Central Bank of India Vs Worlds Window Exim Pvt. Ltd. (NCLT New Delhi)
Summary: The captioned petition was preferred by the Resolution Professional in respect of M/s Worlds Window Exim Pvt. Ltd. seeking approval of the Resolution Plan. Central Bank of India had initiated CIRP against the Corporate Debtor alleging default of Rs. 175,96,47,674/- as on 22.03.2024. Following admission of IB-108/PB/2025, the CIRP commenced and Dickey Special Situation Investment Trust, through its Investment Manager Dickey Asset Management Private Limited, submitted the Resolution Plan and emerged as the successful Resolution Applicant.
Worlds Window Exim Private Limited was incorporated on 19.01.2006. Although its business was stated as sale and purchase of goods, the Resolution Plan also recorded that the company had been incorporated as an asset-holding company of its group companies and was not operative. The Tribunal noted from the record that the Corporate Debtor had been incorporated only to hold a land bank. Its 99.9999% equity shares were held by Worlds Window Infrastructure and Logistics Pvt. Ltd., while 0.0001% shares were held by Mr. Sandesh, a nominee of Worlds Window Infrastructure & Logistics Pvt. Ltd.
The Corporate Debtor had no workers or employees. As on 31.07.2025, claims of the Financial Creditors aggregated to INR 9,97,44,98,649. Against these claims, the Resolution Plan proposed a total payment of only INR 7 crore as upfront payment. The Plan stated that the amount had been arrived at on the basis of the commercial evaluation undertaken by the Resolution Applicant after diligence and examination of the information memorandum.
The Tribunal further noted that the Form H certificate recorded the Fair Value of the Corporate Debtor at Rs. 21,30,53,919/- and its Liquidation Value at Rs. 9,42,25,758/-, whereas the Plan Value was only Rs. 7 crore.
Punjab National Bank, one of the Financial Creditors, did not vote in favour of the Resolution Plan and therefore emerged as a dissenting creditor. The Tribunal observed that while it may not interfere with valuation of the Corporate Debtor’s assets or reject a Resolution Plan merely because its value is below the liquidation value, a Plan value below liquidation value creates a specific issue concerning the amount payable to a dissenting secured Financial Creditor.
The Tribunal considered Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016, including Explanation 1, which requires distribution to dissenting Financial Creditors to be fair and equitable and provides that their payment cannot be less than the amount payable under Section 53(1) in liquidation. The Tribunal rejected the contention advanced on behalf of the Resolution Professional that distribution of Rs. 7 crore amongst secured Financial Creditors might nevertheless result in PNB receiving the amount available to it under Section 53. It held that such a situation would result in the amount payable to another secured creditor being contrary to Explanation 1 to Section 30(2).
Accordingly, the Tribunal held that the Resolution Plan was violative of Section 30(2)(b) of the Code and could not be approved.
The Tribunal also examined Regulation 38(3) of the IBBI (Resolution Process for Corporate Persons) Regulations, 2016, under which the Resolution Plan is expected to address the cause of default. It found from clause 2.14 of the Plan that the Resolution Applicant was not fully aware of the cause of default. The Plan proposed utilisation of the land securitised with lenders after settlement of their dues and stated that a viable business proposition would be attempted to generate positive returns. The Tribunal expressed its inability to appreciate how such a viable business proposition could be attempted when the Corporate Debtor itself had been created as an asset-holding company.
The Tribunal further observed that although creation of an asset-holding company may be legally permissible, the circumstances involving the financial facility availed by such an asset-holding company, assignment of debt by a public bank to an ARC, and a Resolution Plan offering an amount that did not provide the share which a secured Financial Creditor could receive in liquidation had to be viewed with suspicion.
The learned counsel representing the Suspended Promoters conceded the Plan. The Tribunal rejected the Resolution Plan for violation of Section 30(2)(b) of the Code as well as Regulation 39(3)(a) of the IBBI (Resolution Process for Corporate Persons) Regulations, 2016. In accordance with Section 33(1)(b), it directed liquidation of the Corporate Debtor and appointed Mr. Sandeep Chandna (IP), Registration No. IBBUIPA-002/IP-N00447/2017-2018/11237, as Liquidator.
The Liquidator was directed to issue a public announcement stating that the Corporate Debtor was in liquidation and to send a copy of the order to the authority with which the Corporate Debtor was registered. Subject to Section 52 of the Code, a moratorium was directed for the purposes referred to in clauses (a) and (c) of Section 14(1) read with Section 14(3).
The Tribunal further directed the Liquidator to discharge functions under Sections 35(1)(a) to (o), 36(1) and (2), and 37(1) and (3), read with the relevant provisions of the IBBI (Liquidation Process) Regulations, 2016. The Liquidator was not to invite fresh claims and was required to proceed in accordance with Chapters VI and VII of those Regulations read with Section 54 of the Code, while following the procedure under Regulations 21, 30A and 31.
The Liquidator was also directed to investigate the affairs of the Corporate Debtor and take legal steps, including filing and pursuing applications under Sections 43, 45, 50 and 66 of the Code, to disgorge the properties and assets of the Corporate Debtor for utilisation towards discharge of its debt.
The Tribunal specifically clarified that the ARC would not receive from the distributable amount any share exceeding the amount it had paid to Central Bank of India. Any excess amount payable to the assignee of the debt of Central Bank of India was to be paid to the assigner, Central Bank of India. The Committee of Creditors was directed to continue to remain operative and functional during liquidation in terms of Section 21(11) of the IBC.
FULL TEXT OF THE JUDGMENT/ORDER OF NATIONAL COMPANY LAW TRIBUNAL
The captioned petition has been preferred by the RP qua M/s Worlds Window Exim Pvt. Ltd., seeking approval of the Resolution Plan. It is Central Bank of India which initiated CIRP qua the CD alleging default in repayment of an amount of Rs. 175,96,47,674/- as on 22.03.2024. On admission of IB-108/PB/2025, the CIRP commenced and finally the RA viz. Dickey Special Situation Investment Trust through its investment Manager Dickey Asset Management Private Limited submitted its Resolution Plan and emerged successful (SRA). As is reflected in the plan, the CD viz. Worlds Window Exim Private Limited (WWEPL) was incorporated on 19.01.2006. As has been mentioned in the table given in the plan, the business of the CD was sales and purchase of goods. However, in the same table, it is also mentioned that the CD was incorporated as an asset holding company of its group companies and is not operative. The relevant excerpt of the table reads thus:-
2. It appears from the record that the CD was incorporated only to hold a land bank. Its 99.9999% equity shares were held by Worlds Window Infrastructure and Logistics Pvt. Ltd. and 0.0001% shares were held by one Mr. Sandesh (Nominee of Worlds Window Infrastructure & Logistics Pvt. Ltd.). The particulars of assets owned by the CD and its liabilities etc. are mentioned in clause 2.7 to 2.10 of the plan which reads thus:-
3. The CD had no workers and employees. As on 31.07.2025, the claim by the Financial Creditors was INR 9,97,44,98,649 (Indian Rupees Nine Hundred and Ninety Seven Crores Forty Four Lakhs Ninety Eight Thousand Six Hundred and Forty Nine only). Summary of claims of creditors as per the list of claims dated 31.07.2025 and Information Memorandum reads thus:-
4. When the amount claimed by Financial Creditors is Rs. 9,97,44,98,649, the Resolution Plan offered to pay only Rs. 7 Crores to be utilised for upfront payment. The relevant excerpt of the plan in this regard reads thus:-
“Accordingly, the total amount payable by the Resolution Applicant under this Resolution Plan is INR 7,00,00,000 (Rupees Seven Crores) to be utilised for payment of upfront payment (“Total Resolution Amount”). The Total Resolution Amount has been arrived at basis the commercial evaluation done by the Resolution Applicant in light of the diligence conducted by the Resolution Applicant and the information provided in the IM by the RP pursuant to which the following issues have been identified which subsists as on the date of this Resolution Plan”
5. It is seen from the certificate given by RP in the prescribed form viz. Form H, when Fair Value of CD is Rs. 21,30,53,919/- and its Liquidation Value is Rs. 9,42,25,758/-, the Plan Value is Rs. 7 Cr. only. The clauses 7A and 7B of the certificate reads thus:-
6. It is borne out of the record that one of the Financial Creditor viz. Punjab National Bank did not vote in favour of the plan, thus it emerges as dissenting creditor. It may be so that this Tribunal may not interfere with valuation of assets of CD nor can it nix the Resolution Plan on the ground that the plan value is less than liquidation value, but once the plan value is less than liquidation value, the share offered to dissenting secured Financial Creditor would be less than the amount to be paid to it in the event of liquidation of the CD under Section 53 of the Code. During the course of hearing, Mr. Abhishek, the Ld. Counsel for the RP tried to espouse that when Rs. 7 Cr. would be distributed amongst the secured Financial Creditors it may be so that the PNB will get the same amount which could be given to it in the event of liquidation of the CD under Section 53 of the Code. In such situation, the amount payable to other secured creditor would be in violation of explanation 1 to sub-section 2 of Section 30 of the Code. It is no longer res Integra that the explanation had be read as part of the statute. The Section 30(2) of the Code reads thus:-
“30. Submission of resolution plan.
…
(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan-
(a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the [payment] of other debts of the corporate debtor;
[(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than-
(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or
(ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53,
whichever is higher and provides for the payment of debts of Financial Creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor.
Explanation 1. For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors.
Explanation 2. For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor-
(i) where a resolution plan has not been approved or rejected by the Adjudicating Authority;
(ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or
(iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;]
(iv) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan;
(v) the implementation and supervision of the resolution plan;
(vi) does not contravene any of the provisions of the law for the time being in force;
(1) conforms to such other requirements as may be specified by the Board.
[Explanation. For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law]”
7. The Resolution Plan being violative of Section 30(2)(b) of IBC, 2016 cannot be approved and is liable to be rejected.
8. Additionally, when as per the provisions contained in Regulation 38(3) of IBBI (Resolution Process for Corporate Persons) Regulations, 2016, the Resolution Plan is expected to address the cause of default, we find from clause 2.14 of the plan that the Resolution Applicant is not even aware about the cause of default and it has intention to utilize the land securitized with lenders after settlement of their dues. The clause further indicate that a viable business proposition will be attended to generate positive returns. We are unable to appreciate that how and in what manner a viable business proposition will be attempted when CD in itself was created as an asset holding company. It may be legal to create an asset holding company, but availing the financial facility by an asset holding company and then assignment of debt by public bank to an ARC and then plan being offered for an amount which does not provide for share which could be received by secured Financial Creditor in case of liquidation lead to a situation, that has to be viewed with suspicion. The clause 2.14 of the plan reads thus:-
“2.14 Addressing for cause of default
Resolution Applicant is not fully aware about the cause of default. However, as per the financial statements annexed to the IM, the Resolution Applicant notes that the Corporate Debtor has been incurring losses and has no turnover. Further, the liabilities of the Corporate Debtor exceed its assets. Accordingly, the efforts will be made to utilize the land securitized with Lenders after settlement of their dues and a viable business propositions will be attempted to generate positive returns.”
9. The learned counsel who represented Suspended Promoters conceded the plan instantly. The Resolution Plan stands rejected being violative of Section 30(2)(b) of the Code as also that of Regulation 39(3)(a) of IBBI (Resolution Process for Corporate Persons) Regulations, 2016. In due deference to the provisions of Section 33(1)(b), we require the CD to be liquidated and appoint Mr. Sandeep Chandna (IP), Registration No. IBBUIPA-002/IP-N00447/2017-2018/ 11237, E-mail Id- [email protected] and Contact No. 9810768844, who has completed 20 assignments in total and is having one pending assignment as liquidator.
10. The liquidator shall issue a public announcement stating that the CD is in liquidation. He will also ensure that a copy of this order is sent to the authority with which the CD is registered. Subject to the provisions of Section 52 of the Code, there shall be a moratorium for the purposes referred to in clauses ‘a’ and ‘c’ of sub-section 1 read with sub-section 3 of Section 14 of the Code.
11. The liquidator would discharge function in terms of the provisions of Sections 35(1) (`a’ to ‘o’), 36 (1) and (2), 37 (1) and (3) read with relevant provisions of IBBI (Liquidation Process) Regulations 2016. However, the Liquidator will not invite any fresh claim from any corner and would discharge function only in terms of the provisions of chapter VI and VII of the aforementioned regulations read with Section 54 of the Code. Nevertheless, the liquidator would follow the procedure prescribed in Regulation 21, 30A, 31 of the aforementioned Regulations. The liquidator would investigate the affairs of the CD and would take all legal steps including filing and pursuing applications under Sections 43, 45, 50 and 66 of the Code to disgorge the properties and assets of the CD for being utilized to discharge its debt. It is made clear that the ARC will not get the share from distributable amount in excess of the amount what it has paid to Central Bank of India and the excess amount if becomes payable to assignee of the debt of Central Bank of India would be paid to the assigner viz. Central Bank of India. In terms of the provisions of Section 21(11) of IBC, the CoC would continue to remain operative and functional during liquidation process.
