT 46), Swan Energy Ltd. v. Chandan P. Jain (2024 SCC OnLine
NCLAT 892), and Ashdan Properties Pvt. Ltd. v. Mamta Binani (2024 SCC
OnLine NCLAT 386).
46. Learned counsel contends that reliance on Clause 15(xi) of RFRP is
entirely misplaced as contractual provisions cannot override statutory
regulations. Even otherwise, Clause 15(xi) is inapplicable here because:
firstly, RARE submitted its plan individually and not as a consortium, hence
the clause allowing change in consortium composition is irrelevant;
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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secondly, Check Inn was never a PRA, hence the clause permitting PRAs to
form a consortium is equally inapplicable; and thirdly, the contention that
Check Inn's inclusion was valid, since it was a wholly-owned subsidiary of
Naman is untenable, as Naman and Check Inn are distinct legal entities
requiring separate eligibility evaluation.
47. Learned counsel submits that the commercial wisdom of the CoC
cannot be exercised in violation of statutory provisions. The Supreme Court
has consistently held in MK Rajagopalan v. Dr. Periasamy (2023 SCC OnLine
SC 574) and Ebix Singapore v. CoC of Educomp Solutions (2021 SCC OnLine
SC 707) that mandatory legal requirements cannot be circumvented under
the garb of value maximisation.
48. Learned counsel asserts that the argument that an unsuccessful
resolution applicant cannot challenge a plan is misconceived. Respondent
No. 2's challenge is premised on contraventions of law and material
irregularities by the RP/CoC. Even otherwise, under Section 31(1) of the
Code, the NCLT is independently bound to examine compliance of the plan
with Section 30(2).
49. Learned counsel submits that Respondent No. 2 never waived its right
to challenge. On 14.03.2023, it merely sought refund of its bid bond under
the bona fide assumption that its plan had been lawfully rejected. This was
only because the RP failed to update R2 about the actual voting results. In
fact, contemporaneously Respondent No. 2 offered to enhance its offer
through emails dated 27.02.2023 and 16.03.2023. To further establish bona
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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fides, Respondent No. 2 has annexed a fresh demand draft towards the bid
bond with its Reply.
50. Lastly, Learned Counsel submits that the CoC's reliance on past
instances where similar irregularities occurred is legally unsustainable. Past
illegality cannot validate subsequent illegality. The principle of estoppel
cannot operate against law. Summing up he argued that the order of
Adjudicating Authority is legally valid and prayed for dismissal of appeals.
Analysis and finding
51. At the outset, we note that the objections of the suspended directors
and related parties, who were arrayed as Respondents 3 to 8, have been
withdrawn. On 08.09.2025, their counsel, Mr. Rohit Gupta, made a
statement at the Bar that he had instructions from his clients to the effect
that the appeal filed by the CoC may be allowed, and no further objection
would be pressed. The relevant extract of order dated 08.09.2025 is given
below:
"08.09.2025:- I.A. No. 1670-1672 of 2024:- This appeal is
filed by the COC, challenging the order dated 10.07.2024 by
which the Tribunal has dismissed IA No. 1085/2023 and
allowed the IA No. 1466/2023 and 1788/2024. Mr. Rohit
Gupta, appearing on behalf of R-3 to 8 has submitted that he
has instructions from his clients to make a statement at the bar
that this appeal may be allowed. However, Shri Kartikey Bhatt,
appearing on behalf of R2 has contested the appeal. Mr K.
Datta, appearing on behalf of R9 and 10 has also not raised
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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any objection. Therefore, list this case for hearing on
11.09.2025. Counsel for the parties may file short note of the
facts of the case along with relevant citations."
52. As a result of the aforesaid order the only contesting party now is
Respondent No. 2, the unsuccessful resolution applicant (Sankalp
Recreation Pvt. Ltd.), whose challenge to the resolution plan remains to be
adjudicated. We therefore limit our analysis in the present judgment
exclusively to the findings of the Adjudicating Authority and the grounds
taken by Respondent No.2.
53. The findings of the Adjudicating Authority are given in paragraph 16
of the impugned order which is extracted below:
"16. Findings:
16.1 As a corollary to the above discussion, we hold that it is a
trite position of law that the commercial wisdom of the CoC is
beyond the pale of challenge before the Tribunal and with respect
to the application for approval of the resolution plan, the
jurisdiction of this Tribunal is limited to determine whether or not
the resolution plan, as approved by requisite majority of CoC,
complies with the requirements specified under Section 30(2) of
the Code. This includes, inter alia, examining whether the
resolution plan contravenes any of the provisions of the law for
the time being in force and conforms to such other requirements
as may be specified by IBBI. This is further evidenced by Section
61 of the Code which permits any person aggrieved by the order
of the Tribunal to prefer an appeal to the NCLAT on the grounds,
inter alia, that the approved resolution plan is in contravention of
the provisions of any law for the time being in force; or there has
been material irregularity in exercise of the powers by the
resolution professional during the corporate insolvency
resolution period.
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16.2 We have discussed in detail in para. IO hereinabove, the
legality of Check-Inn joining as a resolution applicant when its
name did not appear in the final list of Prospective Resolution
Applicants. It is further reiterated that Regulation 36A prescribes
each step in the process to be taken by the Resolution
Professional to ensure adherence to timelines, provide an
opportunity to all resolution applicants who submitted the
expression of interest to raise objection to the inclusion or
exclusion of a provisional resolution applicant in the provisional
list, etc. The Resolution Professional is also required to conduct
due diligence of prospective resolution applicants based on the
material made available to satisfy that the prospective resolution
applicant complies with the applicable provisions of Section 29A
and other requirements specified in IEOI. The final list of
prospective resolution applicants is to be prepared after following
all the above processes. Further, Regulation 39 of CIRP
Regulations specifies that the CoC shall not consider any
resolution plan received from a person who does not appear in
the final list of prospective resolution applicants or does not
comply with the provisions of Section 30(2) of the Code. Thus, in
CIRP Regulations there are certain boundaries prescribed both
for RP and CoC which need to be strictly adhered to. In the
present case, it is observed that the name of Check-Inn appeared
for the first time in the revised resolution plan dated 17.02.2023
and due diligence on CheckInn was conducted after the
submission of the resolution plan just before putting the
resolution plan for voting. Considering the intent, purpose and
wording of Regulations 36A and 39, we are of the view that
clauses of IEOI/RFRP can never go beyond the provisions of the
Code/CIRP Regulations, nor CoC, in the exercise of its
commercial wisdom can contravene any express provisions of
CIRP Regulations.
16.3 It is also an admitted fact that a copy of the resolution plan
which was discussed in the CoC meeting held on 24.02.2023
and thereafter put to vote without another meeting was
furnished to erstwhile Directors only on 27.02.2023. The law
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remains trite that furnishing a copy of the resolution plan to the
participants of the CoC including the erstwhile directors is not an
empty formality for various reasons including for pointing out
deficiencies in the resolution plan. A combined reading of the
Code as well as the CIRP Regulations, as held in the decision of
Vijay Kumar (supra), leads to the conclusion that members of the
erstwhile Board of Directors, being vitally interested in resolution
plans that may be discussed at meetings of the Committee of
Creditors must be given a copy of such plans as part of the
'documents' that have to be furnished along with the notice of
such meetings. On the basis of the above, we hold that not
furnishing a copy of the resolution plan before the meeting held
on 24.02.2023 is also a material irregularity.
16.4 Based on the above discussions, we conclude that (a) the
Resolution Plan submitted for approval of this Tribunal does not
meet all the parameters laid down in sub-section (2) of Section
30 of the Code read with Regulations 36A and 39 of the CIRP
Regulations on account of its contravention of provisions of the
law and non-conformity to the requirements specified by IBBI,
and (b) there has been material irregularity in non-furnishing the
copy of the resolution plan to the erstwhile directors.
Consequently, IA No. 1085/2023 seeking approval of the
resolution plan is dismissed, while I.A. No. 1466/2023 and I.A
No.1478/2023 objecting to the approval of the resolution plan
are partly allowed to the extent indicated in the foregoing
discussion.
Liberty is granted to RP /CoC to re-run the process strictly in
accordance with the Code and CIRP Regulations and in that
event, an extension of the CIRP period of 4 months shall be
deemed to have been hereby granted for the purpose. The CoC,
however, shall be at liberty to take a contrary call if it so desires
in its wisdom."
54. The Adjudicating Authority in its finding has held that (a) the
Resolution Plan does not comply with Provisions of Section 30 (2) of the Code
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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r/w Regulations 36A and 39 of the CIRP Regulations on account of its
contravention of provisions of law and non-conformity to the requirements
laid down by IBBI; and (b) there has been material irregularity in non-
furnishing the copy of the resolution plan to the Erstwhile Directors. At the
same time the Adjudicating Authority had admitted that a copy of the
resolution plan which was discussed in the CoC meeting held on 24.02.2023
and thereafter was put to vote without another meeting was furnished to the
Erstwhile Directors only on 27.02.2023. The Adjudicating Authority held
that non-furnishing a copy of the resolution plan before the meeting on
24.02.2023 is a material irregularity. Similarly, the Adjudicating Authority
held that in accordance with Regulation 39 of CIRP Regulations the CoC was
not supposed to consider any resolution plan received from a person who
does not appear in the final list of prospective resolution applicants or does
not comply with the provisions of Section 30(2) of the Code.
55. We examine the findings of the Adjudicating Authority first. Section
30(2) of the Code reads as follows:
"30. Submission of Resolution Plan. -
(2) The resolution professional shall examine each resolution
plan received by him to confirm that each resolution plan--
(a) provides for the payment of insolvency resolution process
costs in a manner specified by the Board in priority to the
2[payment] of other debts of the corporate debtor;
3[(b) provides for the payment of debts of operational creditors
in such manner as may be specified by the Board which shall
not be less than--
(i) the amount to be paid to such creditors in the event of a
liquidation of the corporate debtor under section 53; or
(ii) the amount that would have been paid to such creditors, if
the amount to be distributed under the resolution plan had
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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been distributed in accordance with the order of priority in sub-
section (1) of section 53,
whichever is higher and provides for the payment of debts of
financial creditors, who do not vote in favour of the resolution
plan, in such manner as may be specified by the Board, which
shall not be less than the amount to be paid to such creditors
in accordance with sub-section (1) of section 53 in the event of
a liquidation of the corporate debtor.
Explanation 1.- For the removal of doubts, it is hereby clarified
that a distribution in accordance with the provisions of this
clause shall be fair and equitable to such creditors.
Explanation 2.- For the purposes of this clause, it is hereby
declared that on and from the date of commencement of the
Insolvency and Bankruptcy Code (Amendment) Act, 2019, the
provisions of this clause shall also apply to the corporate
insolvency resolution process of a corporate debtor--
(i) where a resolution plan has not been approved or rejected
by the Adjudicating Authority;
(ii) where an appeal has been preferred under section 61 or
section 62 or such an appeal is not time barred under any
provision of law for the time being in force; or
(iii) where a legal proceeding has been initiated in any court
against the decision of the Adjudicating Authority in respect of
a resolution plan;]
(c) provides for the management of the affairs of the Corporate
debtor after approval of the resolution plan;
(d) the implementation and supervision of the resolution plan;
(e) does not contravene any of the provisions of the law for the
time being in force;
(f) conforms to such other requirements as may be specified by
the Board.
4[Explanation.-- For the purposes of clause (e), if any approval
of shareholders is required under the Companies Act, 2013 or
any other law for the time being in force for the implementation
of actions under the resolution plan, such approval shall be
deemed to have been given and it shall not be a contravention
of that Act or law]"
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56. The Adjudicating Authority has not identified any specific clause of the
Section 30(2) which has been violated in the resolution plan submitted by
the Rare ARC, except 30(2)(f) which relates to conformity with the
requirements as may be specified by the IBBI. The reference in this regard
has been made to Regulation 36A and Regulation 39 of the CIRP Regulations.
57. The Regulation 36A of the CIRP Regulations deals with the procedure
for invitation of the Expression of Interest for finalising the list of Prospective
Resolution Applicants. Regulation 36A is extracted below:
"Regulation 36A: Invitation for expression of interest.
1[2[36A. (1) The resolution professional shall publish brief
particulars of the invitation for expression of interest in
Form G of the 3[Schedule-I] at the earliest, 4[not later than
sixtieth day] from the insolvency commencement date, from
interested and eligible prospective resolution applicants to
submit resolution plans.
5[Clarification: The resolution professional after the
approval of the committee may invite a resolution plan for
each real estate project or group of projects of the corporate
debtor.]
6[(1A) The resolution professional may, with the approval of
the committee, invite expression of interest for submission
of resolution plans for the corporate debtor as a whole, or
for sale of one or more of assets of the corporate debtor, or
for both.]
(2) The resolution professional shall publish Form G-
(i) in one English and one regional language newspaper
with wide circulation at the location of the registered office
and principal office, if any, of the corporate debtor and any
other location where in the opinion of the resolution
professional, the corporate debtor conducts material
business operations;
(ii) on the website, if any, of the corporate debtor;
(iii) on the website7, if any, designated by the Board for the
purpose; and
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(iv) in any other manner as may be decided by the
committee.
(3) The Form G in the 8[Schedule-I] shall -
(a) state where the detailed invitation for expression of
interest can be downloaded or obtained from, as the case
may be; and
(b) provide the last date for submission of expression of
interest which shall not be less than fifteen days from the
date of issue of detailed invitation.
(4) The detailed invitation referred to in sub-regulation (3)
shall-
(a) specify the criteria for prospective resolution applicants,
as approved by the committee in accordance with clause (h)
of sub-section (2) of section 25;
(b) state the ineligibility norms under section 29A to the
extent applicable for prospective resolution applicants;
(c) provide such basic information about the corporate
debtor as may be required by a prospective resolution
applicant for expression of interest 9[;]
(d) not require payment of any fee or any non-refundable
deposit for submission of expression of 10[interest; and]
11[(e)
provide details of the corporate debtor's registration
status as a micro, small, or medium enterprise in
accordance with the Micro, Small and Medium Enterprises
Development Act, 2006 (27 of 2006).]
11[Provided that where the corporate debtor has any real
estate project, the committee, for an association or group of
allottees in such real estate project, representing not less
than ten per cent. or one hundred creditors out of the total
number of creditors in a class, whichever is lower, may
relax the following:
(a) eligibility criteria for submission of expression of interest
provided in clause (a) above; and
(b) conditions regarding the refundable deposit.]
12[(4A) Any modification in the invitation for expression of
interest may be made in the manner as the initial invitation
for expression of interest was made:
Provided that such modification shall not be made more
than once.]
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(5) A prospective resolution applicant, who meet the
requirements of the invitation for expression of interest, may
submit expression of interest within the time specified in the
invitation under clause (b) of sub-regulation (3).
(6) The expression of interest received after the time
specified in the invitation under clause (b) of sub-regulation
(3) shall be rejected.
(7) An expression of interest shall be unconditional and be
accompanied by-
(a) an undertaking by the prospective resolution applicant
that it meets the criteria specified by the committee under
clause (h) of sub-section (2) of section 25;
(b) relevant records in evidence of meeting the criteria under
clause (a);
(c) an undertaking by the prospective resolution applicant
that it does not suffer from any ineligibility under section
29A to the extent applicable;
(d) relevant information and records to enable an
assessment of ineligibility under clause (c);
(e) an undertaking by the prospective resolution applicant
that it shall intimate the resolution professional forthwith if
it becomes ineligible at any time during the corporate
insolvency resolution process;
(f) an undertaking by the prospective resolution applicant
that every information and records provided in expression
of interest is true and correct and discovery of any false
information or record at any time will render the applicant
ineligible to submit resolution plan, forfeit any refundable
deposit, and attract penal action under the Code; and
(g) an undertaking by the prospective resolution applicant
to the effect that it shall maintain confidentiality of the
information and shall not use such information to cause an
undue gain or undue loss to itself or any other person and
comply with the requirements under sub-section (2) of
section 29.
(8) The resolution professional shall conduct due diligence
based on the material on record in order to satisfy that the
prospective resolution applicant complies with-
(a) the provisions of clause (h) of sub-section (2) of section
25;
(b) the applicable provisions of section 29A, and
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(c) other requirements, as specified in the invitation for
expression of interest.
(9) The resolution professional may seek any clarification or
additional information or document from the prospective
resolution applicant for conducting due diligence under sub-
regulation (8).
(10) The resolution professional shall issue a provisional list
of eligible prospective resolution applicants within ten days
of the last date for submission of expression of interest to
the committee and to all prospective resolution applicants
who submitted the expression of interest.
(11) Any objection to inclusion or exclusion of a prospective
resolution applicant in the provisional list referred to in sub-
regulation (10) may be made with supporting documents
within five days from the date of issue of the provisional
list.
(12) On considering the objections received under sub-
regulation (11), the resolution professional shall issue the
final list of prospective resolution applicants within ten
days of the last date for receipt of objections, to the
committee.]"
58. We note from the records that RP after following the process as laid
down by the Regulation 36A issued the provisional list of prospective
Resolution applicants (PRAs) on 12.08.2022 in terms of Regulation 36A(10)
as above. The last date for submission of objections to the inclusion or
exclusion of the PRA in the provisional list in terms of Regulation 36A(11)
was 17.08.2022. The RP did not receive any objections to the inclusion or
exclusion of any PRA whose name appeared in the provisional list.
Accordingly, RP in conformity with Regulation 36A(12) of the CIRP
Regulations issued the final list of the PRAs for participating in the CIRP of
the CD within 10 days from the last date for receipt of objections on
27.08.2022.
59. The RP further certified that the final list of the PRA has been prepared
on the basis of due diligence conducted by the RP under Regulation 36A(8)
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read with Regulation 36A(9) of the CIRP Regulations and the undertaking
provided by the PRAs under section 29A of the Code. In the said list of PRAs
names of RARE Asset Reconstruction Ltd. and Shree Naman Developers Pvt.
Ltd figured at Sl. No. 15 and 21 respectively.
60. It comes out very clearly from the above that the entire EOI process
was conducted strictly in accordance with Regulation 36(A) of the CIRP
Regulations. The findings of the Adjudicating Authority regarding non-
compliance with Regulation 36(A) are not based on the factual matrix in this
case.
61. As regards the allegation of material irregularity in delayed provision
of resolution plan to the suspended directors, the record shows that in the
14th CoC meeting held on 24.03.2025, all three of the erstwhile promoters /
Directors of the CD who are respondents herein were present. These included
Priyal Patel/R-3, Representative of Rajesh Patel/R-1 and Representative of
Harish Patel/R-2. All the three PRAs presented their revised plans in great
detail in presence of R-1, R-2 and R-3. So, they were fully aware of the
contents of all 3 resolution plans. After the meeting the revised resolution
plans of all PRAs including that of RARE-Check-Inn, were circulated on
27.02.2023. The plans were thereafter voted on through e-voting process.
The voting window remained open from 01.03.2023 to 10.03.2023. This
afforded all CoC members sufficient time to study the revised plans. The ex-
promoters were also provided with copies of the revised plans on the same
date 27.02.2023, they also got sufficient time to put their objections if any
on record. The finding of the Adjudicating Authority that the circulation was
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
-37-
belated is not borne by facts. We therefore hold that there is no material
irregularity on this ground.
62. We further note from the records that the RP had furnished Section
29A eligibility reports for all the entities involved, including Naman and
Check-Inn, and got the requisite checks done through an independent
agency. There is no evidence that any material information was concealed or
withheld from stakeholders in a manner that would constitute a material
irregularity.
63. We now take up the issue of compliance of resolution plan of the Rare
ARC with regulation 39 of the CIRP regulations. The significance of this issue
lies in the scheme of Regulation 39(1B) of the CIRP Regulations, which
mandates that, only such persons as are included in the final list of
Prospective Resolution Applicants, may submit a resolution plan for
consideration. The underlying object of this regulation is to ensure that every
participant in the plan submission stage has undergone the necessary
scrutiny for eligibility under Section 29A of the Code, and that no unvetted
or last-minute entrant can obtain an unfair advantage by circumventing this
filter.
64. The induction of Check-Inn Hotels, an entity not named in the final
list of PRAs published on 27.08.2022, into the consortium of Rare ARC has
been assailed by Sankalp Recreation Pvt. Ltd. as a back-door entry in direct
contravention of Regulation 39(1B). On the other hand, the Appellant
contends that such induction was not only permissible under the RFRP, but
was also transparently carried out with the approval of the CoC, after
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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ensuring that all eligibility requirements were satisfied. The competing
submissions on this issue thus go to the root of the validity of the resolution
plan itself and therefore require close examination.
65. The Appellant, representing the CoC, has argued that the RFRP which
governed the process contained an express provision under Clause 15(1)(xi)
permitting the formation or alteration of a consortium by prospective
resolution applicants with the prior approval of the CoC. It is contended that
Rare ARC, being a part of the final list of PRAs, was entitled to exercise this
contractual flexibility and to induct Check-Inn Hotels into its consortium. It
is further pointed out that Check-Inn Hotels is a wholly-owned subsidiary of
Shree Naman Developers Pvt. Ltd., which itself was in the final list of PRAs,
and therefore the induction of Check-Inn was not the introduction of a new
or unrelated entity, but rather the participation of a wholly owned subsidiary
of the same corporate group that had already been screened. The Appellant
also places emphasis on the sequence of events, submitting that on
14.12.2022, the Resolution Professional had called upon Rare ARC to
disclose the identity of its strategic investor in order to enable a Section 29A
eligibility check. In compliance with this request, Rare ARC filed a revised
resolution plan on 17.02.2023, identifying Check-Inn Hotels as its strategic
investor, along with a consortium agreement executed on the same date. This
information was thereafter placed before the CoC at its 14th meeting on
24.02.2023, where detailed presentations were made, clarifications sought
by the ex-promoters were duly answered, and the matter was deliberated
upon. Subsequently, the revised plan was circulated to stakeholders on
27.02.2023 and the e-voting window was kept open between 01.03.2023 and
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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10.03.2023. Ultimately, the CoC, after considering all plans, approved the
RARE-Check-Inn plan unanimously with 100% votes, whereafter the Letter
of Intent was issued and the Performance Bank Guarantee was furnished.
According to the Appellant, this chain of events clearly shows that the
induction of Check-Inn was neither surreptitious nor hurried, but a
transparent step taken within the framework of the RFRP, and duly approved
by the CoC in exercise of its commercial wisdom. It is therefore argued that
the NCLT erred in treating the induction as a violation of Regulation 39(1B).
66. Appellant further submitted that the resolution plan was submitted by
Rare ARC as PRA and Check-Inn was shown as strategic investor. The role
of strategic investor was projected from the first resolution plan itself in view
of RBI's Master Guidelines. It is a necessary requirement for ARC to bring in
a equity investor as equity investment in CD was not permitted as per
SARFAESI Act and RBI Master Guidelines for ARCs.
67. On the contrary, Sankalp, the unsuccessful resolution applicant, has
advanced the contention that the prohibition under Regulation 39(1B) is
absolute and mandatory, leaving no scope for exceptions. Since Check-Inn
Hotels Pvt. Ltd. did not figure in the final list of PRAs published on
27.08.2022, it is submitted that its induction into the consortium and the
subsequent consideration of the plan submitted jointly by Rare and Check-
Inn were ex facie impermissible. It is contended that the RFRP is merely an
invitation to submit plans and cannot override the statutory scheme of the
Code and the Regulations framed thereunder. According to Sankalp, Clause
15(1)(xi) of the RFRP cannot be relied upon to dilute the clear prohibition
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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under Regulation 39(1B), and any induction under that clause must
necessarily be tested against the statutory mandate. It is further submitted
that the induction of Check-Inn was not undertaken through any
independent and prior approval of the CoC, but was combined with the
consideration of the plan itself in the 14th CoC meeting, thereby rendering
the exercise a simultaneous and perfunctory step. Sankalp relies upon the
findings of the Adjudicating Authority in the impugned order, which held
that Regulation 39(1B) barred such induction and that the CoC's approval
was not in accordance with law. Judicial precedents have also been cited to
submit that last-minute alterations of this nature defeat the transparency
and fairness of the process, amount to a material irregularity, and
undermine the level playing field among competing resolution applicants.
68. We now have a look at key provisions of RFRP document. Clause 6.17
under the heading eligibility under Section 29 A of the IBC is extracted below:
"6.17 Each Resolution Applicant is required to submit to the
Resolution Professional, along with its Resolution Plan, an
affidavit stating, inter alia, that such Resolution Applicant
is not disqualified or ineligible under IBC from submitting a
Resolution Plan for the Company, in a format set out in as
specified in Format XI at Annexure II (Format for Section
29A Affidavit by the Resolution Applicant) ("29A Affidavit").
In the event the Resolution Applicant is a Consortium or is
acting jointly or in concert with any Person, each member of
the Consortium and each Person acting jointly or in concert
with the Resolution Applicant must submit a 29A Affidavit,
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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and if the Resolution Plan involves any other entity on
behalf of the Resolution Applicant all such entities would be
required to submit the 29A Affidavit. If the Resolution Plan
submitted by the Resolution Applicant or a Consortium
involves setting up or acquisition and control of a special
purpose vehicle, then the 29A Affidavit of such Resolution
Applicant / members of the consortium/persons acting
jointly or in concert with the Resolution Applicant shall
specify that such special purpose vehicle shall also be
compliant with Section 29A of the Code."
(Emphasis supplied)
69. Here we note that Sec 29 A affidavit was duly submitted by the Check-
INN hotels prior to it being included as the strategic investor.
70. In the first Resolution Plan submitted by Rare ARC on 25.11.2022 the
PRA had indicated that he would bring in a strategic investor for
implementing the resolution plan. Rare ARC being an Asset Reconstruction
Company could not take up the equity portion to be brought in the resolution
plan under the RBI guidelines. Accordingly, they had proposed bringing in a
strategic investor for implementation of a resolution plan. The relevant paras
of the resolution plan relating to induction of strategic investor are extracted
below:
"2. Compliance of plan various provisions
Regulation the substantial The investors associated with
37 (c) acquisition of the implementation of
shares of the Resolution plan through its
corporate debtor, Associates themselves
or the merger or proposes to subscribe to 2.5
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consolidation of crore equity shares of Rs.10/-
the corporate each, aggregating Rs.25 crore
debtor within 180 days of the approval
of Resolution Plan. The entire
existing share capital of the
Corporate Debtor shall stand
cancelled and the existing
equity share capital of Rs.22
crore shall stand reduced to
NIL, whereupon there would be
simultaneous allotment of fresh
equity by the Board of Directors
of the Corporate Debtor to the
new shareholders. All the rights
of the existing shareholders
shall stand suspended till the
cancellation of the existing
paid-up capital. Please refer to
para 2.4.
3.1.4 Equity Contribution by Investor/Associates
Investors/Associates/Nominee of Rare ARC will infuse a
sum of Rs.25 crore towards equity of the CD.
It is clarified that the contributors towards equity shares
would not be in contravention of Section 29A of the Code.
Besides, Rare ARC/investors will participate in
restructuring the Board of the company by appointing its
nominees as well as independent directors on the Board. It
is clarified that none of the new shareholders of the
company and the directors appointed in the new Board of
the Company or in the management of the Company would
be in contravention of Section 29A of the Code."
6.1.3
The Nominee Director and key managerial personnel to be
inducted are tentatively proposed as under:
S.No. Name Proposed Designation
1. Rajesh Swarup Nominee Director
2. To be identified* Director
* to be appointed in consultation with investor"
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71. It is clear from these extracts that Rare ARC had clearly stated in its
first resolution plan that it proposed to bring a strategic investor to bring in
the equity component of the resolution plan in compliance with extant RBI
guidelines which permit ARCs to only take over the debt and they had to
bring another entity to fund the equity requirements of the resolution plan.
72. Thereafter, on 14.12.2022, the RP wrote to Rare ARC furnishing his
comments on the resolution plan. In Sl. No. 9 of the comments, it asked for
identification of strategic investor so that its eligibility under Section 29A
could be examined. The relevant portion of the communication is extracted
below:
S.No. Relevant clause Issues
9. Section 2- Section 30 (2) RA to identify the Investors. Please
(c) of the Code note that the investors should be
Section 29A compliant.
73. In compliance with the comments of RP, the PRA Rare ARC filed a
revised resolution plan on 17.02.2023 identifying Check-Inn Hotels Pvt. Ltd.
as the strategic investor. The relevant part of the revised plan is reproduced
hereunder:
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74. It can be seen here from the first page of the resolution plan that the
plan has been submitted by Rare Asset Reconstruction Ltd. along with
Check-Inn Hotels Pvt. Ltd., subsidiary/ SPV of Sh Naman Group, the
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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strategic investor. So, it is clear from the very outset that Check-Inn was
brought in as strategic investor.
75. In para 1.9 of the resolution plan Rare ARC clearly stated that being
an ARC it is only permitted to acquired debt and further clarified that it does
not plan to acquire equity shares of the CD under the resolution plan. The
relevant extract of para 1.9 is given below:
"1.9. Prior experience of the Resolution Applicant in
turnaround/revival of the stressed assets:
The Resolution Applicant, being an ARC, is permitted to
acquire debt and in view thereof submit the Resolution
plan under various provisions including under IBC, 2016.
In particular, it is clarified that the recent RBI Circular
dated October 11, 2022 ("Review of Regulatory
Framework for ARCs"), has additionally permitted ARCs to
directly invest in the equity of a Borrower (i.e. those
activities not specifically allowed under SARFAESI Act), if
they meet specific guideline; including minimum net
owned funds of Rs 1000 crore. It clarified that the Rare
ARC do not intend or plan to acquire equity shares of the
Corporate Debtor under this Resolution Plan."
76. The details of the strategic investor are given in para 2 of the resolution
plan, here also it is clearly stated that the Check-Inn Hotels Pvt Ltd. is being
brought as strategic investor. The relevant portion of para 2.1 is extracted
below:
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"2. Details of the Strategic Investor and its Group:
2.1. Brief Background
Name of the Entity: Check-Inn Hotels Pvt. Ltd.
CIN: U55101 MI-12009PTC189351
Registered Office: 315, Parekh Market, 39, JSS
Road, Opera House, Mumbai-
400004, India. 400004
Check-Inn Hotels Private Limited, subsidiary of Shree
Naman Developers Private Limited ("CIPL" or "Strategic
Investor") is acting as a Strategic Investor for the purpose
of submission of this Resolution Plan and its
implementation pursuant to its Final Approval.
Consortium Agreement is entered between CIPL as a
Strategic Investor and Rare ARC for the submission and
implementation of the Resolution Plan. CIPL is a wholly
owned subsidiary of Shree Naman Group, a renowned
diversified conglomerate group having presence in
Mumbai and Goa. Shri Jayesh Shah founded Shree
Naman Group (SNG) in 1993 having its corporate office at
Naman Centre, C-31, G-Block, Bandra Kurla Complex,
Bandra (E), Mumbai-51. Shree Naman Group is an
established leader in real estate industry with over 2
decades of experience and has developed landmark
properties in Mumbai. Today the group is conglomerate of
diversified businesses which includes Real Estate,
Hospitality, Food and Beverages, Financial Service and
Energy."
77. The further details about the strategic investor are given in para 6 of
the resolution plan, some of the relevant portions are extracted below:
"6.10. The Strategic Investor's holding company has net worth
of Rs. 1,176 crores and further is making upfront payment to
the financial and other creditors delinking hotel with any
financial risk. The Strategic Investor shall infuse an
unsecured loan through debt or any other instrument of
around Rs. 470 crore by itself or through SPV or through
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Resolution applicant and / or any group entities and/or
associates for the purpose of making Upfront Payment to the
Creditors in terms of this Resolution Plan. The Strategic
Investor has also provided balance confirmation certificate
from its banker, i.e. HDFC Bank having deposit of Rs. 498
crore in the bank account of the Strategic Investor and as
attached the same as Anexure-1 to this Resolution Plan. The
Resolution Applicant/ the Strategic Investor may, however,
directly acquire the debt of the financial creditors, at the
discretion of the Secured Financial Creditors in such a
manner, as may be mutually agreed, without affecting their
rights against the personal and corporate guarantors and
third-party securities or as may be allowed under provisions
of law."
78. It is absolutely clear from the extracts of the resolution plan that
Check-Inn Hotels was brought in as a strategic investor, which was a
requirement under the RBI master guidelines for ARCs, which allowed the
ARCs to take over, only the debt in CIRP process and they had to participate
in the resolution process along with a partner who would take over the equity
portion. It is in this background that Check-Inn Hotels was bought in as a
strategic investor.
79. The implementation of resolution plan would have required a suitable
agreement between the PRA, Rare ARC and the strategic investor and
creation of an appropriate implementation instrument like a Special Purpose
Vehicle (SPV) or consortium. Accordingly, to create such a structure, the PRA
- Rare ARC, and strategic investor, Check-Inn Hotels signed the consortium
agreement on 17.02.2023. This fact was duly recorded in the resolution plan.
80. This revised plan was thereafter placed before the 14th meeting of the
CoC on 24.02.2023. The minutes of that meeting record that presentations
were made and clarifications were sought and answered. The e-voting
window for approval of the plans was opened from 01.03.2023 to 10.03.2023,
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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and during this period, the CoC approved the RARE-Check-Inn plan with
100% voting share. It is also noted from the documents on record that the
RP had obtained Section 29A eligibility reports and CIBIL checks in respect
of all the entities involved including Check Inn Hotels, which were placed on
record as part of the CIRP proceedings. This sequence demonstrates that the
identity of the strategic investor was disclosed pursuant to the RP's direction,
the induction was supported by a written consortium agreement, the matter
was placed before and deliberated by the CoC, and the CoC thereafter
exercised its commercial discretion in approving the plan.
81. We now examine the issue relating to compliance of resolution plan
with the provisions of Regulation 39 of CIRP Regulations. The regulation 39
is extracted below:
"Regulation 39: Approval of resolution plan.
39. 1[(1) A prospective resolution applicant in the final list may
submit resolution plan or plans prepared in accordance with
the Code and these regulations to the resolution professional
electronically within the time given in the request for resolution
plans under regulation 36B along with
(a) an affidavit stating that it is eligible under section 29A to
submit resolution plans;
(b) 2[***]; and
(c) an undertaking by the prospective resolution applicant that
every information and records provided in connection with or
in the resolution plan is true and correct and discovery of false
information and record at any time will render the applicant
ineligible to continue in the corporate insolvency resolution
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024
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process, forfeit any refundable deposit, and attract penal
action under the Code.
(1A) The resolution professional may, if envisaged in the
request for resolution plan-
(a) allow modification of the resolution plan received under
sub-regulation (1), but not more than once; or
(b) use a challenge mechanism to enable resolution applicants
to improve their plans.
(1B) The committee shall not consider any resolution plan-
(a) received after the time as specified by the committee
under regulation 36B; or
(b) received from a person who does not appear in the final list
of prospective resolution applicants; or
(c) does not comply with the provisions of sub-section (2)
of section 30 and sub-regulation (1).]]
********
(3) The committee shall-
(a) evaluate the resolution plans received under sub-regulation (2) which comply with the requirements of the Code and regulations made thereunder, as per evaluation matrix;
(b) record its deliberations on the feasibility and viability of each resolution plan; and
(c) vote on all such resolution plans simultaneously."
(Emphasis Supplied)
82. The Adjudicating Authority found that induction of Check-Inn Hotels Pvt. Ltd. into the consortium of Rare ARC violated Regulation 39(1B), since Check-Inn did not appear in the final list of PRAs published on 27.08.2022. Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -50- The purpose of this regulation is to ensure that only those applicants whose eligibility under Section 29A has been verified are allowed to submit resolution plans. The record shows that Rare ARC was itself part of the final list and therefore qualified to submit a plan. Clause 15(1)(xi) of the RFRP also gave the CoC power to approve a modification in consortium structure. Pursuant to a query raised by the RP on 14.12.2022, Rare ARC identified Check-Inn Hotels as strategic investor and filed a revised plan on 17.02.2023 along with a consortium agreement. This induction was placed before the CoC in its 14th meeting on 24.02.2023, and eligibility reports, including Section 29A verification, were carried out. These steps show that due process was followed and that the objective of Regulation 39(1B) was satisfied. In light of these facts, the conclusion of the Adjudicating Authority that the induction itself was impermissible cannot be sustained.
83. The Adjudicating Authority further reasoned that the induction of Check-Inn Hotels and approval of the resolution plan took place at the same time, which it considered a material irregularity. The chronology of events, however, indicates otherwise. The revised plan naming Check-Inn was submitted on 17.02.2023, presented in the 14th CoC meeting on 24.02.2023, and thereafter circulated to stakeholders on 27.02.2023. The CoC voting took place only between 01.03.2023 and 10.03.2023. During this period, clarifications were sought, eligibility reports were placed, and the CoC deliberated on the merits of the revised plans. This sequence shows that induction and approval were not simultaneous, but separated by sufficient opportunity for verification and decision-making. The description of the Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -51- process as simultaneous by the Adjudicating Authority is therefore not borne out by the record and its conclusion on this aspect is incorrect.
84. While we agree that Regulation 39(1B) is mandatory, we find that the NCLT did not give due weight to the fact that the PRA had initiated the process of identifying the strategic investor as early as December 2022, that the revised plan was filed on by RARE ARC which was a PRA 17.02.2023, and not by the Strategic Investor Check-Inn. The matter was deliberated in the 14th CoC meeting on 24.02.2023, well before the voting concluded on 10.03.2023. The presence of eligibility verification reports on record also negates the suggestion that Check-Inn's induction was unexamined or surreptitious. The finding of the NCLT, therefore, rests on a narrow view of timing without appreciating the broader factual context.
85. We also have a look at the clause 15.1(xi) of the RFRP document which is extracted below:
"15.1- ln the event the Applicant is a Consortium, it will be required to comply with the following requirements:
* *
(xi) Notwithstanding the above, the Committee of Creditors may permit change in composition of the Consortium (which may or may not include a PRA who had submitted an EOI) or permit PRAs to come together and form a Consortium and/or combine their Resolution Plans for purpose of presenting a common Resolution Plan for the Company. Any such combination etc. shall be subject to the terms as may be decided by the Committee of Creditors."
86. We also take note of the 9th meeting of CoC on 28.11.2022 the matter related to proposal of M/s Rockwood Hotels and Resorts Ltd. for submitting the resolution plan in consortium with M/s Artek Surfin Chemicals Ltd. was Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -52- placed by RP before the CoC. It was decided by the CoC that as there is no timeline for acceptance of the change in the composition of the PRA and if the plan is viable, the CoC can accord its approval at the time of putting the resolution plan for voting. The relevant extract of the meeting is given below:
"The RP informed the CoC members that one of the PRA, M/s Rockwood Hotels & Resorts Ltd had submitted the Expression of Interest for submission of resolution plan however, Rockwood Hotels & Resorts Ltd. sent a communication to the RP team to submit resolution plan in consortium with M/s Artek Surfin Chemicals Ltd. and has also submitted a plan in consortium with M/s Artek Surfin Chemicals Ltd. The members were informed that as per Clause 15(xi) of the RFRP, the Committee of Creditors may permit change in composition of the Consortium (which may or may not include a PRA who had submitted an EOI) or permit PRAs to come together and form a Consortium and/or combine their Resolution Plans for purpose of presenting a common Resolution Plan for the Company. Any such combination etc. shall be subject to the terms as may be decided by the Committee of Creditors. The CoC members were however of the view that there is no timeline for acceptance of the change in the composition of the PRA and if the plan is viable, the CoC can accord its approval at the time of putting the resolution plans for voting."
87. Subsequently, the CoC in the e-voting process after 14th CoC also voted upon the consortium arrangement of Rockwood Hotels & Resorts Ltd. which involved forming of a consortium with Artek Surfin Chemicals Ltd. The proposal was approved by 100% of voting shares. The CoC also approved the consortium arrangement of Rare ARC with Check-Inn Hotels with 100% of voting shares.
Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -53-
88. We have seen earlier the resolution plan was submitted by Rare ARC who was a prospective Resolution Applicant and in the plan Check-Inn Hotels was shown as Strategic Investor. The plan was not submitted by Check-Inn Hotels, but by Rare ARC which has come out very clearly in the resolution plan. At the same time Naman was a PRA and Check-INN was its wholly owned subsidiary. Two PRAs were permitted to form a consortium, nomination of a subsidiary of the one of the eligible bidders is a standard and approved practice which has been upheld by courts. The consortium was formed with the view to implement the resolution plan as an Asset Reconstruction Company cannot participate in the equity of CD as provided in the master circular of the RBI. The consortium was created as an entity for implementation of resolution plan to meet the requirements under SARFESI Act which is the regulating act for ARCs and RBI is the regulator. This structure is compliant with both SARFESI and IBC.
89. We also note the judgement of the Hon'ble Supreme Court in 'Kalpraj Dharamshi v. Kotak Investment Advisors Ltd. (2021) 10 SCC 401', Hon'ble SC recognised that consortium arrangements and subsequent inclusion of entities are permissible so long as they are in line with the process documents and approved by the CoC. The relevant para of the Judgment is extracted below:
"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 Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -54- 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."
90. In the present case, Clause 15(1)(xi) of the RFRP expressly empowered the CoC to permit modification of consortium structure. The induction of Check-Inn Hotels, being a wholly-owned subsidiary of Shree Naman Developers Ltd. which itself was part of the final list of PRAs, was duly placed before the CoC, verified by the RP, and unanimously approved. Applying the ratio of Kalpraj Dharamshi, such an induction cannot be struck down as impermissible.
91. Similarly, in ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1, the Hon'ble Supreme Court emphasised the principle that the Code must be construed in a manner that advances its purpose, and that eligibility and consortium participation are to be assessed in substance, not in form. The relevant paragraphs of the Judgment are extracted below:
"78. What has now to be determined is whether any challenge can be made at various stages of the corporate insolvency Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -55- resolution process. Suppose a resolution plan is turned down at the threshold by a Resolution Professional under Section 30(2). At this stage is it open to the resolution applicant concerned to challenge the Resolution Professional's rejection? It is settled law that a statute is designed to be workable, and the interpretation thereof should be designed to make it so workable.....
79. Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the adjudicating authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster."
92. In the present case, Check-Inn Hotels cannot be treated as an outsider when its parent, Shree Naman Developers, was in the final list of PRAs. Treating them as a single economic group aligns with the approach adopted by the Supreme Court in 'Titagarh Firema Adler S.P.A. v. Nagpur Metro Rail Corporation Ltd. (2017) 7 SCC 486', where entities within a group were considered together for purposes of eligibility. The relevant paras of the Judgment are extracted below:
"37. With regard to the satisfaction of the 1st respondent, it has been highlighted before us that the said respondent had thoroughly examined the bid documents and satisfied itself about the capability, experience and expertise of Respondent 2 and there has been a thorough analysis of the technical qualification of Respondent 2 by the independent General Consultant and the reports of the Appraisal and Tender Committee of the 1st respondent and also the no objection has been received from KfW Development Bank, Germany which is funding the entire project. Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -56-
38. As is noticeable, there is material on record that Respondent 2, a government company, is the owner of the subsidiary companies and subsidiary companies have experience. The 1st respondent, as it appears, has applied its commercial wisdom in the understanding and interpretation which has been given the concurrence by the Committee concerned and the financing bank. We are disposed to think that the concept of "government-owned entity" cannot be conferred a narrow construction. It would include its subsidiaries subject to the satisfaction of the owner. There need not be a formation of a joint venture or a consortium. In the obtaining fact situation, the interpretation placed by the 1st respondent in the absence of any kind of perversity, bias or mala fide should not be interfered with in exercise of power of judicial review. Decision taken by the 1st respondent, as is perceptible, is keeping in view the commercial wisdom and the expertise and it is in no way against the public interest. Therefore, we concur with the view expressed by the High Court."
93. In our considered view, the induction of Check-Inn Hotels into the consortium of Rare ARC was not in violation of Regulation 39(1B). The purpose of the regulation was served since the identity of the strategic investor was disclosed, verified, deliberated upon, and approved by the CoC in a transparent manner. The contractual flexibility under Clause 15(1)(xi) of the RFRP was exercised consistently with the statutory framework and did not undermine it. Accordingly, the objection raised by Sankalp on this ground fails.
94. We now take the matter related to material irregularity as alleged by unsuccessful RA Sankalp. It has been argued that in the challenge process conducted on 09.02.2023, its resolution plan had emerged as H1 with a net present value of ₹490 crores, which was higher than the RARE-Check-Inn plan that stood at ₹479 crores. It is submitted that the very object of the Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -57- Code is value maximisation and that once Sankalp was identified as H1, the CoC was bound to accept its plan in preference to any other. According to Sankalp, the subsequent approval of the RARE-Check-Inn plan, notwithstanding the higher valuation of its own, constitutes a violation of the Code's objective of maximisation of value of assets. It has further been argued that the inclusion of Check-Inn Hotels in the consortium was irregular, that the revised plan of RARE-Check-Inn was circulated belatedly, and that adequate opportunity was not given to all stakeholders to consider it. These, according to Sankalp, constitute material irregularities in the conduct of the CIRP and justify interference by this Appellate Tribunal under Section 61(3).
95. The Appellant, representing the CoC, has disputed these contentions. It is argued that while Sankalp's plan may have shown a higher net present value, the CoC is not obliged to accept the plan with the highest notional value alone. The CoC is duty-bound to consider not just the quantum of the offer but also the feasibility, viability, and implementability of the plan. According to the Appellant, the plan of RARE-Check-Inn was found more viable as it provided for upfront equity infusion and had the backing of a credible strategic investor, whereas Sankalp's plan contemplated staggered payments over time. The CoC, in its commercial wisdom, considered these factors and unanimously approved the RARE-Check-Inn plan. It is also pointed out that Sankalp, after being declared unsuccessful, accepted refund of its bid bond deposit on 18.03.2023 without protest, which amounted to acquiescence in the outcome of the process. Its subsequent objections, therefore, are an afterthought. The Appellant also emphasises that the Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -58- minutes of the 14th CoC meeting show that all revised plans, including Sankalp's, were placed before the CoC for deliberation, that clarifications were sought and addressed, and that the CoC voted only after due consideration of all alternatives. In such a scenario, it is argued that Sankalp's objections amount to nothing more than dissatisfaction with the commercial choice made by the CoC, which is not a ground for judicial interference.
96. It is seen from the record that three resolution plans were submitted and placed before the CoC in its 14th Meeting on 24.02.2023. These plans were submitted by (i) Rare Asset Reconstruction Ltd. along with Check-Inn Hotels Pvt. Ltd. (ii) Sankalp Recreation Pvt. Ltd. in consortium with Globe Ecologistics Pvt. Ltd. and (iii) Shri Ram Multicom Pvt. Ltd. These plans were evaluated as per the evaluation matrix prescribed in the RFRP document. The scores obtained by the three PRAs on each parameter of the resolution plan along with the total scores are given in the table below:
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97. It can be seen from the above that in the evaluation matrix that Rare with Check-Inn had the highest score of 89.30, Shri Ram Multicom Pvt. Ltd. was second with a score of 64.06 and the Sankalp Resolution Plan was placed last with the score of 48.58.
98. During the electronic voting on the resolution plans by the Committee of Creditors the resolution plan of Rare ARC was approved with 100% of vote share, while that of Sankalp received only 20.61% in favour and 79.39% vote shares against its resolution plan. The voting is clearly in line with scores of various resolution applicants in the evaluation matrix of the resolution plan.
99. We also note that Sankalp have sent a letter on 27.02.2023 to the RP by email wherein they had committed to make total payment of Rs. 490 crores within 90 days from receipt of approval from NCLT.
100. RP in his reply on the same date wrote to the Members of the CoC and Sankalp and stated that as per Regulation 39 (1A) (a) of CIRP Regulations, a resolution plan cannot be modified more than once. Therefore, a Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -60- modification in Resolution Plan post the submission of the revised plan on 17.02.2023 may not be permissible. The extract of the body of the email is given below:
"Dear Members of Coc, Please find attached the letter received from the Consortium of Sankalp Recreation Pvt. Ltd. with Globe Ecologistics Pvt. Ltd.
In the enclosed letter, Sankalp has modified its last financial offer provided in the challenge process. Please note that this modified offer has also not been made a part of the revised resolution plan submitted on 17.02.2023.
Your attention is drawn to the rules of the challenge process held on 09.02.2023, wherein it was provided that "[the last financial bid submitted by the participating Resolution Applicant in the challenge process should form an integral part of resolution plan submitted by such participating Resolution Applicant. As a condition to participation in the Challenge Process, the Resolution Applicants will be required to provide an undertaking as provided in Annexure Il that the financial prop submitted during the Challenge Process will form an integral part of their resolution plans... Please note that the scoring of the plans for each participating Resolution Applicant will be done only on the basis of the last financial proposal submitted during the Challenge Process."
Further, please note that as per Regulation 39(1AX(a) of CIRP Regulations, a resolution plan cannot be modified more than once. Therefore, modification in a resolution plan post the submission of the revised plan on 17.02.2023 may nc permissible.
This is for your information and records.
Regards Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -61- Office of Resolution Professional Rajesh Business and Leisure Hotels Pvt. Ltd."
101. It is therefore clear that the subsequent actions by Sankalp to revise its resolution plan were not in accordance with the provisions of the Code. In the overall evaluation of the resolution plan as per the evaluation matrix also it had the least score. Rare ARC on the other hand was the highest scorer in evaluation matrix. CoC has gone by the logical decision to be made in such as situation i.e. choose the plan with highest score. This is reflected in the unanimous approval accorded to it by the CoC during the e-voting process. Further this decision falls squarely within the domain of commercial wisdom of the CoC. The Supreme Court in K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150 and in Committee of Creditors of Essar Steel v. Satish Kumar Gupta (2020) 8 SCC 531 has categorically held that the CoC's commercial decision cannot be substituted by a judicial authority, and that the jurisdiction under Section 61 is confined to examining contravention of the Code or material irregularities.
102. We also cannot lose sight of the fact that Sankalp accepted refund of its bid bond deposit on 18.03.2023, which signifies its acquiescence in the outcome of the process. Having accepted the refund without demur, it does not lie in its mouth to subsequently challenge the process on grounds of alleged irregularities. Its objections therefore appear to be an afterthought, motivated by its disappointment at not being chosen. Allowing such challenges by unsuccessful resolution applicants would undermine the Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024 -62- finality and certainty of the CIRP and open the door to endless litigation, contrary to the time-bound framework of the Code.
103. The CoC, in its commercial wisdom, was entitled to approve the RARE-Check-Inn plan, which it did after due deliberation and with unanimous consent. The material irregularities alleged in the impugned order and violation of Section 30(2) of the code and relevant regulations are not borne out by the record, and no contravention of the Code is established.
104. In view of findings in above paras, the appeal is allowed. The impugned order dated 10.07.2024 passed by the Adjudicating Authority is set aside. CP (IB) 1171/MB/2021 is restored to its original position. Parties to appear before the Adjudicating Authority for approval of resolution plan on 15.10.2025.
[Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Indevar Pandey] Member (Technical) SA/Pragya (LRA) Company Appeal (AT) (Ins) No. 1670-1672 of 2024, 1675-1677 of 2024 & 1780-1782 of 2024