Alchemist Asset Reconstruction ... vs Asc Insolvency Services Llp & Ors

[Arising out of Order dated 22.01.2025 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in IA No.52 of 2024 & IA No.5176 of 2024 in Company Petition No. (IB)- 653(PB)/2023]

IN THE MATTER OF:

Alchemist Asset Reconstruction Company Ltd. ...Appellant

Versus

ASC Insolvency Services LLP & Ors. ...Respondents

Present:

For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr. Milan Singh Negi, Mr. Nikhil Kumar Jha, Ms. Aakriti Gupta and Ms. Alina Merin Mathew, Advocates For Respondents: Mr. Ramji Srinivasan, Sr. Advocate with Mr. Arijit Mazumdar, Ms. Akansha Kaushik and Mr. Shambo Nandy, Advocates for R-2. Mr. Abhishek Sinha, Mr. Dhruv Malik, Ms. Aditi Sinha and Ms. Rajnandini Singh, Advocates for R- 3/NARCL.

JUDGMENT

(15th May, 2025)

Ashok Bhushan, J.

This Appeal by a Dissenting Financial Creditor has been filed

challenging the order dated 22.01.2025 passed by the Adjudicating

Authority (National Company Law Tribunal), Principal Bench, New Delhi

allowing IA No.52 of 2024 approving the Resolution Plan submitted by

Respondent No.2- 'OCL Iron and Steel Limited' (Successful Resolution 2

Applicant) as well as rejecting IA No.5176 of 2024 filed by the Respondent

No.5- 'Gateway Investment Management Services Limited' (Unsuccessful

Resolution Applicant).

2. Brief facts of the case necessary to be noticed for deciding the Appeal

are:-

2.1. The Corporate Debtor- 'Helios Photo Voltaic Ltd.' was subjected to

Corporate Insolvency Resolution Process (CIRP) by order dated

11.01.202024 on an application filed by Respondent No.3- 'National Asset

Reconstruction Company Ltd.'. Appellant being Secured Financial Creditor

of the Corporate Debtor filed its claim in response to the public

announcement, Appellant was included as member of the Committee of

Creditors (CoC) with voting share of 18.69%. The other two CoC members

were National Asset Reconstruction Company Limited (Respondent No.3)

had 73.36% vote shares and third member, International Finance

Corporation (Respondent No.4) having vote share of 7.95%. CoC finalised

the Request for Resolution Plan (RFRP) in the CoC meeting. RFRP was

issued by the Resolution Professional with the approval of the CoC under

which last date for submission of the Resolution Plan was 06.06.2024.

Resolution Plans were submitted by the Respondent Nos.2 and 5 and other

Resolution Applicants. On 29.07.2024, CoC in 11th meeting decided to hold

a Challenge Process. Challenge Process was conducted on 29.07.2024 where

Respondent Nos.2 and 5 and other Resolution Applicants participated. The

Respondent No.5 offered net present value of Rs.101,05,01,742/- whereas

Respondent No.2 - 'OCL Iron and Steel Limited' offered net present value of

Company Appeal (AT) (Insolvency) No. 179 of 2025 3

Rs.99,05,00,000/-. All the Resolution Applicants were permitted to submit

their final Resolution Plan in accordance with the final offer in the bidding

process by 05.08.2024. Resolution Plans were submitted by the Resolution

Applicants including Respondent Nos.2 and 5. 30.08.2024 was fixed as a

last date for submission of addendums /clarification. Voting commenced on

the Resolution Plan on 31.08.2024 and was to be completed by 07.09.2024.

On 05.09.2024, Respondent No.5 issued e-mail to the CoC and the

Resolution Professional that it is offering payment of second instalment

(75% of NPV) within 90 days instead of 364 days which was proposed in the

Resolution Plan. Voting result on the Resolution Plan was placed before the

CoC and CoC in meeting dated 12.09.2024 approved the Resolution Plan of

Respondent No.2 with 73.38% vote share. Respondent No.5 filed a Writ

Petition No.13278 of 2024 in the Delhi High Court seeking a direction to

consider its revised offer given vide e-mail dated 05.09.2024. Writ Petition

was dismissed by the Delhi High Court on 23.09.2024. A review application

was also filed by the Respondent No.5 before the Delhi High Court which too

was disposed of on 04.10.2024. On 07.10.2024, Respondent No.5 gave

revised financial offer of Rs.120 Crores payable within 30 days. The CoC in

the meeting held on 14.10.2024 considered the revised financial proposal

submitted by Respondent No.5 and resolved to adhere to the provisions of

the IBC and RFRP and not to consider any revised offer after approval of the

Resolution Plan. Respondent No.5 filed an IA No.5176 of 2024 seeking

consideration of its revised offer submitted on 07.10.2024 and also praying

for rejection of the Resolution Plan submitted by Respondent No.2. The

Company Appeal (AT) (Insolvency) No. 179 of 2025 4

aforesaid applications was dismissed on 22.01.2025 by the Adjudicating

Authority aggrieved by which order this Appeal has been filed.

2.2. The Appeal was filed on 24.01.2025. When it came for consideration

on 31.01.2025, Counsel for the Appellant prays leave to file Additional

Affidavit. Time was allowed to file Additional Affidavit. All the parties have

appeared on 31.01.2025 when the Appeal was heard. On 07.02.2025, time

was allowed to file reply to Additional Affidavit before the next date. Reply to

the Additional Affidavit has been filed. Appeal was again taken on

19.03.2025 when Learned Counsel for the Respondent No.1 submitted that

the composite reply to the Additional Affidavit has already been filed.

Respondent Nos.2 and 3 submitted that they have also filed reply to the

Additional Affidavit of the Appellant and they relied on the composite reply

filed by Respondent No.1. Appeal was heard on 26.03.2025 and 28.03.2025

when orders were reserved.

3. Shri Krishnendu Datta, Learned Senior Counsel appearing for the

Appellant in support of the Appeal contends that the Appellant being

Secured Financial Creditor is an aggrieved person who is interested in the

value maximisation of the Corporate Debtor. Counsel for the Appellant

referring to the grounds raised in the Additional Affidavit submits that the

proposed acquisition of the Corporate Debtor through Composite Scheme of

Merger and Demerger in the Resolution Plan is a combination in terms of

Section 5 of the Competition Act, 2002 and obtaining approval of the

Competition Commission of India (CCI) for combination is a mandatory

condition and no approval having been obtained from CCI, the approval of

Company Appeal (AT) (Insolvency) No. 179 of 2025 5

the Resolution Plan is contrary to the provisions of Section 5 of the

Competition Act, 2002 and deserves to be set aside on this ground. Counsel

for the Appellant has relied on judgment of the Hon'ble Supreme Court in

"Independent Sugar Corporation Ltd. vs. Girish Sriram Juneja and

Ors.- Civil Appeal No.6071 of 2023" decided on 29.01.2025. It is further

submitted that the proposed assignment of debt from an ARC to the SRA

who is non-ARC is impermissible in terms of the SARFAESI Act, 2002 and

RBI's Master Directions. It is submitted that an ARC being a financial entity

registered under Section 3 of the SARFAESI Act with RBI, is strictly

regulated in terms of SARFAESI Act, 2002 as well as RBI's Master Directions

which permit the ARC to carry out only such activities which are specifically

permitted under the law. ARC is not permitted to assign its debt to non-

ARC, hence, assignment of debt under the Resolution Plan to SRA is

contrary to law and Resolution Plan deserves to be rejected. It is further

submitted that the proposed assignment of debt from International Finance

Corporation (Respondent No.4 herein) is impermissible. Assignment of debt

from Respondent No.4 being an ECB lender to a non-ECB lender is clearly

in contravention of law. Counsel for the Appellant further submitted that the

proposed treatment of Noida Project Land (sub-leased to Corporate Debtor)

post termination of the sub-lease deed by the lessor and creation of rights in

favour of third party could not have been included in the Resolution Plan.

Resolution Plan thus, included third party assets which is impermissible.

SRA has provided for unilateral and illegal withdrawal of the termination

letter by making some payment to the Liquidator of MBIL, despite the fact

that such lease rights have been assigned to a third party. The proposal in

Company Appeal (AT) (Insolvency) No. 179 of 2025 6

the Resolution Plan qua the Noida land is in contravention of the law. It is

submitted that in addition of the above said grounds, the Resolution Plan

fails to maximise the value of the Corporate Debtor. It is submitted that the

Respondent No.5 who has given the highest NPV has enhanced its offer vide

email dated 07.10.2024 to Rs.120,00,00,000/- which was not accepted by

the CoC in its meeting held on 14.10.2024. Respondent No.3 being the

largest member of the CoC with 73.36% vote did not agree to accept the

revised offer of Rs.120,00,00,000/- although commercial wisdom of the CoC

is non-justiciable but in the facts of the present case, it cannot be said that

CoC has exercised its commercial wisdom. CoC failed to maximise the value

of the Corporate Debtor. It is submitted that in view of the aforesaid grounds

the Resolution Plan deserves to be rejected and the Adjudicating Authority

committed error in approving the Resolution Plan.

4. Counsel for the Resolution Professional refuting the submissions of

the Counsel for the Appellant submits that the entire CIRP process was

conducted in accordance with the IBC and CIRP Regulations. Resolution

Plans which were filed on 06.06.2024 were required to undergo a Challenge

Process which was conducted on 29.07.2024. After the Challenge Process,

all the Resolution Applicants were required to submit their final Resolution

Plan by 05.08.2024. All Resolution Applicants included Respondent Nos.2

and 5 submitted their final Resolution Plans in accordance with the bidding

in Challenge Process by 05.08.2024. All Resolution Applicants were also

permitted to submit addendum/clarification which addendum/clarification

were submitted by Resolution Applicant by 30.08.2024. Marks of Resolution

Applicants were computed as per the evaluation matrix both on quantitive Company Appeal (AT) (Insolvency) No. 179 of 2025 7

and qualitative basis and Respondent No.2 secured 51 marks whereas

Respondent No.5 secured 48 marks. Voting on the plan commenced on

31.08.2024 and was to be completed on 07.09.2024. On 05.09.2024,

Respondent No.5 sent a revised offer copy of which e-mail was sent to the

CoC members as well as the Resolution Professional. As per the Challenge

Process Document, financial offers received in the Challenge Process could

not be modified by any Resolution Applicants, hence, revised financial offer

given on 05.09.2024 was not liable to be considered. In the CoC meeting

held on 12.09.2024, Resolution Plan of Respondent No.2 was approved with

73.38% vote share. Letter of Intent (LoI) was issued and Performance

Guarantee has already been submitted by Respondent No.2. Respondent

No.5 has given a revised offer of Rs.120 Crores on 07.10.2024. The CoC in

its meeting held on 14.10.2024 considered the revised offer dated

07.10.2024 submitted by Respondent No.5 and was of the view that in view

of the RFRP and the Challenge Process Document, no revised offer can be

considered, Resolution Plan having already been approved on 12.09.2024. It

is further submitted that there is no embargo on Asset Reconstruction

Company to assign their debt to non-ARC. It is further submitted that the

provisions of Section 5 of the Competition Act, 2002 are not attracted. The

value of the Corporate Debtor is only Rs.70.76 Crores and turnover of

Rs.10.72 Crores, no prior approval from CCI was required to be obtained. It

is submitted that the Appellant is Dissenting Financial Creditor who has

never raised any objection, which is now sought to be raised in the

Additional Affidavit, in the meetings of the CoC although Appellant was part

of the CoC, objections are raised as an afterthought to delay

Company Appeal (AT) (Insolvency) No. 179 of 2025 8

implementation. Appellant having never raised any such objection, it is

precluded from raising any objection in the present Appeal. Counsel has

referred to Notification dated 07.03.2025 and 09.09.2024.

5. Counsel for the Respondent No.3 refuting the submissions of the

Counsel for the Appellant submits that the Adjudicating Authority has

rightly approved the decision of the CoC approving the Resolution Plan with

requisite majority. CoC in its commercial wisdom decided to approve the

Resolution Plan submitted by Respondent No.2 which has secured highest

marks on the evaluation matrix. The Respondent No.5 who had given

Rs.101 Crore had proposed to give 25% of the amount within 45 days and

rest 75% within 364 days. The revised offer given by e-mail dated

05.09.2024 could not have been considered since the voting had already

commenced on the Resolution Plan and as per Process Document, no

Applicant was entitled to modify its offer. It is further submitted that the

provisions of the SARFAESI Act, 2002 or the RBI (Asset Reconstruction

Companies) Directions 2024 does not prohibit ARCs from assigning its debt

to a non-ARC entity. It is submitted that the judgment of the Hon'ble

Supreme Court in Independent Sugar Corporation Ltd. (supra) is not

applicable in the present case. In the present case, no prior approval of the

CCI was required under Section 5. It is submitted that by virtue of

Notification issued by Central Government on 07.03.2024 any merger or

amalgamation referred to in Section 5(c) of the Competition Act where the

value of assets being acquired, taken control of, merged or amalgamated is

not more than Rs.450 Crores in India or turnover or not more than Rs.1250

Crores in India are exempt from the provisions of Section 5 of the Company Appeal (AT) (Insolvency) No. 179 of 2025 9 Competition Act for a period of two years. It is submitted that as per the

above Notification dated 07.03.2024, the Corporate Debtor's value being less

than Rs.450 Crores, acquisition of Corporate Debtor by merger was

exempted and there is no applicability of Section 5. With regard to Noida

Project Land, it is submitted that the Resolution Plan of SRA mentioned that

it will continue the litigation as regard the Noida Project Land after approval

of the Resolution Plan, hence, there is no violation of any provision.

6. Counsel for the Successful Resolution Applicant (SRA) refuting the

submissions of the Counsel for the Appellant submits that the submission

of the Appellant that Composite Scheme of Merger and Demerger required

prior approval of the CCI is not correct. The value of Corporate Debtor being

less than the amount as provided in Notification dated 07.03.2024 obtaining

prior approval from the CCI for combination under Section 5 of the CCI is

thus, clearly exempted and there is no applicability of Section 5 nor there

was any requirement of obtaining prior approval of the CCI. Financial

Statement of the Corporate Debtor as on 31.03.2023 mentions that its value

is Rs.79,78,84,000/- which is much less than Rs.450 Crores. It is submitted

that the assignment of debt from ARC to non-ARC entity is not prohibited

and there is no prohibition under the SARFAESI Act, 2002 or Master

Direction- Reserve Bank of India (Asset Reconstruction Companies)

Directions, 2024. Any approval from the RBI with respect to external

commercial borrowing can be obtained under Section 31(4) within one year

after approval of the Resolution Plan. The Corporate Debtor had acquired

leasehold right over a Noida Project Land along with building structures in

2008. The lease was terminated prior to initiation of CIRP of the Corporate Company Appeal (AT) (Insolvency) No. 179 of 2025 10

Debtor. Litigation with regard to Project Land is pending before the

Adjudicating Authority. SRA has acknowledged the pending litigation. SRA

has offered to pay the lessor Rs.7,20,00,000/- as a solution to ending the

dispute regarding the project. The money offered to the lessor is in addition

to the payments to be made to the financial creditors under the Resolution

Plan of SRA. The above mechanism does not violate any provision of the

Code. It is submitted that the Appellant who is Dissenting Financial Creditor

is taking steps to obstruct the implementation of the Resolution Plan.

7. We have considered the submissions of the Counsel for the parties

and perused the record.

8. The Appellant was part of the CoC having 18.69% vote shares,

Appellant participated in the process of the CoC. The RFRP and the

Evaluation Matrix was approved by the CoC with 81.31% vote share.

Resolution Plan was approved on 12.09.2024. After receiving the final

Resolution Plans by the Resolution Applicants by 05.08.2024, marks were

computed as per Evaluation Matrix. CoC decided to put the plans on vote,

as a result of the voting, CoC approved the Resolution Plan with 73.38%

vote share. Appellant did not vote for approval of the Resolution Plan and

has now filed this Appeal challenging the approval of the Resolution Plan. As

per Section 30(4), the CoC is to approve the Resolution Plan by vote not less

than 66% voting share of the Financial Creditors after considering its

feasibility and viability and the manner of distribution proposed. The

Resolution Plan in the present case has been approved with 73.38% vote

Company Appeal (AT) (Insolvency) No. 179 of 2025 11

share. Resolution Plan approved by the Adjudicating Authority is binding on

all including the Dissenting Financial Creditor.

9. Counsel for the Respondent has referred to judgment of this Tribunal

in "Yogesh Kelkar & Ors. vs. Resolution Professional of Anudan

Properties Private Limited & Ors.- Company Appeal (AT) (Insolvency)

No. 751 of 2023" where this Tribunal laid down following:-

"24.................Regardless of the composition of CoC, the IBC places the CoC in control of the insolvency resolution process. For this purpose it has provided for different threshold levels of voting percentages for CoC to take decisions. As regards approval of resolution plan is concerned, the IBC provides for 66% vote share and once this threshold is met, the decision of the CoC, irrespective of whether it is a single-member or multi-member, the decision of the CoC becomes sacrosanct and binding on all stakeholders. The decision of the CoC on the validity of a resolution plan is essentially a business decision and hence should be left to the CoC so long as it musters more than 66% vote share. There can be no fetters on the commercial wisdom of the CoC."

10. As noted above, Additional Affidavit was filed by the Appellant raising

certain additional grounds to challenge the Resolution Plan under which

ground as per the Appellant, Resolution Plan could not have been approved.

We need to examine each of the grounds raised by the Appellant challenging

the approval of the Resolution Plan in seriatim.

Company Appeal (AT) (Insolvency) No. 179 of 2025 12

11. The 1st ground on which order approving the Resolution Plan by the

Appellant is challenged on the strength of Section 5 of the Competition Act,

2002. Counsel for the Appellant relied on judgment of the Hon'ble Supreme

Court in Independent Sugar Corporation Ltd. (supra) decided on

29.01.2025. The Hon'ble Supreme Court in the said judgment has laid down

that approval of the CCI as contemplated under Section 31(4) proviso of the

IBC has to be mandatorily obtained before approval of the plan by the CoC.

Section 31(4) of the IBC provides as follows:-

"31. Approval of resolution plan. - ...........(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later:

Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors."

12. Majority judgments of the Hon'ble Supreme Court in the above case in

paragraph 150 laid down following:-

"150. In the present case, for reasons discussed above, the statutory provision and legislative intent

Company Appeal (AT) (Insolvency) No. 179 of 2025 13

unequivocally affirm the mandatory nature of the proviso to Section 31(4) of the IBC. For a Resolution Plan containing a combination, the CCI's approval to the Resolution Plan, in our opinion, must be obtained before and consequently, the CoC's examination and approval should be only after the CCI's decision. This interpretation respects the original legislative intent, and deviation from the same would not only undermine the statute but would also erode the faith posed by the stakeholders in the integrity of our legal and regulatory framework."

13. Section 5 of the Competition Act, 2002 deals with 'combination'. Sub-

clause (c) of Section 5 provides as follows:-

"Combination

(c) any merger or amalgamation in which-- (i) the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,--

(A) either in India, the assets of the value of more than rupees one thou sand crores or turnover more than rupees three thousand crores; or (B) [in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars, including at least rupees five hundred crores in India, or turnover more than fifteen hundred million US dollars, including at least rupees fifteen hundred crores in India; or]

(ii) the group, to which the enterprise remaining after the merger or the enter prise created as a result of the amalgamation, would belong after the merger or the

Company Appeal (AT) (Insolvency) No. 179 of 2025 14

amalgamation, as the case may be, have or would have,--

A) either in India, the assets of the value of more than rupees four-thou sand crores or turnover more than rupees twelve thousand crores; or (B) [in India or outside India, in aggregate, the assets of the value of more than two billion US dollars, including at least rupees five hundred crores in India, or turnover more than six billion US dollars, including at least rupees Fifteen Hundred Crores in India Explanation.-- For the purposes of this section,--

(a) "control" includes controlling the affairs or management by--

(i) one or more enterprises, either jointly or singly, over another enterprise or group;

(ii) one or more groups, either jointly or singly, over another group or enterprise;

(b) "group" means two or more enterprises which, directly or indirectly, are in a position to --

(i) exercise twenty-six per cent or more of the voting rights in the other enterprise; or

(ii) appoint more than fifty per cent of the members of the board of directors in the other enterprise; or

(iii) control the management or affairs of the other enterprise;

(c) the value of assets shall be determined by taking the book value of the assets as shown, in the audited books of account of the enterprise, in the financial year immediately preceding the financial year in which the date of proposed merger falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered

Company Appeal (AT) (Insolvency) No. 179 of 2025 15

proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout- design or similar other commercial rights, if any, referred to in sub-section (5) of section 3."

14. Section 6 of the Competition Act, 2002 deals with 'regulation of

combinations' which contemplated approval by the CCI for such merger and

amalgamation amounting to combination. Counsel for the Appellant

contended that the assets of the SRA as well as the Corporate Debtor after

merger are more than prescribed threshold which are more than Rs.2500

Crore assets in India, hence, meets the threshold of combination under

Section 5 of the Competition Act. Thus, mandatory approval from the CCI

was required prior approval of the plan by the CoC. Counsel appearing for

the Respondent refuting the submission submits that the above Section 5 of

the Competition Act is not attracted in the facts of the present case and it is

covered by exemption issued by MCA by Notification dated 07.03.2024. The

Notification dated 07.03.2024 provided that Section 5 of the Competition Act

is not applicable for two years where the value of the assets being acquired,

taken control of , merged or amalgamated is not more than Rs.450 Crore in

India or turnover of not more than Rs.1250 Crores in India. It is useful to

extract the Notification dated 07.03.2024 which is as follows:-

"MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 7th March, 2024.

S.O. 1131(E).-- In exercise of the powers conferred by clause (a) of section 54 of the Competition Act, 2002 (12 of 2003), the Central Government, in public Company Appeal (AT) (Insolvency) No. 179 of 2025 16

interest, hereby exempts the enterprises being parties to --

(a) any acquisition referred to in clause (a) of section 5 of the Competition Act;

(b) acquiring of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service, referred to in clause (b) of section 5 of the Competition Act; and

(c) any merger or amalgamation, referred to in clause (c) of section 5 of the Competition Act, where the value of assets being acquired, taken control of, merged or amalgamated is not more than rupees Four hundred and fifty crore in India or turnover of not more than rupees One thousand two hundred and fifty crore in India, from the provisions of section 5 of the said Act for a period of two years from the date of publication of this notification in the Official Gazette.

2. Where a portion of an enterprise or division or business is being acquired, taken control of, merged or amalgamated with another enterprise, the value of assets of the said portion or division or business and or attributable to it, shall be the relevant assets and turnover to be taken into account for the purpose of calculating the thresholds under section 5 of the Act. The value of the said portion or division or business shall be determined by taking the book value of the assets as shown, in the audited books of accounts of the enterprise or as per statutory auditor's report

Company Appeal (AT) (Insolvency) No. 179 of 2025 17

where the financial statement have not yet become due to be filed, in the financial year immediately preceding the financial year in which the date of the proposed combination falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indications, geographical indications, design or layout- design or similar other commercial rights, if any, referred to in sub-section (5) of section 3. The turnover of the said portion or division or business shall be as certified by the statutory auditor on the basis of the last available audited accounts of the company.

[F. No. 05/7/2013-CS] MANOJ PANDEY, Addl. Secy."

15. In the Consolidated Reply filed by the Resolution Professional, balance

sheets of the Corporate Debtor as on 31.03.2023 and 31.03.2024 have been

referred to and brought on record. As per the balance sheets of the

Corporate Debtor who is being acquired under the Resolution Plan, the

value of the Corporate Debtor is Rs.70.76 Crore and the turnover is

Rs.13.72 Crores. The value of the Corporate Debtor as above is clearly

covered by exemption provided in Notification dated 07.03.2024 as extracted

above. We thus, are of the view that Section 5 of the Competition Act, 2002

is not applicable in the facts of the present case and there was no

requirement of any prior approval from CCI. Hence, the submission

advanced by the Appellant cannot be accepted.

Company Appeal (AT) (Insolvency) No. 179 of 2025 18

16. Now we come to the second submission advanced by the Appellant i.e.

assignment of debt by ARC is not permissible to non-ARC. It is submitted

that the SARFAESI Act, 2002 under which ARC is registered is regulated by

Sections 9 and 10 and further, RBI has issued RBI (Asset Reconstruction

Companies) Directions 2024 which master direction permits ARC to assign

its debt only to ARC. Subject to certain conditions under Sections 9 and 10

as well as above Master Directions, no assignment of debt is permissible to

non-ARC. ARC is registered under the SARFAESI Act. Section 9 of the

SARFAESI Act, 2002 deals with 'measures for assets reconstruction'. Section

9 of the SARFAESI Act, 2002 is as follows:-

"9. Measures for assets reconstruction.--

(1)Without prejudice to the provisions contained in any other law for the time being in force, an asset reconstruction company may, for the purposes of asset reconstruction, provide for any one or more of the following measures, namely:--

(a) the proper management of the business of the borrower, by change in, or take over of, the management of the business of the borrower;

(b) the sale or lease of a part or whole of the business of the borrower;

(c) rescheduling of payment of debts payable by the borrower;

(d) enforcement of security interest in accordance with the provisions of this Act;

(e) settlement of dues payable by the borrower;

(f) taking possession of secured assets in accordance with the provisions of this Act;

Company Appeal (AT) (Insolvency) No. 179 of 2025 19

(g) conversion of any portion of debt into shares of a borrower company:

Provided that conversion of any part of debt into shares of a borrower company shall be deemed always to have been valid, as if the provisions of this clause were in force at all material times. (2) The Reserve Bank shall, for the purposes of sub-

section (1), determine the policy and issue necessary directions including the direction for regulation of management of the business of the borrower and fees to be charged.

(3) The asset reconstruction company shall take measures under sub-section (1) in accordance with policies and directions of the Reserve Bank determined under sub-section (2)."

17. Sub-section (2) of Section 9 empowers the RBI, for the purposes of

sub-section (1), determine the policy and issue necessary directions. RBI

has issued Master Directions 2024 which is relied by the Appellant. Copy of

the said Master Directions 2024 has been brought on the record by the

Appellant by means of Additional-Affidavit. Counsel for the Appellant has

referred to Master Directions 2024 issued on 24.04.2024 which has brought

on record as Annexure 2 of the Additional Affidavit. Clause 8 of the Master

Directions 2024 deals with 'activities of ARCs' which is as follows:-

"8. Activities of ARCs

8.1 An ARC shall commence/ undertake only securitisation and asset reconstruction activities and functions provided under Section 10 of the Act.

Company Appeal (AT) (Insolvency) No. 179 of 2025 20

8.2 In terms of the provision of Section 10(2) of the Act, ARCs have been permitted to undertake those activities as Resolution Applicants under Insolvency and Bankruptcy Code, 2016 (IBC) which are not specifically allowed under the Act. This permission shall be subject to the following conditions:

i. The ARC has a minimum NOF of ₹1,000 crore. ii. The ARC shall have a Board-approved policy regarding taking up the role of Resolution Applicant which may, inter alia, include the scope of activities, internal limit for sectoral exposures, etc. iii. A committee comprising of a majority of independent directors shall be constituted to take decisions on the proposals of submission of resolution plan under IBC.

iv. The ARC shall explore the possibility of preparing a panel of sector-specific management firms/ individuals having expertise in running firms/ companies which may be considered for managing the firms/ companies, if needed. v. In respect of a specific corporate insolvency resolution process (CIRP), the ARCs shall not

retain any significant influence or control over the corporate debtor after five years from the date of approval of the resolution plan by the Adjudicating Authority under IBC. In case of non-compliance with this condition, the ARCs shall not be allowed to submit any fresh resolution plans under IBC either as a Resolution Applicant or a Resolution Co- Applicant."

Company Appeal (AT) (Insolvency) No. 179 of 2025 21

18. We need to notice Clause 10 of the Master Directions 2024 which

deals with 'plan for realisation of financial assets'. Clause 10.1, 10.2, 10.3

and 10.4 which are relevant are as follows:-

"10. Plan for realisation of financial assets

10.1 Every ARC may, within the planning period, formulate a plan for realisation of assets which may provide for one or more of the following measures:

i. Change in or takeover of the management of the business of the borrower ii. Sale or lease of the whole or part of business of borrower

iii. Rescheduling of debts payable by the borrower iv. Enforcement of security interest in accordance with the provisions of the Act v. Settlement of dues payable by the borrower vi. Conversion of any portion of debt into equity of a borrower company

10.2 The ARC shall formulate the policy for realisation of financial assets under which the period for realisation shall not exceed five years from the date of acquisition of the financial asset concerned.

10.3 The Board of the ARC may increase the period for realisation of financial assets so that the total period for realisation shall not exceed eight years from the date of acquisition of the financial asset concerned.

10.4 In case, the ARC is one of the lenders in an account, where a resolution plan has been finalised and the same extends beyond the maximum resolution

Company Appeal (AT) (Insolvency) No. 179 of 2025 22

period allowed for ARCs as per paragraph 10.3 above, the ARC may accept a resolution period co-terminus with other secured lenders."

19. When we look into the above, clause 10.1 empowers every ARC to

formulate a plan for realisation of assets which may provide for one or other

measures referred to in Clause 10.1. Sub-clause (v) of Clause 10.1 deals

with settlement of dues payable by the borrower. Settlement of dues is a

wide phrase which encompasses in itself any manner of settlement of dues.

Settlement of dues can include part payment of upfront or by any other

mode or manner. Clause 10.2 provides that ARC shall formulate the policy

for realisation of financial assets under which the period for realisation shall

not exceed five years from the date of acquisition of the financial asset

concerned whereas under Clause 10.3 the Board of the ARC may increase

the period for realisation of financial assets so that the total period for

realisation shall not exceed eight years. However, Clause 10.4 contains

further exemption that where resolutions plan has been finalised and which

extends beyond the maximum resolution period allowed for ARCs. Under

clause 10.4, the ARC may accept a resolution period co-terminus with other

secured lenders. Thus, Clause 10.4 contemplates extension of period of

realisation which may exceed to eight years as provided in Clause 10.3.

Thus, Resolution Plan has been contemplates as one contingency where

relaxation can be granted.

20. When we look into Section 9(1)(e) of the SARFAESI Act, 2002,

settlement of dues payable by the borrower is also one of the measures

contemplated for purposes of asset reconstruction. We are of the view that

Company Appeal (AT) (Insolvency) No. 179 of 2025 23

the settlement of dues is a phrase of wide import which can take measure

for settlement of dues payable by the borrower. In the present case,

Resolution Plan submitted by the Respondent No.2 which is approved by

requisite vote share of the CoC provides for the payment of dues of the

Financial Creditor. The debt has been categorised in sustainable and

unsustainable debt and sustainable debt discharge is the payment proposed

by the Resolution Applicant to the secured Financial Creditors whereas

unsustainable debt is the balance amount claim of secured creditors which

is noticed in paragraph 7.2 of the impugned order. The plan proposes the

secured financial creditors Rs.99.05 Crores within 30 days of the approval of

the Resolution Plan. Appellant in paragraph 5 of the Additional Affidavit has

extracted Clause E(iv) of Section IV of the plan which provides for

unsustainable debt shall be assigned to the Resolution Applicant which

assignment to the Resolution Applicant is sought to be questioned by the

Appellant. Section 9 of the SARFAESI Act, 2002 which specifically empowers

the ARC to take measures of settlement of dues payable by the borrower, all

modes and manner for settlement of dues are permissible and the debt

having been classified into sustainable and unsustainable debt.

Sustainable debt is being discharged by payment to the financial creditors

and unsustainable debt being assigned to the Resolution Applicants, it is

the commercial wisdom of the CoC to approve or not approve the mode and

manner of settlement of dues and in the present case, when settlement of

dues have been approved by the CoC by 73.38% vote share, we are not

persuaded to accept the submission that the assignment of the

unsustainable debt to the Resolution Applicants violates any provision of the

Company Appeal (AT) (Insolvency) No. 179 of 2025 24

IBC or CIRP Regulations or any provisions of the SARFAESI Act, 2002. We,

thus, do not find any substance in the submission of the Appellant.

21. The next submission which has been pressed by the Appellant is that

the debt owed to Respondent No.4- 'International Finance Corporation'

cannot be assigned to an entity in India without specific approval by the

RBI. The CoC as well as the SRA had submitted that approval of the RBI, if

required for assignment of debt of Respondent No.4 is to be obtained within

one year from approval of the Resolution Plan. As per provision of Section

31(4) of the IBC, the SRA can obtain approval from RBI after approval of the

Resolution Plan once the assignment has been approved. We, thus, do not

find any error in the above part of the Resolution Plan which proposes

assignment of debt of Respondent No.4 to the Resolution Applicant.

Approval, if any, can be obtained within one year from the RBI as per

Section 31(4), hence, on the said ground approval of Resolution Plan cannot

be faulted.

22. The next ground urged by the Appellant is that under the Resolution

Plan, SRA has dealt with Noida Project Land which is not the asset of the

Corporate Debtor. The Noida Project Land along with building structure was

obtained by sub-lease deed dated 18.01.2008 and lease deed dated

23.06.2008 from Moser Baer India Ltd. (MBIL). MBIL went into liquidation

under the Code and liquidator of MBIL vide letter of termination dated

30.03.2019 addressed to the Corporate Debtor has cancelled the said sub-

lease and the Noida Project Land along with the pending litigation has been

assigned to Palika Towns LLP by the Liquidator of MBIL. The submission of

Company Appeal (AT) (Insolvency) No. 179 of 2025 25

SRA in the above regard is that lease was terminated prior to initiation of

CIRP. With regard to which the litigation is pending before the NCLT, SRA

has acknowledged the pending litigation and offered to pay the lessor

Rs.7,20,00,000/- as a solution to ending the dispute regarding the project.

The money offered to the lessor is in addition to the payments to be made to

the financial creditors under the Resolution Plan of the SRA. The above

mechanism which was adopted by SRA in Resolution Plan does not violate

any provisions of the Code and the Resolution Plan submitted by the SRA is

strictly in compliance with the provisions of the IBC. Counsel for the NARCL

submits that Appellant has no locus to intervene in the issue pertaining to

Noida Project Land which is a subject matter of dispute between the

Liquidator of MBIL, Pallika Towns LLP and the SRA. Clause 5.3 of the

Resolution Plan mentions that it will continue the litigation as regards the

Noida Project Land after approval of the Resolution Plan which provision in

no manner violates any process.

23. We, thus, are of the view that on the above ground Appellant cannot

raise any grievance nor above clause in the Resolution Plan dealing with the

manner proposing a solution for Noida Project Land and continue the

litigation by SRA with regard to Noida Project Land does not violate any

provisions of the IBC or CIRP Regulations. The Resolution Plan cannot be

said to have violated any provisions of the law in the above regard. We, thus,

do not find any substance in the above submission.

24. Now as far as the submission of the Appellant that Respondent No.5-

'Gateway Investment Management Services Limited' has given a revised offer

Company Appeal (AT) (Insolvency) No. 179 of 2025 26

of Rs.120 Crore which ought to have been accepted by the CoC to fulfil the

object of maximisation the value of the assets. Respondent No.5 itself has

filed an IA before the Adjudicating Authority being IA No.5176 of 2024

seeking a direction to consider its revised offer of Rs.120 Crore and to reject

the Resolution Plan of Respondent No.2 which IA has been rejected by order

dated 22.01.2025. Respondent No.5 has filed its separate Appeal being

Company Appeal (AT) (Insolvency) No. 148 of 2025 challenging the order

dated 22.01.2025. We by our separate order of the date has dismissed the

Company Appeal (AT) (Insolvency) No. 148 of 2025, hence, the Respondent

No.5 who was the Resolution Applicant offering the revised offer has already

raised grounds which did not find favour. It is not open for the Appellant to

raise any ground on behalf of the Respondent No.5 whose Appeal has

already been dismissed.

25. In view of the foregoing discussions, we do not find any substance in

any of the submissions of the Counsel for the Appellant. There is no merit in

the Appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

New Delhi Anjali Company Appeal (AT) (Insolvency) No. 179 of 2025