
NCLAT: Investors Who Opt For Settlement Cannot Claim Under Resolution Plan; Bars Dual Recovery
- Post By 24law
- August 30, 2025
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Mohd Faiz Alam Khan (Judicial Member) and Naresh Salecha (Technical Member), has held that once investors of the Corporate Debtor (CD) receive their dues under a Settlement Agreement and submit an unconditional undertaking to forgo claims under the Resolution Plan, they cannot subsequently seek the same amount under the Resolution Plan. The Tribunal clarified that dual recovery is impermissible under the Insolvency and Bankruptcy Code, 2016 (IBC).
Background
The appeal arose under Section 61 IBC against an order dated 11 June 2024 passed by the National Company Law Tribunal (NCLT), Kolkata, which dismissed the appellants’ application. The appellants—non-convertible debenture (NCD) holders of Ashiana Landcraft Realty Pvt. Ltd.—had invested nearly ₹80.53 crore under a Portfolio Management Scheme (PMS) facilitated by Piramal Fund Management Pvt. Ltd. Their claims were admitted at ₹146.92 crore in the corporate insolvency resolution process (CIRP).
Under the approved Resolution Plan dated 11 August 2023, NCD holders, represented through IDBI Trusteeship, were entitled to ₹16.10 crore (21.48% share of the secured debt) and 2,14,800 Class B equity shares of ₹10 each. However, during parallel proceedings before the Delhi High Court in a criminal writ petition filed by the Piramal Fund Manager concerning disputes with investors, Piramal offered to settle by paying the principal investment of ₹80.53 crore to all 188 NCD holders. The High Court accepted the proposal, appointed a retired judge as Administrator, and directed disbursal of the settlement amount.
As a precondition, each investor furnished an irrevocable undertaking agreeing to withdraw or not pursue any further proceedings, including claims under the Resolution Plan, in exchange for receiving their share of the settlement amount. On 5 April 2024, the Delhi High Court confirmed that all investors had received their settlement dues and ordered that any CIRP proceeds payable under the plan would instead go to the Piramal Fund Manager. A modification plea and subsequent SLP filed by some investors were dismissed by the Delhi High Court and later by the Supreme Court.
Appellants’ Contentions
The appellants argued before NCLAT that NCLT had illegally rejected their plea, contending that the settlement before the Delhi High Court was distinct from the Resolution Plan and that receipt of funds under the settlement should not extinguish their entitlement of ₹16.10 crore and allotment of 10 lakh Class B shares under the plan. They maintained that the Resolution Plan, once approved, could not be altered or diluted. It was also claimed that the NCD holders were not properly represented before the Committee of Creditors (CoC), as IDBI Trusteeship and Piramal Fund Manager allegedly acted contrary to their interests.
Respondents’ Stand
The Successful Resolution Applicant (SRA) opposed the appeal, submitting that the appellants had already received amounts far exceeding their entitlement under the Resolution Plan. For instance, two applicants had received ₹25 lakh each against their entitlement of just ₹5.12 lakh under the plan. It was argued that having voluntarily opted for the settlement and executed undertakings to relinquish claims under the plan, the appellants were estopped from making further demands.
Piramal Fund Manager also pointed out that the settlement was concluded under Delhi High Court supervision, with all 188 NCD holders participating, and that the Supreme Court had already dismissed challenges to the settlement.
NCLAT’s Findings
The Appellate Tribunal observed that the Resolution Plan had been approved on 11 August 2023 and was not challenged by the debenture holders. Further, IDBI Trusteeship had properly represented them in the CoC, and their objections to representation were earlier rejected by NCLT.
On the core issue, the Bench noted that the Delhi High Court orders of September 2023 and April 2024 made it clear that investors had two options: either accept their dues under the settlement by giving an irrevocable undertaking to withdraw all proceedings, or reject the settlement and pursue claims under the plan. Having chosen the former and received settlement payments, the appellants could not claim again under the Resolution Plan. The Bench remarked: “The appellants were attempting to receive the money due to them twice—firstly under the settlement held before the Hon’ble High Court of Delhi and secondly under the Resolution Plan. This is not permissible.”
Upholding the NCLT’s order, the NCLAT dismissed the appeal, holding that once investors opted for and received their dues under the Delhi High Court-approved settlement, along with furnishing undertakings to forgo further claims, they were barred from asserting rights under the Resolution Plan.
Appearance
For Appellant: Mr. Vinod Chaurasia & Mr. Prince Sethi, Advocates
For Respondent: Mr. Sakal Bhushan, Mr. Vasu Bhushan & Mr. Nipun Bhushan, for R-1 to 3.
Cause Title: Shobhana Thakkar & 9 Ors. V. Monitoring Committee of Ashiana Landcraft Realty Pvt. Ltd. and 2 Ors.
Case No: Company Appeal (AT) (Insolvency) No. 2156 of 2024
Coram: Justice Mohd Faiz Alam Khan [Judicial Member], Naresh Salecha [Technical Member]