NCLAT Rules, Failure To Submit Final Plan Or Participate In Challenge Process Bars Unsuccessful Bidder From Questioning Approved Plan
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, has held that an unsuccessful resolution applicant who neither submits a final resolution plan nor participates in the challenge mechanism cannot later question the approval of another resolution plan or allege irregularities in the Corporate Insolvency Resolution Process (CIRP). A Bench comprising Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member) dismissed an appeal filed by Ganga Construction Consortium, an unsuccessful resolution applicant, challenging the approval of a resolution plan submitted by Manglam Multiplex Pvt. Ltd. for Varutha Developers Pvt. Ltd.
Background
Varutha Developers Pvt. Ltd., the corporate debtor, had purchased 9.26 acres of land in Gurugram, financed by loans amounting to ₹300 crore from SREI Equipment Finance Ltd. After defaulting on repayment, SREI initiated insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), and the NCLT admitted the petition. The Resolution Professional (RP) invited Expressions of Interest (EOIs) under Form G, and eight Prospective Resolution Applicants (PRAs), including Ganga Construction Consortium (the appellant) and Manglam Multiplex Pvt. Ltd. (Respondent No. 6), expressed their interest.
The RP later introduced a challenge mechanism, directing all PRAs to submit financial bids of at least ₹250 crore. While Manglam and other applicants participated, Ganga Construction failed to submit its final financial bid despite being granted multiple opportunities. Consequently, the Committee of Creditors (CoC) approved Manglam Multiplex’s plan, which was subsequently approved by the NCLT. Aggrieved, Ganga Construction filed an appeal before the NCLAT, claiming irregularities in the process and ineligibility of the successful resolution applicant under Section 29A of the IBC.
Appellant’s Submissions
The appellant argued that the Share Purchase Agreement (SPA) dated 17.05.2019 between M3M group entities and the shareholders of Varutha Developers resulted in M3M obtaining de facto control of the corporate debtor. It was contended that Manglam Multiplex Pvt. Ltd., being linked to the M3M group, was ineligible under Section 29A(c), (h), and (j) of the IBC, which bar certain related entities and guarantors from submitting a resolution plan. The appellant further alleged that the CoC’s approval process lacked transparency and violated procedural requirements of the IBC and the CIRP Regulations. It urged that the approved plan should be set aside as being contrary to law.
Respondents’ Submissions
The Resolution Professional and Manglam Multiplex Pvt. Ltd. opposed the appeal, arguing that the appellant lacked locus standi to challenge the approved plan since it failed to participate in the challenge mechanism or submit a final resolution plan. It was submitted that while the SPA between the M3M group and the corporate debtor’s shareholders was executed in 2019, it never materialized because the Directorate of Enforcement (ED) attached the land in February 2020. As a result, no shares were ever transferred, and no control—de jure or de facto—was ever exercised by the M3M group. Hence, Manglam Multiplex, though linked to certain group entities, did not attract disqualification under Section 29A of the IBC.
Findings of the Tribunal
The NCLAT first noted that the appellant neither submitted its final plan nor participated in the challenge mechanism, despite being given multiple opportunities by the RP. It held that the appellant, having opted out of the process, had no right to challenge the resolution plan approved by the CoC and sanctioned by the NCLT. The bench observed: “The Appellant neither participated in the Challenge Mechanism nor submitted a final resolution plan. Any submission regarding the conduct of the CIRP not being in accordance with the Regulations cannot be entertained.”
On the question of ineligibility under Section 29A, the Tribunal found that while Respondents Nos. 8 and 9 (M3M group entities) had entered into a Share Purchase Agreement dated 17.05.2019 with the corporate debtor’s shareholders, the transaction never culminated due to the ED’s attachment of assets on 04.02.2020. The bench held: “There is no dispute that Respondent Nos. 8 and 9 entered into the Share Purchase Agreement dated 17.05.2019 with shareholders of the Corporate Debtor. However, the assets of the Corporate Debtor were provisionally attached by the Directorate of Enforcement on 04.02.2020, and no shareholding was ever transferred in favour of the purchasers.”
The Tribunal further ruled that Section 29A(c), (h), (i), and (j) were not applicable, since the M3M group had never acquired control of the corporate debtor. It also rejected the argument that M3M or its subsidiaries acted as guarantors under Section 29A(h), stating: “The Share Purchase Agreement in no manner can be read as a guarantee. Respondent Nos. 8 and 9 never gave any guarantee within the meaning of Section 29A(h). Hence, the alleged ineligibility is non-existent.” The Tribunal also took note that another unsuccessful resolution applicant had already filed an appeal challenging the approval of the same resolution plan, which had been dismissed earlier. Thus, this subsequent appeal by Ganga Construction was not maintainable.
The NCLAT concluded that Ganga Construction Consortium, having failed to submit its final plan or participate in the challenge process, could not question the approved resolution plan or allege ineligibility of the successful resolution applicant after the conclusion of the CIRP. Accordingly, the appeal was dismissed, and the order of the NCLT approving the plan of Manglam Multiplex Pvt. Ltd. was upheld. No order as to costs was passed.
Appearance
For Appellant: Mr. Mohit Choudhary, Mr. Prakhar Mithal, Mr. Gaurav Raj, Advocates.
For Respondents: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Nikhil Pillai, Mr. Shwetank Ginodia, Ms. Malvi Dedhia and Ms. Mini Aggarwal, Advocates for R-1. Company Appeal (AT) (Insolvency) No. 185 of 2025 Mr. Krishnendu Datta, Sr. Advocate with Mr. Harsh Gurbani, Mr. Harshit Chaudhary and Ms. Suparna, Advocates for R-2 & 3. Mr. Arun Kathpalia, Sr. Advocate with Ms. Ruby Singh Ahuja, Ms. Aakriti Vohra, Ms. Roopali Gupta, Ms. Varsha Himatsingka and Ms. Diksha, Advocates for R-6. Mr. Rajat Juneja, Mr. Anmol Kumar, Advocates for R-8 & 9.
Cause Title: Ganga Construction (Consortium) v. Anil Kumar Mittal, RP of Varutha Developers Pvt. Ltd. & Ors.
Case No: Company Appeal (AT) (Insolvency) No. 185 of 2025
Coram: Justice Ashok Bhushan, Mr. Arun Baroka (Technical Member)
