Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member), has directed the Resolution Professional (RP) of Heera Constructions Company Pvt. Ltd. to issue a fresh Form G, inviting new expressions of interest (EOI) from prospective bidders in the ongoing insolvency resolution process of the Kochi-based real estate firm.

Also Read: NCLAT Rules, Mere Allegations Of Fraud Can't Invalidate Auction When Unsuccessful Bidder Failed To Put In Bid Despite Opportunity

The Tribunal passed the order while allowing two appeals filed by IFCI Ltd, a secured financial creditor, which challenged the March 31, 2023 order of the National Company Law Tribunal (NCLT), Mumbai Bench. The NCLT had previously approved the resolution plan submitted by Royal Heights Projects Pvt. Ltd., the successful resolution applicant (SRA). The Appellate Tribunal observed that the conduct of the Resolution Professional, Raju Palanikunnathil Kesavan, was marked by “material irregularities” and that he had “miserably failed” to include several of the assets of the corporate debtor in the Information Memorandum (IM) without any sufficient justification.

Heera Constructions Company Pvt. Ltd., engaged in real estate development, had defaulted on loans extended by IFCI Ltd, which had provided financial assistance amounting to approximately ₹50 crore. Following the default, IFCI initiated insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, which were admitted by the NCLT, Mumbai Bench, on March 27, 2019. The Committee of Creditors (CoC) consisted primarily of homebuyers holding 73.13% of the voting share, while IFCI held 20.55%. The CoC approved the resolution plan submitted by Royal Heights with a 74.19% voting share, despite IFCI dissenting to the plan.

In its appeal before the NCLAT, IFCI argued that the RP had failed to include and value two prime properties—Attipra land in Thiruvananthapuram and Poonithura land in Ernakulam—which were integral to the company’s assets. IFCI contended that the RP had arbitrarily assigned a nil value to the Attipra land and had also excluded several properties that were later discovered by the Enforcement Directorate (ED). The financial institution maintained that these omissions effectively allowed the successful resolution applicant to acquire undisclosed properties “for free” through Clause 13.11 of the resolution plan, which stated that all assets, whether disclosed or not, would continue to remain vested in the corporate debtor.

The Tribunal found substantial merit in IFCI’s contentions. It held that the RP had “miserably failed to account for such properties and to include them in the Information Memorandum.” The Bench took note of the ED’s search and seizure operations conducted in February 2023, well before the NCLT’s approval of the resolution plan. These operations unearthed multiple properties of the corporate debtor worth over ₹23 crore that were not disclosed to the CoC or included in the IM. The Tribunal observed that the RP’s failure to disclose such significant information and his omission to account for valuable assets had vitiated the entire Corporate Insolvency Resolution Process (CIRP).

The NCLAT emphasized that under Section 25(2)(a) and Regulation 36 of the CIRP Regulations, 2016, the RP is duty-bound to take immediate custody of all assets and to prepare an Information Memorandum that comprehensively includes the financial position and assets of the corporate debtor. The Tribunal noted that despite being aware of the ED’s investigation and seizure of title deeds, the RP chose not to disclose those facts or include them in the IM. This conduct, the Bench held, was a serious violation of statutory duties and amounted to a material irregularity.

Referring to Clause 13.11 of the resolution plan, which provided that all properties, whether reflected in the books or not, would remain vested in the corporate debtor, the Tribunal remarked that such a provision “would never be fair” and effectively enabled the resolution applicant to gain ownership of undisclosed properties without paying any value for them. It further held that the commercial wisdom of the CoC cannot override the process when “crucial aspects were never placed before the Committee of Creditors,” as the CoC’s decision cannot be considered valid in the absence of complete and accurate information.

The NCLAT relied on its earlier ruling in Masatya Technologies Pvt. Ltd. v. Amit Agarwal, where it had held that failure to include or value newly discovered properties amounts to a material irregularity in the exercise of powers by the RP. The Appellate Tribunal also cited the Supreme Court’s decision in Victory Iron Works Ltd. v. Jitendra Lohia & Anr. (2023 7 SCC 227), which clarified that the term “asset” under the Insolvency and Bankruptcy Code encompasses all kinds of property—tangible, intangible, and developmental rights—thereby affirming that the RP’s omission of these assets was contrary to law.

In light of these findings, the Tribunal concluded that the RP’s omissions and non-disclosures had undermined the sanctity of the insolvency process. It noted that more than six years had passed since the initiation of CIRP, yet the successful resolution applicant had failed to take any steps to complete the project as per the resolution plan’s schedule. The NCLAT held that such prolonged inaction, combined with procedural irregularities, necessitated a fresh start to the process.

Also Read: NCLAT Rules, Claims Based On Guarantee Can Be Considered By RP Even If Guarantee Was Not Invoked Before Insolvency Commencement Date

Consequently, the Tribunal set aside the approved resolution plan and directed the Resolution Professional to issue a fresh Form G to invite new expressions of interest. It further ordered that the entire CIRP, including the consideration of new resolution plans, must be completed within three months from the date of the order. Delivering its verdict on November 11, 2025, the NCLAT concluded that the Resolution Professional’s failure to include crucial assets, disclose ongoing ED proceedings, and prepare a complete Information Memorandum constituted a material irregularity under the Insolvency and Bankruptcy Code. The ruling reinforces that transparency and diligence are indispensable in the conduct of insolvency proceedings and that any deviation from these principles can render the process void, requiring fresh initiation.

Appearance

For Appellant: Senior Advocate Krishnendu Datta with Advocates Amish Tandon, Anushree Kulkarni; Advocate TS Sundaram for Promoters Directors Advocates Ilam Paridi, Senior Advocate Ashish Dholakia, Advocate Rohan Chawla, Advocate.

For Respondent: Senior Advocate Sunil Fernendes with Advocates Rukma George, Ashhab Khan, Mukund P Unny

Cause Title: IFCI Ltd v. Raju Palanikunnathil Kesavan, RP of Heera Construction Co Pvt Ltd & Ors.

Case No: Company Appeal (AT) (Insolvency) No. 740/2023; IA No. 2500, 2504/2023 and 3307, 8228 of 2024

Coram: Judicial Member Justice Yogesh Khanna, Technical Member Ajai Das Mehrotra