Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has set aside an order of the National Company Law Tribunal (NCLT), New Delhi Bench-IV, which had declared the promoters of JC World Hospitality Pvt. Ltd. ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC) and quashed their resolution plan. The NCLAT strongly criticized the NCLT for acting in a “callous and perverse manner” by ignoring a crucial Ministry of Corporate Affairs (MCA) communication that confirmed the removal of the promoters’ disqualification under Section 164(2) of the Companies Act, 2013.

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Background

The appeals arose from an order dated 22 July 2025, passed by the NCLT during the Corporate Insolvency Resolution Process (CIRP) of JC World Hospitality Pvt. Ltd., an MSME engaged in real estate development. The promoters — Dr. Vijay Kant Dixit, Ms. Rita Dixit, and Ms. Vasudha Dixit — were declared ineligible under clauses (c), (e), (g), (i), and (j) of Section 29A of the IBC, and their resolution plan (approved by the Committee of Creditors (CoC)) was set aside. The NCLT had further directed that the plan submitted by the rival applicant, Amrapali Fincap Ltd., be reconsidered by the CoC. Aggrieved by this, the promoters, along with the Resolution Professional and a homebuyer, approached the NCLAT challenging the findings of ineligibility and procedural irregularities in the NCLT’s order.

Findings of the NCLAT

The Appellate Tribunal noted that the CIRP voting process was conducted in accordance with Section 25A(3A) of the IBC, which provides that if more than 50% of the financial creditors in a class vote in favor of a plan, the authorized representative’s vote counts as 100% approval. Accordingly, since the CoC approved the promoters’ plan with more than 50% support, it was validly approved. “The CoC and RP have rightly concluded that the resolution plan stood approved with 100% vote shares since more than 50% of vote shares of the CoC were cast by financial creditors in a class,” the Bench observed.

NCLT’s ‘Callous’ Approach

The NCLAT came down heavily on the NCLT for rejecting a critical piece of evidence — an email dated 07.03.2025 from the MCA, confirming the removal of disqualification of Mrs. Rita Dixit and Dr. Vijay Kant Dixit effective 13.08.2018 and 29.05.2018, respectively. The Bench remarked that the NCLT “wrongly rejected” the MCA communication and failed to consider it while assessing eligibility under Section 29A(e). “This communication was sufficient to negate disqualification under Section 29A(e), yet the Adjudicating Authority, in a callous and perverse manner, ignored the record and erroneously held them disqualified under Section 164(2),” the Bench observed. The Tribunal criticized the NCLT for selectively accepting documents filed by the unsuccessful resolution applicant (Amrapali Fincap Ltd.) while refusing to consider material produced by the successful resolution applicant (SRA).

Commercial Wisdom of CoC

The NCLAT reaffirmed that CoC’s commercial decisions are non-justiciable, except when there is a violation of the IBC or its regulations. It held that the CoC had duly considered the eligibility of the promoters and approved the plan after proper due diligence. “The SRA was fully eligible. The Resolution Professional did his due diligence and found the SRA qualified. The CoC also examined the eligibility. It was Amrapali Fincap, the unsuccessful resolution applicant, which kept raising objections to delay the CIRP,” the Bench noted. The Tribunal also rejected the NCLT’s view that the performance guarantee furnished by Rishikesh Hire Purchase and Leasing Pvt. Ltd., an identified investor under the plan, violated Regulation 36B(4A). “When the resolution plan itself provided that the PBG shall be given by the investor, there was no violation of Regulation 36B(4A),” the Bench clarified.

Observations on Disclosure and Disqualification

The NCLAT held that the NCLT erred in finding fault with the promoters for non-disclosure of criminal proceedings under Regulation 38(3) of the CIRP Regulations. It observed that this regulation had been substituted in 2018 and no longer required such disclosure at the time of submission of the resolution plan. Further, the NCLAT held that the promoters had properly disclosed all relevant information, including the FIRs and chargesheets filed after the filing of the resolution plan.

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The NCLAT concluded that the NCLT’s order suffered from serious procedural and factual errors, including non-consideration of key evidence and misapplication of Section 29A of the IBC. Accordingly, the NCLAT allowed the appeals, restored the promoters’ eligibility, and upheld the CoC’s approval of their resolution plan.

Appearance

For Appellants: Mr. Krishnendu Datta and Mr. Abhijeet Sinha, Sr. Advocate with Ms. Prachi Johri, Ms. Kamal Naini Sharma and Ms. Mrigangi Parul, Advocates.

For Respondents: Mr. Kunal Godhwani and Ms. Kinjal Chadha, Advocates for R3. Mr. Sumant Batra, Ms. Neeha Nagpal, Mr. Malak Bhatt, Mr. Ajatshatru Singh Rawat, Mr. Sarthak Bhandari and Ms. Riya Kaur Arora, Advocates. Mr. Milan Singh Negi, Mr. Nikhil Kumar Jha and Mr. Gautam Goel, Advocates for R1/RP.

Cause Title: Dr. Vijay Kant Dixit & Anr. Versus Amrapali Fincap Ltd. & Ors.

Case No: Comp. App. (AT) (Ins) No. 1149 – 1151 of 2025

Coram: Justice Ashok Bhushan, Mr. Barun Mitra (Technical Member)