NCLAT Rules, Resolution Plan Providing Contingencies To Ensure Compliance With Building Norms Can't Be Deemed Unviable
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member), and Mr. Barun Mitra (Technical Member), held that a resolution plan proposing multiple contingencies to resume construction based on approval from statutory authorities cannot be labelled unviable or unworkable. The Tribunal dismissed appeals filed by a suspended director of the corporate debtor and upheld the approval of the resolution plan submitted by a homebuyers' association.
The case arose from the insolvency resolution of Som Resorts Pvt. Ltd., a real estate developer undertaking a project on land allotted by the UP Housing and Development Board (UPAVP) in Vasundhara, Ghaziabad. The promoters violated sanctioned building plans, resulting in the project’s sealing by UPAVP. Following this, 26 homebuyers initiated insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The National Company Law Tribunal (NCLT), by order dated 02.08.2022, admitted the petition and appointed Mr. Sumit Shukla as the Interim Resolution Professional (IRP), later replaced by Mr. Rabindra Kumar Mintri.
After the CIRP commenced, multiple Committee of Creditors (CoC) meetings were held, and a revised ‘Form G’ was issued with modified eligibility criteria. Among the applicants, Casa Italia Social Welfare Association, an association of homebuyers, submitted a resolution plan. This plan was approved unanimously by the CoC during the e-voting held between 12.04.2023 and 14.04.2023. The Resolution Professional (RP) filed an application for plan approval on 19.04.2023. Eight months later, the appellant, a suspended director, filed objections under I.A. No. 459/2024. The NCLT rejected the objections and approved the resolution plan on 03.12.2024.
Objections Raised by the Appellant
The appellant challenged the process and substance of the CIRP, alleging:
The CoC, consisting solely of homebuyers, submitted and approved a resolution plan via their own association, raising conflict of interest concerns.
More viable plans were ignored, and eligibility criteria were diluted to accommodate Casa Italia.
The plan was not a single viable proposal but a contingent one, containing four separate options, none of which guaranteed resolution.
The net worth of the association was only ₹93 lakhs, whereas the earlier criteria demanded ₹2 crores.
Defense by Respondents
The RP and Successful Resolution Applicant (SRA) countered these claims, submitting:
The eligibility criteria were lawfully revised in the 5th CoC meeting held on 23.12.2022, lowering the requirement to ₹90 lakhs for homebuyer associations.
Casa Italia met the revised criteria and submitted its resolution plan accordingly.
The project had been sealed due to illegal construction by the appellant’s management, and the four contingencies in the plan were lawful, practical options to resume construction with UPAVP’s approval.
The appellant never participated in any CoC meetings nor raised objections until long after plan approval, indicating an attempt to derail the resolution process.
NCLAT’s Observations and Findings
Addressing the locus standi issue, the Tribunal referred to the Supreme Court’s ruling in Kalyani Transco v. Bhushan Power and Steel Ltd [Civil Appeal No. 1808/2020], which clarified that "any person aggrieved" includes suspended directors and other stakeholders. The Tribunal held the appeal maintainable and proceeded to examine its merits.
On eligibility, the Tribunal referred to the 5th CoC meeting minutes and found that the net worth criterion for associations was duly revised to ₹90 lakhs, and Casa Italia, with a net worth of ₹93 lakhs, met the requirement. The appellant’s objection on this ground was thus rejected.
Regarding the alleged “contingent” nature of the plan, the Tribunal clarified that the project had been sealed since 2016 due to unauthorized construction, and therefore, any resolution plan had to necessarily propose remedial measures acceptable to UPAVP. The four proposed options were not speculative, but practical alternatives designed to gain re-approval for resuming construction. The Tribunal noted: “We do not find any substance in the submission of the appellant that the plan is contingent and not viable or not workable. Contingencies are alternate options under which the resolution applicant has to carry out the construction in accordance with the requirement of law.”
The Tribunal also recorded that UPAVP, in an affidavit filed before the NCLT, had expressed agreement to Option 4 among the four contingencies, thus validating at least one proposed path under the resolution plan. The SRA also committed to proceed with whichever option was approved.
Further, the Tribunal rejected the appellant’s arguments regarding breach of CIRP timelines, observing that the resolution plan was approved and the application for its approval was filed within the extended CIRP period allowed by the NCLT.
Finally, the Tribunal referred to the IBBI’s clarification in Regulation 31A (post-amendment) that associations of allottees are eligible to submit resolution plans for real estate projects, further reinforcing the legitimacy of Casa Italia’s role.
Verdict
The NCLAT held that the resolution plan complied with all statutory and regulatory requirements, including Section 30(2)(b) of the IBC and the CIRP Regulations, 2016. It upheld the NCLT’s approval of the plan and rejected the appellant’s objections as meritless. Consequently, both appeals were dismissed.
Appearance
For Appellant: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Arjun Mahajan, Mr. Sumit R. Sharma, Mr. Piyush Gautam, Mr. Sagar Agarwal and Mr. Harshit Kapoor, Advocates.
For Respondents: Mr. Arvind Nayyar, Sr. Advocate with Mr. Akshay Joshi and Mr. Akash Srivastava, Advocates for R 1. Mr. Alok Dhir, Ms. Varsha Banerjee and Ms. Udita Singh, Advocates for R-2.
Cause Title: Anuj Gaur & Ors. V. Rabindra Kumar Mintri RP of Som Resorts Pvt. Ltd. & Anr.
Case No: Company Appeal (AT) (Insolvency) No. 312 & 313 of 2025
Coram: Justice Ashok Bhushan [Judicial Member], Mr. Arun Baroka [Technical Member], Mr. Barun Mitra [Technical Member]
