National Asset Reconstruction Company ... vs Sunil Kumar Sharma Suspended Director ...

IN THE MATTER OF: National Asset Reconstruction Company Ltd., ...Appellant (Trustee of NARCL Trust-0025)

Versus

Sunil Kumar Sharma, ...Respondent Suspended Director of Jaiprakash Associates Ltd.

Present: For Appellant : Mr. Madhav Kanoria, Ms. Srideepa Bhattacharyya, Ms. Neha Shivhare, Advocates. For Respondent : Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Palak Kalra, Ms. Ridhima Mehrotra, Advocates for R-1. Mr. Vaijayant Paliwal, Mr. Nikhil Mathur, Mr. Aditya Marwah, Ms. Kirti Gupta, Ms. Rashi Sharma, Advocates for R-2.

ORDER

(Hybrid Mode)

10.10.2025: I.A. No. 5964 of 2025:- This is an application praying for

condonation of delay of 10 days. The grounds taken in the application is that

matter involves extensive documentation pertaining to the Corporate

Insolvency Resolution Process ("CIRP") of the Corporate Debtor. The time was

taken in compilation, collation, verification, and systematic arrangement of

such voluminous documents.

Sh. Abhishek Anand, Advocate appears on behalf of the Respondent.

We find sufficient cause for condonation of delay. Delay condoned.

Cont'd.../ -2-

Company Appeal (AT) (Ins) No. 1523 of 2025:-

Heard Ld. Counsel for the appellant and Sh. Abhishek Anand

appearing for the respondent. This appeal has been filed against an order

passed by the NCLT, Allahabad Bench, Prayagraj dated 30.07.2025 in IA(IB)

No. 233/(ALD)/2025 in C.P.(IB)- 330(ALD)/2018. The application was filed

by the Respondent No.1 to the Suspended Board of Directors and Personal

Guarantor of Jaiprakash Associates Limited praying for certain directions

which have been quoted in paragraph 1 of the order which is as follows:

"In view of the facts and circumstances and the submissions made in the present application, the Applicant most humbly prays that this Hon'ble Adjudicating Authority may be pleased to grant the following relief(s):

I. Allow the present Application.

II. Kindly quash and set aside the minutes of the 10 & 11 CoC meetings held on 18.03.2025 and 25.03.2025, in view of the violation of Regulation 28 of the CIRP Regulations and the failure of the Resolution Professional to adhere to the statutory framework governing the resolution process;

III. Kindly quash and set aside the Agenda Item No. 3 and consequential resolution passed by the Committee of Creditors with 88. 96 % voting share in the 11th meeting of the Committee of Creditors, being in contravention to the provisions of the Code and Regulations made thereunder;

IV. During the pendency of the present application kindly issue ex- parte ad-interim stay on inviting EOI as resolved by the Committee of Creditors in the 11th meeting of the Committee of Creditors for sale of investment of Corporate Debtor in Jaiprakash Power Ventures Limited and Jaypee Fertilizers & Industries

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Limited and/ or Kanpur Fertilizers & Chemicals Limited being in contravention to the provisions of the Code and Regulations made thereunder;

V.Consequentially, issue appropriate directions to the Respondents to follow the mandate of Regulation 28 & 29 of the CIRP Regulations as required;

VI. Pass any other order(s) as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case."

2. In the application the parties were heard and by impugned order the

Adjudicating Authority has disposed of the application. In Paragraph 88, 89

of the application directions have been issued which are as follows:

"88. We therefore, pass the following orders:

i. With regard to relief sought by the Applicant in prayer No. II, we hold that it was valid for the Respondent No.2- NARCL to have participated in the meeting of the CoC at any date after execution of the assignment deed. The Regulation 28 is only procedural in nature and is therefore to be complied with by the Resolution Professional, which has subsequently been done by him. We are therefore not inclined to accept the relief sought by the applicant in this regard.

ii. With regard to the relief sought in Prayer no. III," we decide as:-

a. The minutes of the 11th CoC meeting resolving to start bidding process for issuance of Expression of Interest for price discovery of the two assets of the Corporate Debtor as its investment in JPVL and JFIL are set aside to the extent of the same being resorted to only for price discovery, as there is no stipulation under Regulation 29 of the CIRP Regulations, 2016 for such a method to be adopted.

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b. As per Regulation 29 of the CIRP Regulations unencumbered assets only are permitted to be sold by issuing Expression of Interest. The investment of the Corporate Debtor in the shares of JPVL being an encumbered asset (other than 4.99% of total holding), therefore does not qualify the ingredients of Regulation 29 of CIRP Regulations, 2016, which however is permitted to be sold only after removing the encumbrancy and meeting the requirement of Regulation 29 of CIRP Regulations, 2016.

c. As regards to the assets of JFIL is concerned, the asset being unencumbered, the process can be continued/completed for the purpose of sale only by inviting Expression of Interest as per Regulation 29 of CIRP Regulations, 2016. However, the procedure for price discovery alone is not permitted as being not contemplated under Regulation 29 of CIRP Regulations, 2016.

89. In light of the above, I.A No. 233 of 2025 is disposed off as per the aforesaid terms."

3. Aggrieved by the order this appeal has been filed. Ld. Counsel for the

appellant has submitted that the minutes of 11th CoC meeting by which the

decision was taken by the appellant was only for purposes of price discovery

of the Corporate Debtor investment in JPVL and the said process which was

decided was to proceed with sale only after obtaining release of

encumbrances of the assets, hence, there was no prohibition with the

process which was initiated. It is submitted that the sale was to take place

only after release of encumbrances, hence the Adjudicating Authority ought

not to have interfered with the decision taken by the CoC in the 11th CoC

meeting.

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4. Sh. Abhishek Anand, appearing for the Respondent has submitted that

Adjudicating Authority by the impugned order in the same has considered all

aspects of the matter and has come to the conclusion that the process has

been initiated under Regulation 29 of CIRP Regulation 2016 and said such

bidding process can be initiated only after release of the encumbrances. It is

submitted that the Adjudicating Authority has clearly permitted sale of the

investment in the JPVL of the CD after removing the encumbrancy and

meeting the requirement of Regulation 29 of CIRP Regulation 2016 with

imply protect the interest of the appellant.

5. We have considered submissions of learned counsel for the parties and

perused the records.

6. The Adjudicating Authority in detail has considered the entire process

and the decision taken in the 11th CoC meeting. The Regulation 29 of CIRP

Regulation 2016 clearly envisaged the sale of the unencumbered assets on

fulfilling the conditions as provided in the Regulation. The statutory process

thus has to in accordance with the Regulation 29. The solution is that the

process was initiated, only for price discovery, and not for the sale does not

appeal to us, as when the investment is encumbered, even the price

discovery may not be optimum and once the investments are encumbrance

free, there is possibility of a better price discovery. Hence, the steps taken by

the appellant for price discovery is not commensurate with the objective of

maximizing the value of the assets of the CD.

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7. The Adjudicating Authority by the impugned order has clearly in

paragraph 88 (ii) (b) has permitted the sale after removing the encumbrancy

and meeting the requirement of Regulation 29 of CIRP Regulation 2016. The

Appellant in no manner is inhibited to take steps in accordance with the

Regulation 29 of CIRP Regulation 2016, which involves mechanism of price

discovery before actual sale.

8. We thus are of the view that the decision taken by the Adjudicating

Authority protect the interest of both the parties and we do not find any

ground to interfere in exercise of Appellate jurisdiction. We only observe that

the order impugned in no manner inhibits the appellant to proceed in

accordance with the Regulation 29 of CIRP Regulation 2016.

9. With these observations, the appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Mr. Indevar Pandey] Member (Technical)

SA/MD

Company Appeal (AT) (Ins) No. 1523 of 2025