Puro Natural Sugars Jv vs Shree Warana Sahakari Bank Ltd. & Ors. & ...

[Arising out of order dated 25.04.2025 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court - V) in I.A No.4484 of 2024 in CP (IB) No.1340/MB/2020]

IN THE MATTER OF: Puro Natural Sugars JV ...Appellant Versus Shree Warana Sahakari Bank Ltd. & Ors. ...Respondents

Present: For Appellant : Mr. Krishnendu Datta, Sr. Advocate with Mr. Ramchandra Madan, Mr. Tushar Nigam, Mr. Himanshu Yadav, Ms. Alina Merin Mathew and Mr. Harshit Chaudhary, Advocates.

For Respondents : Mr. Abhijeet Sinha, Sr. Advocate with Mr. Ayush Pratap Singh and Mr. Udayraj Patwardhan, Advocates for R-1 & R-2.

Mr. Udayraj Patwardhan and Ms. Shreya, Advocates for R-3, R-5 & R-6.

JUDGMENT

ASHOK BHUSHAN, J.

This appeal by a Successful Resolution Applicant (SRA) has been filed

challenging only the observations in paragraphs 55 to 57 of the impugned

judgment dated 25.04.2025 passed by the adjudicating authority (National

Company Law Tribunal, Mumbai Bench, Court - V) in I.A. No.4484/2024.

The I.A. 4484/2024 filed by the appellant - SRA, has been allowed by the

impugned order, however, by allowing the application, certain observations in paragraphs 55 to 57 have been made, aggrieved by which observations, this

appeal has been filed.

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

are:

i. The corporate debtor, Shivaji Cane Processors Limited an MSME was

put to Corporate Insolvency Resolution Process (CIRP), on an

application by ASREC (India) Ltd. vide order dated 18.02.2021.

ii. The corporate debtor was sanctioned a consortium loan amounting to

Rs.18,20,00,000/- under which the Respondent No. 1 - Shree Warana

Sahakari Bank Ltd. has advanced the loan of Rs. 6,20,00,000/- vide

sanction letter dated 23.01.2017 and Respondent No. 2 - Kolhapur

Urban Co-operative Bank Ltd. haD advanced the loan of Rs.

6,00,00,000/- vide sanction letter dated 11.01.2017.

iii. The corporate debtor to secure the loan of respondents No. 1 & 2 as a

security has executed Mortgage Deed, third-party guarantees and

guarantees by personal guarantors.

iv. On initiation of CIRP against the corporate debtor, Respondent No. 1

filed a claim under Form-C dated 25.02.2021 (revised on 05.03.2021

for total amount of Rs. 8,94,62,429/-). The respondent No. 2 filed a

claim in Form-C dated 25.02.2021 for an amount of Rs.8,65,70,898/-.

Comp. App. (AT) (Ins.) No. 1003 of 2025 2 of 22 v. Pursuant to invitation of Expression of Interest (EoI), the appellant -

Puro Natural Sugars JV a joint venture between three entities

submitted their resolution plan.

vi. Committee of Creditors (CoC) was constituted by the Resolution

Professional (RP) in which committee, the respondent No. 1 - Shree

Warana Sahakari Bank Ltd. was allocated 11.13% vote shares,

whereas, Respondent No. 2 - Kolhapur Urban Co-operative Bank Ltd.

was allocated 10.84% vote shares. The CoC vide its resolution

27.07.2021 approved the resolution plan submitted by the appellant

with 78.03% vote shares. The respondents No. 1 & 2 dissented and

were treated as dissenting financial creditors. I.A. No. 2156/2021 filed

by the RP for approval of resolution plan.

vii. The adjudicating authority vide its order dated 01.05.2023 rejected the

application filed by the RP on the ground that resolution plan seeks to

extinguish the personal guarantee and securities without the consent

of the dissenting financial creditors.

viii. Aggrieved by the order dated 01.05.2023, the Comp. App. (AT) (Ins.) No.

661-663/2023 was filed in this Tribunal by the appellant, Puro Natural

Sugars JV and Comp. App. (AT) (Ins.) No. 651/2023 was filed by the RP

and Comp. App. (AT) (Ins.) No. 1005/2023 was filed by the Suspended

Director of the corporate debtor challenging the order dated

01.05.2023. This Tribunal vide its judgment and order dated

24.11.2023 allowed all the appeals. Resolution plan submitted by Puro

Comp. App. (AT) (Ins.) No. 1003 of 2025 3 of 22 Natural Sugars JV was approved. Challenging the order of this

Tribunal dated 24.11.2023, respondents No. 1 & 2 filed an appeal

before the Hon'ble Supreme Court. Respondent No. 1 preferred the

appeal being Civil Appeal No. 3965-3969/2024 before the Hon'ble

Supreme Court. The Hon'ble Supreme Court vide order dated

11.03.2024 dismissed the appeal filed by respondent No. 1.

ix. Resolution plan outlines payment of Rs.22,48,71,434/- in two portions.

One portion adjusted towards the debt and balance assigned to an

entity nominated by the Resolution Applicant (RA) for an aggregate

consideration of Rs.2,00,00,000/- under the resolution plan.

x. The respondents No. 1 & 2 were made their full payment, however,

despite receiving the payment under the plan, respondents No. 1 & 2

retained possession of the assets of the guarantors, continued recovery

proceedings against the guarantors, and also raised demands upon the

corporate debtor.

xi. The appellant filed an I.A. being I.A. No. 4484/2024 in August 2024

directing to respondent No.1 to forthwith implement clauses of the

resolution plan and further restrain the respondent for taking any steps

of recovery or enforcement of debt. Direction was also sought to refer

the matter to IBBI for filing a complaint against the respondents No. 1

& 6 under Section 236 of the Insolvency and Bankruptcy Code, 2016

(for short the Code or the IBC) for the offence of under Section 74(3) of

the Code.

Comp. App. (AT) (Ins.) No. 1003 of 2025 4 of 22 xii. In the application, reply was filed by respondent Nos. 1 & 2 opposing

the prayers made in the application. The adjudicating authority after

hearing the parties by impugned order, allowed the I.A. No. 4484/2024

and held that approved resolution plan validly extinguishes the rights

of dissenting financial creditor against the personal guarantors and

further the action of the respondents in continuing the recovery against

the guarantors is illegal and unsustainable. The adjudicating authority

by making said observation in paragraph 58 has allowed the

application. In paragraphs 58 & 59 of the judgment, following has been

held:

"58. In view of the above findings, the Tribunal concludes that the approved Resolution Plan validly extinguishes the rights of dissenting financial creditors against the personal guarantors. The action of the Respondents in continuing recovery against the guarantors is illegal and unsustainable.

59. The above IA No 4484 of 2024 is allowed and Disposed off."

xiii. The adjudicating authority, however in the same impugned order, made

following observations in paragraphs 55 to 57:

"55. It is observed that the as per the letter personal properties of the guarantors located at:

Mouje Chikhali, Taluka Shirala;

Mouje Shirala, Taluka Shirala; and Mouje Sone, Taluka Walva, District Sangli, were neither mentioned nor secured under the aforesaid mortgage deed. These personal properties were attached by the Bank under Section 156 of the Maharashtra Co-operative Societies Act, 1960, read with Rule 107 of the MCS Rules, pursuant to an award passed under Section 101 of the MCS Act. Comp. App. (AT) (Ins.) No. 1003 of 2025

5 of 22

56. Therefore, this Tribunal clarifies that only those assets of the erstwhile promoters, directors, and guarantors which were given as guarantee or security for the Corporate Debtor and are specifically addressed in the Resolution Plan shall stand released. The personal properties which were not subjected to any such mortgage or security arrangement in favour of the lenders of the Corporate Debtor shall not be deemed to be released from encumbrance or attachment, and shall remain unaffected by the approval of the Resolution Plan.

57. The liabilities of personal guarantors, being independent, are not extinguished by the approval of the Resolution Plan unless specifically stated. It is further observed that the Resolution Plan does not provide any specification or identification of properties. However, it contains a general clause{(C-13(7)) stating that all encumbrances, security interests, liens and/or attachments (including those under applicable laws) over the assets of the erstwhile promoters, directors and guarantors of the Corporate Debtor, given as guarantee or security, shall be irrevocably released. Accordingly, only such properties which were mortgaged or otherwise charged in favour of the lenders of the Corporate Debtor, and thereby fall within the scope of the Resolution Plan, shall be eligible for such release."

xiv. The appellant aggrieved by the observations made by the adjudicating

authority in paragraphs 55 to 57 has made following prayers in the

appeal, which is as follows:

"a) This Hon'ble Tribunal may be pleased to allow the present Appeal and set aside the observations in paragraph nos. 55 - 57 of the Impugned Order dated 25th April 2025 passed by the Hon'ble National Company Law Tribunal Bench, in I.A. No. 4484 of 2024 (Ex. A herein) in so far as the restrict the scope of extinguishment of personal guarantees only to assets which were mortgaged against the debts of the Corporate Debtor.

b) Pending the hearing and final disposal of the present Appeal, this Hon'ble Tribunal may be pleased to stay the effect and operation of paragraph nos. 55-57 of the

Comp. App. (AT) (Ins.) No. 1003 of 2025 6 of 22 Impugned Order dated 25th April 2025 passed by the Hon'ble National Company Law Tribunal Bench, in I.A. No. 748 of 2023 (Ex. A herein).

c) For such other reliefs as this Hon'ble Tribunal deems fit in the facts of the present matter.

d) For costs."

3. We have heard learned Sr. counsel Mr. Krishnendu Dutta along with

Mr. Ram Chandra Madan appearing for the appellants. Learned Sr. counsel

Mr. Abhijeet Sinha has appeared for respondents No. 1 & 2. Learned counsel

Mr. Uday Raj Patwardhan, PCA has appeared for Respondents No. 3, 5 & 6.

4. Learned counsel for the appellant in support of the appeal submits that

resolution plan submitted by the appellant clearly contemplated

extinguishment of all encumbrances created including securities of personal

guarantors. The dissenting financial creditors who were opposed to

extinguishment of securities of personal guarantor had objected to the

resolution plan and on their objection, the resolution plan was rejected by the

adjudicating authority on 01.05.2023 against which, company appeal was

filed in this Tribunal by SRA, RP and suspended directors which appeals were

allowed by this Tribunal holding that resolution plan can validly extinguish

the third-party securities and securities given by the personal guarantors and

the plan was approved. Respondent No. 1 unsuccessfully challenged the said

order before the Hon'ble Supreme Court which also dismissed the appeal by

respondent No. 1. The resolution plan which specifically provided for

extinguishment of all securities including securities given by personal

guarantors, it is not open for respondent Nos. 1 & 2 to contend that they shall

not release the securities and can proceed against the personal guarantors to

Comp. App. (AT) (Ins.) No. 1003 of 2025 7 of 22 realise their dues. Act of respondents No. 1 & 2 after approval of the

resolution plan which was affirmed by the Hon'ble Supreme Court to persist

with their objection is in clear breach of the resolution plan. It is submitted

that all objections which were raised by respondents No. 1 & 2 objecting to

the clauses of resolution plan extinguishing personal securities were rejected

when this Tribunal allowed the appeal. It is not open for the respondents No.

1 & 2 to raise same objections and object and not release the securities

including the securities given by the personal guarantors. The adjudicating

authority although allowed the application filed by the SRA but has made

observations in paragraphs 55 to 57 which are unsustainable. Observation

of the adjudicating authority that personal properties of the guarantors which

were neither mentioned nor secured under the mortgage are not included.

Clarification issued by the adjudicating authority that only those assets of the

erstwhile promoters, directors, and guarantors which were given as guarantee

or security for the corporate debtor and are specifically addressed shall stand

released. Personal properties which were not subjected to any such mortgage

or securities shall not deem to be released from encumbrances or attachment.

It is submitted when the entire debt of the respondent Nos. 1 & 2 has been

resolved in the insolvency resolution process, bank has no authority or

jurisdiction to keep any personal property of the promoters, directors and

guarantors. The attachment which is claimed by respondents No. 1 & 2 are

attachment for recovering their dues and their dues having already been

settled, the attachment cannot continue in law and entire action of the

respondent is in breach of resolution plan which is binding on respondents

Comp. App. (AT) (Ins.) No. 1003 of 2025 8 of 22 No. 1 & 2 by virtue of Section 31 of the IBC. It is submitted that in spite of

the approval of the resolution plan and dismissal of the appeal filed by

respondent No. 1 even the assets of the corporate debtor was not released and

it was only on after order dated 12.11.2025 passed by this Tribunal that the

respondents No. 1 & 2 has released the assets of the corporate debtor. The

action of the respondent is wholly contrary to the approved resolution plan

and the respondents are liable to be proceeded for prosecution under Section

74 of the IBC.

5. Learned Sr. counsel Mr. Abhijeet Sinha appearing for the respondents

No. 1 & 2 refuting the submissions of the appellant submits that assets of the

corporate debtor has already been released. It is submitted that assets of the

promoters, guarantors and personal guarantors cannot be included in the

plan for resolution of the corporate debtor. The dissenting financial creditors

are entitled for third-party securities interest. It is submitted that respondent

No. 1 in its claim submitted in Form-C had not included the third-party assets

and respondents No. 1 & 2 are entitled to recover their dues from third-party

assets which were not part of any securities given by third-party assets. It is

submitted that resolution plan seeks assignment of personal guarantees and

third-party securities of secured financial creditor for a meagre sum of Rs.

2,00,00,000/-, despite residual debt exceeding Rs.29.48 crores and estimated

valuation of personal guarantee and third-party securities being Rs.19.81

crores. It is submitted that appellant is wrongly portraying that it has made

adequate payment of consideration for release/extinguishment of securities,

personal guarantees and third-party mortgages to dissenting financial Comp. App. (AT) (Ins.) No. 1003 of 2025 9 of 22 creditor. It is submitted that the dissenting creditor cannot be worse of than

in liquidation. CIRP proceedings cannot be used for recovery of ex-promoter

assets.

6. Learned counsel for respondents No. 3, 5 & 6 has also adopted the

submissions advanced by learned Sr. counsel Mr. Abhijeet Sinha.

7. We have considered the submissions of the counsel for the parties and

perused the records.

8. For appreciating the submissions advanced by the counsel for the

parties, it is relevant to first notice the certain clauses of resolution plan

submitted by the appellant which has ultimately been approved by this

Tribunal and challenged to the said approval has also been negated by the

Hon'ble Supreme Court by dismissing the appeal filed by the respondent No.

1. Paragraph C deals with the resolution plan. Paragraph C-3 (II) deals with

the terms of payment of secured financial creditors. It is useful to notice

Paragraph C-3(II)(g) & (h) which is as follows:

"C-3: PROVISION FOR SECURED FINANCIAL CREDITORS OF CORPORATE DEBTOR II. THE TERMS OF PAYMENT OF SECURED FINANCIAL CREDITORS:

g. On approval of the Resolution Plan the entire debt of the Secured Financial Creditor will be settled and on assignment of debt at the end of four years there will be no liability remaining.

h. Sharing of the secured creditor of the aggregate amount is as follows.

Sr. Particulars Sharing Resolution No. Ratio (%) Amount Rs.

Comp. App. (AT) (Ins.) No. 1003 of 2025 10 of 22 1 ASREC Limited 48.55% 123309495 2 Mahindra & 17.71% 44970529 Mahindra Financial Services Ltd. 3 Shri Warna 17.09% 43415371 Sahakari Bank Ltd. 4 The Kolhapur 16.65% 42296889 Urban Co-op Bank Ltd. Total 100.00% 253992284"

9. Paragraph C-3 (IV) deals with release of release of security on the assets

of corporate debtor/other security charged to secure the financial debt.

Paragraph C-13 deals with extinguishment of claims/rights/litigation. It is

useful to notice sub-Clause (2), (3), (7) & (14), which are as follows:

"C-13: EXTINGUISHMENT OF CLAIMS /RIGHTS /LITIGATION:

2. Save and except specifically dealt with under this Resolution Plan, no other payments or settlements (of any kind) shall be made to any other Person in respect of claims filed under the CIRP (including, for the avoidance of doubt, any unverified portion of their claims) and all claims against the Corporate Debtor or Suspended Directors& Guarantors of Corporate Debtor along with any related legal proceedings, including criminal proceedings and other penal proceedings, shall stand irrevocably and unconditionally abated, settled and extinguished in perpetuity.

3. The payment to Persons contemplated in this Resolution Plan shall be the Corporate Debtor's and Resolution Applicant's full and final performance and satisfaction of all its obligations to such Persons and all Claims (including, for the avoidance of doubt, any unverified portion of their Claims) of such Persons against the Corporate Debtor or Suspended Directors& Guarantors of Corporate Debtor and Affiliates shall

Comp. App. (AT) (Ins.) No. 1003 of 2025 11 of 22 stand irrevocably and unconditionally settled and extinguished in perpetuity.

7. All encumbrances, security interest, liens and/or attachments (including pursuant to applicable Law) created or exists over the assets of the erstwhile promoters, directors and Guarantors of Corporate Debtor (charged or not charged with the lenders) shall be irrevocably released and all enforcement commenced by any person over any of the assets of the erstwhile promoters, directors and Guarantors of Corporate Debtor charged with the Financial Creditors to secure the debt of Corporate Debtor shall stand released and reversed without the requirement of any further deed or action on part of the Resolution Applicant or the erstwhile promoters, directors and Guarantors of Corporate Debtor.

14. The past payment obligation to secured creditor, unsecured creditors, employees dues, government dues, workmen dues, equity shareholders and/or any type of other liabilities shall stand revised as per this Resolution Plan and these stakeholders would not be eligible to recourse in any form for the past commitment in terms of the value & time."

10. The above clauses clearly contemplated that all claims against the

corporate debtor, suspended directors and guarantors of corporate debtor

along with any related legal proceedings shall stand extinguished and all

encumbrances, security interest, or attachments created over the assets of

the erstwhile promoters, directors and guarantors of corporate debtor shall

be irrevocably released. We repeat Clause (7) again to put emphasis:

"7. All encumbrances, security interest, liens and/or attachments (including pursuant to applicable Law) created or exists over the assets of the erstwhile promoters, directors and Guarantors of Corporate Debtor (charged or not charged with the lenders) shall be irrevocably released and all enforcement commenced by any person over any of the assets of the erstwhile promoters, directors and Guarantors of Corporate Debtor charged with the Financial

Comp. App. (AT) (Ins.) No. 1003 of 2025 12 of 22 Creditors to secure the debt of Corporate Debtor shall stand released and reversed without the requirement of any further deed or action on part of the Resolution Applicant or the erstwhile promoters, directors and Guarantors of Corporate Debtor.

(Emphasis in bold supplied)"

11. It is relevant to notice that the resolution plan was initially rejected by

the adjudicating authority vide order dated 01.05.2023 and reason for

rejection of the resolution plan was that resolution plan extinguishes

extinguishment of rights of dissenting creditor to proceed against the personal

guarantors. The order of the adjudicating authority dated 01.05.2023 came

to be set aside when Comp. App. (AT) (Ins.) No. 661-663/2023 came to be

allowed. Judgment of this Tribunal dated 24.11.2023 is brought on the

record as Annexure A-4 in the appeal, where this Tribunal after noticing the

clauses of the plan regarding securities and personal guarantees given to the

financial creditor including dissenting financial creditor approved the said

clauses. It is useful to notice paragraph 16 of the judgment of this Tribunal,

which is as follows:

"16. The present is a case where CoC deliberated over the issue and on such deliberation and inputs, the Successful Resolution Applicant submitted revised Resolution Plan and the Resolution Plan dealt with security interest and the personal guarantee also. We, thus, answer Question No.(I) holding that Resolution Plan in question has consciously dealt with securities and personal guarantees given to the Financial Creditors including the dissenting Financial Creditors and the said clauses of the Resolution Plan do not contravene any provisions of Section 30, sub-section (2) as well as CIRP Regulations, 2016. The view of the Adjudicating Authority that Resolution Plan is contrary

Comp. App. (AT) (Ins.) No. 1003 of 2025 13 of 22 to provisions of Section 30, sub-section (2) is unsustainable and deserved to be set-aside."

12. As noted above, against the order of this Tribunal, the appeal was filed

in the Hon'ble Supreme Court by respondent No. 1, the dissenting financial

creditor which appeal came to be dismissed on 11.03.2024.

13. The clauses of resolution plan as noted above thus attained finality and

cannot be questioned. After the approval of the resolution plan, dismissal of

the appeal by the Hon'ble Supreme Court when the respondent No. 1 & 2

dissenting financial creditor did not release the security on the assets of the

corporate debtor, personal guarantors and third-party securities, the

application was filed by the SRA which has come to be allowed. The

adjudicating authority vide its order passed on 25.04.2025 as noted above

has already allowed the application i.e., accepting all the prayers made in the

application. As noted above, the only limited challenge raised in this appeal

is to the observation made in paragraphs 55 to 57 as quoted above. The

submission which has been much pressed by the counsel for the respondents

No. 1 & 2 is that third-party securities were even not part of claim form i.e.,

Form-C submitted by respondents No. 1 & 2. Third-party securities which

were taken by the bank cannot be said to be subject matter of the appeal.

14. Learned counsel for the respondent in the additional affidavit filed has

given details of property description referred to in Form-C. It is contended

that several assets of the personal guarantors which were not referred in

Form-C although referred in Comp. App. (AT) (Ins.) Nos. 661-663/2023 and

Comp. App. (AT) (Ins.) No. 1003/2025 where attachment under Section 101

Comp. App. (AT) (Ins.) No. 1003 of 2025 14 of 22 of the Maharashtra Cooperative Societies Act, 1960 and cannot be subject

matter of the CIRP process. The submission of the respondents No. 1 & 2 is

that those third-party assets which have been attached by respondents No. 1

& 2 under Section 101 of the Maharashtra Cooperative Societies Act, 1960

are not part of the CIRP and can be retained by the respondents No. 1 & 2 for

realisation of its debts from the assets of the personal guarantors and the

third-party guarantors. It is submitted that several assets which are attached

under Section 101 of the Maharashtra Cooperative Societies Act, 1960 were

not part of the claim form, hence the bank respondents No. 1 & 2 can still

proceed to recover its dues.

15. We already noticed the provisions of resolution plan specially paragraph

C-13 which dealt with extinguishment of claims/rights/litigation. Clause (7)

which we have noticed above which clearly provided all encumbrances,

security interest, liens and/or attachments (including pursuant to applicable

law) created or exists over the assets of the erstwhile promoters, directors and

guarantors of Corporate Debtor shall be irrevocably released and all

enforcement commenced by any person over any of the assets of the erstwhile

promoters, directors and guarantors of corporate debtor charged with the

financial creditors to secure the debt of corporate debtor shall stand released.

The above clause is couched in a very wide term which not only release all

encumbrances, security interest in the asset of erstwhile promoters, directors

and guarantors of the corporate debtor but also releases all attachments.

Comp. App. (AT) (Ins.) No. 1003 of 2025 15 of 22

16. Learned counsel for the respondent has relied on Section 101 of the

Maharashtra Cooperative Societies Act, 1960 which provides as follows:

"101. [Recovery of certain sums and arrears due to certain societies as arrears of land revenue.] [This marginal note was substituted by Maharashtra Act No. 16 of 2013 dated 13-8-2013, Section 64(c), (w.e.f. 14-2-2013).]

- [(1) Notwithstanding anything contained in sections 91, 93 and 98, on an application made by a resource society undertaking the financing of crop and seasonal finance as defined under the Bombay Agricultural Debtors Relief Act, 1947, [or advancing loans for other agricultural purposes repayable during a period of not less than eighteen months and not more than five years] [Sub-section (i) was substituted for the original by Maharashtra 27 of 1969, Section 17(a).] for the recovery of arrears of any sum advanced by it to any of its members on account of the financing of crop or seasonal finance [or for other agricultural purposes as aforesaid] [This portion was deemed to have been inserted on 1st July 1971 by Maharashtra 44 of 1973, Section 3(b).] or by a crop-protection society for the recovery of the arrears of the initial cost or of any contribution for obtaining services required for crop- protection society or for the recovery of the arrears of the initial cost or of any contribution for obtaining services required for crop protection which may be due from its members or other owners of lands included in the proposal (who may have refused to become members) or by a lift irrigation society for the recovery of arrears of any subscription due from its members for obtaining services required for providing water supply to them, [or by a Tulaka or Block level village artisans multipurpose society advancing loans and arranging, for cash credit facilities for artisans for the recovery of arrears of its dues,] [This portion was inserted by Maharashtra 36 of 1975, Section 8.] [or [[***] [This portion was Inserted by Maharashtra 20 of 1986, Section 52(a).], or by a co-operative dairy society advancing loans for the recovery of arrears of any, sum advanced by it to any of its-members or by an urban co-operative bank for the recovery of arrears of its dues, [or any sum advanced by the District Central Co- operative Bank to its individual members or by non-

Comp. App. (AT) (Ins.) No. 1003 of 2025 16 of 22 agricultural co-operative credit society for the recovery of the arrears, of its dues] [These words were inserted by Maharashtra Act No. 16 of 2013 dated 13-8-2013, Section 64(a)(ii), (w.e.f. 14-2-2013).] or by salary- earners co-operative society for the recovery of arrears of its dues, or by a fisheries co-operative society for the recovery of arrears of its dues,] [or by any such society or class of societies, as the state Government may from time to time, notify in the Official Gazette, for the recovery of any sum advanced to, or any subscription or any other amount due from, the members of the society or class of societies so not notified;] [This portion was substituted by Maharashtra 31 of 1990, Section 2.] and [on the society concerned furnishing a statement of accounts and any other documents as may be prescribed] [These words were substituted for the words 'on the society concerned furnishing a statement of accounts' by Maharashtra Act No. 16 of 2013 dated 13-8-2013, Section 64(a)(iii), (w.e.f. 14-2- 2013).] in respect of the arrears, [the Registrar may, after making the inquiry in such manner as may be prescribed, grant a certificate for the recovery of the amount stated therein to be due as arrears. The application for grant of such certificate shall be made in such form and by following such procedure, accompanied by such fees and documents as may be prescribed] [This portion was substituted by Maharashtra 20 of 2006, Section 2(9), w.e.f. 10-5-

2006.] [Explanation I] [This Explanation was renumbered as Explanation i by Maharashtra Act No. 16 of 2013 dated 13-8-2013, Section 64(a)(iv), (w.e.f. 14-2-2013).]. - For the purposes of this sub-section, the expression 'other agricultural purposes' includes dairy, pisciculture and poultry.] [***] [Deleted 'Explanation II - For the purposes of this sub-section the expression 'maintenance and service charges' means such charges as are specified in the by-laws of the concerned co-operative housing society.' by Maharashtra Act No. 23 of 2019, dated 23.7.2019.] (2)Where the Registrar is satisfied that [the concerned society has failed to take action under the foregoing sub-section in respect of any amount due as arrears,] [This portion was substituted for the original by Maharashtra 27 of 1969, Section 17(b).] the

Comp. App. (AT) (Ins.) No. 1003 of 2025 17 of 22 Registrar may, of his motion, after making such inquiries [as may be prescribed] [These words were substituted for the words 'as he deems fit' by Maharashtra 20 of 2006, Section 2(b), w.e.f. 10-5- 2005.], grant a certificate for the recovery of the amount stated therein to be due as arrears and such a certificate shall be deemed to have been issued as if on an application made by the society concerned.

(3)A certificate granted by the Registrar under sub- section (1) or (2) shall be final and a conclusive proof of the arrears stated to be due therein, and the same shall be recoverable according to the law for the time being in force [as arrears of land revenue. A revision shall lie against such order or grant of certificate, in the manner laid down under section 154 and such certificate shall not be liable to be questioned in any court] [These words were substituted for the words 'for the recovery of land revenue' by Maharashtra Act No. 16 of 2013 dated 13-8-2013, Section 64(b), (w.e.f. 14- 2-2013).].

(4)It shall be lawful for the Collector and the Registrar to take precautionary measures authorised by sections 140 to 144 of the [Bombay Land Revenue Code, 1879] [See now the Maharashtra Land Revenue Code, 1966 (Maharashtra XLI of 1966).] or any law or provision corresponding thereto for the time being in force, until the arrears due to [the concerned society] [These words were substituted for the words 'the resource society' by 27 of 1969, Section 17(c).], together with interest and any incidental charges incurred in the recovery of such arrears, are paid, or security for payment of such arrears is furnished to the satisfaction of the Registrar."

17. Section 101 is the provision of recovery of certain sums and arrears due

to certain societies as arrears of land revenue. When the enforcement action

has been initiated by respondent Nos. 1 & 2 for recovery and any asset has

been attached the said attachment is only with recovery of dues of the

respondents No. 1 & 2 consequent to the financial credit extended to the

corporate debtor. When entire debt of respondents No. 1 & 2 has been

Comp. App. (AT) (Ins.) No. 1003 of 2025 18 of 22 resolved by approval of the resolution plan in the CIRP of the corporate debtor,

it is not open for respondents No. 1 & 2 to submit that it will keep the assets

attached under Section 101 of the Maharashtra Cooperative Societies Act,

1960, for recovering its dues. When resolution plan is approved and all debt

of the respondents No. 1 & 2 which was filed as a claim in CIRP has been

resolved and dealt with in the plan, the submission on behalf of the

respondents No. 1 & 2 that is has still some amount due to be recovered is

fallacious and contrary of the scheme of the IBC. We thus do not find any

substance in the submission of learned counsel appearing on behalf of

respondents No. 1 & 2 that respondents No. 1 & 2 can keep third-party

securities and securities of personal guarantors and promoters which were

not covered by any mortgage and which were under attachment to recover the

dues of respondent Nos. 1 & 2.

18. It is relevant to notice that the respondents No. 1 & 2 who are dissenting

financial creditor has been in very beginning after approval of the resolution

plan has been objected for extinguishing of their securities against the

personal guarantors and promoters which objections were overruled and did

not find favour and the issues have already been finalized between the parties

vide judgment of this Tribunal dated 24.11.2023 in Comp. App. (AT) (Ins.) No.

661-663/2023 which order has been affirmed by the Hon'ble Supreme Court.

It is not open for the respondents No. 1 & 2 to raise the same submissions

again and again to contend that it is entitled to retain third-parties securities

and assets of the promoters to recover its dues. The action of respondents

Comp. App. (AT) (Ins.) No. 1003 of 2025 19 of 22 No. 1 & 2 is clearly contrary to the whole IBC proceedings and need to be

deprecated.

19. Now coming to the observations made by the adjudicating authority in

paragraphs 55 to 57, the adjudicating authority committed error in observing

that liabilities of personal guarantors being independent are not extinguished

by approval of the resolution plan unless it is created. Adjudicating authority

has further observed that resolution plan does not provide any specification

or identification of the properties although general Clause C-13(7) has been

noted. Clause C-13(7) is a clause which extinguishes all encumbrances of the

personal guarantors and promoters. It is not open for the adjudicating

authority to observe that personal properties of the guarantors which were

attached under Maharashtra Cooperative Societies Act, 1960, pursuant to

award has to be kept out. The enforcement action under Maharashtra

Cooperative Societies Act, 1960 by the respondents No. 1 & 2 to recover its

dues and attachment pursuant thereof shall stand released by virtue of

Clause C-13(7) and it is not open for the respondents No. 1 & 2 to continue

their recovery enforcement action relying on the attachments made. The

respondents No. 1 & 2 cannot rely on any attachment prior to in the CIRP

process and claimed that those attachments shall continue to entitle it to

recovery its dues.

20. The submission of the counsel for the respondents No. 1 & 2 that

meagre amount of Rs. 2,00,00,000/- was offered in the resolution plan for

securities under personal guarantee of promoters and guarantors whereas the

Comp. App. (AT) (Ins.) No. 1003 of 2025 20 of 22 value of the securities of the dissenting creditors was much more. When

amount was indicated in the plan of Rs.2,00,00,000/- for towards assignment

of all residual debts of the secured creditors which has been approved by the

CoC with requisite vote shares, it is not open for the dissenting financial

creditor to contend about amount being meagre or inadequate. It is not open

for the dissenting financial creditor to contend that amount paid under the

plan towards their personal securities and guarantees inadequate or meagre.

21. We do not find any substance in the submission of counsel for

respondents No. 1 & 2 to contend that in spite of the resolution plan having

been approved with the clauses as noted above the respondents No. 1 & 2 can

continue with their enforcement action against their third-party guarantees

and assets of the promoters and guarantors. Adjudicating authority by the

impugned order has allowed the application all prayers in the application as

noted above has to be treated to have been allowed. When one of the prayers

in the application was to restrain the respondents No. 1 & 2 from taking any

steps of recovery or enforcement for the debt which was due and payable by

corporate debtor and prayed for direction to respondents No. 1 & 2 to act in

any manner in contravention of the resolution plan, the respondents are

clearly bound by order passed by the adjudicating authority.

22. We may also notice that one of the prayers made in I.A. i.e., prayer (a)

was to refer the matter to IBBI for filing a complaint against respondents No.

1 & 2 under Section 236 of the Code for offence under Section 74(3) of the

Code. The said prayer has already been allowed.

Comp. App. (AT) (Ins.) No. 1003 of 2025 21 of 22

23. In view of the aforesaid discussions and conclusions, we allow the

appeal in following manner:

i. Prayers made in appeal for setting aside the observations made in

paragraphs 55 to 57 are allowed. Paragraphs 55 to 57 is deleted from

the impugned order. Rest of the order shall remain unaffected.

ii. That in event, the respondents do not release the entire assets of the

promoters, personal guarantors and third-parties, the adjudicating

authority shall forward the copy of the order to the IBBI, within 30

days from today. The adjudicating authority shall forward the copy

of the order for IBBI to consider for initiating prosecution against the

respondent in accordance with Section 74(3) of the IBC.

Parties shall bear their own costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

06th February, 2025

himanshu

Comp. App. (AT) (Ins.) No. 1003 of 2025 22 of 22