Gujarat Industrial Development ... vs Zaveri & Co. Pvt. Ltd & Ors & Ors

(Arising out of the Impugned Order dated 13.09.2023 passed by the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi Bench) in IA No. 1764 of 2021 in C.P. (IB) No. 571 (ND)/2020)

IN THE MATTER OF: Kanwar Raj Bhagat 6 GF, Block 3 Eros Garden, Charmwood Village, Surajkund Road, Faridabad- 121009 ...Appellant

Versus

1. M/s. Gujarat hydrocarbons and Power Sez Limited Having its registered office at: 22 Community Centre Basant Lok, Vasant Vihar, New Delhi - 110057 ...Respondent No.1

2. M/s. Srei Infrastructure Finance Limited Having its registered office at: Vishwakarma, 86 C, Topsia Road (South), Kolkata - 700046 ...Respondent No.2

3. Mr. Rakesh Kumar Agarwal, Erstwhile Resolution Professional of M/s. Gujarat hydrocarbons and Power Sez Limited at 20 N.S. Road Room No. 15 Block A, Kolkata - 700001 ...Respondent No.3

4. Zaveri & Company Limited Having its registered office at: U-02, Upper Plaza, Swagat Building, Near Lal Bungalow, C.G. Road, Ahmedabad - 38006 ...Respondent No.4

With Company Appeal (AT) (Insolvency) No. 1684 of 2023

(Arising out of the impugned Orders dated 13.09.2023 passed by the National Company Law Tribunal, New Delhi in I.A. No. 596 of 2022 in C.P. (IB) No. 571 (ND)/2020 and 19.09.2023 passed by the National Company Law Tribunal, New Delhi, in I.A. No. 4585 of 2021 in C.P. (IB) No. 571 (ND)/2020] IN THE MATTER OF: Assam Company India Limited Having its corporate office at: Nilhat House, 11 RN Mukherjee Road, Kolkata- 700001, West Bengal And its registered office at: Greenwood Tea Estate, Dibrugarh - 786001 ...Appellant

Versus

1. M/s. Gujarat hydrocarbons and Power Sez Limited Having its registered office at: 22 Community Centre Basant Lok, Vasant Vihar, New Delhi - 110057 ...Respondent No.1

2. M/s. Srei Infrastructure Finance Limited Having its registered office at: Vishwakarma, 86 C, Topsia Road (South), Kolkata - 700046 ...Respondent No.2

3. Mr. Rakesh Kumar Agarwal, Erstwhile Resolution Professional of M/s. Gujarat hydrocarbons and Power Sez Limited at 20 N.S. Road Room No. 15 Block A, Kolkata - 700001 ...Respondent No.3

4. Zaveri & Company Limited Having its registered office at: U-02, Upper Plaza, Swagat Building, Near Lal Bungalow, C.G. Road, Ahmedabad - 38006 ...Respondent No.4

Present: For Appellant : Mr. Ajay Gaggar and Mr. Shreedhar Gaggar, Advocates For Respondent : Mr. Raheel Patel, Mr. Himanshu Satija and Mr. Anshul Rao, Advocates for RP. Mr. Palash Singhai, Mr. Harshal Sareen and Ms. Aashima Gautam, Advocates for SRA.

With Company Appeal (AT) (Insolvency) No. 626-628 of 2025 & I.A. No. 4475, 5530 of 2025

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 2 of 87 (Arising out of the impugned Orders dated 19.02.2025 passed by the National Company Law Tribunal, New Delhi in I.A. No. 4585 of 2021 in CP (IB) No. 571 of 2020 and IA No. 136 of 2022 and IA No. 5224 of 2024 in CP (IB) no. 571 of 2020 passed by the National Company Law Tribunal, New Delhi, in I.A. No. 4585 of 2021 in C.P. (IB) No. 571 (ND)/2020]

IN THE MATTER OF: Gujarat Industrial Development Corporation Block No. 4, 2nd Floor, Udhyog Bhavan, Sector-11, Gandhinagar-382011 ...Appellant

Versus

1. Zaveri & Co. Pvt. Ltd. Swagat, CG Road, Ahmedabad - 380006 ...Respondent No.1

2. Rakesh Kumar Agarwal Ex-Resolution professional of Gujarat Hydrocarbon & Power SEZ Ltd. 20 N S Road, Room No. 15, Block A, 1st Floor, Kolkata, West Bengal - 700001 ...Respondent No.2

3. Gujarat Hydrocarbon & Power SEZ Ltd. (Corporate Debtor) 22 Community Centre, Basant Lok, Vasant Vihar, South Delhi, New Delhi, Delhi, India - 110057 ...Respondent No.3

4. M/s SREI Infrastructure Finance Ltd. Y 10, Block EP, Sector V, Salt Lake City, Kolkata 700091 ...Respondent No.4

Present: For Appellant : Mr. Virendra Ganda, Sr. Advocate with Mr. A. Sheth, Ayandeb Mitra, Ishita Singh, Advocates.

For Respondent : Mr. Abhimanyu Bhandari and Arav Pandit, Advocates for SREI/CoC.

Mr. Abhijeet Sinha, Sr. Advocate with Palash Singhai, Tirth Nayak, Harshal Sareen and Aashima Gautam, Advocates for SRA.

Mr. Raheel Patel, Himanshu Satija, Harsh Saxena and Anshul Rao, Advocates for RP.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 3 of 87 JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)] This judgment disposes of a cluster of connected Appeals arising out of

the Corporate Insolvency Resolution Process ("CIRP") of M/s Gujarat

Hydrocarbons and Power SEZ Limited ("the Corporate Debtor" or "GHPSL"),

incorporated on 17.08.2007 to develop, operate and maintain a sector-specific

Special Economic Zone ("SEZ") on leasehold land at Vilayat, Bharuch, Gujarat

(the "Demised Premises"), taken on lease from the Gujarat Industrial

Development Corporation ("GIDC"), a statutory corporation which features in

this matter simultaneously as lessor of the land, as an Operational Creditor

of the Corporate Debtor, and as the statutory regulator of GIDC-allotted

industrial land. The Demised Premises is, on the admitted case of all parties,

the sole material asset of the Corporate Debtor.

2. In these two sets of Appeals the subject matters are interconnected and

arise from the same insolvency matrix and are heard together and accordingly

we are disposing of together by this common judgment.

3. Set 1 -- Company Appeal (AT)(Ins) No. 1557 of 2023 (by the suspended

director of the Corporate Debtor) and Company Appeal (AT)(Ins) No. 1684 of

2023 (by Assam Company India Limited, the corporate guarantor, through its

own Successful Resolution Applicant, BRS Ventures Investments Ltd.) --

concerns the quantum of the claim of the sole Financial Creditor, SREI

Infrastructure Finance Limited ("SREI"), admitted in this CIRP, and the

ranking of the corporate guarantor's subrogated claim.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 4 of 87

4. Set 2 -- Company Appeal (AT)(Ins) Nos. 626, 627 and 628 of 2025, filed

by GIDC -- concerns whether a resolution plan built upon leasehold SEZ

land, on the premise that the land stands (or will stand) de-notified for non-

SEZ industrial use, can be sustained where that de-notification has not been

completed and the plan's very feasibility is contested by the land-owning

regulator.

5. The two sets of Appeals revolve around the Corporate Insolvency

Resolution Process of the Corporate Debtor (GHPSL) and an approved

resolution plan, and for that reason they are analysed together - though each

set is analysed separately with its independent conclusions. Since the appeals

arise from the same Corporate Insolvency Resolution Process and involve

overlapping questions, they are being disposed of by this common judgment.

Brief facts and chronology

6. The Corporate Debtor availed a credit facility of ₹ 100 crores from SREI

in 2011, for which Assam Company India Limited ("ACIL"), the

holding/guarantor company, executed a corporate guarantee dated

05.01.2011. In the CIRP of ACIL before the NCLT, Guwahati Bench (CP(IB)

No. 20/GB/2017), SREI's claim of ₹ 648.80 crore was reduced by the Interim

Resolution Professional to ₹ 357.29 crore, and thereafter by the Resolution

Professional to ₹ 241.27 crore on 03.04.2018, principally on the ground that

capitalisation of penal interest is impermissible in law. SREI's challenge to

this reduction (I.A. No. 34/2018) was dismissed by the NCLT, Guwahati by

order dated 23.07.2018, which was affirmed by this Tribunal on 01.02.2019

in Company Appeal (AT)(Ins) No. 291 of 2018, this Tribunal there recording Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 5 of 87 that it expressed "no opinion" on the claim but leaving SREI at liberty to take

recourse under Section 60(6) of the Code, a liberty SREI did not avail. The

resolution plan of BRS Ventures Investments Ltd. for ACIL was approved by

the NCLT, Guwahati on 20.09.2018, under which SREI was paid ₹ 38.87

crores.

7. On SREI's application under Section 7 of the Code against the

Corporate Debtor (the principal borrower on the very same 2011 facility), CIRP

commenced by order dated 18.11.2020, and the third Respondent was

appointed Resolution Professional ("RP"). In this CIRP, SREI filed and the RP

admitted a claim of ₹ 1,885.08 crores as a secured Financial Creditor -- a

figure roughly 7.8 times the ₹ 241.27 crore judicially fixed and finally settled

in the ACIL CIRP barely two years earlier, on the very same debt and default.

SREI's claim was admitted at ₹ 1,885.08 crore in GHPSL despite the earlier

ACIL determination. ACIL was admitted only as an unsecured related-party

Financial Creditor, at nil value on liquidation-value logic, notwithstanding its

payment of ₹ 38.87 crore to SREI.

8. The resolution plan of Zaveri & Co. Pvt. Ltd. was approved by the CoC

(SREI, 100% voting share) on 30.08.2021. The suspended director filed I.A.

No. 1764 of 2021 seeking correction of the admitted claim and rectification of

the Information Memorandum ("IM"); ACIL filed I.A. No. 596 of 2022 seeking

recognition as a secured Financial Creditor to the extent of ₹ 38.87 crore. Both

were dismissed by the Adjudicating Authority on 13.09.2023, with costs of

₹50,000 imposed on the suspended director, principally on the reasoning that

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 6 of 87 the Adjudicating Authority could not, post-CoC-approval, go into "the nitty

gritties" of a claim admitted on the strength of facts arising in a different

Corporate Debtor's CIRP. The resolution plan itself was approved on

19.09.2023 and the costs were imposed..

9. Meanwhile, GIDC -- lessor of the Demised Premises and an Operational

Creditor -- terminated the Lease Deed on 13.12.2021, during the subsistence

of the Section 14 moratorium, and initiated eviction proceedings under the

Gujarat Public Premises (Eviction of Unauthorised Occupants) Act, 1972.

GIDC's objections to the resolution plan (I.A. No. 136 of 2022) and its later

application (I.A. No. 5224 of 2024, seeking deferment pending the outcome of

its writ challenge) were both dismissed by the Adjudicating Authority.

10. Following a remand directed by this Appellate Tribunal on 08.08.2024

(upheld by the Hon'ble Supreme Court on 20.08.2024), GIDC's objections

were reheard and again dismissed, together with the approval of the plan, by

the composite Impugned Order dated 19.02.2025, essentially by a one-

paragraph disposal (para 10.2) holding that there was "no infirmity in the

decision of the CoC" and declining to "interfere in the decision on the

Resolution Plan taken by the CoC in their Commercial Wisdom."

11. It is necessary to record two further, undisputed developments. First,

the Hon'ble Supreme Court, in 1BRS Ventures Investments Ltd. Vs SREI

Infrastructure Finance Ltd. & Anr. (2025) 1 SCC 456 decided on

1 BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr., 2024 INSC 548:

(2025) 1 SCC 456 decided on 23.07.2024 Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 7 of 87 23.07.2024 held (i) that payment of ₹ 38.87 crore to SREI in the ACIL CIRP

did not extinguish the Corporate Debtor's liability for the balance of the debt;

(ii) that a Financial Creditor may proceed under Section 7 against the

Corporate Debtor and the corporate guarantor separately or simultaneously;

and (iii) that even where Section 140 of the Indian Contract Act, 1872 is

attracted, the surety's subrogation runs only to the extent of the amount

actually recovered by the creditor from the surety -- here, ₹ 38.87 crore --

though the Court did not render an operative finding on subrogation as the

point was not pressed before it. Second, the Gujarat High Court, by judgment

dated 01.12.2025 in Gujarat Hydrocarbons and Power SEZ Limited v.

Gujarat Industrial Development Corporation & Ors. SCA No. 4937 of

2022, quashed GIDC's termination of the Lease Deed and the consequent

eviction proceedings, holding that GIDC, a statutory authority, could not

invoke the Gujarat Public Premises Act, 1972 to defeat the moratorium and

the overriding scheme of the Code under Section 238; GIDC's Letters Patent

Appeal against that judgment has also since been dismissed.

CA(AT) (Ins.) No. 1557 of 2023 and CA (AT) (Ins.) No. 1684/2023

12. Set-1 involves CA(AT) (Ins.) No. 1557 of 2023 and CA (AT) (Ins.) No. 1684

of 2023 which arise out of the Corporate Insolvency Resolution Process of M/s

Gujarat Hydrocarbons and Power SEZ Limited ("the Corporate Debtor").

Company Appeal (AT) (Ins.) No. 1557 of 2023 is being treated as the lead

matter.

Submissions of the Appellant/ Suspended Director of GHPSL in Set 1 CA (AT) (Ins.) No. 1557 of 2023

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 8 of 87

13. Mr. Kanwar Raj Bhagat, the suspended director of the Corporate

Debtor, submits that the claim of the Financial Creditor, having been

quantified at ₹ 241.27 crore in the Corporate Insolvency Resolution Process

of the Corporate Guarantor and judicially affirmed, could not have been

admitted at ₹ 1,885.08 crores in the Corporate Insolvency Resolution Process

of the Corporate Debtor. The Resolution Professional is bound by the said

adjudication and is not vested with any adjudicatory power to enlarge a claim

already determined. The Information Memorandum, being founded upon the

said admission and upon the classification of the Corporate Guarantor as an

unsecured related party, stands vitiated, and that the Corporate Insolvency

Resolution Process is, in consequence, liable to be set aside and re-conducted

in accordance with law. The costs of ₹ 50,000/- came to be imposed upon the

Appellant without any reason being recorded. It is accordingly prayed that the

impugned order dated 13.09.2023 be set aside; that the admission of the

claim of the Financial Creditor at ₹ 1,885.08 crores be set aside; that the

Information Memorandum be rectified and the claim re-assessed; and the

Appellant be permitted to submit its claim in Form C; and that the costs of

₹50,000/- imposed upon it be set aside.

Submissions of the Appellant/ACIL-the Corporate Guarantor/BRS Ventures in Set 1 - CA (AT) (Ins.) No. 1684 of 2023

14. Learned Counsel appearing for the Appellant, M/s Assam Company

India Limited, the Corporate Guarantor (represented by the successful

resolution applicant, that is, BRS Ventures Investment Limited), submits that

upon payment of a sum of ₹ 38.87 crore in discharge of its liability as surety,

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 9 of 87 it stands subrogated, by virtue of Section 140 of the Indian Contract Act,

1872, to the rights of the Financial Creditor to the extent of the said amount,

and ought accordingly to have been treated as a secured financial creditor of

the Corporate Debtor to that extent, and not as an unsecured related-party

Financial Creditor. Learned Counsel has placed reliance on the judgment of

the Hon'ble Supreme Court in 1BRS Ventures Investments Ltd. in support

of the said submission.

15. It is prayed by ACIL that it be treated as a secured Financial Creditor

of the Corporate Debtor to the extent of ₹ 38.87 crore; and, in the alternative,

that it be held entitled to a proportionate share in the amount payable under

the resolution plan to the Financial Creditors of the Corporate Debtor.

16. The claim of ₹ 1885.08 Cr filed by the Financial Creditor (Respondent

No. 2) and accepted by the erstwhile Resolution Professional (Respondent No.

3) is erroneous and inflated and ought to be set aside and the Information

Memorandum prepared by the Resolution Professional is erroneous and

incorrect and waiver of Cost imposed upon the Appellant.

Submissions of the Appellant - GIDC in Set 2 - CA (AT) (Ins.) No. 626-628 of 2025

17. In IA No. 4585 of 2021 in CP (IB) No. 571 of 2020 and IA No. 136 of

2022 and IA No. 5224 of 2024 in CP (IB) No. 571 of 2020 the Ld. NCLT has

approved the resolution plan which is based on sub plotting the leased

premises leased by the appellant to the CD. This plan was approved without

any consent /permission from the appellant, where such lease has already

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 10 of 87 come to be terminated and CD is evicted under the provisions and order of

the Gujarat Public Premises (Eviction of Unauthorised Occupants) Act, 1972.

Such position is accepted by the SRA. Further the resolution plan is not in

line with the purpose for which the lease was given to the CD being that of

SEZ purpose being that of Energy sector. Also the denotification of the SEZ

has never been effected qua the land in question, since the Development

Commissioner has never issued certificate no benefits availed certificate

and/or refund of benefit received certificate to complete the denotification

process. Further the resolution plan seeks to revive the CD by sub leasing the

land of the Appellant in piece meal as non SEZ sub plots which is not

permissible as per the terms and conditions between the Appellant and the

CD, and the approval has tantamounted to rewriting the contract between the

Appellant and the CD and resulting in violation of the law of the land.

Submissions of the Respondents/FC - SREI Finance in Set 1 CA (AT) (Ins.) No. 1557 of 2023

18. Learned Counsel appearing for the Financial Creditor, the second

Respondent, refuting the submissions of the Appellants, submits that the

orders passed in the Corporate Insolvency Resolution Process of the Corporate

Guarantor contained an express reservation that no opinion was expressed

therein and that other proceedings would remain unaffected. It is submitted

that each Resolution Professional is required independently to verify the

claims placed before him, and that the claim of the Financial Creditor in the

Corporate Insolvency Resolution Process of the Corporate Debtor has been

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 11 of 87 correctly verified and admitted. It is submitted that the appeals are liable to

be dismissed and the approved resolution plan upheld.

Submissions of the Respondents/Resolution Professional in Set 1 CA (AT) (Ins.) No. 1557 of 2023

19. Learned Counsel appearing for the Resolution Professional, the third

respondent, submits that a Resolution Professional is not bound by the

computation of claims made in the resolution process of a different Corporate

Debtor, and is not vested with adjudicatory power to sit in judgment over a

creditor's proof. It is submitted that the claims were collated and verified, and

the Information Memorandum prepared, in accordance with the provisions of

the Code and the Regulations framed thereunder.

Submissions of the Respondents/Successful Resolution/Zaveri in Set 1 CA (AT) (Ins.) No. 1557 of 2023

20. Learned Counsel appearing for the Successful Resolution Applicant

submits that the resolution plan, having been approved by the Committee of

Creditors with a hundred per cent voting share and sanctioned by the

Adjudicating Authority, is binding and irrevocable; that the commercial

wisdom of the Committee of Creditors is not justiciable save upon the grounds

contemplated by Section 30(2) of the Code; and that the amount payable to

the secured Financial Creditor under the plan is fixed and is unaffected by

the quantum of the claim as admitted. It is submitted that the challenge to

the approved resolution plan is liable to be rejected.

Appraisal [CA AT Ins No. 1557 of 2023 & 1684 of 2023] [By ex-director of the CD & corporate guarantor]

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 12 of 87

21. Entities involved in the Appeals being dealt in here are noted as follows

for better appreciation:

Role Entity Significance

Suspended director of GHPSL;

Appellant Mr. Kanwar Raj Against impugned order dated (1557/2023) Bhagat 13.09.2023 NCLT, New Delhi In IA-1764/ND/2021 in CP (IB) 571 (ND)/2020

Connected appeal

seeks secured-creditor status to extent of ₹ 38.87 Cr by subrogation Appellant Assam Company (1684/2023) India Ltd. Against impugned order dated 13.09.2023 NCLT, New Delhi In I.A. Nos. 596/ND/2022 in CP (IB) 571 (ND)/2020; Gujarat Principal borrower; Corporate Hydrocarbons & Debtor (R-1) Power SEZ Ltd. CIRP under CP(IB) 571(ND)/2020 (GHPSL) before NCLT Delhi. Original lender of ₹ 100 cr (2011); Financial SREI Infrastructure itself underwent CIRP at NCLT Creditor (R-2) Finance Ltd. Kolkata (plan approved 11.08.2023). Guaranteed the GHPSL loan (Deed dt. 05.01.2011); Corporate Assam Company underwent its own CIRP at NCLT Guarantor India Ltd. (ACIL) Guwahati;

₹ 38.87 cr paid to SREI in that CIRP. RP of GHPSL; Resolution Mr. Rakesh Kumar admitted SREI's claim at ₹ Professional Agarwal 1885.08 cr; (R-3) figure being challenged

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 13 of 87 Role Entity Significance Successful Resolution Applicant for GHPSL; Zaveri & Co. Pvt. SRA Ltd. plan of ₹ 135 cr approved by CoC 100% (30.08.2021). Lessor of the SEZ land; Gujarat Industrial Objector objections (IA-136/2022, IA- Development Corpn. below 5224/2024) (GIDC) dismissed 19.02.2025.

22. We note that the appeal CA (AT) Ins No 1684 of 2023 has been filed by

the Appellant/Corporate Guarantor (BRS Ventures - SRA of ACIL) challenging

the impugned order dated 13.09.2023 passed by the Ld. NCLT, New Delhi in

I.A. Nos. 596/ND/2022 in CP (IB) 571 (ND)/2020. The appeal CA (AT) Ins No

1557 of 2023 has been filed by the Appellant/the erstwhile Director of

Respondent No. 1, challenging the same impugned order. The main grounds

for challenging the impugned order in both the appeals are similar and are

related to exaggerated claim and subrogation and are noted together as

follows:

 Claim of ₹ 1885.08 Cr filed by the Financial Creditor (Respondent No. 2-SREI) and accepted by the erstwhile Resolution Professional (Respondent No. 3) is erroneous and inflated and ought to be set aside.

 ACIL to be treated as a Secured Financial Creditor to the extent of ₹ 38.87 crores, and not an Unsecured Financial Creditor by the Respondent No. 3.

 The Information Memorandum prepared by the Resolution Professional is erroneous and incorrect.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 14 of 87

23. Briefly speaking the Appellants (suspended director and ACIL/BRS

Ventures) contend that SREI's claim, having been finally and judicially fixed

at ₹ 241.27 crore in the ACIL CIRP -- a determination that attained finality

upon dismissal of SREI's own challenge by the NCLT, Guwahati and by this

Tribunal -- could not, on the very same debt and default, balloon to ₹ 1,885.08

crores in the CIRP of the principal borrower within a span of roughly two

years. It is also claimed that the RP, though not possessed of adjudicatory

power, was nonetheless bound to correctly collate and verify the claim in light

of that judicial determination, and that mechanical admission of an inflated,

unverified figure is itself a failure of the RP's statutory duty under 2 Swiss

Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17 and is amenable to

correction under 3 Axis Bank Ltd. v. Samruddhi Realty Ltd., (2023) 23

2 Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17 paras 88-91 (holding that the Resolution Professional is statutorily entrusted with receiving, collating and verifying creditors' claims, and may require such information, documents or evidence as are necessary to satisfy himself regarding the existence and quantum of the claim. The verification of claims is an integral statutory function to be undertaken in accordance with the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations, and is intended to ensure that only duly verified claims are taken into account during the corporate insolvency resolution process. 3 Axis Bank Ltd. v. Samruddhi Realty Ltd., (2023) 23 Comp Cas-OL 596

Para 49 and 50, "49. It is to be pointed that a "Tribunal" has the power to look behind the judgment on which the "creditor" cements his proof with a view to decide whether the "debt" is really and truly due. A liquidator has these, powers, while functioning in a quasi, judicial status. As a matter of fact, the "Tribunal" and the liquidator may not look behind every decision/judgment "as a matter of routine".

50. A "Tribunal" can interfere where the liquidator has not exercised his discretion in a bona fide manner or he was proposing to do an act which no reasonable or prudent person will do. A "liquidator" as an "officer of the Tribunal" is to act justly and fairly while dealing with an individual who has an adverse claim to his own and does not stand on his right either in equity or in law, as opined by this Tribunal."

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 15 of 87 Comp Cas-OL 596, which permits the Adjudicating Authority to look behind

an admitted claim.

24. Further relying on Section 140 of the Indian Contract Act, 1872 and on

BRS Ventures (supra), that ACIL, having paid ₹ 38.87 crore to SREI in

discharge of its guarantee, stands subrogated to SREI's rights as secured

Financial Creditor to that extent, and ought to have been so recognised in the

Corporate Debtor's CIRP rather than being classified as an unsecured related

party entitled to nil.

25. Further, it is claimed that the IM prepared by the RP is vitiated on two

counts -- the erroneous classification of ACIL and the erroneous, inflated

admission of SREI's claim -- rendering the entire CIRP arbitrary and non-

transparent and requiring the process to be set aside and re-conducted with

a corrected IM, relying on 4Bimalesh Bhardwaj v. Value Infratech India Pvt.

4 Bimalesh Bhardwaj v. Value Infratech India Pvt. Ltd., 2021 SCC OnLine NCLAT 443 Para 20. "We find that, while the CoC took a decision for going for liquidation of the Corporate Debtor, the Appellants have challenged the very basis of constitution of CoC and fixing of voting rights by labeling it illegal, done to provide undue and unfair advantage to Respondent No. 4. Moreover, the Appellants have also claimed that the CoC took a decision for liquidation without following the procedure under CIRP stipulated in the IBC. The basic reason for seeking Resolution Plan under CIRP is to ensure that the Corporate Debtor can continue to function as a going concern, while taking care of interests of its creditors. Liquidation is the last resort which implies corporate death of the company. For the Corporate Insolvency Resolution Process to result in successful resolution of the corporate Debtor, preparation of a correct information memorandum is a must, which may result in work able resolution plans. In the present case, we find that information memorandum was not prepared with full and correct details of assets and liabilities of the Corporate Debtor. The RP also did not pursue his application u/s 19(2). As a result the CoC decided to abandon the step of inviting of EOI for Resolution Plan. Thereafter in undue haste, the CoC decided to go for liquidation of the Corporate Debtor. Since the CoC consisted of two members - Capri Global and homebuyers - with Respondent No. 4 being given inflated voting share, the decisions by CoC was completely swayed by the Respondent No. 4 and its selfish interests. The decisions of CoC was a blotted Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 16 of 87 Ltd., 2021 SCC OnLine NCLAT 443. It is also claimed that the costs of ₹ 50,000

imposed on the suspended director were imposed without recorded reasons

and are liable to be set aside.

26. GIDC in set 2 contends that it approaches this Tribunal in its dual

capacity as lessor/regulator and as Operational Creditor, and that only the

order approving the plan (I.A. 4585/2021) needs to meet the closed-list test

of Section 61(3), while the dismissal of its objection-IAs (136/2022 and

5224/2024) stand on ordinary appellate footing. It contends that the

resolution plan proceeds on the SRA's own unilateral presumption that the

SEZ stands, or will stand, de-notified, permitting conversion of the Demised

Premises to non-SEZ industrial use and its sub-plotting/sub-leasing --

without GIDC's consent, without the Development Commissioner's "no

benefits availed"/refund certificate ever having issued, and without the

Corporate Debtor's name having been formally removed from the notified-SEZ

list. It submits that Clause 3.3(v) of the Lease Deed permits a change of use

only with GIDC's "prior consent, approval or permission," which has never

been granted, and that a resolution plan cannot rewrite that condition or

Regulation 37(j) of the CIRP Regulations cannot be stretched to authorise a

change in the very nature of the demised land's permitted use.

27. GIDC also contends that the IM did not disclose the pendency, or the

incomplete state, of the de-notification correspondence between the Corporate

one, since it was taken in the CoC, in which Respondent No. 4 was given voting right much in excess of its real and correct share."

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 17 of 87 Debtor, GIDC and the Development Commissioner's office, whereas the SRA's

resolution plan itself reveals detailed, non-public knowledge of that very

correspondence -- correspondence dated 05.03.2024, 07.03.2024, and SRA's

own letters of 10.04.2024, 29.05.2024 and 26.07.2024 -- giving rise to a

serious question of an uneven playing field among competing resolution

applicants and of suppression of material information going to the feasibility

of the plan. It submits that, as land-owner and statutory regulator, its

objections on feasibility are not ordinary commercial-wisdom grievances

immune from scrutiny, relying on 27Greater Noida v. Prabhjit Singh Soni

(2024) 6 SCC 767, where a plan founded on statutorily regulated land was

held to require closer feasibility scrutiny and the necessary statutory

approvals, and where both the NCLT and this Tribunal were faulted for not

engaging with that dimension. It submits that the composite order's disposal

of its restored objection-IAs by a single paragraph of reference (para 10.2),

without discrete findings on the statutory-land and suppression questions,

does not meet the standard expected of objections reheard de novo pursuant

to this Tribunal's own remand.

28. Brief description of the opposition by the Respondents (SRA/Zaveri &

Co.; SREI; Resolution Professional) is that a resolution plan, once approved

by the CoC with 100% voting share and sanctioned by the Adjudicating

Authority, is binding and its commercial wisdom non-justiciable save on the

closed grounds of Section 30(2) and Section 61(3), relying on 5K. Sashidhar;

5 K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150;

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 18 of 87 6Essar Steel ; 7Kalpraj Dharamshi ; 8Vallal RCK ; and the recent decisions

in 9 Independent Sugar Corpn. Ltd., and in 10 Piramal Capital & Housing

Finance Ltd. It is submitted that the RP is under no obligation to treat a

different Corporate Debtor's claim-computation as binding, that each RP

verifies independently, and that the fixed pay-out to SREI (₹ 125 crore) under

the plan is, in absolute terms, materially less than even the Appellants' own

reckoning of the correct figure (₹ 202.40 crore), such that any error in the

admitted quantum is not outcome-determinative and causes no prejudice.

On the SEZ question, it is claimed that Clause 3.3(v) of the Lease Deed itself

contemplates change of use, that Clause 4.1-4.3 permits sub-leasing, that

Regulation 37(j) of the CIRP Regulations permits a change in portfolio of

goods/services under a plan, that the Corporate Debtor's name does not

appear on the current notified-SEZ list, that the Development Commissioner

has filed no claim in the CIRP, and that the plan itself provides ₹ 3,06,65,250

towards stamp duty to complete the de-notification formalities, with Section

30(4) of the Code affording the SRA a further year to secure necessary

approvals post-approval. It is submitted that GIDC's objections are, in

substance, a monetary grievance seeking better-than-class treatment, having

accepted ₹ 6.14 crore under the plan; that GIDC cannot resile from its own

6 Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531; 7 Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., (2021) 10 SCC 401; 8 Vallal RCK v. Siva Industries and Holdings Ltd., (2022) 9 SCC 803; 9 Independent Sugar Corporation Ltd. v. Hindustan National Gas & Industries Ltd. (Resolution

Professional) (2025) SCC OnLine SC 181 10 Piramal Capital & Housing Finance Ltd v. 63 v. 63 Moons Technologies Ltd., reported in

(2025) 10 SCC Comp Cas 452

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 19 of 87 affidavit dated 20.05.2022 while simultaneously demanding further sums;

that the lease termination -- effected during the moratorium and since

quashed by the Gujarat High Court -- furnishes no ground of infeasibility;

and that the sole-CoC-member ground was neither pleaded in I.A. 136/2022

nor otherwise available, SREI's Administrator having ratified all decisions

taken.

Apex Court on co-extensive liability of the Corporate Debtor and the corporate guarantor

29. Before formulating the points of determination in the two sets of

appeals, we would like to take up the judgment of the apex court with respect

to co-extensive liability of the Corporate Debtor and corporate guarantor,

which is crucial for this case. This case hinges upon this issue, which was

litigated before the Honourable Supreme Court, which was related to

challenge to filing of appeals against both the principal borrower and also the

corporate guarantor, and which has been now settled by the Honourable

Supreme Court. For better appreciation of the context and the import of the

judgment of the honourable apex court, it will be useful to extract the history

of litigation starting from NCLT to NCLAT and thereafter before the

honourable Supreme Court, which are extracted as below:

FC filed a petition u/s 7 of the Code against the GHPSL, being CP (IB) No. 571 of 2020 before the NCLT New Delhi for a sum of 10.02.2020 ₹ 1428.84 Crores on the basis of same set of debt and default for which CIRP of ACIL took place.

NCLT admitted the petition being CP (IB) No. 571 of 2020 and 18.11.2020 the GHPSL was admitted into CIRP

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 20 of 87 BRS Ventures Investment Ltd./SRA of ACIL preferred an appeal against the admission order dated 18.11.2020 before the 14.12.2020 NCLAT being CA(AT) (Ins) 1109 of 2020.

Being aggrieved, by the acceptance of the RP of the claim of the FC of the sum of ₹ 1885 Crores against the GHPSL, the erstwhile director along with BRS Venture Investment Ltd. filed 05.04.2021 an application being IA. No. 1764/ND/2021 in CP(IB)571(ND)/ 2020 before the NCLT, New Delhi.

NCLAT dismissed CA(AT) (Ins) 1109 of 2020 filed by BRS Venture Investment Ltd.

11.05.2021 This order was challenged before the Hon'ble Supreme Court in Civil Appeal No. 4565 of 2021.

The Hon'ble Supreme Court passed an order in Civil Appeal No. 4565 of 2021 directing that "any further orders would abide by 17.09.2021 the final decision of this Court".

NCLT, New Delhi dismissed the IA. No. 1764/ND/2021 in CP 13.09.2023 (IB) 571 (ND)/2020 filed by the Appellant.

NCLT approved the resolution plan submitted by the Zaveri 19.09.2023

Final judgment in Civil Appeal No. 4565 of 2021 (BRS Ventures 23.07.2024 Investments Ltd (supra) passed by Hon'ble Apex Court

30. The Section 7 admission order of 18/11/2020 in CP 571/2020 against

the CD-GHPSL, was challenged by the Successful Resolution Applicant (SRA)

of the ACIL / Corporate Guarantor before this Appellate Tribunal in CA AT

(Ins) 1109/2020. This Appellate Tribunal on 11/5/2021 dismissed the appeal

and allowed the Financial Creditor to claim for the balance amount from the

principal borrower in the Section 7 Proceedings in CP 571/2020. The decision

of this Appellate Tribunal was challenged by 1BRS Ventures (supra) before

Hon'ble Supreme Court in Civil Appeal 4565/2021. The Hon'ble Supreme

Court by its interim order dated 17th September, 2021 noted that "any further

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 21 of 87 orders would abide by the final decision of this Court". Honourable Supreme

Court had noted the following two issues in its final judgement decided on

23.07.2024, which are noted as below:

XXX

12. Before we deal with the submissions canvassed across the Bar, we must note the issues formulated in the impugned judgment of the NCLAT. Based on the submissions made before it, two issues were framed, which read thus:

13. Following issues arise in this appeal for our consideration:

(i) Whether the application Under Section 7 of IBC is barred by limitation?

(ii) Whether the second Application Under Section 7 of IBC is not maintainable against the Corporate Debtor as for the same debt and default, CIRP has already been taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its dues?

31. The Hon'ble Supreme Court in 1BRS Ventures (supra) holds that:

"21. Under the corporate guarantee, in the facts of this case, the liability of ACIL was to the extent of the entire amount repayable by the 2nd respondent corporate debtor to the corporate creditor. In the CIRP of ACIL, the appellant paid a sum of Rs. 38.87 crores only to the 1st Respondent financial creditor. The amount was paid by the appellant on behalf of ACIL, the corporate guarantor. For the rest of the amount payable as per the guarantee, the 1st Respondent financial creditor had to take a haircut because of the involuntary process by operation of law. Only the liability of ACIL under the corporate guarantee to repay the loan to the 1st respondent financial creditor has been extinguished on the payment of Rs. 38.87 crores. By the involuntary act of the creditor of accepting part of the

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 22 of 87 amount from the surety in the discharge of the entire liability of the surety, even if Section 140 is attracted, it will confer on the guarantor or the appellant the right to recover only the amount mentioned above from the corporate debtor. The subrogation will be only to the extent of the amount recovered by the Creditor from the surety."

32. We observe that the Hon'ble Supreme Court of India has rendered its

final judgment in 1 BRS Ventures (supra), decided on 23.07.2024, the

operative part of which is extracted as below:

XXX

28. Hence, we summarize some of our conclusions as under:

a. Payment of the sum of Rs. 38.87 crores to the 1st Respondent- financial creditor under the resolution plan of the corporate guarantor-ACIL will not extinguish the liability of the 2nd Respondent- principal borrower/corporate debtor to pay the entire amount payable under the loan transaction after deducting the amount paid on behalf of the corporate guarantor in terms of its resolution plan;

b. A holding company is not the owner of the assets of its subsidiary. Therefore, the assets of the subsidiaries cannot be included in the resolution plan of the holding company, and

c. The financial creditor can always file separate applications Under Section 7 of the IBC against the corporate debtor and the corporate guarantor. The applications can be filed simultaneously as well;

29. Thus, the view taken by NCLAT cannot be faulted. Accordingly, the appeal is hereby dismissed with no order as to costs.

XXX Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 23 of 87

33. The above judgment of the Hon'ble Supreme Court makes it clear that

a Financial Creditor can always file a separate application under Section 7 of

the Code against the Corporate Debtor after it had filed the Section 7

proceedings against the Corporate Debtor. That too to pay the entire amount

payable under the loan transaction after deducting the amount paid on behalf

of the corporate guarantor in terms of its resolution plan.

34. In the facts of the present case, FC/R2 contends that the Appellant is

re-agitating its claim by way of this present appeal and the arguments of the

Appellant have already been dealt with by the Hon'ble Supreme Court in 1BRS

Ventures (supra). We note that in 1BRS Ventures (supra), the appeal was

filed before the Hon'ble Apex Court to challenge the Section 7 admission order

passed against the Principal borrower i.e. Respondent No. 1. The argument

raised by the Appellant before the Hon'ble Apex Court was that upon approval

of the resolution plan in the CIRP of the ACIL, and on payment of ₹ 38.87

crores to the Respondent No. 2/ Financial Creditor, the same constituted a

full and final settlement of the dues of the Respondent No. 2. The Hon'ble

Apex Court concluded that payment of a sum of ₹ 38.87 crores to the

Respondent No. 2/FC under the resolution plan will not extinguish the

liability of the Respondent No. 1/CD/GHPSL to pay the entire amount

payable under the loan transaction after deducting the amount paid by the

Corporate Guarantor/ Appellant in terms of the resolution plan. Thus, even

from the findings made by the Hon'ble Apex Court, it is evident that the

Respondent No. 2 is only liable to recover the remaining amount in the CIRP

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 24 of 87 of Respondent No. 1 i.e. the difference between the amount already

adjudicated by the Ld. NCLT and Ld. NCLAT i.e. ₹ 241.27 crores minus the

amount already paid in the CIRP of the Appellant i.e. ₹38.87 crores. Thus, we

note that the Hon'ble Apex Court has nowhere adjudicated the claim amount

of the Respondent No. 2. Similarly, while observing that the subrogation will

be to the extent of the amount recovered by the creditor from the surety i.e. ₹

38.87 crores, the Hon'ble Apex Court does not provide any finding to that

effect as the issue of subrogation had never been pressed by the SRA.

35. Thus, we find that the arguments of the Appellant as made in the

present appeal have not been decided by the Hon'ble Apex Court, and is thus

not barred by the principles of res judicata.

Points of determination

36. Having heard the counsels of both sides and also after perusal of the

material placed on record, the following points of determination emerge:

CA (AT(Ins.) No. 1557 of 2023 & 1684 of 2023 by ex-director of the Corporate Debtor & Corporate Guarantor

I. Whether the Adjudicating Authority erred in declining to examine the admitted claim of SREI at ₹ 1,885.08 crore, and whether that claim, and the classification of ACIL as an unsecured related party, vitiate the Information Memorandum;

CA (AT(Ins.) No. 626-628 of 2025 by GIDC/lessor of land

II. Whether GIDC has the locus to maintain its challenge, and whether its objections fall within the scope of appellate scrutiny under Section 61(3) and the ordinary appellate jurisdiction over the dismissal of its objection-IAs;

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 25 of 87 III. Whether the resolution plan, premised on the Demised Premises standing or becoming de-notified from SEZ to non-SEZ industrial use, and on GIDC's consent to change of use and sub-plotting being assumed rather than obtained, is feasible and viable within the meaning of Section 30(2) of the Code;

IV. Whether the Impugned Order's disposal of GIDC's restored objection-IAs by reference (para 10.2), without discrete reasons, can be sustained; and V. What relief and directions are called for, including as to the recognition of the amount paid by ACIL/BRS Ventures Investments Ltd. to SREI in the ACIL CIRP.

37. Each of these issues is being dealt with here in after.

Claim of ₹ 1885.08 Crs filed by FC & accepted by RP - erroneous & inflated or not

38. The first point for determination, which arises from the first set of

appeals, is whether the Adjudicating Authority erred in declining to examine

the admitted claim of SREI at ₹ 1,885.08 crore, and whether that claim, and

the classification of ACIL as an unsecured related party, vitiate the

Information Memorandum. This section delves into this issue in detail.

39. The Appellants claims that the Financial Creditor has filed an

exaggerated claim of approx. ₹ 1885 crores in the CIRP proceedings of the

Corporate Debtor, i.e. Gujarat Hydro Carbons and Power SEZ Limited.

40. We find that the Impugned order dated 13.09.2023 dismissed the

applications filed by the Appellants holding that once the resolution plan was

approved by the Committee of Creditors, the Adjudication Authority could not

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 26 of 87 look into the nitty gritty involved in the CIRP of the Corporate Debtor based on

facts that were in existence earlier in the CIRP of another Corporate Debtor.

Furthermore, the Ld. Adjudicating Authority imposed costs of ₹ 50,000/-. The

relevant portion is extracted as below for better appreciation of the views of the

Adjudicating Authority:

XXX

9. We find that that there is no provision under the IBC which allows the computation of claims done by a Resolution Professional for one Corporate Debtor's Resolution to be binding on a completely different Resolution Process of a different Corporate Debtor. In the present case, the Applicant has wrongly attempted to seek directions from this Adjudicating Authority. It is well within the ambit of IBC for reducing the claim of the answering Respondent in the CIRP of M/ s. Assam Company India Limited and not to exclude penal interest but to remove calculation mistakes and errors committed by the IRP m calculating and compounding the penal interest in the claim submitted by the answering Respondent.

10. Coming to the factual matrix of the present Application, it is a settled law that once the Resolution Plan has been approved by the CoC, the Adjudicating Authority can't go back to look into the nitty gritties involved in the CIRP of the Corporate Debtor based on facts which were in existence earlier in the CIRP of different Corporate Debtor. Therefore, this Adjudicating Authority cannot entertain the present Application which is devoid of merits and not sustainable. The Applicant has no locus standi to file the present Application and is attempting to derail and delay the present CIRP proceedings of the Corporate Debtor. XXX

41. For better appreciation we briefly look into the filing process of the claim

by the Financial Creditor - R2 - SREI in the related Insolvency Proceedings in

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 27 of 87 the matter of ACIL, which is the Corporate Guarantor. In the CIR proceedings

of ACIL, the Respondent No. 2/FC lodged a claim of ₹ 648,80,93,833/-

(Approx. ₹ 648.80 Crores) with the Interim Resolution Professional on

14.11.2017. The claim of the Respondent No. 2 amounting to a sum of

₹648.80 Crores was assessed at ₹ 357.29 Crores by the Interim Resolution

Professional on 28.11.2017. In the meantime, on 12.01.2018 an order was

passed by the Hon'ble NCLT, Guwahati in CP (IB) No. 20/GB/2017 wherein,

the Interim Resolution Professional was replaced by the Resolution

Professional namely, Mr. Kannan Tiruvengadam. Thereafter on 03.04.2018

the claim of the Respondent No. 2 was further reduced to ₹ 241.27 Crores

from ₹ 357.29 Crores by the Resolution Professional.

42. Being aggrieved by the decision of the Resolution Professional to reduce

the claim of the Respondent No. 2 to ₹ 241.27 Crores, the Respondent No. 2

in July 2018 filed an application being IA. No 34/2018 in CP (IB) No.

20/GB/2017 before the Hon'ble NCLT, Guwahati challenging the decision of

the Resolution Professional. On 23.07.2018 this application challenging the

decision of the Resolution Professional was dismissed by the Ld. NCLT,

Guwahati and the decision of the Resolution Professional to reduce the claim

of the Respondent No. 2 to ₹ 241.27 Crores was upheld. NCLT - Guwahati

upheld the decision of the resolution professional to reduce the claim. We note

that with respect to the contention of the Financial Creditor that penal interest

was excluded from the claim of the creditors only for the purpose of assigning

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 28 of 87 the voting rights of individual FCs in the CoC and not for any other purpose

whatsoever, Adjudicating Authority gave a very clear finding noted as below:

XXX

31. I have considered the reply advanced by the RP in regard to the contention of the Applicant that "penal interest was excluded from the claim of the creditors only for the purpose of assigning the voting rights of individual FCs in the CoC and not for any other purpose whatsoever,"

having regard to the definition of "voting share" as given in Section 5(28) of the Code, 2016, and found reason to concur with such submission advanced from the side of the RP. Being so, the contention of the respondents that the term "voting share", so used in the Code of 2016, does not contemplate different connotations for different purposes appears to be convincing and same is accordingly accepted.

32. It may be noticed here that the decision of IRP and COC in its first meeting to exclude the penal interest from the claims of the creditors has not been disputed by the applicant although till the time of filing of the present application as many as four other creditors' meetings were conducted during the period between 28/11/2017 and 28/02/2018 but at no point of time, the applicant found it necessary to question such decision, adopted by COC in its first meeting held on 28.11.2016.

33. Such revelation, in the facts and circumstances, firmly serves to show that the applicant had accepted the decision to exclude the penal interest from the claim of the creditors wholeheartedly and that too, even for the purpose of ascertainment of admissible claim of the creditors including the applicant. The fact that none of the other creditors whose penal interests were also so excluded from the claims, they had made against the CD had ever questioned such decision of the RP/COC only fortifies my conclusion that the trimming of penal interests from the claims

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 29 of 87 of the creditors was for all purposes including the ascertainment of legally admissible claim of the creditors.

XXX

43. Furthermore, on the issue of the reduction in the claim of the Financial

Creditor, the Adjudicating Authority, gave the following findings:

XXX

34. Now, let us see if capitalisation of penal interest is permissible under the law. Here, it needs to be noted that the law relating to capitalization of penal interest is no longer res integra. In that connection, one can look into 11 Central Bank of India. For ready reference, same is reproduced below:

"(1) Though interest can be capitalised on the analogy that the interest falling due on the accrued date and remaining unpaid, partakes the character of amount advanced on that date, yet penal interest, which is charged by way of penalty for non-payment, cannot be capitulised.

Further interest, i.e. interest on interest, whether simple, compound or penal, cannot be claimed on the amount of penal interest. Penal Interest cannot be capitalised. It will be opposed to public policy."

35. In 12M. Rajeswar Rao (supra, it has again been held that the capitalisation of penal interest is also not permissible. The relevant part is reproduced below:

"However, 'penal interest' has to be distinguished from 'interest'. Penal interest is an extraordinary liability incurred by a debtor on account of his being a wrong-doer by having

Central Bank of India Vs Ravindra and others, reported in (2001) SCC 367 11

Rajeswar Rao and others Vs. Chituri Satyam (Died) & others, reported in 2013 SCC OnLine 12

AP 809.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 30 of 87 committed the wrong of not making the payment when it should have been made, in favour of the person wronged and it is neither related with nor limited to the damages suffered. Thus, while liability to pay interest is founded on the doctrine of compensation, penal interest is a penalty founded on the doctrine of penal action. Penal interest can be charged only once for one period of default and, therefore, penal interest cannot be permitted to be capitalized. Further interest i.e., interest on interest, whether simple or compound or penal cannot be claimed on the amount of penal interest."

36. The above leaves no manner of doubt that penal Interest by whatever name it is called cannot be allowed to be capitalized. On a perusal of the application and other relevant documents, it is found that the applicant herein has capitalized the penal interest. In that view of the matter too, the decision of the IRP to exclude the penal interest in calculating the actual claim of the creditors is found to be well founded.

XXX

44. Adjudicating Authority, after noting the above findings, had come to the

following conclusion:

XXX

The above leaves no manner of doubt that penal Interest by whatever name it is called cannot be allowed to be capitalized. On a perusal of the application and other relevant documents, it is found that the applicant herein has capitalized the penal interest. In that view of the matter too, the decision of the IRP to exclude the penal interest in calculating the actual claim of the creditors is found to be well founded. XXX

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 31 of 87

45. Adjudicating Authority has also gone through the loan agreement and

the deed of agreement to find out whether the terms and conditions in these

documents override the position as existing in the law and has returned the

following findings:

XXX

37. I have also noticed that referring to loan agreement 05-01-2011 and deed of guarantee dated 05-01-2011, the applicant argued that under the loan agreement, the borrower was to pay not only the interest at the agreed rate on the principal amount, same being 100 crores but was to pay default interest too at the agreed rate for every default. More importantly, the parties thereto also agreed that default interest would be capitalised.

The CD herein, being the guarantor to the due repayment of such loan as per schedule of repayment, had unconditionally undertaken to abide by all the conditions under which said loan was made available to the borrower vide deed of guarantee 05-01-2011.

38. Since both the borrower and the guarantor had agreed to pay not only the interest at the agreed rate but also agreed to pay penal interest with provision for capitalisation of penal interest, the borrower as well as the guarantor are bound by such terms and conditions and it is beyond the competence of the COC, IRP or RP to ignore such a contract.

39. In other words, the agreements, aforementioned, makes it impossible for the IRP/RP/COC to reduce the claim of the applicant from an amount of Rs.648,80,93,833 crores as on 14.11.2017 to any lesser amount on the date aforesaid. In support of such contention, my attention has been drawn to the decision of Hon'ble High Court of Judicature, Andhra Pradesh at Hyderabad in State Bank of India, Hyderabad Vs S.H Associates, Hyderabad & others, 2011 AIR CC 2467, to contend that the

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 32 of 87 parties to a contract are bound by contractual agreement regarding the rate of interest to be paid on the principal amount.

40. But then, it is a settled proposition of law that parties to an agreement cannot be allowed to do something which runs counter to any law whether statutory law or the law, made by the court. Since capitalization of penal interest is not permissible in view of law, laid down in Central Bank of India (supra), therefore, IRP had committed no wrong whatsoever in excluding the penal interest (which was compounded and capitalised) in computation of claim for the purpose of voting rights in the meeting of the COC or for any other purpose whatsoever.... XXX

46. We find that the Adjudicating Authority has given a clear finding that

parties to an agreement cannot be allowed to do something which runs

counter to any law whether statutory law or the law, made by the court. Since

capitalization of penal interest is not permissible in view of law, laid down in 11 Central Bank of India (supra), therefore, IRP had committed no wrong

whatsoever in excluding the penal interest (which was compounded and

capitalised) in computation of claim for the purpose of voting rights in the

meeting of the COC or for any other purpose whatsoever.

47. We note that the above decision of the Adjudicating Authority as noted

here in earlier was challenged by the Financial Creditor - R2-SREI before this

Appellate Tribunal in 13CA (AT) (Ins.) No. 291/2018 but it was dismissed by

CA AT INS 291/2018 dtd 01.02.2019 Prasad Gempex vs Star Agro with SREI Infra Finance vs 13

Kannan @ 175 APB

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 33 of 87 this Appellate Tribunal on 01.02.2019. This Appellate Tribunal had noted as

below:

"So far as the SREI Infrastructure Finance Ltd. who is aggrieved by the decision of the Resolution Professional, it may also take steps under sub- section (6) of Section 60 against the corporate debtor or any other party. In this case, we make it clear that we have not expressed any opinion with regard to the claim made by the SREI Infrastructure Finance Ltd. or the decision as taken by the Resolution Professional."

Thus, we find that the initial claim of the Financial Creditor/R2 during the CIRP

of the ACIL/Appellant initially stood at an inflated amount of ₹ 648.80 crores

in the year 2017, which was reduced to ₹ 357.29 crore by the IRP, and

subsequently reduced to ₹ 241.27 crores by the RP. The reduction was done as

the claim of the Financial Creditor/R2 included capitalization of penal interest.

The claim amount of the Financial Creditor/R2 being reduced to ₹ 241.27 crores

were challenged before the Ld. NCLT, Guwahati bench, which upheld the

reduction of claim the RP in its order dated 23.07.2018 which was subsequently

upheld by this Hon'ble Appellate Tribunal in its order dated 01.02.2019 passed

in CA (AT) (Ins.) No. 291/2018. Despite liberty being given to the Financial

Creditor/R2 to take steps under sub-section 6 of Section 60 against the

Corporate Debtor or any other party, it did not challenge the order dated

01.02.2019 or take any steps. Thus, the order dated 01.02.2019 had attained

finality. Against that background, the admission, within a short span of

roughly two years and on the very same facility, of a claim of ₹ 1,885.08 crore

-- nearly 7.8 times the judicially settled figure called for careful verification,

not mechanical acceptance.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 34 of 87

48. As noted by us here in the earlier section that 1BRS Ventures (supra)

cleared the way for proceeding further against the principal borrower but to

be guided as per the ratio. Per the decision of the Hon'ble Supreme Court, we

note that it has not gone into the issue of the extent of the claim which was

filed by the Financial Creditor and thus the question is still open. There is

nothing in 1BRS Ventures (supra) that reopens the quantum. Hon'ble

Supreme Court there addressed maintainability of a separate Section 7

application and the principle of subrogation, and did not adjudicate, much

less enlarge, the figure of ₹ 241.27 crore.

49. In such a background in the CIR proceedings of CD-Gujarat Hydro

Carbon, the RP has to has to correctly identify the claim against the principal

borrower. The remaining quantum of claim, which has to become part of the

insolvency proceedings of the Corporate Debtor, will have to be determined

on the basis of the past determination and payment which had happened in

the earlier CIR proceedings. Moreover, the claim cannot have quantum leap

from ₹241 crores to ₹1,885 crores within a span of 3 years. And the

observation of the Adjudicating Authority that they cannot go into the nitty-

gritty is not appropriate. In fact, for this reason alone both the resolution

professional and the Adjudicating Authority will have to go into the details.

We observe that the determination of the claim of the Financial Creditor in

the CIR proceedings of the Corporate Debtor is not dependent on the

determination of the RP of the corporate guarantor alone but basis the judicial

decision which attained finality. Further because of its interlinkage in the CIR

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 35 of 87 proceedings of the principal borrower, it becomes an important determining

factor for the remaining amount of the claim. Therefore, the argument of the

Adjudicating Authority that it will not go into the nitty-gritties is

unsustainable and deserves to be set aside.

50. Particularly if an exaggerated claim is presented before the resolution

professional, it is the duty of the resolution professional to correctly determine

the claims and maintain an updated list of claims. This process cannot be

construed to be adjudication. This becomes all the more relevant in the

present proceedings where in the earlier proceedings the insolvency under

Section 7 had been initiated against the corporate guarantor Financial

Creditor/SREI. And now for the balance amount the same Financial Creditor,

SREI, is invoking Section 7 insolvency proceedings against the principal

borrower. Thus, we find that in the background of the past history of the

present case, the claim needs to be thoroughly scrutinized and more so when

the Financial Creditor/SREI has made unjustified claims, which are primarily

based on capitalization of the penal interest.

51. The Ld. NCLT by way of the impugned order dated 13th September,

2023, dismissed the application filed by the Appellant and further on 19th

September, 2023 approved the resolution plan submitted by the R4/Zaveri.

We further observe that this was done inspite of the fact that the Resolution

Applicant of ACIL i.e. BRS Ventures Investment Ltd. had already preferred an

appeal before the Hon'ble Supreme Court being Civil Appeal No. 4565 of 2021

against the order of this Hon'ble Appellate Tribunal dated 11th May, 2021 in

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 36 of 87 which the Hon'ble Supreme Court by its order dated 17th September, 2021

clearly stated that "any further orders would abide by the final decision of this

Court".

52. As noted by us here earlier, despite adjudication of the claim amount to

be ₹ 241.27 crores in the CIRP of the ACIL and receipt of ₹ 38.87 crores by the

FC, the Financial Creditor/R2 filed another claim of ₹ 1885.09 crores against

the Principal Borrower in a very short period of time, which is claimed by the

Appellant to be improbable. Further the same has been accepted by the

Resolution Professional, Respondent No. 3 as a secured Financial Creditor to

the tune of ₹ 1885.08 crores.

53. We find that in the impugned order IA 1764/2021 in

CP(IB)571(ND)/2020, the Adjudicating Authority, while delving into the issue

of the claims, has given the finding that

"once the Resolution Plan has been approved by the CoC, the Adjudicating Authority can't go back to look into the nitty gritties involved in the CIRP of the Corporate Debtor based on facts which were in existence earlier in the CIRP of different Corporate Debtor."

54. Such a conclusion of the Adjudicating Authority could have been fully

justified if the situation was different than what exists in the present facts

and circumstances, wherein the Financial Creditor had initially invoked

insolvency resolution proceedings under Section 7 of the Code against the

corporate guarantor and now it has also invoked the insolvency proceedings

under Section 7 against the principal borrower. We observe that the

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 37 of 87 Resolution Plan of BRS Ventures Investment Ltd. for ACIL - the holding

company /Corporate guarantor of the CD was approved by the NCLT,

Guwahati by an order dated 20th September, 2018, per which Respondent No.

2/ SREI was paid a sum of ₹ 38.87 Crores, which the Appellant claims were

in full and final settlement of its dues against the sum of ₹ 241.27 Crores. It

is the contention of the Appellant that inspite of receiving the sum of ₹ 38.87

Crores in full and final settlement of its dues in the CIRP of ACIL, the

Respondent No. 2/FC/SREI filed an application being CP (IB) No. 571 of 2020

under Section 7 of IBC, 2016 before the Ld. NCLT, New Delhi against the

Respondent No. 1/Gujarat Hydro Carbons and Power SEZ Limited and which

was admitted by the order dated 18th November, 2020 and the Respondent

No. 3 was appointed as the Interim Resolution Professional. During the CIRP

of the Respondent No. 1/Gujarat Hydro Carbons and Power SEZ Limited, the

Respondent No. 2 filed its claim for an amount of ₹ 1885.08 Crores on the

basis of the same set of debt and default for which CIRP of ACIL took place.

The Appellant is aggrieved by the admission of the Respondent No. 2's claim

by the Respondent No. 3 to the tune of ₹ 1885.08 Crores filed an application

being I.A. No. 1764 of 2021 before the Ld. NCLT, New Delhi and is seeking

directions to the Respondent No. 3/ex-RP to reassess and/ or recalculate the

claim submitted by the Respondent No. 2 in light of the fact that the claim of

the Respondent No. 2 had already been admitted by the Hon'ble NCLT,

Guwahati for an amount of ₹ 241.27 Crores and a sum of ₹ 38.87 Crores had

already been paid to the Respondent No. 2 in full and final settlement of its

dues through the Resolution Plan of ACIL which was accepted by the

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 38 of 87 Respondent No. 2 and thus, the right of the Respondent No. 2 with respect to

the debt had been extinguished by virtue of Section 63 of the Indian Contract

Act, 1872.

55. Thus, we are unable to accept the Adjudicating Authority's view,

expressed in the order dated 13.09.2023, that once a resolution plan has been

approved by the CoC, it is impermissible to examine facts arising in the CIRP

of a different Corporate Debtor bearing on the same debt. That view overlooks

that this is not a case of two unconnected insolvencies; it is a single debt and

a single default, litigated first against the corporate guarantor and, for the

balance, against the principal borrower. The claim of ₹ 241.27 crore was not

an informal or provisional figure; it was fixed after a reasoned adjudication by

the NCLT, Guwahati Bench (order dated 23.07.2018) -- expressly disallowing

capitalisation of penal interest as opposed to public policy -- which was

affirmed by this Tribunal on 01.02.2019 and thereafter attained finality, SREI

having availed no further recourse despite the liberty granted to it.

56. Furthermore, we also note that the issue relating to the extent of the

claim was already settled in the judgment of the NCLT Guwahati dated

23.07.2018 and was not agitated before the Hon'ble Supreme Court in 1Civil

Appeal No. 4565 of 2021 by the Respondents. Thus, we find that the issue

of quantum of claim was raised before NCLT and the claim amount had

crystallized in the judgment dated 23.07.2018 in IA 34/2018 in CP (IB)

20/GB/2017 of NCLT- Guhahati Bench and later on attained finality. This

judgment of NCLT had returned a finding that:

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 39 of 87 "penal interest by whatever name it is called cannot be allowed to be capitalized. On a perusal of the application and other relevant documents, it is found that the applicant herein has capitalized the penal interest. In that view of the matter too, the decision of the IRP to exclude the penal interest in calculating the actual claim of the creditors is found to be well founded."

57. We observe that had it been a standalone case of insolvency

proceedings, then it could have proceeded totally independently. But in this

case RP of the Corporate Debtor had to find out the remaining amount for

Section 7 proceedings against the Corporate Debtor basis a judgement which

had attained finality. Here in this case the RP was bound by the judgment of

the NCLT Guwahati, which had attained finality.

58. The argument of the Adjudicating Authority that the RP is not bound

by the decision of the RP of another Corporate Debtor is unsustainable. We

find that in the conclusion, the observations of the Adjudicating Authority

that:

"there is no provision under the IBC which allows the computation of claims done by a Resolution Professional for one Corporate Debtor's Resolution to be binding on a completely different Resolution Process of a different Corporate Debtor. In the present case, the Applicant has wrongly attempted to seek directions from this Adjudicating Authority. It is well within the ambit of IBC for reducing the claim of the answering Respondent in the CIRP of M/ s. Assam Company India Limited and not to exclude penal interest but to remove calculation mistakes and errors committed by the IRP m calculating and compounding the penal interest in the claim submitted by the answering Respondent."

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 40 of 87

59. This is very much against the judgment of the apex court in the case of

14Central Bank (supra) as was cited by the Adjudicating Authority, Guwahati

Bench, in its dated 23-07-2018. Therefore, the adjudicating authority has to

go into the details of the CIR proceedings and return an appropriate finding

and it will not be appropriate to say that it need not go into the nitty-gritties

of the CIR proceedings, and thus such a finding is unsustainable.

60. We briefly look into the duties of the resolution professional and

whether they were discharged appropriately or not. While an RP possesses no

adjudicatory power to determine disputed questions 15NTPC Ltd. v. Rajiv

Chakraborty, Resolution Professional (supra), the RP's duty under 2Swiss

Ribbons Pvt. Ltd. v. Union of India (supra) to collate, verify and correctly

determine the amount of a claim is a distinct and antecedent obligation, and

this Tribunal, and the Adjudicating Authority before it, retain the power under

16Axis Bank Ltd. v. Samruddhi Realty (supra) to look behind a claim so

admitted where, as here, its correctness is squarely put in issue by a judicially

settled figure on the identical debt.

61. SREI's claim had already been judicially reduced to ₹ 241.27 crore in

the ACIL CIRP, and ₹ 38.87 crore was thereafter paid under the ACIL

resolution plan. The later admission of ₹ 1,885.08 crore in GHPSL's CIRP,

without reconciliation with that final determination, rendered the IM

materially inaccurate. We accordingly hold that the admission of SREI's claim

14 Central Bank of India Vs Ravindra and others, reported in (2001) SCC 367 15 NTPC Ltd. v. Rajiv Chakraborty, Resolution Professional (2021) 10 SCC 480 16 Axis Bank Ltd. v. Samruddhi Realty (2023) 23 Comp Cas-OL 596

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 41 of 87 at ₹ 1,885.08 crores, without reference to or reconciliation with the finally

adjudicated figure of ₹ 241.27 crore, was not a proper discharge of the RP's

verification duty, and that the correct starting point for computation of SREI's

recoverable claim against the Corporate Debtor is ₹ 241.27 crore, less credit

for the ₹ 38.87 crore already recovered by SREI in the ACIL CIRP, consistent

with the Hon'ble Supreme Court's holding in BRS Ventures (supra) that

payment by the guarantor does not extinguish the principal borrower's

liability for the balance but the creditor may recover from the borrower only

the sum remaining after such credit.

Is ACIL a secured Financial Creditor to the extent of ₹ 38.87 crs paid by ACIL to FC in the CIRP of ACIL or not

62. We observe that ACIL has been shown as an Unsecured Financial

Creditor in the CIRP of GHPSL (R1). The argument of ACIL that they are to be

treated as a Secured Financial Creditor in the CIRP of R1 to the extent of

₹38.87 crores are basis the judgment of the Hon'ble Supreme Court in 1BRS

Ventures (supra) wherein the judgment held that:

"Under the corporate guarantee, in the facts of this case, the liability of ACIL was to the extent of the entire amount repayable by the 2nd respondent corporate debtor to the corporate creditor. In the CIRP of ACIL, the appellant paid a sum of Rs. 38.87 crores only to the 1st Respondent financial creditor. The amount was paid by the appellant on behalf of ACIL, the corporate guarantor. For the rest of the amount payable as per the guarantee, the 1st respondent financial creditor had to take a haircut because of the involuntary process by operation of law. Only the liability of ACIL under the corporate guarantee to repay the loan to the 1st respondent financial creditor has been extinguished on the payment of Rs. 38.87 crores. By the involuntary act of the creditor of accepting part of the Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 42 of 87 amount from the surety in the discharge of the entire liability of the surety, even if Section 140 is attracted, it will confer on the guarantor or the appellant the right to recover only the amount mentioned above from the corporate debtor. The subrogation will be only to the extent of the amount recovered by the Creditor from the surety."

63. We note that in the CIRP of ACIL, the resolution plan submitted by BRS

Venture Investments Ltd (SRA) was duly approved on 20.09.2018 by the

NCLT, Guwahati, by virtue of which the SRA through ACIL had paid ₹ 38.87

Cr to the Financial Creditor, against its total claim of INR 241.27 crores.

Appellant/ACIL/SRA contends that upon such payment made by ACIL,

Section 140 of the Indian Contract Act, 1872 would squarely apply as the

rights of the Secured Financial Creditor shall stand subrogated in favour of

ACIL and ACIL would directly step into the shoes of the R2, as Secured

Financial Creditor to the extent of the amount paid to the R2 i.e. ₹ 38.87

crores. Appellant places its reliance on the judgment by the Hon'ble Supreme

Court in 1BRS Ventures (supra) wherein it has clearly held that the SRA or

ACIL has stepped into the shoes of the R2 as a Secured Financial to the extent

of an amount of ₹ 38.87 crores paid by the SRA through ACIL to the R2, and

is thus entitled to all benefits as enjoyed by the R2 to the extent of the amount

paid. Thus, by virtue of the above, ACIL claims to have become a secured

Financial Creditor to the extent of ₹ 38.87 crores paid by SRA through ACIL

to the R2 in the resolution plan ACIL.

64. The Appellant/ACIL further relies on the following Judgements:

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 43 of 87  Hon'ble Supreme Court in 17Amrit Lal Goverdhan Lalan (Dead)

wherein it was held that while a surety is not discharged merely

because the creditor grants the principal debtor time or indulgence,

the surety is discharged pro tanto under Section 141 of the Indian

Contract Act where the creditor, by negligence or otherwise, loses or

parts with the security held for the debt without the surety's

consent. The Court explained that a surety is entitled to the benefit

of every security held by the creditor, and any impairment or loss of

such security attributable to the creditor proportionately reduces the

surety's liability.

 18Economic Transport Organization v. Charan Spinning Mills, in

this the Supreme Court held that the doctrine of subrogation,

reflected in Section 140 of the Indian Contract Act, embodies the

equitable principle that upon satisfying the guaranteed obligation or

indemnifying the assured for the entire loss, the surety or insurer is

invested with all the rights and remedies that the creditor or assured

could have enforced against the principal debtor or wrongdoer. The

Court clarified that subrogation operates by operation of law upon

full indemnification, enabling the subrogee to step into the shoes of

the original claimant, while the extent and mode of enforcement may

17 Amrit Lal Goverdhan Lalan (Dead) by his Legal Representatives vs. State Bank of Travancore, (1968) 3 SCR 724:

AIR 1968 SC 1432 (Refer Para No. 7) 18 Economic Transport Organization v. Charan Spinning Mills Private Ltd. and Another: (2010) 4 SCC 114 (refer Para No. 20, 26 and 35)

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 44 of 87 be modified by the terms of a written subrogation or subrogation-

cum-assignment.

65. The Appellant/ACIL contends that without prejudice to the rights of

ACIL and without admitting in any manner, in case the proposition as placed

by the ACIL that the Resolution Plan submitted by the Successful Resolution

Applicant in the case of the Corporate Debtor is not set aside, ACIL should be

entitled to the proportionate share in the amount agreed to be paid by the

Successful Resolution Applicant to the Financial Creditors of the Corporate

Debtor.

66. SRA of the CIR proceedings of the CD/GHPSL, on the other hand

contends that the right of subrogation under Section 140 of the Contract Act

is attracted only when the surety pays all that it is liable for under the

guarantee and it further claims that in the present case, the resolution

applicant of ACIL paid only ₹ 38.87 Crores against an admitted liability of

₹241.27 Crores. Therefore, Section 140 has no application to extinguish the

Corporate Debtor's liability.

67. FC contends that before Honourable Supreme Court in 1BRS Ventures

(supra), subrogation was not pressed and the Court gave no operative finding.

They bring to our notice that ACIL is shown as an unsecured related party

and the resolution plan pays such parties nil on liquidation-value logic.

68. Appellant had separately claimed that payment of about ₹ 38.87 crores

was as per the resolution plan in the CIR Proceedings of ACIL was for full and

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 45 of 87 final settlement of the claim of about ₹ 241.27 crores but as we had noted

earlier, that argument is unsustainable and has been dismissed by us herein

earlier.

69. We further note that subrogation is dealt in Sections 140 and 141 of

the Indian Contract Act, which are extracted as below:

"Section 140. Rights of surety on payment or performance Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. Section 141. Surety's right to benefit of creditor's securities. A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security."

70. Section 140 provides that where a guaranteed debt has become due and

the surety has paid or performed "all that he is liable for", the surety is

"invested with all the rights which the creditor had against the principal

debtor" i.e. 'stepping into the shoes'. We observe that subrogation is not a new

right the surety is contending for, but the transfer of the creditor's existing

rights, with their incidents. Section 141 gives the surety "a right to the benefit

of every security which the creditor has against the principal debtor at the

time when the contract of suretyship is entered into."

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 46 of 87

71. We observe that while delivering the judgment of 1BRS Ventures

(supra), the Hon'ble Supreme Court articulated the principle but declined to

apply it operationally because it was not pressed. The Supreme Court had

noted that even if Section 140 is attracted, it will confer on the guarantor or

the Appellant the right to recover only the amount mentioned above from the

Corporate Debtor. The subrogation will be only to the extent of the amount

recovered by the Creditor from the surety.

72. Thus, in the above circumstances we find that RP needs to re-rank

ACIL's claims as secured creditor above unsecured related parties and also

Information Memorandum (IM) and distribution require correction.

Does the erroneous Information Memorandum vitiate CIR proceedings?

73. On the Issue of information memorandum being erroneous and

incorrect, the Appellant contends that the Information Memorandum

prepared by the Resolution Professional of the Corporate Debtor is erroneous

in two ways:

 The Appellant is treated as an unsecured Financial Creditor in the

CIRP of the Respondent No. 1, whereas the Appellant was required

to be treated as a Secured Financial Creditor in the CIRP of

Respondent No. 1 to the tune of ₹ 38.87 crores;

 The Financial Creditor's claim is admitted to the tune of ₹ 1885

Crores in the CIRP of Respondent No. 1.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 47 of 87

74. The Appellant further claims that the information memorandum is the

foundation and has a pivotal role for preparation of a proper resolution plan.

In the Corporate Insolvency Resolution Process, the information

memorandum is the basic document which contains all aspects of the

Corporate Debtor that enables the resolution applicant/s to prepare the

resolution plan in accordance with the information contained in the

information memorandum and submit the same to the resolution

professional. Section 29 of the Insolvency and Bankruptcy Code, 2016

provides that the Resolution Professional shall prepare an Information

Memorandum in such form and manner which shall contain relevant

information as maybe specified by the Board for formulating a Resolution Plan

whereas Regulation 36 of the IBBI (Insolvency resolution process for corporate

persons) Regulations, 2016 clearly states the relevant information should

contain details of assets and liabilities of the Corporate Debtor, latest annual

financial statement, audited financial statement of the Corporate Debtor, list

of creditors, particulars of debt due from or to the Corporate Debtor and other

information.

75. For canvassing the importance of the correct information

memorandum, the Appellant has relied on the following judgments:

 19M/s. Avenue Realty vs. The Assistant Commissioner

Srirangam dated 14.08.2025

Madurai Bench of the Madras High Court in M/s. Avenue Realty (A Partnership Firm) vs. 19

The Assistant Commissioner Srirangam (GST Circle) & Ors. [W.P. (MD) No. 8260 of 2025, paras 70-73]

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 48 of 87 "70. Reading of Section 29 of the Code read with Regulation 36 of the 2016 Regulations reveals that a Resolution Professional (RP) appointed has to prepare an "Information Memorandum"

containing various details of the "Corporate Debtor" so that a Resolution Applicant who intends to submit a "Resolution Plan"

(RP) is aware of the assets and liabilities of the "Corporate Debtor", including the details about the "Creditors" and the amounts claimed by them.

71. The "Information Memorandum" is required to contain the details of the guarantees that have been given in relation to the debts of the Corporate Debtor by other persons and the details with regard to all material litigation and an ongoing investigation or proceeding initiated by the Government and statutory authorities are also required to be detailed in the information memorandum. So also the details regarding the number of workers and employees and liabilities of the corporate debtor towards them and other Statutory Authorities are required to be contained in the Information Memorandum.

72. Section 29 of the Code is reproduced below:-

"29. Preparation of information memorandum. -

(1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan.

(2) The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes-

(a) to comply with provisions of law for the time being in force relating to confidentiality and insider trading;

(b) to protect any intellectual property of the corporate debtor it may have access to; and

(c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with.

Explanation. - For the purposes of this section,"relevant information" means the information required by the resolution applicant to make the resolution plan for the corporate debtor, Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 49 of 87 which shall include the financial position of the corporate debtor, all information related to disputes by or against the corporate debtor and any other matter pertaining to the corporate debtor as may be specified."

73. Thus, the Resolution Professional (RP) is required to take note of pre-existing charges. The details contained in the Information Memorandum is intended to equip a Resolution Applicant about the liabilities of the Corporate Debtor to prepare a "Resolution Plan", which apart from satisfying a part of such liabilities would also ensure that the Corporate Debtor is revived and made a running establishment."

 20Bimalesh Bhardwaj : the Hon'ble NCLAT has held that "for the Corporate Insolvency Resolution Process to result in a successful resolution of the Corporate Debtor, preparation of a correct Information memorandum is a must, which may result in workable Resolution Plans."

76. The Appellant therefore argues that the information memorandum lays

down the path for maximization of the value of the assets of the Corporate

Debtor by providing true and correct information about the Corporate Debtor

including its financial statements which includes such amount due and

payable to the Creditors. But due to aforesaid two errors which are reflecting

in the Information Memorandum, the entire CIRP of the R1 has been

conducted in a wholly arbitrary, haphazard and non-transparent manner.

thereby causing serious prejudice to the stakeholders and defeating the

objective of maximization of value of the assets of the Corporate Debtor.

Consequently, the entire CIRP stands vitiated in law and is liable to be set

Bimalesh Bhardwaj & Ors. v Value Infratech India Pvt. Ltd & Ors: [2021 SCC Online NCLAT 20

443]

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 50 of 87 aside, with a direction for initiation of the process afresh in accordance with

law.

77. Appellant further argues that even assuming the fact that the total pay-

out in terms of the approved Resolution Plan is less than the correct amount

due and payable to the Financial Creditor i.e. ₹ 202.40 crores (₹ 241.27 crores-

₹ 38.87 crores), such proposition cannot be accepted as the law is well laid

down that any information memorandum which is faulty and does not

comprise of the correct assets and liabilities of the Corporate Debtor should

be set aside and the correct information memorandum is once again required

to be floated for inviting new applicants for a resolution.

78. Vehemently opposing the argument that erroneous information

memorandum vitiates the CIR proceedings, the SRA/R4 contents that such

an argument is ex facie contrary to Section 61(3) of the IBC. It is argued that

a resolution plan can be challenged only on the exhaustive grounds

enumerated in Section 61(3). Alleged discrepancies in the Information

Memorandum do not constitute any of the prescribed grounds for challenge.

Once a resolution plan is approved by the CoC and sanctioned by the

Adjudicating Authority, it is not open to the tribunal to scrutinize the

commercial wisdom of the CoC in accepting the plan. Moreover, even

assuming that the claim of SREI was somehow overstated, the Resolution Plan

proposed a payment of only ₹ 125 Crores to SREI against its admitted claim

of ₹ 1885.08 Crores. Even by the Appellant's own reckoning, the original

principal amount of the loan was ₹ 100 Crores and the outstanding balance

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 51 of 87 (as determined during the ACIL CIRP) was ₹ 241.27 Crores, which is

substantially higher than the ₹ 125 Crores being paid under the present

Resolution Plan. Therefore, even if the Appellant's argument regarding the

quantum of claim is accepted in its entirety (which is denied), it would have

no impact whatsoever on the validity or the fairness of the Resolution Plan to

any stakeholder, least of all the Appellant who is only an erstwhile director.

79. The Appellants lean on 20Bimalesh Bhardwaj v. Value Infratech

(NCLAT) that a correct IM is a 'must' for a workable plan -- and on the

19 Madras High Court's Avenue Realty (2025) for the IM's pivotal role and we

find that both these judgments support the case of the Appellant.

80. The Respondents also relies on the entire commercial-wisdom

arguments and with the practical point that the secured FC's pay-out is fixed

and the unsecured related parties get Nil on liquidation-value logic, so the

alleged errors are not outcome-determinative.

81. Thus, on the issue whether the Adjudicating Authority erred in

declining to examine the admitted claim of SREI at ₹ 1,885.08 crores, and

whether that claim, and the classification of ACIL as an unsecured related

party, vitiate the Information memorandum we find that the Information

Memorandum was fundamentally incorrect as SREI's claim of about ₹1,885

crores was admitted despite earlier judicial determination reducing the

recoverable debt. Material facts relating to the earlier ACIL CIRP and the

amount already recovered were either omitted or not properly reflected. Since

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 52 of 87 every prospective resolution applicant bases its commercial decision upon the

Information Memorandum, an IM founded on materially incorrect financial

information vitiates the entire resolution process. We also find that

exaggerated admission of SREI's claim materially distorted the CIRP. The RP

failed to discharge his statutory obligation of independent verification. The

inflated claim resulted in distorted voting dynamics and valuation.

82. The Respondents have argued that the commercial wisdom is non-

justiciable and therefore cannot be questioned. On the contrary we find that

Commercial wisdom cannot validate a plan founded upon incorrect material

information. The CoC's commercial wisdom cannot be insulated where the

commercial decision itself proceeded on incorrect foundational facts. We

observe that Judicial review would be available where Information

Memorandum is materially defective; mandatory provisions of the Code have

been violated; feasibility rests upon assumptions contrary to statutory

records; the decision-making process is fundamentally flawed. Thus, we

overrule the argument of the commercial wisdom of the committee of creditors

(COC).

83. In the above facts and circumstances, we find that the IM is vitiated

and therefore we find sufficient justification to set aside the resolution plan

and go for a fresh information memorandum and also a re-invitation of

expression of interest.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 53 of 87 Findings in CA (AT) (Ins.) No. 1557 of 2023 & 1684 of 2023

84. We find that the Information Memorandum was fundamentally

incorrect as SREI's claim of about ₹1,885 crores was admitted despite earlier

judicial determination reducing the recoverable debt. Material facts relating

to the earlier ACIL CIRP and the amount already recovered were either omitted

or not properly reflected. Since every prospective resolution applicant bases

its commercial decision upon the Information Memorandum, an IM founded

on materially incorrect financial information vitiates the entire resolution

process. Furthermore, exaggerated admission of SREI's claim materially

distorted the CIRP. The RP failed to discharge his statutory obligation of

independent verification. The inflated claim resulted in distorted voting

dynamics and valuation. The CoC's commercial wisdom cannot be insulated

where the commercial decision itself proceeded on incorrect foundational

facts. We also find that there has been failure to account for BRS Ventures

payment. The amount paid under ACIL CIRP through BRS Ventures ought to

have been reflected while determining SREI's outstanding entitlement and

corresponding secured creditor rights by way of subrogation also required

consideration. Failure to incorporate these facts rendered the claim register

and IM materially defective.

CA (AT(Ins.) No. 626-628 of 2025 - Another set of interrelated Appeals filed by GIDC/lessor of land

85. Basis conclusions and findings in the above two Appeals [CA (AT) (Ins.)

No. 1557 of 2023 & 1684 of 2023], we cannot give a quietus to the issues

involved in the CIRP proceedings against the Corporate Debtor as we were

confronted with another set of appeals in which we find that there is a Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 54 of 87 commonality of the debt, two corporate insolvencies (guarantor and principal

borrower), one Financial Creditor, and one piece of leasehold land. Because

of the interrelatedness of the two sets of appeals, we have consolidated them

and now we deal with the second set of appeals. The order dated 19.02.2025

of the Adjudicating Authority, in CP (IB) No. 571/2020, is a single composite

order disposing of three interlocutory applications. We note that three Appeal

numbers CA (AT(Ins.) No. 626-628 of 2025 correspond to three Interlocutory

Applications which were disposed of as follows:

Interlocutory How Disposed of What it sought application (19.02.2025) IA 4585/2021 Approval of the SRA's Allowed Resolution Plan Plan approved (s. 30(6) r/w s. 31, filed by the RP) IA 136/2022 GIDC's objections to the Dismissed Resolution Plan IA 5224/2024 GIDC's application to defer Dismissed plan hearing pending the Gujarat High Court

86. We briefly recapitulate that the Corporate Debtor is Gujarat

Hydrocarbons and Power SEZ Limited-GHPSL, incorporated on 17.08.2007 to

develop, operate and maintain a sector-specific Special Economic Zone (SEZ)

on land at Vilayat, Bharuch, Gujarat. Its principal -- effectively sole -- asset

is that leasehold land (the "Demised Premises"), taken from the Appellant,

Gujarat Industrial Development Corporation ("GIDC" or "the Appellant"), a

statutory corporation acting in this matter as lessor, as an Operational

Creditor, and as regulator of the land. The Successful Resolution Applicant

(SRA) is Zaveri & Co. Pvt. Ltd. The sole Financial Creditor and sole member of

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 55 of 87 the Committee of Creditors (CoC) was SREI Infrastructure Finance Limited

(SREI), itself admitted to insolvency during this CIR proceedings.

87. Per Appellant/GIDC the resolution plan is based on sub plotting the

leased premises leased by the Appellant to the CD without any consent

/permission from the Appellant, where such lease has already come to be

terminated and CD is evicted under the provisions and order of the Gujarat

Public Premises (Eviction of Unauthorised Occupants) Act, 1972 and such

position is accepted by the SRA, and further neither is the resolution plan in

line with the purpose for which the lease was given to the CD being that of

SEZ purpose being that of Energy sector, and the denotification of the SEZ

has never been effected qua the land in question, since the Development

Commissioner has never issued certificate no benefits availed certificate

and/or refund of benefit received certificate to complete the denotification

process, and the resolution plan seeks to revive the CD by sub leasing the

land of the Appellant in piece meal as non SEZ sub plots which is not

permissible as per the terms between the Appellant and the CD, and the

approval has tantamounted to rewriting the contract between the Appellant

and the CD and resulting in violation of the law of the land.

Locus of the Appellant/GIDC as Operational Creditor

88. In this subsection we are dealing with the issue whether GIDC has the

locus to maintain its challenge-raised by the SRA, and whether its objections

fall within the scope of appellate scrutiny under Section 61(3) and the

ordinary appellate jurisdiction over the dismissal of its objection-IAs.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 56 of 87

89. The respondent-SRA questions the locus of the Appellant GIDC on the

ground that a resolution plan may be challenged only on the s. 61(3)21 grounds

and the appeal discloses none. Appellant has countered these arguments by

bringing to our notice that it is only the impugned order passed in IA 4585 of

2021, the order for approval of the resolution plan, is required to meet the

test of s. 61(3)21 of the IBC, which in the present case is being met with.

90. Appellant contends that such test does not apply in the impugned orders

passed in IA 136 of 2022 and IA 5224 of 2024. The appeals against those

dismissals stand on ordinary appellate grounds. Basis the material placed on

record, we find sufficient grounds in to take up appeals within Section 30(2)

as well as within Section 61(3)(ii)/(iii). We find that the arguments of the

Respondents are not convincing and the Appellant has a locus to file an

appeal. This line of argument presented by the Respondent is rejected.

21

Section 61: Appeals and Appellate Authority.

61. (1) ...

(2) ...

(3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:--

(i) the approved resolution plan is in contravention of the provisions of any law for the time being in force;

(ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;

(iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board;

(iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or

(v) the resolution plan does not comply with any other criteria specified by the Board.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 57 of 87

91. Respondent also claims that GIDC is an Operational Creditor whose

claim was frozen on admission. Its grievance is really that it wants better than

class treatment, which is more of a monetary grievance cloaked as objections.

Appellant/GIDC contends that it has objected on the grounds of

contravention of law, within section 30(2)(e) and also within section

61(3)(ii)/(iii). It further claims that they are not a collateral attack on

commercial wisdom but on the legality and the feasibility of the plan. We are

not in agreement with the line of argument presented by the Respondent and

concur with the argument of the appellant and we cannot question the locus

of the Appellant.

92. The Respondent also contends that Appellant/GIDC has no locus on

the issue of the de-notification/SEZ status and only the SEZ authorities could

raise it, and none has raised it. The appellant/GIDC, on the other hand,

contends that GIDC is not an ordinary Operational Creditor. Since the

resolution plan deploys the land which it owns and also regulates and

therefore the Appellant/GIDC definitely has the locus. We also note that the

denotification of the SEZ status has not reached finality. In such a situation

the claim of the Respondent that since the land is almost de-notified (as noted

by us here in the earlier submissions of the Respondent), GIDC has no locus

and only SEZ authorities could raise it is not a justified ground.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 58 of 87

93. We note that the judgment relied upon by the Appellant/GIDC in the

matter of the of the 22Greater Noida Industrial Development Authority v.

Prabhjit Singh Soni (see infra note 27/as discussed below in para 94 ) , in

which the Hon'ble SC held that where a resolution plan depends on assets or

approvals of a third-party statutory authority, there must be a closer

examination of plan's feasibility. Thus, we find that the argument of the

Respondents is not sustainable on this line and GIDC, as an Operational

Creditor, has the locus.

94. Respondents rely upon various precedents and claim that commercial

wisdom is non-justiciable. The Respondents places reliance on the following

judicial precedents:

o Essar Steel v. Satish Kumar Gupta23: Commercial wisdom non-justiciable; review confined to s. 30(2)- cited by AA / SRA / SREI.

o K. Sashidhar v. Indian Overseas Bank24: AA's discretion circumscribed by s. 31; commercial wisdom of CoC is not

22 Greater Noida v. Prabhjit Singh Soni (2024) 6 SCC 767 (Refer Para 54 and 55) 23 Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531;

67... Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned. the parameters of such review having been clearly laid down in K. Sashidhar."

24 K. Sashidhar v. Indian Overseas Bank K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150;

"55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 59 of 87 to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code- cited by AA / SRA.

o Kalpraj Dharamshi v. Kotak Investment25: No factor beyond ss. 30(2)/61(3); CoC wisdom paramount - cited by SRA.

operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code."

25 Kalpraj Dharamshi v. Kotak Investment (2021) 10 SCC 401 Para 158. "This Court has held, that it is not open to the adjudicating authority or appellate authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the I&B Code. It has further been held, that the commercial wisdom of CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. This Court thus, in unequivocal terms, held, that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. It has been held, that the opinion expressed by CoC after due deliberations in the meetings through voting, as per voting shares, is a collective business decision. It has been held, that the legislature has consciously not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the adjudicating authority and that the decision of CoC's "commercial wisdom" is made non-justiciable. "

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 60 of 87 o 26Vallal RCK v. Siva Industries & Holdings Ltd., (2022)

9 SCC 803 NCLT/NCLAT cannot sit in appeal over CoC wisdom - noted by Adjudicating Authority.

95. On the other hand, the Appellant places its reliance on 27 Greater Noida

v. Prabhjit Singh Soni where a plan uses land owned by a statutory body

bound by its own regulations, feasibility demands closer scrutiny and the

necessary statutory approvals, and both NCLT and NCLAT were faulted for

not dealing with this. Even the SRA relies upon this judgment for the general

s. 30/31 scheme of the Code, but its ratio is not of assistance to the Appellant.

96. We note the judgments cited by the Respondents on the commercial

wisdom line; however, we find that they do not answer the questions relating

to fraud or the statutory land feasibility scrutiny that Greater Noida v.

Prabhjit Singh Soni (supra) carves out in the following paragraphs: 26

Vallal RCK v. Siva Industries & Holdings Ltd., (2022) 9 SCC 803 Para 24.

"When 90% and more of the creditors, in their wisdom after due deliberations, find that it will be in the interest of all the stake-holders to permit settlement and withdraw CIRP, in our view, the adjudicating authority or the appellate authority cannot sit in an appeal over the commercial wisdom of CoC. The interference would be warranted only when the adjudicating authority or the appellate authority finds the decision of the CoC to be wholly capricious, arbitrary, irrational and de hors the provisions of the statute or the Rules."

27 Greater Noida v. Prabhjit Singh Soni Para 26 and 27.

"26. It is thus clear that the decision of the CoC was taken after the members of the CoC, had due deliberation to consider the pros and cons of the settlement plan and took a decision exercising their commercial wisdom. We are therefore of the considered view that neither the learned NCLT nor the learned NCLAT were justified in not giving due weightage to the commercial wisdom of CoC.

27. This Court has, time and again, emphasized the need for minimal judicial interference by NCLAT and NCLT in the framework of IBC."

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 61 of 87 "54.3. Under Regulation 38(3) of the CIRP Regulations, 2016, a resolution plan must, inter alia, demonstrate that:

(a) it is feasible and viable; and

(b) it has provisions for approvals required and the timeline for the same.

In the instant case, the plan conceived utilisation of land owned by the appellant. Ordinarily, feasibility and viability of a plan are economic decisions best left to the commercial wisdom of the CoC. However, where the plan envisages use of land not owned by the CD but by a third party, such as the appellant, which is a statutory body, bound by its own rules and regulations having statutory flavour, there has to be a closer examination of the plan's feasibility. Here, on the part of the CD there were defaults in payment of instalments which, allegedly, resulted in raising of demand and issuance of pre-cancellation notice. In these circumstances, whether the resolution plan envisages necessary approvals of the statutory authority is an important aspect on which feasibility of the plan depends. Unfortunately, the order of approval does not envisage such approvals. But neither NCLT nor NCLAT dealt with those aspects."

97. Applying the above principles in the facts and circumstances of this

case we find that the Appellant is a statutory body, who is the owner of the

land and has given the land on lease. This body is bound by its own

regulations. Feasibility of a resolution plan requires closer scrutiny and

necessary statutory approvals, which in this case are lacking and therefore

there is locus for the Appellant.

98. In this background, we are unable to accept the Respondents'

contention that GIDC's grievances are, in substance, a disguised monetary

claim immune from scrutiny. GIDC appears before us in a dual capacity: as

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 62 of 87 an Operational Creditor whose claim stands admitted, and, also as the

statutory land-owning authority whose own regulations and consent are being

invoked by a resolution plan that proposes to alter the very character of use

of its land. The objection that a plan deploys land owned and regulated by a

statutory body without the necessary consequential approvals is not a

commercial-wisdom grievance as in the precedents cited in K. Sashidhar,

Essar Steel, Kalpraj Dharamshi or Vallal RCK (supra). Herein it is a

feasibility objection of the kind this Appellate Tribunal must weigh under

28Section 30(2)(e) and Regulation 38 (as noted herein earlier ), and one to

which Greater Noida Industrial Development Authority v. Prabhjit Singh

Soni (supra) speaks directly -- where a plan is built upon land owned by a

statutory authority bound by its own regulations, feasibility "demands closer

scrutiny and the necessary statutory approvals," and a failure to engage with

that dimension is itself appealable error. We accordingly hold that GIDC has

the locus to maintain these appeals, that its objections are not foreclosed by

the commercial-wisdom line of authority, and that the appeals against the

dismissal of I.A. 136/2022 and I.A. 5224/2024 stand on the ordinary

28 Section 30. Submission of resolution plan.

(1) A resolution applicant may submit a resolution plan 1[along with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on the basis of the information memorandum.

(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan--

(a)

(b)

(c)

(d)

(e) does not contravene any of the provisions of the law for the time being in force;

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 63 of 87 appellate footing GIDC claims for them, independent of, though cumulatively

reinforcing, its challenge to the approval order under Section 61(3).

99. Thus, we find that the Appellant definitely has a locus and the

objections raised by the Respondents are found to be not sustainable.

Lease termination during moratorium by the Appellant/GIDC - Can the Resolution Plan be set aside due to termination of Lease Deed?

100. Now we delve into the issue whether GIDC's termination of the Lease

Deed on 13.12.2021 -- during the s. 14 moratorium -- is void or ineffective

as against the CIRP; and, if the Corporate Debtor's title to its sole asset is in

question, whether the plan can be feasible. A related sub-question is the effect

of the Gujarat High Court's judgment dated 01.12.2025 quashing the

termination, and outcome of the LPA against it (which has been decided by

the Gujarat High Court at the time of pronouncement of this judgement).

101. Respondents claims that the termination during the moratorium is per

se illegal and in the teeth of Section 14 of the court and the Adjudicating

Authority rightly so held. The Respondents bring to our notice that the

Gujarat High Court on 01-12-2025 quashed the termination and eviction and

this ground does not survive. The Appellant/GIDC cannot seek to profit from

their own wrong by terminating in breach of the code and then pleading

infeasibility from that termination. SRA contends that they are ready and

willing to implement the resolution plan regardless of the outcome of the

termination of the lease deed and claim that the Corporate Debtor continues

to exist.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 64 of 87

102. The Appellant claims that the termination question is not for the

NCLT/NCLAT. Appellant also brings to our notice that RP chose to litigate it

before the Gujarat High Court in SCA 4937/2022. In its Rejoinder Appellant

/GIDC claims that it reserved the right to cancel the allotment in its very claim

form and no protest was raised against that reservation by anyone. Therefore,

as of today, the Corporate Debtor has no right, title or interest in the land,

which stands terminated. In this situation the plan is therefore neither

feasible nor viable. Further the SRA says it will implement "irrespective of" the

High Court outcome shows the SRA is indifferent to title -- underscoring

infeasibility.

103. Appellant claims that the termination of the lease deed is extraneous to

NCLT/NCLAT. Without going into this question, we find that the facts of the

matter very much go against the Appellant. We note that during the

moratorium per Section 14 of the Code during the pendency of the IBC

proceedings, the Appellant/GIDC could not have terminated the lease deed.

Furthermore, Section 238 of the Code overrides the lease termination

proceedings or eviction proceedings which were ongoing at the start of the

CIRP proceedings. This has been held by even the Gujarat High Court in the

appeal by the Respondent against the termination of the lease deed. At the

time of the arguments, the letter patent application (LPA) from the Appellant's

side/GIDC before the Gujarat High Court was pending. From a web search of

the Gujarat High Court, we find that even that has been dismissed. In such a

situation the contention of the Appellant that, since the lease has been

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 65 of 87 terminated, consequently the plan is not feasible, does not hold any ground.

Therefore, the contentions of the Appellant are rejected on this ground.

104. Thus, on this narrow point, we are unable to accept GIDC's submission

that the Corporate Debtor's title stands terminated so as to render the plan

infeasible. The termination of the Lease Deed on 13.12.2021 occurred

squarely during the subsistence of the Section 14 moratorium, and Section

238 of the Code overrides any provision of the Gujarat Public Premises

(Eviction of Unauthorised Occupants) Act, 1972 to the contrary -- a position

now authoritatively confirmed by the Gujarat High Court's judgment dated

01.12.2025 quashing the termination, GIDC's Letters Patent Appeal against

which stands dismissed. GIDC cannot found an infeasibility objection on a

termination that was itself void ab initio and has since been judicially undone.

This ground fails.

Is the Affidavit filed by the SRA undertaking to pay GIDC's "legitimate claim" binds it to make payment of entire dues

105. Now we delve into another issue which has been agitated by the

Appellant, which is that whether the SRA's letter (03.05.2022) and affidavit

(20.05.2022) -- offering to pay GIDC's "legitimate" claim over and above the

plan -- bind the SRA to pay GIDC's entire dues, or whether that offer lapsed

with the collapse of the contemplated withdrawal of objections; and whether

GIDC, having accepted plan payment, is bound by it.

106. The Appellant/GIDC contends that the affidavit binds the SRA to pay

the entire dues and GIDC's demand of 18.10.2023 for full payment shows it

never accepted ₹ 6.14 crore as full and final.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 66 of 87

107. The case for the Respondents (SRA/SREI) is that the offer was made in

view of a withdrawal of objections that never happened. Once GIDC refused

to withdraw and the NCLAT issued remand order dated 08.08.2024 [CA (AT)

(Ins.) No. 1648-1649/2023) and which was upheld by Honourable Supreme

Court, on 20.08.2024 (in SRA's Civil Appeals Nos. 8777-8778/2024), the

03.05.2022 letter and 20.05.2022 affidavit have no significance. Moreover,

the Respondents claims that the offer was only for a "legitimate"/"acceptable"

amount, expressly outside the IBC. Respondents also claims that GIDC's real

grievance is a monetary one.

108. We find that the offer was made in a specific, conditional context -- in

contemplation of a withdrawal of objections that did not materialise -- and its

terms ("legitimate"/"acceptable") were, on a plain reading, always outside the

four corners of the plan and incapable of converting into an unconditional

payment obligation once the contemplated withdrawal collapsed. Thus, we

find no substance in the contention of the Appellant/GIDC that the SRA's

letter dated 03.05.2022 and affidavit dated 20.05.2022, offering to pay GIDC's

"legitimate" or "acceptable" claim over and above the plan, bind the SRA to

discharge GIDC's entire demand. Thus this ground fails.

Can the Resolution Plan be set aside on the ground that the Sole CoC member has undergone insolvency?

109. Now we delve into the issue whether the approval of the plan by a CoC

whose sole member (SREI) was itself admitted to CIRP on 08.10.2021 is

vitiated; and whether this ground can be raised at the Appellate stage at all.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 67 of 87

110. The Appellant claims that since the sole CoC member was undergoing

insolvency, therefore on this ground the plan should be set aside. The

Appellant also claims that SREI filed nothing to substantiate decisions taken

post-termination of the lease deed (13.12.2021) and initiation of eviction

proceedings and there has been no reply to the prayers in IA 5224/2024. On

the other hand, SRA/SREI contends that there are no pleadings on this in IA

136/2022 and such a ground cannot be raised belatedly. It is also brought

to our notice by the Respondent that the plan was first approved by SREI

before its own CIRP. Thereafter the Administrator (appointed on 08.10.2021)

and the RBI superseded governance ratified the authorized officers' acts. We

find that both sides have not been able to clearly canvass the arguments

specifically validating or invalidating approval by a COC whose sole member

is in CIRP. In the facts and circumstances of the case the Respondent/SREI

was being governed by the Administrator and furthermore the authorized

officer's acts were ratified by the Administrator. In such a situation the

grounds raised by the Appellant/GIDC are not sustainable and therefore the

argument canvassed by the Appellant that approval of the plan by a CoC

whose sole member (SREI) was itself admitted to CIRP on 08.10.2021 cannot

be considered to be vitiated.

111. Thus, we find that the ground that approval by a CoC whose sole

member (SREI) was itself under CIRP from 08.10.2021 is vitiated was not

specifically pleaded in I.A. 136/2022, and the record shows that decisions

were thereafter taken through and ratified by SREI's Administrator. In the

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 68 of 87 absence of any authority establishing that approval by a sole CoC member in

insolvency is per se vitiated, and given the ratification on record, we do not

find this a sustainable independent ground for disturbing the plan. Thus, this

ground raised by the Appellant also fails.

De-notification premise, feasibility, and the fraud allegation

112. In this section we deal with the issue whether the resolution plan,

premised on the demised premises standing or becoming de-notified from SEZ

to non-SEZ industrial use, and on GIDC's consent to change of use and sub-

plotting being assumed rather than obtained, is feasible and viable within the

meaning of Section 30(2) of the Code.

113. This is the heart of the matter. We note that GIDC's Appeals, CA (AT)

(Ins) 626-628/2025 attacks the approved resolution plan on the grounds that

whether a resolution plan can provide for converting the demised SEZ

premises to non-SEZ industrial use, and for sub-plotting / sub-leasing,

without the lessor's consent.

114. It is the claim of the SRA/R1 that the lease deed itself permits a change

of land use per Clause 3.3 (v)29 and the lease deed further allows subleasing

as per Clause 4.1-4.330 without further consent.

29 Clause 3.3 (v) of the Lease Deed 21.02.2008: Notwithstanding the foregoing however, the parties herewith agree that the lessee may, during the term of this lease, seek a change of the nature of use of the demised premises from an SEZ to any other industrial use duly sanctioned under the applicable statutory or regulatory provisions enacted in reference thereto, with prior consent, approval or permission of the lessor.

30 4. SUB-LEASE

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 69 of 87

115. SRA/R1 further relies on Regulation 37(j) of the CIRP Regulations,

which expressly permits a change in the portfolio of goods or services under

a plan. SRA/R1 claims that the resolution plan merely continues the

Corporate Debtors' object of developing and sub-leasing the land.

116. We observe that GIDC/Appellant, has contended in their appeal that

the change of land use is not simpliciter as clause 3.3 (v), which is relied upon

by the SRA, itself requires the lessor's/GIDC's prior consent, approval, or

permission. Furthermore, for SEZ land the Development Commissioner's

permission is also required along with the return of availed benefits.

117. A perusal of the relevant clauses of the lease deed brings clarity and we

find that Clause 3.3 (v) permits a change of use but only on the lessor's

consent. The relevant Clause 3.3(v) is extracted as below for better

appreciation of the terms and conditions of the lease deed for the change of

use from SEZ to any other industrial use:

4.1 The Lessor herewith undertakes that the Lessee is free to make independent sub-Lease with units within the SEZ in accordance with the SEZ Act and Rules thereunder. Lessee shall sub-lease the parts of the Demised Premises on the terms and conditions as finalized by the Lessee but not contravening to the Lease Deed executed with Lessor.

4.2 In the event of cancellation/surrender of plot or building or structure on Account of the non-fulfillment of the terms and conditions of the sub-lease or any other agreement or conditions of approval of such Units, the Lessee may offer such plots to other Units in accordance with the provisions of applicable law.

4.3 The Lessor agrees that no administrative fee or any transfer fee shall be payable to the Lessor by the Lessee in respect of sub-leases entered by the Lessee for giving land to Units in SEZ area.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 70 of 87 "3.3(v) Notwithstanding the foregoing however, the Parties herewith agree that the Lessee may during the Term of this Lease seek a change of the nature of use of the Demised Premises from an SEZ to any other industrial use duly sanctioned under the applicable statutory of regulatory provisions enacted in reference thereto with prior consent, approval or permission of the Lessor."

118. We further note that the resolution plan makes a presumption that the

permission will be granted to convert the land from SEZ to non-SEZ. This is

apparent from the following extracts from the resolution plan, which were

brought to our notice by GIDC:

"Based on the information available on the official website of the SEZ- INDIA, pertaining to the SEZs which are notified and operating in the country and also pertaining to the list published for existing notified SEZ in the country wherein the name of the Corporate Debtor is not appearing in the list. The Development Commissioner, SEZ has also not filed any claim(s) for any of their dues pertaining to the Corporate Debtor with the Resolution Professional. So. the Resolution Applicant have all the good reasons to believe that the SEZ de-notification is approved and all the dues between the Corporate Debtor and Development Commissioner. SEZ might have been settled at the time of de-notification.

With the de-notification of the SEZ, now the only business activity that can be carried out by the Corporate Debtor is the development of the Demised Premises by building the necessary infrastructure within the Demised Premises as the anchor tenant, on-boarding the entrepreneurial units by sub-leasing the industrial plots created & developed within the Demised Premises as per the customized requirement for the proposed entrepreneurs who would be occupying the units."

[page 306 APB: page 58-Res Plan]

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 71 of 87

119. We find that on the basis of these presumptions, the SRA has come to

its own conclusion that, with the denotification of the SEZ, the only business

activity that can be carried out by CD is the development of the demised

premises by building necessary infrastructure within the demised premises

as an anchor tenant. On the basis of the presumption of denotification, the

SRA provides its own interpretation of the lease deed and makes a proposal

in the resolution plan as follows:

"The terms of the Lease Deed also provide for the change of sector specific usage to general industrial usage and also the terms therein also permit the Lessee to be the developer and act as an anchor tenant for the Demised Premises as per the prevailing regulations of the GIDC. The Resolution Applicant envisages undertaking the development of the Demised Premises by building the necessary infrastructure within the Demised Premises, on-boarding the entrepreneurial units by sub-leasing the industrial plots created & developed within the Demised Premises as per the customized requirement for the proposed entrepreneurs who would be occupying the units."

120. We note that as per 29clause 3.3 (v), the change of the nature of use of

the demised premises from an SEZ to any other industrial use is possible only

with the prior consent or permission of the lessor. Even though

correspondence was going on between the Lesser, Lessee and the

Development Commissioner but it has not fructified in the grant of the

permission to the CD for use of the land from SEZ to any other industrial use.

Thus, the resolution plan cannot make a presumption that it has been

granted or it will be granted. And on that basis , SRA makes a proposal for

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 72 of 87 developing the leased area as an anchor tenant for purposes other than a

SEZ. Such a presumption, if allowed will make the plan a conditional plan.

121. To better understand the contents of the resolution plan, we need to

compare its contents with the information memorandum. The information

memorandum, which was not on record, was handed over in the open court

by the Respondents. We had gone through the information memorandum (IM)

and we do not find any disclosure of the pendency of the SEZ denotification

process or any pending application. If this information memorandum did not

have such vital information, it means that the prospective resolution

applicants would not have been aware of such relevant fact. This information

was not commonly available to all and was known only to the Corporate

Debtor and in the current scenario of the CIR Proceedings with the Resolution

Professional. It is worth noting that the Information Memorandum did not

disclose that the Corporate Debtor is trying and likely to get permission for

use other than SEZ purpose. The exchange of correspondence between the

Corporate Debtor, GIDC and Development Commissioner was not public

information. When we peruse the contents of the resolution plan of the

successful resolution applicant, inference can be drawn that it had detailed

information relating to the correspondence which was going on between the

Corporate Debtor and the GIDC and also the development commissioner's

office.

122. Such a level playing field was not available to the other prospective

resolution applicants. If the other resolution applicants had known that a

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 73 of 87 conditional resolution plan could be submitted, which allows the conversion

from SEZ to non-SEZ purposes also, then probably more people would have

applied and value maximization could have happened.

123. A perusal of the resolution plan also indicates that the information

contained in the resolution plan is much more than what was available in the

information memorandum and also in the public domain, as a lot of specific

details relating to the Corporate Debtor were contained in the resolution plan.

We are not going deep into the circumstances under which this information

was available with the SRA - whether it was exclusively available to SRA or

to the other resolution applicants or not but suffice it to say that it raises a

lot of doubts about the level playing field and the resolution process itself.

Without going into the details of excessive information available with the SRA,

we delve into the other related and important issue that if the SRA was to be

allowed for converting from SEZ to any other industrial use, it should have

been made explicit in the information memorandum for all resolution

applicants and that would have made a level playing field for others.

124. We further note that the resolution plan itself admits that the land

leased by GIDC is the only asset available with the Corporate Debtor and the

entire revival of the Corporate Debtor depends on how the said asset is used

or utilized. The relevant paragraph is extracted as below:

"This Demised Premises along-with all its rights is the only the asset available with the Corporate Debtor and entire revival of the Corporate Debtor depends on how the said asset is utilized and put to its best use. With the development of industrial infrastructure facilities; the same can Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 74 of 87 generate steady revenues in the form of lease rentals if granted on sub- lease for long term to industrial units of good repute or looking at the current market scenario, even the Corporate Debtor has the option of charging the entire premium amount upfront to recover the capital cost."

125. Perusal of the Resolution Plan indicates that SRA made the resolution

plan basis visit and inspection of the project site, information available on the

official website of the SEZ-India, and its commercial analysis, and also basis

presumptions that this land can be used for any other purpose also. Thus,

we find that the resolution plan itself is based on some presumptions, which

makes it a conditional plan.

126. Another line of argument canvassed by the SRA is reliance on the

Regulation 37(j) of the CIRP Regulations, which permit a change in the

portfolio of goods or services under a plan. We have gone through the

provision and find that a change in the portfolio of goods or services is not the

same as the change of the use of the land from SEZ to any other industrial

purpose. Therefore, reliance on this regulation is misplaced and we reject

such a contention.

127. It is also brought to our notice by the Appellant that the Resolution Plan

seeks reliefs and concessions which are re-writing the lease Deed. GIDC

further claims that a plan cannot rewrite the lease. Presumptions by SRA of

change of use to non SEZ along with the approvals for reliefs and conclusions

all the more conditional.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 75 of 87

128. From the materials placed on record we find an important fact that SEZ

denotification was only granted in principle, subject to certain conditions.

Does this mean that the non-issuance of the formal notification vitiates a plan

which is premised on the land being available for non-SEZ use? Is there any

suppression/fraud on the Adjudicating Authority as GIDC alleges? Briefly

speaking Clause 2.1 of the Lease Deed records that the Demised Premises

was allotted "on an 'as is where is' basis for the purpose of setting up an SEZ."

Clause 293.3(v) permits the Lessee to "seek a change of the nature of use of the

Demised Premises from an SEZ to any other industrial use duly sanctioned

under the applicable statutory or regulatory provisions," but only "with prior

consent, approval or permission of the Lessor." Further that consent has

admittedly never been granted. Nor has the Development Commissioner

issued the "no benefits availed"/refund-of-benefits certificate that alone

completes the de-notification process; correspondence between the Corporate

Debtor, GIDC and the Development Commissioner's office on this very

question remained pending as recently as March-July 2024, well after the

plan had been approved by the CoC. Notwithstanding this, the resolution plan

proceeds on the SRA's own stated assumption -- recorded in terms in the

plan itself -- that because the Corporate Debtor does not presently appear on

the published list of notified SEZs and the Development Commissioner has

filed no claim in the CIRP, the SRA has "all the good reasons to believe that

the SEZ de-notification is approved." On that unverified premise, the plan

proposes to develop the Demised Premises as an anchor tenant and to sub-

lease industrial plots created within it for general, non-SEZ industrial use --

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 76 of 87 activity that Clause 3.3(v) permits only with GIDC's prior consent, and that,

for SEZ land, additionally requires the Development Commissioner's formal

permission and completion of the benefits-refund process. A resolution plan

cannot proceed on a presumption of a regulatory approval that has not been

obtained, particularly where the very authority whose consent is required has,

throughout these proceedings, actively contested that presumption. To

approve such a plan is, in substance, to accept a conditional and contingent

plan as though it were unconditional, leaving the realisation of the Corporate

Debtor's sole asset hostage to a future regulatory event that GIDC -- the

regulator -- says will not occur. We are unable to regard reliance on

Regulation 37(j) of the CIRP Regulations (permitting a change in the "portfolio

of goods or services"). We note that a change in the sanctioned character of

use of statutorily regulated leasehold land is not a mere portfolio adjustment

within the CoC's ordinary commercial discretion. It is a matter requiring the

consent of the land-owning regulator under the very lease on which the

Corporate Debtor's existence depends.

129. We are further troubled by the disparity between the disclosures in the

Information Memorandum placed before all prospective resolution applicants

and the granular knowledge of the de-notification correspondence reflected in

the SRA's own resolution plan. The IM placed before us contains no disclosure

of the pendency, or incompleteness, of the de-notification process, nor of the

correspondence exchanged between the Corporate Debtor, GIDC and the

Development Commissioner. Yet the resolution plan submitted by the SRA

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 77 of 87 demonstrates a level of familiarity with that very correspondence that goes

well beyond what was available in the IM or in the public domain. If conversion

from SEZ to non-SEZ use, and the sub-plotting/sub-leasing that the SRA's

plan is built upon, were genuinely open possibilities, that fact -- and the

existence and status of the correspondence bearing upon it -- ought to have

been disclosed in the IM to all resolution applicants alike, so that a level

playing field existed for the formulation of competing plans and so that the

CoC's commercial wisdom was exercised on complete and accurate

information, consistent with the object of value maximisation. Its omission

from the IM, coupled with its evident availability to the SRA, is sufficient by

itself to vitiate the informational foundation on which the plan was invited,

evaluated and approved. We do not find it necessary, for the purposes of this

judgment, to attribute this omission to any individual; it suffices to hold, as

we do, that the Information Memorandum was materially incomplete and

inaccurate on a matter going to the very feasibility of the plan, and that a plan

invited and approved on such an Information Memorandum cannot be

sustained.

130. We accordingly hold that the resolution plan of the SRA, resting as it

does on contested presumption that the SEZ status of the Demised Premises

stands or will stand de-notified, without GIDC's consent under Clause 3.3(v)

of the Lease Deed and without the Development Commissioner's certificate, is

not a feasible or viable plan within the meaning of Section 30(2)(e) of the Code

and Regulation 38 of the CIRP Regulations; and that its approval, invited and

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 78 of 87 obtained on an Information Memorandum that did not disclose the true and

complete state of the de-notification process, cannot stand.

Costs

131. The Appellant/Corporate Guarantor brings to our notice that NCLT,

New Delhi has imposed cost of ₹ 50,000/- on the Appellant without providing

any proper reason. The application being IA No. 596/ND/2022 was filed by

the Appellant in good faith before the Ld. NCLT, New Delhi to bring the facts on

record, and the Ld. NCLT, New Delhi without appreciating the same have simply

imposed the said cost without providing any formal reasons. Thus, the said cost

imposed by the Ld. NCLT, New Delhi should be waived and/ or set aside. After

having gone through the facts and circumstances of the case and also the

impugned order, we do not find sufficient grounds to impose a cost of ₹50,000.

As the cost was imposed without any reasons being recorded for the quantum

or the necessity thereof, and in light of our findings above, the imposition of

costs cannot be sustained and we are inclined to set aside the imposition of

cost on the Appellant/the suspended director by the order dated 13.09.2023.

Adequacy of reasons on the objection-IAs

132. Now we delve into the issue whether the composite order adequately

reasons the dismissal of IA 136/2022 and IA 5224/2024 -- disposed of by

reference in para 10.2 rather than by discrete issue-by-issue findings -- such

that the dismissals withstand appellate scrutiny.

133. The Appellant contends that the objection-IAs were disposed of without

engaging the specific grounds. The reasoning is by reference and not by any

finding, which was the basis for remand. On the other hand, the Respondent

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 79 of 87 (SRA/SREI) brings to our notice that the order does deal with

feasibility/viability and it holds it to be within COC's commercial wisdom. For

better appreciation of the contention of the Appellant, we extract the contents

of Para 10.2 in the impugned order dated 19.02.2025:

"We have taken a view in IA-136/2022 In (IB) - 571(ND) / 2020 filed by Gujarat Industrial Development Corporation, Applicant under the provision of Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 and IA- 5224/2024 In (IB)-571(ND)/2020 filed by Gujarat Industrial Development Corporation, Applicant under the provision of Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 that there is no infirmity in the decision of the CoC and find no reason to interfere in the decision on the Resolution Plan taken by the CoC in their Commercial Wisdom and dismissed both the IAs (IA-136/2022 and IA-5224/2024). Therefore, the prayers in the present IA4585/2021 survives."

134. We find that in IA-5224/24, the prayer was to defer the hearing pending

the Gujarat High Court order and since the matter has already been disposed

of by the Gujarat High Court, therefore there is no merit in continuing with

this IA.

135. As examined by us separately, in IA 136/2022 the Appellant was raising

issues relating to the legality and feasibility of the plan and was not an attack

on the commercial wisdom. The Appellant, being the lessee and also the land

regulator, had a much better locus and sufficient justification to question the

resolution plan wherein it is being treated as an ordinary Operational Creditor

Greater Noida Industrial Development Authority v. Prabhjit Singh Soni

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 80 of 87 (supra). The plan deploys the land which is owned and regulated by the

Appellant and therefore the commercial wisdom line which has been taken up

by the Adjudicating Authority may not be sufficient justification to ignore the

grounds raised by the Appellant in IA 136 of 2022. We further note that the

commercial wisdom line does not immunize a want of reasons. It could at best

limit the grounds of interference. We need to note that it was the duty of the

Adjudicating Authority to deal with the objections that were formally restored

and heard de nova by the NCLAT, on this Appellate Tribunal's direction of

08.08.2024. Furthermore, the judicial precedent in Greater Noida Industrial

Development Authority v. Prabhjit Singh Soni is very pertinent. We need

to note that the statutory approval aspect of the land which has been raised

herein has to be dealt with while dealing with the feasibility. Therefore, the

objection-IAs, which were restored by this Appellate Tribunal, cannot be

dismissed just by a reference. There has to be adequacy of reasons.

Can the Appellant contest the Reliefs and Concessions?

136. Appellant claims that the relief sought are very wide and contrary to the

law and a plan cannot create rights alien to it. On the other hand, the

Respondent/SRA/SREI contends that para 10.8 grants no individual relief

and each one have to be dealt "strictly as per law". Therefore, there is nothing

to be aggrieved by and even the SRA has not appealed against these releases.

It claims that the plan as a whole is compliant and the reliefs are merely to

enable the implementation and create no extraneous rights. We observe that

this has been dealt with by the Adjudicating Authority at para 10.8, which is

extracted as below for better appreciation:

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 81 of 87 "The reliefs, concessions and waivers sought by the Successful Resolution Applicant will be dealt with strictly as per law"

137. We observe that the Adjudicating Authority has given a very broad

waiver with respect to the treatment of the SRA's reliefs, concessions, and

waivers when it states that it to be dealt with strictly as per law. It could be

appropriate in a normal situation but in this situation, wherein the main

asset of the Corporate Debtor is land which is leased by the appellant and the

Appellant is also the regulator, it is appropriate that the objections raised by

the Appellant, particularly citing the judgment of Greater Noida Industrial

Development Authority v. Prabhjit Singh Soni (supra) should have been

dealt with appropriately.

138. The most important issue which was raised by the Appellant was with

respect to the presumption of the Respondent/SRA that denotification has

already happened and that concession will be granted. If such notification

has to be dealt with as per law and it has to be decided by the Appellant being

a regulator, then it is a resolution plan fraught with a lot of future problems

and thus not a feasible resolution plan.

Common Conclusions

139. For the reasons recorded above, we hold:

(a) that GIDC has the locus and the appeals are maintainable;

(b) that the resolution plan of Zaveri & Co. Pvt. Ltd., proceeding on an unverified and contested presumption that the Demised Premises stands or will stand de-notified from SEZ to non-SEZ industrial use, without GIDC's consent as lessor and without the

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 82 of 87 Development Commissioner's certificate, is not feasible or viable and its approval cannot be sustained;

(c) that the Information Memorandum on which the plan was invited and evaluated was materially erroneous in overstating SREI's claim, misclassifying ACIL's status, and omitting material disclosures on the de-notification process;

(d) that the dismissal of GIDC's objection-IA (136/2022) by bare reference, without discrete reasons, cannot be sustained; and

(e) that ACIL/BRS Ventures Investments Ltd. is entitled to be recognised as a secured financial creditor of the Corporate Debtor to the extent of ₹38.87 crore paid to SREI in the ACIL CIRP, and that SREI's recoverable claim against the Corporate Debtor is to be computed on the footing of the finally adjudicated figure of ₹241.27 crore, net of such credit.

140. In these circumstances, the appropriate and only just course is to set

aside the approval of the resolution plan and direct that the CIRP of the

Corporate Debtor be recommenced from the stage of a fresh invitation of

Expression of Interest, on a corrected and complete Information

Memorandum.

141. As we noted herein that the CIR proceedings have not gone ahead

smoothly, partly due to the errors which have crept into the information

memorandum and also partly due to acceptance of the exaggerated claims

and consequently defective information memorandum being published and

several other issues which we have already noted here in earlier, it would

therefore be appropriate that it is led by a fresh resolution professional.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 83 of 87 Order

142. Company Appeals (AT)(Ins) Nos. 626, 627 and 628 of 2025, filed by

Gujarat Industrial Development Corporation, are allowed as described herein.

The composite order dated 19.02.2025 is set aside in its entirety, including

the approval of the resolution plan of Zaveri & Co. Pvt. Ltd. in I.A. No. 4585

of 2021 and the dismissal of I.A. No. 136 of 2022; I.A. No. 5224 of 2024 having

been rendered academic by the decision of the Gujarat High Court, no further

orders are required thereon.

143. Company Appeal (AT)(Ins) No. 1557 of 2023 is allowed in part. The order

dated 13.09.2023 in I.A. No. 1764 of 2021 is set aside. i.e. setting aside

admission of claim of ₹ 1885.05 crores.

144. The costs of ₹50,000 imposed on the Appellant are set aside.

145. Company Appeal (AT)(Ins) No. 1684 of 2023 is allowed in part. The order

dated 13.09.2023 in I.A. No. 596 of 2022 is set aside to the extent it classifies

Assam Company India Limited as an unsecured related-party Financial

Creditor. It is declared and directed that Assam Company India Limited

stands subrogated to, and shall be recognised and ranked as, a secured

Financial Creditor of the Corporate Debtor to the extent of ₹38.87 crore paid

by it (through its resolution applicant, BRS Ventures Investments Ltd.) to

SREI Infrastructure Finance Limited in the Corporate Insolvency Resolution

Process of Assam Company India Limited.

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 84 of 87

146. The resolution plan of Zaveri & Co. Pvt. Ltd., as approved, stands set

aside and shall not be implemented further. Any steps already taken in

implementation shall abide by the directions herein, and the Resolution

Professional/CoC, as reconstituted pursuant to the directions below, shall

take an account of any part-implementation and payments made, for

adjustment in the fresh process.

147. The Adjudicating Authority/Resolution Professional shall recommence

the Corporate Insolvency Resolution Process of the Corporate Debtor from the

stage of issuance of a fresh Form G / invitation of Expression of Interest, on

the basis of a corrected and complete Information Memorandum, which shall,

without limitation:

i. correctly and completely disclose the status of the Demised Premises as SEZ-notified land, the precise stage and status of any de-notification correspondence or proceedings with GIDC and the office of the Development Commissioner, and the requirement of GIDC's prior consent under Clause 3.3(v) of the Lease Deed for any change in the nature of use, so that all prospective resolution applicants compete on an equal informational footing;

ii. reflect the claim of SREI Infrastructure Finance Limited computed on the basis of the finally adjudicated figure of ₹241.27 crore (as fixed by the NCLT, Guwahati Bench by order dated 23.07.2018 and affirmed by this Tribunal on 01.02.2019), net of the sum of ₹ 38.87 crore already recovered by SREI in the corporate insolvency resolution process of Assam Company India Limited, subject to

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 85 of 87 independent verification by the newly engaged Resolution Professional; and

iii. reflect Assam Company India Limited as a secured financial creditor of the Corporate Debtor to the extent of ₹38.87 crore, ranking pari passu with other secured financial creditors to that extent.

148. The Adjudicating Authority shall, within two weeks of this order, issue

fresh orders and appoint a new Resolution Professional to carry the process

forward in terms of this judgment.

149. The period from the date of admission of the Corporate Debtor into CIRP

(18.11.2020) until the date of this judgment shall stand excluded for the

purpose of computing the timelines under Section 12 of the Code, and the

CIRP shall proceed afresh from the stage directed above within the timelines

prescribed by the Code and the Regulations framed thereunder, computed

from the date of this order.

150. Status quo with respect to title, possession and use of the Demised

Premises, as it stood immediately prior to the resolution plan's

implementation, shall be maintained until the Committee of Creditors is

reconstituted and appropriate directions are obtained from the Adjudicating

Authority.

151. It is clarified, for the avoidance of doubt, that our findings on the lease

termination, the SRA's affidavit dated 20.05.2022, and the sole-CoC-member

ground are affirmed against GIDC and do not survive as independent

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 86 of 87 grounds; they are recorded here only for completeness and do not detract from

the relief granted on the grounds set out at above.

152. All IAs stand disposed of as per this order. Parties shall bear their own

costs.

[Justice N. Seshasayee] Member (Judicial)

[Arun Baroka] Member (Technical) New Delhi.

August 31, 2026.

pawan

Company Appeal (AT) (Insolvency) Nos. 1557 & 1684 of 2023 and 626-628 of 2025 87 of 87