Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), New Delhi, has imposed a cost of ₹15 lakh on Astral Agro Ventures, a Prospective Resolution Applicant (PRA), for repeatedly obstructing and delaying the Corporate Insolvency Resolution Process (CIRP) of Megi Agro Chem Ltd. The Tribunal strongly criticised the PRA’s conduct, observing that the insolvency process “cannot be reduced to a Tom & Jerry show” where a participant who has no legal right attempts to derail the proceedings.

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A Bench comprising Justice N. Seshasayee (Judicial Member) and Arun Baroka (Technical Member) dismissed the appeal filed by the PRA, which had challenged the approval of a resolution plan submitted by Arainfra Projects Pvt. Ltd. The Tribunal described the appellant’s conduct as “pretentious” and “loaded with well-concealed chicanery,” noting that the PRA had failed to submit a resolution plan despite filing an Expression of Interest (EOI) and despite receiving a special extension from the Committee of Creditors (CoC).

The CIRP of the corporate debtor began in 2022. Astral Agro Ventures filed an EOI but never submitted a plan. The only resolution plan received was from Arainfra Projects Pvt. Ltd., which was approved by the CoC. After the approval, the PRA sought to challenge the plan, alleging that the Successful Resolution Applicant (SRA) did not meet the minimum net worth criteria and that its directors were related to a wilful defaulter. It also alleged that some CoC meetings were held without 24-hour notice.

The Resolution Professional countered these allegations, submitting that the PRA had no locus to challenge the CoC’s commercial decision because it had never submitted a resolution plan, had repeatedly sought extensions, and had thereby become “procedurally irrelevant.” The NCLAT agreed, observing: “When on facts locus standi of the appellant is reduced to procedural irrelevance due to its failure to submit a resolution plan within the time stipulated, it does create considerable uneasiness in accommodating it to object to CoC’s approval of the resolution plan. Its voice does not merit consideration.”

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The Tribunal went on to clarify the limited role of a PRA in the resolution process: “A PRA enters the scene only from the time it submits its Expression of Intent… and it moves to the next stage only if its name is shortlisted for submitting a resolution plan. And once it submits its resolution plan its role stops, for it does not have a vested right to have its plan approved.”

Emphasising that CIRP is not meant to accommodate disruptive behaviour, the Tribunal made a sharp remark: “We believe that we are not watching any Tom & Jerry show of hide, seek and chase, nor do we tolerate appellant’s attempt to reduce the ongoing CIRP to an entertainment show.” The Tribunal found that the PRA’s objections were intended solely to stall the CIRP and frustrate the resolution process. It held that issues such as detailed CoC minutes or meeting notices were immaterial when the CoC had validly evaluated commercial considerations.

Significantly, the NCLAT also recommended that the Insolvency and Bankruptcy Board of India (IBBI) consider introducing regulations to blacklist PRAs who attempt to derail CIRPs. It further suggested that all PRAs should be required to disclose their previous participation history in CIRPs when submitting EOIs.

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The NCLAT dismissed the appeal filed by Astral Agro Ventures, imposed a penalty of ₹15 lakh for obstructing the resolution process, and upheld the CoC’s approval of the resolution plan. The Tribunal issued strong observations discouraging PRA-driven disruptions and suggested regulatory reforms to prevent similar conduct in future CIRPs.

Appearance

For Appellant: Advocate Amey Hadwale, Advocate

For Respondents: Advocates Abhira Raj and Advocate Shivesh Kaushik

Cause Title: Astral Agro Ventures Vs Mr. Vakati Balasubramanyam Reddy and Ors.

Case No: Comp. App. (AT) (Ins) No. 530 of 2025

Coram: Justice N. Seshasayee (Judicial Member), Arun Baroka (Technical Member)