Phoenix Arc Limited (Formerly Known As ... vs Rajesh Jhunjhunwala & Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Comp. App. (AT) (Ins.) No. 1745 of 2026 (Arising out of the Order dated 23.07.2026 passed by the National Company Law Tribunal, Mumbi Bench, in IA (I.B.C)/3054(MB)2026 in C.P. (IB)/414(MB)2025

IN THE MATTER OF: 1. Phoenix ARC Limited (formerly known as Phoenix ARC Private Limited), Trustee of Phoenix Trust FY 22-16 3rd Floor, Wallace Towers, 139- 140/B/l, Crossing of Sahar Road and Western Express Highway, Vile Parle (East), Mumbai, Maharashtra, India - 400057 ...Appellant

Versus

1. Rajesh Jhunjhunwala, Erstwhile Resolution Professional of Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Private Limited A51, Aashit CHS, Azad Road, H B Gawde Marg, Stanburg Estate, Juhu Koliwada, Mumbai - 400049 ...Respondent No. 1

2. Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Private Limited, Represented through its Liquidator, Mr. Shailesh Pranlal Bhuta 901, Regent Chambers, Nariman Point, ...Respondent No. 2 Mumbai - 400021 Comp. App. (AT) (Ins.) No. 1745 of 2026

Present For Appellant: Mr. Gaurav Mitra, Sr. Adv. along with Ms. Chitra Rentala, Mr. Khyati Mehrotra, Mr. Treenok Guha & Ms. Shravani Madirrala.

For Respondents: Mr. Rajesh Jhunjhunwala, for R-1 (in person). Mr. Rudra Deosthali, for R-2.

JUDGEMENT

( 06.10.2026)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed by the Appellant i.e., Phoenix ARC

Limited (formerly known as Phoenix ARC Private Limited), acting in its capacity

as trustee of Phoenix Trust FY 22-16, who is the Financial Creditor, herein, under

Section 61 of the Insolvency and Bankruptcy Code, 2016 ('Code') against the

Order dated 23.07.2026 ("Impugned Order") passed by the National Company

Law Tribunal, Mumbai Bench ("Adjudicating Authority") in IA

(I.B.C)/3054(MB)2026 in C.P. (IB)/414(MB)2025.

Rajesh Jhunjhunwala, who is the erstwhile Resolution Professional of

Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Private Limited, is the

Respondent No.1 herein.

Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Private Limited,

represented through its Liquidator, Mr. Shailesh Pranlal Bhuta, who is the

Corporate Debtor, is Respondent No. 2, herein.

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Comp. App. (AT) (Ins.) No. 1745 of 2026

2. The Appellant submitted that as per the Impugned Order dated 23.07.2026,

the application under Section 33(1A) of the Code, was rejected and liquidation of

the Corporate Debtor was directed, which proceeds on an erroneous construction

of Section 33(1A) of the code, according to the Appellant. The Appellant

contended that the statutory conditions contemplated under the said provision

stood satisfied in the present case, as no resolution plan had been approved within

the CIRP period and the Committee of Creditors ("CoC") had, by a unanimous

voting share of 100%, resolved to seek restoration of the CIRP.

3. The Appellant submitted that Section 33(1A), brought into force with

effect from 26.05.2026, enables the Adjudicating Authority, before passing an

order of liquidation, to consider an application approved by not less than 66% of

the voting share of the CoC for restoration of the CIRP for a period not exceeding

120 days. The Explanation to the provision also extends its application to CIRPs

which had commenced prior to the amendment, where no liquidation order had

been passed. In the present case, the CoC's resolution dated 02.07.2026 was

therefore squarely within the statutory framework introduced by Section 33(1A).

4. It is submitted that the CoC did not merely satisfy the statutory threshold

of 66%. The proposal for restoration of the CIRP, together with exclusion of 120

days, was approved unanimously by 100% voting share, while the proposal for

liquidation was unanimously rejected. The Appellant, holding 17.17% voting

share in the CoC, itself voted in favour of restoration and against liquidation. The

Appellant therefore contended that the Impugned Order effectively nullifies a

Page 3 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

statutory mechanism by which the CoC was expressly permitted to seek a further

opportunity for resolution.

5. The Appellant submitted that the Adjudicating Authority itself recorded in

paragraph 10 of the Impugned Order that the CoC's resolution for restoration had

been approved unanimously by 100% voting share and that the statutory threshold

of 66% had been "comfortably exceeded". There was, therefore, no finding of

any procedural infirmity in the decision-making process of the CoC or any

allegation of mala fides in the decision to seek restoration.

6. In such circumstances, the Appellant contended that the Adjudicating

Authority could not substitute its own assessment as to whether restoration was

commercially justified for the unanimous commercial decision of the CoC. The

Appellant submitted that the CoC had considered the available alternatives,

namely restoration of CIRP, recovery of the dues arising from the Arbitral Award,

and liquidation, and had thereafter consciously and unanimously chosen

restoration while rejecting liquidation.

7. The Appellant further submitted that the commercial decision was not

taken in isolation. It was preceded by the rejection of four resolution plans after

multiple rounds of negotiations and by consideration of the Corporate Debtor's

principal asset, the Arbitral Award, the market response to the earlier Form G,

and the possibility of a fresh resolution process. The decision was consequently

the result of a deliberative commercial process and not an unexplained or

mechanical exercise of voting.

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Comp. App. (AT) (Ins.) No. 1745 of 2026

8. The Appellant contended that once the statutory threshold had been

satisfied and the CoC had unanimously determined that a further resolution

process was commercially viable, the Adjudicating Authority could not

effectively sit in appeal over that commercial determination by concluding that

liquidation was preferable. Such an approach, according to the Appellant,

amounts to judicial substitution of commercial wisdom in a field entrusted by the

Code to the CoC.

9. The Appellant submitted that the principal reason assigned in the

Impugned Order for declining restoration was that the Arbitral Award could also

be pursued during liquidation. It is contended that this reasoning proceeds on an

erroneous premise, because the mere availability of liquidation as an alternative

mechanism for realisation of an asset cannot, by itself, defeat an otherwise

statutorily permissible application for restoration under Section 33(1A).

10. The Appellant submitted that the Corporate Debtor's principal asset is the

Arbitral Award for approximately Rs. 318,94,70,738/-, inclusive of litigation

costs of Rs. 3,00,00,000/-, together with interest at 12.50% per annum from

20.09.2016 until actual payment. The Award was passed in favour of the

Corporate Debtor against the Public Works Department, Government of

Maharashtra. The challenge to the Award under Section 34 of the Arbitration and

Conciliation Act, 1996 remains pending before the Hon'ble Bombay High Court,

with no stay having been granted, while execution proceedings are also pending.

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Comp. App. (AT) (Ins.) No. 1745 of 2026

11. It is further submitted that the Corporate Debtor's total claim, including

accrued interest, was approximately Rs. 800 crores, and settlement discussions

with the PWD under the Vivad Se Vishwas Scheme had included a figure of

approximately Rs. 363.60 crores, although no final settlement had been arrived

at and further time was indicated to be required for obtaining cabinet approval.

Thus, the asset was not a merely speculative or extinguished claim but

represented substantial value which remained capable of realisation.

12. The Appellant contended that if the reasoning adopted in the Impugned

Order were accepted, every corporate debtor whose principal asset is a monetary

or actionable claim could be denied restoration merely because such claim could

technically be pursued in liquidation. Such an interpretation would create an

exclusion from Section 33(1A) which is not contained in the statutory text and

would materially restrict the operation of a provision specifically introduced to

enable a further attempt at resolution before liquidation.

13. The Appellant submitted that Section 33(1A) would be rendered

substantially ineffective if the existence of an alternative liquidation route were

itself treated as sufficient reason to refuse restoration. Liquidation is precisely the

consequence which Section 33(1A) permits the CoC to seek to avoid where it

considers that a further time-bound resolution process may maximise value.

14. The Appellant contended that the finding that restoration was not justified

failed to give due consideration to the material demonstrating continued market

interest. Pursuant to the Form G published on 24.10.2025, as many as 11 EOIs

Page 6 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

were received, from which four resolution plans were ultimately submitted by

SMS Limited, Viceroy Hotels Limited, Shanti G.D. Ispat and Power, and Agra

Gwalior Pathways Private Limited. Although all four plans were eventually

rejected after negotiations and voting, the earlier participation itself demonstrated

that the Corporate Debtor had attracted prospective resolution applicants.

15. The Appellant further submitted that the fresh process approved by the

CoC was not merely prospective or hypothetical. Pursuant to the CoC's resolution

dated 02.07.2026, a fresh Form G was republished on 13.07.2026. By the notice

dated 30.07.2026 for the 13th CoC meeting, seven EOIs had already been

received, of which five were accompanied by earnest money deposits. In addition,

an eighth EOI accompanied by an earnest money deposit of Rs. 1,00,00,000/- was

received on 29.07.2026 from SMS Limited, an earlier prospective resolution

applicant.

16. It is submitted that these developments occurred immediately after the CoC

had resolved to restore the CIRP and before the liquidation process had

meaningfully progressed. According to the Appellant, the subsequent market

response materially corroborated the CoC's assessment that a fresh resolution

process remained commercially viable. The Appellant also submitted that the

fresh EOI process was structured to invite resolution plans on three alternative

bases: the Corporate Debtor as a whole on a going-concern basis, the Corporate

Debtor excluding the Arbitral Award, and the Arbitral Award alone. Thus, the

fresh process was designed to explore resolution of the Corporate Debtor in

Page 7 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

different commercial configurations and was not confined merely to monetisation

of the Arbitral Award.

17. The Appellant submitted that the Impugned Order further proceeded on the

observation that continuation of the CIRP could permit monetisation of

unabsorbed losses available to the Corporate Debtor at the cost of the

Government exchequer. It is contended that this consideration did not arise from

the application under Section 33(1A), nor did the Impugned Order identify any

material establishing that restoration would operate to the detriment of the public

exchequer.

18. The Appellant submitted that the Corporate Debtor had carried-forward

losses of approximately Rs. 397 crores, accumulated over the preceding four

years. It was specifically submitted that a major part of these losses comprised

interest payable on debt raised for construction of the asset and depreciation

thereof, and that such amounts had been and would be treated in accordance with

applicable law, including the applicable accounting and taxation treatment. The

Appellant contended that such lawful treatment of losses cannot, without more,

be characterised as a benefit accruing at the cost of the Government exchequer.

19. It is further submitted that the object of the code is value maximisation and

resolution, and any treatment of losses in accordance with law which facilitates

maximisation of the value of the Corporate Debtor and consequent recovery of

creditors cannot, merely on account of its tax consequences, constitute a ground

to reject a statutory application for restoration. The Appellant therefore contended

Page 8 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

that the reasoning concerning carried-forward losses was vague, unsupported by

any demonstrated prejudice to the exchequer, and unrelated to the statutory

considerations governing restoration under Section 33(1A).

20. The Appellant submitted that the Impugned Order is also materially

inconsistent with the earlier order dated 02.06.2026 passed by the very same

Adjudicating Authority in the same CIRP. By that order, a further extension of

60 days was granted up to 21.07.2026, and the Adjudicating Authority expressly

recorded the existence of "exceptional circumstances" warranting such extension

so as to avoid liquidation, which could be considered a last resort, and to enable

successful resolution of the Corporate Debtor in accordance with the objectives

of the Code.

21. The Appellant contended that the material circumstances which formed the

basis of the earlier order substantially continued when the application under

Section 33(1A) came to be considered. The Arbitral Award remained the

principal asset; settlement efforts with PWD continued; and, importantly, the

CoC had thereafter unanimously rejected liquidation and approved restoration

with 100% voting share.

22. It is submitted that, within approximately six weeks, the Adjudicating

Authority adopted a contrary approach and directed liquidation, without

adequately explaining the basis for such departure. According to the Appellant,

the subsequent factual developments did not diminish the case for resolution;

rather, the CoC had undertaken a fresh commercial assessment and the

Page 9 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

subsequent EOI process had generated further market participation. The

Appellant therefore contended that the departure from the earlier approach,

particularly in relation to liquidation being treated as a last resort, required cogent

reasons, which are absent from the Impugned Order.

23. The Appellant submitted that the CIRP had commenced on 25.08.2025

and, after an initial period of 180 days, had been extended by 90 days up to

22.05.2026 and thereafter by a further 60 days up to 21.07.2026, resulting in a

total CIRP period of 330 days.

24. Following rejection of all four resolution plans on 29.06.2026, the CoC met

on 02.07.2026 and considered restoration under Section 33(1A). The application

seeking restoration and exclusion of 120 days was filed on 16.07.2026, before

expiry of the CIRP period on 21.07.2026. The restoration sought would extend

the CIRP period up to 18.11.2026. The Appellant submitted that the sequence of

events demonstrates that the CoC acted within the statutory framework and before

liquidation had been ordered. The statutory mechanism was therefore invoked at

the stage and in the circumstances for which Section 33(1A) had been enacted.

25. The Appellant submitted that the record discloses a case where the CoC,

by 100% voting share, rejected liquidation and resolved to pursue restoration for

a further 120 days, while the fresh resolution process had already generated

further market participation, including eight EOIs, with five of the first seven

EOIs accompanied by earnest money deposits and a further EOI from SMS

Limited accompanied by an earnest money deposit of Rs. 1,00,00,000/-.

Page 10 of 31

Comp. App. (AT) (Ins.) No. 1745 of 2026

26. Concluding arguments, the Appellants requested this Appellate Tribunal to

set aside the Impugned Order and allow this appeal.

27. Per contra, during the pleadings, the Respondents have submitted that they

do not wish to file any reply to the IAs or the Appeal, which has also been

considered by us in our order dated 16.09.2026, which reads as under:

Findings

28. At the outset, we take into consideration that Section 33(1A) of the Code

was inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2026,

with effect from 26.05.2026. The relevant provision, reads as under:

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Comp. App. (AT) (Ins.) No. 1745 of 2026

"(1A) Notwithstanding anything contained in sub-section (1), where the Adjudicating Authority is satisfied that the grounds mentioned in clause (a) or clause (b) of sub-section (1) of this section exist, it shall, before passing the liquidation order, consider an application made by the committee of creditors, in such manner and subject to such conditions as may be specified, by not less than sixty-six per cent. of the voting share, for restoring the corporate insolvency resolution process, and, upon considering such application, may, by order, restore the corporate insolvency resolution process for such period, not exceeding one hundred and twenty days, as it deems fit.

Explanation. -- For the removal of doubts, it is hereby clarified that the provisions of this sub-section shall also apply in relation to a corporate insolvency resolution process commenced before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2026, where no order of liquidation under sub- section (1) has been passed."

29. Having noted pleadings of the all parties noted earlier, which we will not

repeat for sake of brevity, we find that in order to decide the present appeal, we

need to frame following issues: -

ISSUE I- What is the nature and extent of the Adjudicating Authority's

power, under Section 33(1A) of the Code, over a restoration application

approved by the CoC with the requisite majority - is the CoC's commercial

decision immune from interference in the same manner as its decision

approving or rejecting a resolution plan under Sections 30 and 31 of the

Page 12 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

Code, or does the Adjudicating Authority retain an independent discretion,

and if so, of what character and subject to what constraints?

ISSUE II- Whether the finding in the Impugned Order that continuation of

the CIRP would enable the Corporate Debtor's creditors to "monetise

unabsorbed losses...at the cost of the Government exchequer" is sustainable,

having regard to (a) whether it is founded on any material or submission on

the record; (b) whether it comports with the principles of natural justice;

and (c) whether, even taken at its highest, it is legally capable of outweighing

a unanimous, threshold-exceeding CoC decision?

ISSUE III- Whether the reasoning that the Corporate Debtor's arbitral

claim "can further proceed in the liquidation process also", and that

restoration would therefore serve no independent purpose, furnishes a

legally sound basis, on the facts of this case, for declining restoration under

Section 33(1A)?

ISSUE IV- Whether, and to what extent, the Impugned Order's departure,

without reference or explanation, from the Adjudicating Authority's own

Extension Order dated 02.06.2026, passed in the very same proceeding,

bears upon the sustainability of the Impugned Order?

ISSUE V- Whether the Impugned Order satisfies the standard of a reasoned,

speaking order, particularly where it overrides a unanimous commercial

decision of the CoC taken pursuant to a specific statutory mechanism?

ISSUE VI- What relief follows?

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Comp. App. (AT) (Ins.) No. 1745 of 2026

30. ISSUE I- What is the nature and extent of the Adjudicating

Authority's power, under Section 33(1A) of the Code, over a restoration

application approved by the CoC with the requisite majority - is the CoC's

commercial decision immune from interference in the same manner as its

decision approving or rejecting a resolution plan under Sections 30 and 31

of the Code, or does the Adjudicating Authority retain an independent

discretion, and if so, of what character and subject to what constraints?

31. We note that it is by now settled beyond controversy that the commercial

wisdom of the CoC, in matters entrusted to it under the scheme of the Code

principally, the approval or rejection of a resolution plan under Sections 30(4)

and 31, is not open to judicial review on merits, and that the jurisdiction of the

Adjudicating Authority, is confined to examining whether the decision-making

process prescribed by the Code has been observed. This position stands

authoritatively laid down in K. Sashidhar v. Indian Overseas Bank, (2019) 12

SCC 150; reaffirmed and elaborated in Committee of Creditors of Essar Steel

India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, holding that the

commercial wisdom of the CoC has been given paramountcy without any judicial

intervention, and that the Adjudicating Authority and the Appellate Tribunal

cannot substitute their views for the collective business decision of the financial

creditors.

32. We take into consideration the fact that Section 33(1A), however, is not

framed in the same terms as Sections 30(2) and 31. Under the latter, once the

Page 14 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

Adjudicating Authority is satisfied that a resolution plan approved by the CoC

meets the requirements of Section 30(2), it has no discretion to withhold approval;

its role is confined to a check on compliance. Section 33(1A), by contrast, on the

material before us, casts on the Adjudicating Authority a duty to consider the

CoC's application, and confers upon it a power, cast in terms of discretion ("may...

restore"), to allow or decline restoration, subject to the outer time-limit of 120

days. The provision does not, in terms, replicate the closed, compliance-only

architecture of Section 30(2)/31; nor, on the other hand, does it purport to hand

the Adjudicating Authority an unconfined power to reject a compliant application

on any ground it thinks fit.

33. In our considered view, the correct position lies between these two poles.

Where the CoC's application satisfies the twin statutory conditions, namely, that

a ground under Section 33(1)(a) or (b) exists, and that the application carries the

approval of not less than 66% of the voting share, the residual discretion vested

in the Adjudicating Authority is a real one. However, the discretion vested must

accordingly be exercised judicially on relevant considerations in accordance to

the object of the provision i.e., whether a further time-bound attempt at resolution

is likely to serve, rather than defeat, the value-maximisation and resolution-first

objectives enshrined in the Code and not on considerations extraneous to the

record, or mere preference for a different commercial outcome than the one the

CoC, exercising its own commercial wisdom, has arrived at. This Appellate

Tribunal and the Adjudicating Authority ordinarily accord to the CoC's

Page 15 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

commercial wisdom under Sections 30-31, even though it is not, the case of

complete ouster of the discretion of the Adjudicating Authority. In the other

words the considered CoC's decision, which is unanimous or comfortably

exceeds the statutory threshold, and is the request of deliberation across

successive meetings rather than a single meeting, then more cogent and specific

reasons must exist for declining the request of the CoC by the Adjudicating

Authority.

34. Tested against this standard, we note that the Impugned Order itself

records, that the resolution for restoration was approved unanimously by 100%

voting share, comfortably exceeding the statutory threshold of 66%, and does not

anywhere suggest that the CoC's decision-making process suffered from any

procedural infirmity, or that it was tainted by mala fides or arrived at without due

deliberation. It is noted that indeed, the record (12th CoC Minutes) shows the

contrary as liquidation was commercial decision of the CoC member, against

liquidation and in favour of restoration. We find that in these circumstances, the

threshold conditions under Section 33(1A) stood not merely met but substantially

exceeded, and the burden was squarely on the Adjudicating Authority, if it were

to decline restoration after restoring specific and cogent, reasons capable of

displacing so considered and unanimous a commercial decision of the CoC.

Therefore, we find merit in the contentions of the Appellant on this issue, based

on the specific facts of the present case.

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Comp. App. (AT) (Ins.) No. 1745 of 2026

35. ISSUE II- Whether the finding in the Impugned Order that

continuation of the CIRP would enable the Corporate Debtor's creditors to

"monetise unabsorbed losses...at the cost of the Government exchequer" is

sustainable, having regard to (a) whether it is founded on any material or

submission on the record; (b) whether it comports with the principles of

natural justice; and (c) whether, even taken at its highest, it is legally capable

of outweighing a unanimous, threshold-exceeding CoC decision?

36. The Impugned Order records, that the Adjudicating Authority was

conscious that if CIRP is continued, the Creditors may be able to monetize

unabsorbed losses available to the Corporate Debtor at the cost of the

Government exchequer, and holds that the resolution of corporate debtor only

with objective of such monetization would not be in accordance with the spirit

and intent of IBC.

Based on the record before us, this consideration does not appear to have been

raised by any party or canvassed in the IA, or put to the Resolution Professional

or the CoC for an explanation before being relied upon by the Adjudicating

Authority before rejecting the application. We may infer that perhaps the only

reference to accumulated losses on this record is disclosure made by the

Resolution Professional in the ordinary course of his overview of the Corporate

Debtor's financial position at the 12th CoC meeting that the Corporate Debtor

carried forward losses of approximately Rs. 397 crores over the preceding four

years. It seems that such disclosure are made in insolvency proceedings and not

Page 17 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

accompanied by, or connected to, any suggestion that such losses were intended

to be, or were capable of being, unlawfully monetised. We also note that the

findings in the Impugned order, does not identify the mechanism by which such

monetisation was apprehended to occur. The impugned order also does not

explain how it would operate at the cost of the Government exchequer, and does

not engage with the fact that the treatment of carried-forward business losses of

a corporate debtor is, in the first instance, governed by the provisions of the

Income-tax Act, 1961 and administered by the income-tax authorities, not by the

Adjudicating Authority under the Code. We are of opinion that the issue as to

whether, and to what extent, an incoming resolution applicant may set off or carry

forward such losses is a matter of substantive tax law and falls to be examined,

by the tax authorities in accordance with the relevant law. We also do not find

any specific and reasoned finding in the impugned order that the CoC's or the

RP's conduct involved fraud, or an abuse of the resolution process for an object

extraneous to the Code. It may be stated that the availability of such losses on the

Corporate Debtor's books is result of its financial history and cannot, be converted

into a disqualifying feature of a CoC approved restoration application without

any specific reasons. No such finding of fraud or abuse is recorded in the

Impugned Order.

37. We also note that the finding is based on apprehension and possibility that

creditors may be able to monetise such losses, rather than as a definite finding.

We are of considered view that a conjectural apprehension of this nature,

Page 18 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

unaccompanied by any supporting material, reasoning, or opportunity to the

affected party to respond, is an insufficient basis on which to override a

unanimous, commercial decision of the CoC, taken pursuant to a specific

statutory mechanism enacted for precisely such situations.

38. For these reasons, we find that the Impugned Order's reliance on the

possibility of monetisation of unabsorbed losses...at the cost of the Government

exchequer is unsustainable, both as a matter of procedural fairness and on its own

merits, and cannot furnish a valid ground for declining restoration under Section

33(1A).

39. ISSUE III- Whether the reasoning that the Corporate Debtor's

arbitral claim "can further proceed in the liquidation process also", and that

restoration would therefore serve no i01ndependent purpose, furnishes a

legally sound basis, on the facts of this case, for declining restoration under

Section 33(1A)?

40. The Impugned Order's other reasoning is that since the Corporate Debtor's

only asset is, in substance, the arbitral claim against the Public Works

Department, Government of Maharashtra, valued, as recorded before the

Adjudicating Authority, at approximately Rs. 318.94 crore inclusive of litigation

costs, with interest accruing at 12.5% per annum. This was subject of a settlement

discussion pegged at approximately Rs. 363 crores before the Amicable

Settlement Committee constituted under the Vivad Se Vishwas Scheme of the

government. We are unable to sustain this reasoning, for various reasons. First, it

Page 19 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

proceeds on a premise that is only partially accurate. It has been brought to our

notice that the Preliminary Report of the Liquidator dated 21.08.2026 (filed under

Regulation 13 of the IBBI (Liquidation Process) Regulations, 2016) itself records

that the Corporate Debtor's assets, valued in aggregate at approximately Rs.

390.48 crore of which the arbitral claim/receivable, carried as an intangible asset,

accounts for approximately Rs. 386.69 crore. This stand against aggregate

liabilities of approximately Rs. 913.82 crore. In this background whether the

claim is pursued through a resolution applicant who acquires the Corporate

Debtor or is instead realised by a liquidator through sale of the entity's remaining

assets under Section 33(5) and the Liquidation Process Regulations, the

underlying claim remain the same claim. The Impugned Order does not undertake

the process, timeline, and value likely to be realised through either route of

restoration and possible resolution of the Corporate Debtor vis-à-vis straight

liquidation of the Corporate Debtor.

41. We must emphasise that it is well settled now that resolution and not

liquidation is the primary object of the Code, the liquidation is intended to operate

as a measure of last resort and not a default outcome to be preferred over a

genuine, credible prospect of resolution. This very principle was applied by the

Adjudicating Authority itself, on materially the same facts, in its own Extension

Order dated 02.06.2026. We also note that Section 33(1A) of the code is the

Legislature's own, express instantiation of this principle for the cases, like the

present case, where the CIRP period has run its full course without an approved

Page 20 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

plan. In case of the liquidation, the creditors alone bear the ultimate economic

consequences of that choice. During the hearing, the appellant emphatically

pleaded that given a chance they will be able to achieve better outcomes rather

than the liquidation which has got its own limitations. We note that on the facts

of this case, the record discloses more than a bare, generalised hope of a better

outcome. Eleven EOIs were received against the original Form G, of which four

converted into resolution plans that were the subject of extensive negotiation over

several months. We also note the submissions made by the Appellants that since

then, seven fresh EOIs had already been received against the republished Form G

within a fortnight, five of them with the requisite EMD, and an eighth (also with

EMD) followed a day later from one of the original resolution applicants.

Although we also notice consciously that the fresh bids were received subsequent

to passing of the impugned order, and therefore the adjudicating authority did not

have benefit of the details, however since we are considering the appeal based on

the facts and the pleadings made by the appellants before us, to justify their case,

we take into consideration of these facts. In view of this, in our assessment, the

CoC's optimism about the prospect of an improved resolution outcome did not

rest on speculation. Nor, in our view, can it be said that a liquidator's realisation

of the same claim would necessarily yield comparable value. A sale of a disputed,

sub judice arbitral receivable in liquidation , necessarily discounted for litigation

risk, and further uncertain enforcement timeline. The very fact that the CoC

structured its fresh Form G to invite plans on a going-concern basis (and not

Page 21 of 31 Comp. App. (AT) (Ins.) No. 1745 of 2026

merely for assignment of the bare receivable) reflects a considered commercial

judgment, one this Appellate Tribunal will not to discount merely because, in the

abstract, a claim can be pursued either way.

42. We would only add, that we do not read Section 33(1A) as requiring the

Adjudicating Authority, in every case, to restore the CIRP wherever the CoC

applies nor do we suggest that the mere theoretical possibility of an improved

outcome will always suffice. What we hold is that a bare, undifferentiated

statement that a monetary claim can proceed in liquidation also, without any

comparative assessment of realisable value, timelines, cost, and the market

response cannot, without more, constitute a sufficient reason to override a

unanimous, statutorily compliant CoC decision. We do not consider that

Parliament, in enacting Section 33(1A) with retrospective application to pending

CIRPs by way of the Explanation, intended the provision to be so readily rendered

nugatory.

43. For these reasons, we find that the logic of the Adjudicating Authority that

the arbitral claim can further proceed in the liquidation process also does not, on

the facts of this case, furnish a legally sound or sufficient basis for declining

restoration under Section 33(1A). We, however, would like to make it clear that

we are not laying any general law that the Adjudicating authority can never order

for liquidation despite the COC contrary recommendations. We reiterate that all

this will depend upon the facts of each case and prevailing circumstances. In the

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present case, we find sufficient reasoning as submitted by the appellant to be

convincing to support their case in the present appeal

44. ISSUE IV- Whether, and to what extent, the Impugned Order's

departure, without reference or explanation, from the Adjudicating

Authority's own Extension Order dated 02.06.2026, passed in the very same

proceeding, bears upon the sustainability of the Impugned Order?

45. We note that on 02.06.2026, in this very proceeding, the Adjudicating

Authority allowed a 60-day extension of the CIRP period, recording in terms that

there exist exceptional circumstances warranting for the extension as prayed for

by the Applicant in this Application so as to avoid Liquidation, which can be

considered as last resort and enable the Successful Resolution of the Corporate

Debtor in line with the objectives of the Code. That finding rested on the same

arbitral award, the same ongoing settlement engagement with PWD, and the same

underlying commercial rationale namely, that a genuine, live prospect of

resolution justified a further extension in preference to allowing the process to

lapse into liquidation.

46. In this background, it is taken into consideration that in around seven

weeks later, on materially the same factual matrix, save that the facts had, if

anything, moved further in favour of continued resolution, in that the CoC had by

then, unanimously, rejected liquidation and approved restoration The Impugned

Order reached the opposite conclusion, without any reference whatsoever to the

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Extension Order or to the last resort principle it had itself applied few weeks

earlier.

47. We do not suggest that an Adjudicating Authority is bound, as a matter of

res judicata or issue estoppel, to reach the same conclusion at a later stage of the

same CIRP merely because it reached a particular conclusion earlier. We do not

overlook that the Extension Order was passed under Section 12(2) of the Code,

in the context of an ongoing process with resolution plans still under

consideration, whereas the Impugned Order arose under Section 33(1A), after the

CIRP period had fully run its course. It is also noted that the fresh restoration was

being sought at a materially different statutory stage, entailing a materially

different statutory test. To that extent, the two orders cannot be compared. What

is nonetheless required, as a matter of the reasoned, consistent exercise, is that

where an authority departs from a considered assessment it had itself earlier

recorded on substantially the same underlying facts , the value of the arbitral

award, the state of settlement discussions, and the applicability of the "liquidation

as last resort" principle , it should, at a minimum, advert to that earlier assessment

and explain why the same underlying facts no longer justify the same approach.

The complete silence of the Impugned Order on this score is not, by itself, an

independent ground for setting it aside but it is a significant indicator, when read

together with our findings on Points (II) and (III) above, of the absence of the

considered engagement with the record that the magnitude of the decision,

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overriding a unanimous CoC vote and consigning the Corporate Debtor to

liquidation, is called for.

48. ISSUE V- Whether the Impugned Order satisfies the standard of a

reasoned, speaking order, particularly where it overrides a unanimous

commercial decision of the CoC taken pursuant to a specific statutory

mechanism?

49. It is well settled that the Adjudicating Authority is required to record

reasons that are intelligible and demonstrate due application of mind to the

material on record as reasons are the heartbeats of every conclusion, and their

absence renders an order vulnerable. Measured against this standard, the entirety

of the Adjudicating Authority's reasoning for overriding the CoC's unanimous

resolution is contained within two paragraphs of the Impugned Order (paragraphs

15 and 16), which reads as under:

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Comp. App. (AT) (Ins.) No. 1745 of 2026

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50. In our considered view, these 2 paragraphs do not advert to the eleven

EOIs received against the original Form G, or what they demonstrate about the

Corporate Debtor's standing as a going-concern proposition independent of the

bare arbitral receivable; The fact, and manner, of the CoC's deliberation across

separate meetings over several months, including that liquidation was placed was

rejected by the CoC. The Adjudicating Authority's own Extension Order was not

discussed in the Impugned Order and no comparative assessment of realisable

value between the resolution and liquidation routes was done. The Impugned

Order rests instead on the proposition that the claim can proceed in either i.e.

Resolution or Liquidation. We find, accordingly, that the reasoning recorded in

the Impugned Order is disproportionately brief and insufficiently engaged with

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the record, having regard to the magnitude of what it overrides, and does not meet

the standard of a reasoned order expected of a quasi-judicial authority in the

circumstances of this case.

51. ISSUE VI- What relief follows?

52. On a cumulative consideration of the foregoing, we find that the Impugned

Order cannot be sustained which it overrides a unanimous, CoC decision without

any cogent reasons and merely on a consideration that the monetisation of

unabsorbed losses which was unpleaded, unexplained, and insufficiently

supported on the record, could perhaps be misutilised. On a further consideration

that the claim can equally be pursued in liquidation that does not engage with the

comparative value-maximisation inquiry central to the object of Section 33(1A).

53. Before concluding, we would like to reiterate that each case is required to

be dealt based on its own facts and circumstances. It is also reiterated that

liquidation is the last resort as it results in the corporate death of the corporate

entity. However, we need to keep in mind that prolonged CIRP extensions or

restoration, as the case may be, without any likely resolution of the corporate

debtor, does not also do any good to the creditors and it in this background, the

parliament has passed 2026 amendment, giving sufficient discretionary powers

to the adjudicating authority to decide on the issue of liquidation. If the facts of

any particular case warrants that liquidation is the only remedy or the whole

process seem to be vitiated based on the circumstance of the particular case, the

adjudicating authority will be within rights to determine and order for liquidation

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of the corporate debtor, despite any contrary recommendations of the COC, using

discretion provided in the recently amendments, we discussed earlier. However,

we find sufficient merit in the submissions of the appellant in the present case and

simultaneously, we do not find sufficient reasoning in the impugned order

justifying liquidation in the present case at this stage

54. We find sufficient merit in the appeal. The Appeal accordingly succeeds,

and the Impugned Order dated 23.07.2026 is set aside. All the parties are directed

to appear before the Adjudicating Authority on 26th October, 2026. The

Adjudicating Authority shall process the original petition in accordance with law.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Naresh Salecha] Member (Technical)

Sim Chinmayee Sinha

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