Sangeetha Prathap

The National Company Law Appellate Tribunal (NCLAT) has set aside a July 2025 decision of the National Company Law Tribunal (NCLT), New Delhi, which had declared the promoters of JC World Hospitality Pvt. Ltd. ineligible to submit a resolution plan under Section 29A of the Insolvency and Bankruptcy Code (IBC). Allowing multiple connected appeals, the Appellate Tribunal restored the promoters’ resolution plan for consideration and directed the NCLT to decide the pending plan approval application within three months.

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The appeals were heard by a Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member). The dispute relates to the resolution process of JC World Hospitality, an MSME real estate company admitted into insolvency on 13 December 2019 on a Section 7 petition filed by homebuyers, who constitute 100% of the Committee of Creditors (CoC). Resolution plans were received from the promoters—Dr. Vijay Kant Dixit and Mrs. Vasudha Gaur Dixit—and from Amrapali Fincap Ltd.

Following directions of the NCLT, the Resolution Professional conducted re-voting in November 2021. The promoters’ revised resolution plan received 51.56% “yes” votes from the class of homebuyers, while Amrapali’s received 50.39%. Under Section 25A(3A), the authorised representative must vote in accordance with the majority of the creditors in the class; therefore both plans were recorded as having received 100% votes. Applying the tie-breaker formula adopted by the CoC, the promoters’ plan was treated as the approved plan, and a Letter of Intent was issued in November 2021.

However, the process stalled due to an interim stay obtained by Amrapali from the Supreme Court in April 2022, which continued for more than two years before being lifted in July 2024. Amrapali thereafter raised several objections before the NCLT, including allegations that the promoters were ineligible under various clauses of Section 29A due to alleged NPAs, director disqualification, association with entities facing findings of avoidance transactions, and lack of net worth exceeding ₹50 crores.

The promoters contended that they were protected under Section 240A, as the corporate debtor is an MSME. They further relied on a 2025 email issued by the Ministry of Corporate Affairs showing that their Director Identification Numbers had been active since the removal of temporary disqualification in 2018. They also highlighted that the resolution plan explicitly provided that the Performance Bank Guarantee and requisite funds were to be arranged by the investor, Rishikesh Hire Purchase and Leasing Pvt. Ltd., in accordance with the terms of the plan.

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After examining the record, the NCLAT rejected each ground cited by the NCLT. On the allegation of NPA, the Appellate Tribunal held that the conclusion that the promoters’ accounts had been declared NPA at the time of plan submission was “unfounded and cannot be sustained,” referring to materials placed on record and the MCA’s communication confirming continued validity of the DINs. On director disqualification, the Tribunal criticised the NCLT’s findings, noting that they were contrary to the material available on record and observing that the Adjudicating Authority had reached a conclusion “in a callous manner without looking into materials on record.”

The Appellate Tribunal also held that the NCLT erred in disregarding the MCA’s email confirming removal of disqualification in 2018. It emphasised that once the competent authority had clarified the status of the DINs, the NCLT could not have treated the promoters as disqualified. On the issue of preferential transactions and alleged linkage with Jaypee group entities, the Tribunal noted that no basis was shown to establish that the promoters were in management or control of the relevant companies so as to attract disqualification under Section 29A(g). The objection regarding net worth was also rejected on the ground that the plan had been approved by the CoC after examining the involvement of the investor and the structure of the plan.

The NCLAT further noted that the NCLT had ignored relevant pleadings and had reached several erroneous factual conclusions. It found that the objections raised by Amrapali were belated and contributed significantly to delaying the insolvency resolution of a project where 286 commercial space buyers had been awaiting completion for several years.

Ultimately, the Tribunal allowed the promoters’ appeals, set aside the order declaring them ineligible, and restored the application for approval of their resolution plan. It also dismissed Amrapali’s appeal seeking approval of its own plan and rejected a separate appeal by a homebuyer seeking issuance of a fresh Form G.

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The NCLAT restored the promoters’ right to participate in the resolution process, revived the Resolution Professional’s application seeking approval of their plan, dismissed Amrapali’s objections and appeal, and directed the NCLT to decide the resolution plan approval application within three months.

Appearance

For Appellants: Senior Advocates Krishnendu Datta and Abhijeet Sinha with Advocates Prachi Johri, Kamal Naini Sharma and Mrigangi Parul

For Respondents: Advocate Kunal Godhwani and Kinjal Chadha for Advocates for R3.Advocates Sumant Batra, Neeha Nagpal, Malak Bhatt, Ajatshatru Singh Rawat, Sarthak Bhandari and Riya Kaur Arora, Advocates; Advocate Sumant Batra, Neeha Nagpal, Malak Bhatt, Ajatshatru Singh Rawat, Sarthak Bhandari and Riya Kaur Arora for RP.

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

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

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