Resolution Plan Was Collusive, Sought Clean Slate Without Revival; NCLT Ahmedabad Orders Liquidation Of Girdhari International
Pranav B Prem
The National Company Law Tribunal (NCLT), Ahmedabad Bench, has refused to approve the resolution plan submitted for Girdhari International Private Limited after finding that the process was vitiated by collusion between the resolution applicant and the sole financial creditor. Holding that the plan was a mere attempt to secure the benefits of a “clean slate” under the Insolvency and Bankruptcy Code, 2016 (IBC), without any genuine effort at revival, the tribunal ordered liquidation of the corporate debtor.
The Bench comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma observed that “the entire exercise suggests an accommodation or collusive arrangement” rather than a bona fide resolution process. The tribunal found that the plan had been approved despite glaring red flags, including missing export proceeds exceeding ₹50 crore, serious financial irregularities, and the absence of any credible mechanism to revive the company’s business.
The corporate insolvency resolution process (CIRP) of Girdhari International commenced on February 29, 2024, on a petition filed by Drip Capital Inc. As Drip Capital was the only financial creditor, it constituted the sole member of the Committee of Creditors (CoC). The tribunal noted that as many as sixteen CoC meetings were held during the process. Throughout the CIRP, the Resolution Professional repeatedly reported non-cooperation by the suspended board of directors, failure to provide records, breaches of the moratorium, and the need to republish Expressions of Interest on multiple occasions due to lack of response.
The tribunal also took note of the fact that the corporate debtor’s bank accounts had been frozen during the process. Eventually, a resolution plan was submitted on November 18, 2024 by a consortium led by Kailash Thanmal Shah along with Nova Dyestuff Industries Private Limited. The CoC approved this plan on April 21, 2025 for a total consideration of ₹45 lakh, which included ₹25 lakh payable to Drip Capital and ₹20 lakh towards CIRP costs.
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However, the Resolution Professional strongly opposed approval of the plan. She pointed out that the plan failed to address the root causes of insolvency and completely ignored the issue of unrecovered export proceeds. According to her submissions, 416 export shipments valued at USD 33.39 lakh had not yielded any payments, resulting in sundry debtors amounting to ₹50.51 crore. Due to lack of information and supporting documents, the valuers assessed these receivables at nil value.
The Resolution Professional further highlighted that the corporate debtor had no ongoing operations, no employees, and only about ₹70,000 in its bank account. She also drew attention to fictitious accounting entries and a written-down investment of ₹3.30 crore, which led her to file an application under Section 66 of the IBC against the suspended directors alleging fraudulent trading and wrongful conduct.
After examining the material on record, the tribunal held that the resolution plan offered no concrete proposal to restart the business or recover the missing export proceeds. It rejected the resolution applicants’ claim that goodwill alone would revive the company, observing that such assertions were wholly unsubstantiated. The Bench underscored that while commercial wisdom of the CoC is generally accorded deference, such deference cannot extend to a plan that is “wholly capricious, arbitrary, irrational and de hors the provisions of the statute or rules.”
The tribunal noted that the IBC requires the CoC to assess a resolution plan on the touchstone of feasibility and viability, a responsibility that had not been properly discharged in the present case. It observed that the lack of scrutiny over business projections and financial provisions, coupled with the nominal resolution amount in the face of massive unresolved receivables, demonstrated arbitrary decision-making not at arm’s length. According to the Bench, such conduct undermines the IBC’s objective of value maximisation for stakeholders.
Concluding that the resolution plan and the manner in which it was approved reflected an attempt to secure undue benefits under the Code without any genuine revival effort, the NCLT rejected the plan and ordered liquidation of Girdhari International Private Limited. The tribunal appointed Rajendra Jain as the liquidator, directed that a forensic audit be conducted, and declined to grant a fresh moratorium so that authorities such as tax, customs and the Reserve Bank of India could continue their scrutiny of the company’s affairs. Accordingly, the NCLT held that liquidation was the only viable course in the facts of the case, bringing the CIRP to an end and paving the way for further investigation into the financial irregularities identified during the proceedings.
Appearance
For Applicant : Advocate Monaal Davawala for the Resolution Professional
For Respondents: Advocate Nandan Soni for the Income Tax Department; Advocate Somya Jain for the State Tax Department
Cause Title: Neha Bhasin and Anr. v. Kailash Thanmal Shah & Ors. in Primus Insolvency Resolution & Valuation Pvt. Ltd.
Case No: IA(Plan)/12(AHM)2025 with IA/1033(AHM)2025 in CP(IB)/238(AHM)2023
Coram: Judicial Member Shammi Khan, Technical Member Sanjeev Sharma
