M/S Smv Agencies Private. Limited vs M/S Granite Gate Properties Pvt Ltd

[Arising out of Order dated 24.07.2024 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench-II in CP IB No. 1248 of 2018]

IN THE MATTER OF:

SMV Agencies Pvt. Ltd. ...Appellant

Versus

Granite Gate Properties Pvt. Ltd. ...Respondents Through Its Resolution Professional and Ors.

Present:

For Appellant: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Arijit Mazumdar, Ms. Akanksha Kaushik and Ms. Hina Kochar, Advocates.

For Respondents: Mr. Sumant Batra, Mr. Sanyam Saxena, Mr. Sahil Sethi, Ms. Nidhi Yadav, Mr. Shivam Sharma and Mr. Nubair Alvi, Advocates for RP. Ms. Raveesha Gupta, Advocate for AR/ R2. Mr. Rachit Mittal, Mr. Kanishk Raj and Mr. Adarsh Srivastava, Advocates for Noida Authority.

JUDGMENT

(17th July, 2025)

Ashok Bhushan, J.

This Appeal has been filed by Successful Resolution Applicant

challenging the order dated 24.07.2024 passed by the Adjudicating

Authority (National Company Law Tribunal), in CP IB No.1248 of 2018. 2

Appellant in this Appeal is aggrieved by only part of the order i.e. direction

contained in paragraph 79(a) of the impugned order.

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

are:-

2.1. New Okhla Industrial Development Authority (NOIDA) (Respondent

No.3 herein) granted a Lease Deed dated 29.12.2009 for land measuring

1,64,120 sq. mtrs. situated at Plot No. GH-005, Sector 110 Noida. Another

Lease Deed dated 30.12.2008 was also granted in favour of the Corporate

Debtor in Sector 100 Noida admeasuring 1,20,009 sq. mtrs. The Corporate

Debtor launched a Group Housing Project in the lease land on an

application filed by an allottee of the project. Corporate Insolvency

Resolution Process (CIRP) against the Corporate Debtor commenced vide

order dated 10.01.2019. In pursuance of the publication made by the

Interim Resolution Professional (IRP), claims were filed including the claim

by NOIDA who have submitted a claim of Rs.889 Crores. IRP issued Form G

inviting Expression of Interest on 05.07.2019 and 30.09.2019. IRP was

replaced by one Mr. Chandra Prakash as Resolution Professional by order

dated 27.11.2019. The Resolution Professional decided to issue fresh Form

G on 09.03.2020. In pursuance of fresh Form G, Resolution Plans were

submitted. Appellant also submitted a fresh Resolution Plan on 06.07.2020.

The NOIDA was accepted as creditor of the Corporate Debtor and was

allocated 23.79% voting share in the Committee of Creditors (CoC). In the

19th meeting of the CoC held on 15.07.2020, CoC decided to put three

Resolution Plans to vote simultaneously. The voting was held between

Company Appeal (AT) (Insolvency) No.1714 of 2024 3

19.07.2020 to 22.07.2020. On result of voting, the Resolution Plan

submitted by the Appellant was approved with 80.13% vote shares. NOIDA

did not vote in favour of the plan. After approval of the plan on 13.08.2020,

Resolution Professional filed an application IA No.3255 of 2020 under

Section 30(6) of the IBC for approval of the Resolution Plan submitted by

Appellant. The NOIDA filed an objection on 18.09.2020 to the Resolution

Plan and IA No.2298 of 2021 was filed by an order seeking direction to

Resolution Professional not to give effect to the minutes of the 21st meeting

of the CoC. Another IA No.3067 of 2022 was filed by NOIDA on 02.07.2022

praying for rejection of the Resolution Plan. At the time of hearing of the

application for approval of the Resolution Plan and its objection, it was

pointed out by Respondent No.3 that there are two breaches in law i.e.

disclosure of liquidation value in Information Memorandum and value of

Corporate Debtor being determined by IRP only after one valuer gave its

report whereas Regulation 35 of the CIRP Regulations provide for two

valuation reports. Adjudicating Authority after hearing the parties on

29.08.2023 directed the Counsel for the Resolution Professional and other

counsel to address the Bench on the above breaches of the law. Resolution

Professional filed an IA No.506 of 2024 seeking leave of the Court to

undertake fresh valuation. Parties were heard and by the impugned order

dated 24.07.2024, Adjudicating Authority issued various directions.

Directions issued in paragraph 79 in the impugned order are to the following

effect:-

Company Appeal (AT) (Insolvency) No.1714 of 2024 4

"79. In the wake of the aforementioned findings and discussions and in view of the irregularity in valuation and accounting of assets of CD and the plea raised in IA-506/2024, it is ordered thus:-

a) The Resolution Plan stands remitted back to the CoC. It would be for CoC to take a call, as to whether the CIRP should resume from the stage of preparation of IM or from any other stage or the present SRA/PRA's should be given opportunity to submit revised Resolution Plan after Forensic Audit and proper fresh valuation of the assets of the CD.

b) The present IP who is functioning as RP qua the CD is replaced with the IPE- ARCK Resolution Professionals LLP (IBBI/IPE-0030/IPA-1/2022-

23/50013) and henceforth the said Insolvency Professional Entity would act as RP to conduct CIRP qua the CD

c) The present RP would extend all assistance to IPE as a professional. d) The Insolvency Professional Entity would first get the transaction/ forensic audit be conducted qua the CD and then would get the valuation of its assets done in accordance with Regulation 27 read with Regulation 35 of IBBI (CIRP) Regulations, 2016.

e) The 'I-Ring' project would be treated as asset of the CD. Nevertheless it would be open to SRA to deal with the same in accordance with the provisions of regulation 37 (1) a of IBBI (CIRP) regulations 2016 and in the process the SRA may deal with Shomit Finance Limited.

Company Appeal (AT) (Insolvency) No.1714 of 2024 5

f) The plea regarding replacement of AR stands nixed.

g) The NOIDA would be treated as Secured Creditor with all consequences.

h) The NOIDA would be entitled to two instalments of premium and the amount which is payable towards water and sewage charges as also the time extension charge, etc. to it by the CD as CIRP cost.

i) The IA-3926/2023 is allowed and the IA-

3325/2020, IA-3025/2022 and IA-3330/2020 stands dismissed as withdrawn. Nevertheless, as has been directed above the project ('I-ring') mentioned in IA-3926/2023 would be treated as asset of CD and would be dealt with in terms of the Resolution Plan."

2.2. Appellant is aggrieved only with above direction contained in

paragraph 79(a) and in the Appeal, Appellant has made following prayers:-

"a) Admit the present Appeal; and

b) Set aside the Impugned Order dated 24.07.2024 passed by the Ld. National Company Law Tribunal in CP (IR) (PB) 1248/2018 to the extent that it allows the CoC to take a call, as to whether the CIRP should resume from the stage of preparation of IM or from any other stage or the present SRA/PRA's should be given opportunity to submit revised Resolution Plan after Forensic Audit and proper fresh valuation of the assets of the CD.; and

Company Appeal (AT) (Insolvency) No.1714 of 2024 6

c) Direct the CoC to consider the Resolution Plan of the Appellant after carrying out the necessary rectifications; and

d) Pass any other order which this Hon'ble Appellate Tribunal deems fit in the facts and circumstances of the instant case."

3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel for the

Appellant, Shri Sumant Batra, Learned Counsel for the Resolution

Professional and Shri Rachit Mittal, Learned Counsel for the NOIDA.

4. Learned Counsel for the Appellant challenging the direction contained

in paragraph 79(a) submits that the Adjudicating Authority having not

found any non-compliance in the Resolution Plan with Section 30(2), the

Adjudicating Authority ought to have sent back the plan to the CoC and

given an opportunity to the Appellant to submit a fresh Resolution Plan

complying the deficiency as complying the objection raised by NOIDA. It is

submitted that the Adjudicating Authority committed error in giving liberty

to the CoC to whether CIRP to commence from the stage of preparation of

Information Memorandum or other stage. It is submitted that when there is

no non-compliance was found in Resolution Plan of the Appellant within the

meaning of Section 30(2), SRA was to given an opportunity to submit a

revised plan to take care of the objection which was required to be

considered by the CoC for approval. The Resolution Plan of the Appellant

was approved by 80.13% of the CoC and Appellant has already deposited

Performance Bank Guarantee of Rs.5 Crore which was renewed for the last

Company Appeal (AT) (Insolvency) No.1714 of 2024 7

five years. It is submitted that the Hon'ble Supreme Court in "Greater

Noida Industrial Development Authority vs. Prabhjit Singh Soni &

Anr.- Civil Appeal Nos.7590-7591 of 2023" has held that although the

commercial wisdom of the CoC is non-justiciable, the Adjudicating Authority

remit the Resolution Plan back to the CoC for removal of shortcomings in

terms of Section 30(2) of the Code and applicable Regulations. It is

submitted that the CIRP commenced on 10.01.2019 and it has already run

beyond 6 years. Adjudicating Authority, thus, committed error in giving

liberty to the CoC to initiate CIRP from the stage of preparation of

Information Memorandum or any other stage which is not sustainable.

5. Counsel for the Resolution Professional submitted that NOIDA was

earlier classified as Financial Creditor but after judgment of the Hon'ble

Supreme Court in "New Okhla Industrial Development Authority vs.

Anand Sonbhadra- Civil Appeal No.222 of 2021" decided on 17.05.2022

classifying NOIDA as an Operational Creditor. The NOIDA has alleged

violation of CIRP Regulations. Erstwhile Resolution Professional has filed

Affidavit explaining the valuation. It is submitted that the Adjudicating

Authority has rightly remitted the Resolution Plan for reconsideration of the

CoC and it is for the CoC to take a view as to from what stage CIRP should

commence. It is submitted that in the 19th CoC meeting the Resolution Plan

of the Appellant was approved and 85% of Financial Creditors in a class

have voted in favour of the plan.

Company Appeal (AT) (Insolvency) No.1714 of 2024 8

6. Counsel appearing for the Respondent No.3 in support of the order

submits that the IRP has admitted claim of Rs.533.55 Crores, it is

submitted that there was violation of CIRP Regulations in the conduct of

CIRP. In the Information Memorandum, the Resolution Professional has

disclosed the liquidation value and due to which the amount earmarked for

payment to the NOIDA was earlier Rs.230 Crores against admitted amount

of Rs.532.55 Crores but subsequent to disclosure of liquidation value, the

Successful Resolution Application have offered an amount of Rs.21 crores

against claim of Rs.848.48 Crores. It is further submitted that as per

Regulation 35 of the CIRP Regulations, the valuation has to be obtained

from two registered valuer by the Resolution Professional. In the present

case, only one valuation report was on the record, hence, there was non-

compliance of Regulation 35 of the CIRP Regulations. Adjudicating Authority

has rightly directed for fresh valuation. It is submitted that after the

judgment of the Hon'ble Supreme Court in "New Okhla Industrial

Development Authority vs. Anand Sonbhadra" (supra), NOIDA has not

pressed its objection regarding classification of the Operational Creditor. It

is submitted that the NOIDA is Secured Creditor in view of the judgment of

the Hon'ble Supreme Court in "Greater Noida Industrial Development

Authority vs. Prabhjit Singh Soni & Anr.". It is submitted that the

Resolution Plan has rightly been rejected after taking consideration of the

claim of the NOIDA in accordance with law.

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

and perused the record.

Company Appeal (AT) (Insolvency) No.1714 of 2024 9

8. The facts, as noted above, indicate that after issuance of Form G

thrice, the Resolution Plans were received in the CIRP of the Corporate

Debtor which commenced on 10.01.2019 and the Resolution Plan submitted

by the Appellant was approved with 80.13% vote share. NOIDA has filed

objection to the Resolution Plan as well as further objection by IA No.3067 of

2022 for rejection of the plan. The breaches were noticed by the

Adjudicating Authority itself in its hearing on 29.08.2023 which is recorded

in the order dated 29.08.2023 which is as follows:-

"IA-3255/2020, IA-3067/2022, IA-3243/2023, IA- 3588/2023, IA3596/2023, IA-3926/2023 & IA-

4179/2023 During the course of hearing, two breaches of law have been mainly raised by Adv. Rachit Mittal for NOIDA which are disclosure of liquidation value in the Information Memorandum and also the value which has been determined by the IRP in the CIRP Proceedings was only from one valuer whereas the regulation provided for two valuation reports. On the above two breaches of law and the effect of the same on the ongoing proceedings before this Adjudicating Authority, we would like to hear Mr. Sumant Batra, Ld. Counsel for the RP as to the implications of these breaches of the laid down law and the impact thereof on the CIRP Proceedings.

We would like the Ld. Counsels for the parties to address this Tribunal on 25.09.2023. Accordingly, list the matter on 25.09.2023.

Company Appeal (AT) (Insolvency) No.1714 of 2024 10

New IA-4491/2023 & New IA-4498/2023

Notice of both these Applications be sent to the Respondents/Nonapplicants returnable on dated 26.09.2023.

List these IAs on 26.09.2023."

9. Subsequent to the aforesaid hearing, Counsel for the Resolution

Professional took time to obtain instructions and clarification and Affidavits

were filed by the Resolution Professional explaining the issues of valuation.

It is submitted that the Adjudicating Authority has rightly by paragraph

79(d) directed for fresh valuation in accordance with Regulation 27 read with

Regulation 35 of the CIRP Regulations by direction in paragraph 79(d).

10. The Appellant has confined this Appeal only to the direction as

contained in paragraph 79(a) which for ready reference is extracted as

below:-

"a) The Resolution Plan stands remitted back to the CoC. It would be for CoC to take a call, as to whether the CIRP should resume from the stage of preparation of IM or from any other stage or the present SRA/PRA's should be given opportunity to submit revised Resolution Plan after Forensic Audit and proper fresh valuation of the assets of the CD."

11. From the sequence of the facts as noted above, it is clear that the

Adjudicating Authority in the impugned order has not found any violation of

Section 30(2) in the Resolution Plan submitted by the Appellant.

Company Appeal (AT) (Insolvency) No.1714 of 2024 11

Adjudicating Authority however, in the impugned order has noted non-

compliance of the CIRP Regulations 2016 by the Resolution Professional.

Adjudicating Authority consequently has issued direction in paragraph 79(d)

as noted above. In the Appeal, an interim order was passed on 31.07.2024

which order stood modified on 15.10.2024 under which modification this

Tribunal permitted Resolution Professional to carry out the transaction

audit report as well as the valuation. In the written submission which was

submitted by the Resolution Professional dated 16.04.2025 it was

mentioned that valuation by two registered IBBI Valuer within next 15 days.

Valuation by two IBBI registered valuer is under process and was expected

to be completed within next 15 days. We have no doubt that valuation report

need to be submitted as per the directions of the Adjudicating Authority

which shall also be circulated for all members of the CoC for consideration

after obtaining confidentiality undertaking including the NOIDA. The

submission which has been raised by the Appellant is that the Adjudicating

Authority in facts of the present case ought not to have given liberty to the

CoC to resume CIRP from the stage of preparation of Information

Memorandum or any other stage. The CIRP against the Corporate Debtor

commenced on 10.01.2019 and the CIRP period came to an end even before

approval of the Resolution Plan. In the application which has been filed by

the Resolution Professional for approval of the Resolution Plan i.e. IA

No.3255 of 2020, Resolution Professional has given the facts regarding

extension of CIRP for period of 60 days from 19.06.2020. It is useful to

Company Appeal (AT) (Insolvency) No.1714 of 2024 12

notice pleadings in paragraph 29 of the IA No.3255 of 2020 where following

has been pleaded:-

"29. In view of the incumbent lockdown/curfews imposed by the Central as well as State Governments due to the outbreak of COVID-19 pandemic, the Applicant/ Resolution Professional filed an application in terms of the decision taken by the CoC in its Seventeenth Meeting seeking extension of time for CIRP of the Corporate Debtor. It is pertinent to mention that although the registered office of the Corporate Debtor is in Delhi, the business activities / operations of the Corporate Debtor primarily take place in Noida only. As the head office of the Corporate Debtor and the project/ construction site are in Noida, there were many hinderances in the resumption of work at full swing and further hardships were faced to pace up the work despite relaxation of on lockdown by the Government. This Hon'ble Tribunal passed an Order dated 19.06.2020 further extending the time period available for the CIRP by a period of 60 days. True copy of the Order dated 19.06.2020 passed by this Hon'ble Tribunal is annexed herewith and marked as Annexure - Q."

12. The above indicates that the CIRP period was extended for 60 days on

19.06.2020 meaning thereby, CIRP period come to an end on 19.08.2020.

The Resolution Plan was approved in July 2020 and application was filed on

13.08.2020 i.e. within CIRP period. Application which was filed on

13.08.2020 remain pending before the Adjudicating Authority till the

Company Appeal (AT) (Insolvency) No.1714 of 2024 13

impugned order dated 24.07.2024 has been passed. The timeline for

completion of the CIRP has its own importance and significance. IBC itself

contemplate that in event the CIRP is not completed within the timeline,

steps for liquidation are to be taken which scheme is delineated by Section

33 of the IBC. Adjudicating Authority while issued direction in paragraph

79(a) giving liberty to the CoC i.e. "it would be for CoC to take a call, as to

whether the CIRP should resume from the stage of preparation of IM or from

any other stage or the present SRA/PRA's should be given opportunity to

submit revised Resolution Plan after Forensic Audit and proper fresh valuation

of the assets of the CD". Counsel for the Appellant has relied on the

judgment of the Hon'ble Supreme Court in "Greater Noida Industrial

Development Authority vs. Prabhjit Singh Soni & Anr." where Hon'ble

Supreme Court in paragraph 33 of the judgment has made following

observations:-

"33. In light of the analysis of the provisions of the IBC and the Regulations framed thereunder, in our view, though commercial wisdom of the COC in approving a resolution plan may not be justiciable in exercise of the power of judicial review, the Adjudicating Authority can always take notice of any shortcoming in the resolution plan in terms of the parameters specified in sub-section (2) of Section 30 of the IBC coupled with Regulations 37 and 38 of the CIRP Regulations 2016. If any such shortcoming appears in the resolution plan, it may send the resolution plan back to the COC for re-submission after satisfying the parameters so laid down.

Company Appeal (AT) (Insolvency) No.1714 of 2024 14

Likewise, the appellate authority can also interfere upon noticing any shortcoming in the resolution plan while exercising its powers under Section 32 read with Section 61 (3) of the IBC."

13. Adjudicating Authority in the impugned order has not recorded any

finding that the Resolution Plan submitted by the Appellant is not in

compliance with Section 30(2). The Adjudicating Authority has pointed out

non-compliance of the CIRP Regulations 2016 for remedying such

irregularities. Remedial direction has been issued in paragraph 79 for fresh

valuation.

14. With respect to direction issued in Para 79(a), both Authorized

Representative for Granite Gate Properties Pvt. Ltd. and NOIDA has filed

Company Appeal (AT) (Ins.) No.1479 of 2024 and Company Appeal (AT) (Ins.)

No.1713 of 2024. Directions issued in Para 79 has been modified by us in

our judgment in the above two appeals.

15. The Appellant, who is a Successful Resolution Applicant whose

resolution plan was approved by the CoC in July, 2020 is entitled to submit

a resolution plan. We have already directed in the above two appeals to the

CoC to direct Resolution Professional to issue a fresh Request for Resolution

Plan. Appellant being included in the final list of Resolution Applicants is

fully entitled to submit a resolution plan.

Company Appeal (AT) (Insolvency) No.1714 of 2024 15

16. This appeal i.e. Company Appeal (AT) (Ins.) No.1714 of 2024 is also

decided in terms of order passed of the date in Company Appeal (AT) (Ins.)

No.1479 of 2024 and Company Appeal (AT) (Ins.) No.1713 of 2024.

Parties shall bear their own costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

New Delhi Anjali/Archana

Company Appeal (AT) (Insolvency) No.1714 of 2024