State Bank of India Vs SU Toll Road Private Limited (NCLT Mumbai)
Summary : The National Company Law Tribunal (NCLT), Mumbai Bench-I, declined to approve the ₹419.50 crore resolution plan for SU Toll Road Private Limited under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal held that the successful resolution applicant’s refusal to take responsibility for overdue major maintenance and repair (MMR) made the plan impossible to implement. The 19 July 2007 build-operate-transfer concession for the Salem–Ulundurpet highway was the corporate debtor’s sole asset and the source of its toll revenue. Continued operation depended on addressing the overdue works.
The Tribunal had admitted State Bank of India’s Section 7 application on 18 August 2025. After publication of Form G and issuance of the Request for Resolution Plan (RFRP), six applicants submitted plans. A challenge process followed, and the plan of VK Gupta & Associates and Harish Kumar Agarwal, revised on 4 May 2026 and read with the 8 May clarification, went to the Committee of Creditors (CoC) on 12 May. The result was declared on 9 June and the Resolution Professional (RP), S. Rajendran, applied for approval on 23 June. The order records 100% approval in paragraph 1 and 99.93% in paragraph 32.
The plan earmarked ₹417 crore for financial creditors, ₹50 lakh for CIRP costs, ₹4 lakh for specified operational claims and ₹1.96 crore for other operational creditors. Financial creditors were also to receive cash balances and gross trade receivables up to 30 June 2026 or the date of approval, whichever came first, after deduction of eligible CIRP costs. Form H used a provisional cash balance of ₹152.30 crore as of 18 June. The consortium submitted performance guarantees totalling ₹41.90 crore and proposed to acquire control and continue the toll road business.
NHAI sought rejection of the plan in IA (IBC) No. 3433 of 2026. It had filed an operational claim of about ₹444.68 crore, of which about ₹65.07 crore arising from a prior settlement was admitted. A substantial portion remained contingent in pending arbitration. The corporate debtor claimed about ₹841.23 crore in that arbitration and NHAI counterclaimed for ₹328.12 crore, besides other amounts it asserted. NHAI challenged its treatment as a creditor, its involvement in the resolution process, compliance with the 2026 amendments, preservation of the concession and escrow terms, and the handling of pending MMR obligations.
On distribution, the Tribunal applied Essar Steel and found that the plan offered operational creditors more than their nil liquidation entitlement, even though their proposed recovery was about 2% against about 74% for secured financial creditors. The Tribunal also applied Ujaas Energy to hold that NHAI could use its counterclaim defensively as a set-off against the corporate debtor’s arbitration claim, without obtaining affirmative relief on that defence.
On the concession, the Tribunal read the cited shareholding clause as a representation and warranty and found that NHAI had identified no clause requiring its prior approval for the proposed change in control. The plan nevertheless required the consortium to obtain applicable approvals. The Tribunal distinguished the municipal property decision in Abhilash Lal, which concerned the creation of a fresh security interest in third-party property. It also considered NHAI’s participation objection in light of invitations issued from the seventh CoC meeting onwards and NHAI’s non-attendance at those meetings. As to pre-approval access, the order records that no control had passed and that the CoC limited disclosure to non-confidential toll information subject to safeguards. Paragraph 86 nevertheless concludes in terms of prejudice to confidentiality and vitiation of the approval process.
The Tribunal held that the amendment to Section 30(4), effective 26 May 2026, requiring reasons for plan approval did not apply to plans already deliberated on and put to vote. The fact that voting concluded on 9 June did not change when those steps took place. The Tribunal likewise found no breach of Regulation 39(3)(b) as it stood when deliberations occurred, since the additional requirement to record a rationale took effect on 8 June. It added that even on NHAI’s interpretation, under which reasons were due after voting, the omission could be cured if the plan were otherwise compliant.
Clause 25.2 of the concession agreement gave specified operation and maintenance expenses priority in the application of escrowed toll receipts. The Tribunal found that the proposed transfer of accumulated cash to lenders did not itself violate the clause, while the outstanding road works still had to be performed. The engineering material showed that the second resurfacing cycle remained overdue. Once the Section 14 moratorium ended, the default could expose the concession to termination. The Tribunal cited O.J. Janeesh on the relationship between toll collection and the public’s right to safe and unhindered road access.
The RP and CoC maintained that the consortium had to complete the pending works at its own cost in addition to the plan commitments. The consortium argued that the obligations should be extinguished or funded from the cut-off cash balance as CIRP costs. Applying Section 5(13) and Regulation 31, the Tribunal found that tendering had not led to performance giving a vendor a right to payment by 30 June. The continuing maintenance obligation therefore did not create an accrued CIRP cost deductible from that balance. The Tribunal also held that the consortium’s 23 July clarification could not expand the deductions under the CoC-approved plan.
The cash-flow projections provided a combined ₹193.09 crore over three years for toll operations and maintenance, funded from projected toll collections. They contained no separate allowance or upfront funding for the overdue work. The Tribunal found that the CoC had not adequately examined how the obligations would be financed and that the consortium had neither sought clarity on responsibility before approval nor committed to carrying out the pending works. The Tribunal held that the 8 May and 23 July communications made the plan impossible to implement, although it stated that the plan met the requirements of Section 30(4) read with Regulation 37.
The Tribunal dismissed IA (IBC) (Plan) No. 59 of 2026 and allowed NHAI’s IA (IBC) No. 3433 of 2026. It left the CoC and RP free to exercise any rights arising from rejection of the plan. Given another applicant’s expression of interest, it directed the CoC to decide the next course within 15 days and the RP to report that decision. If the CoC chooses to issue a fresh Form G, the resolution process will be extended by 120 days from the date of that decision.
Cases Discussed
- Dharampal Premchand Ltd. v. Jitendra Bhandari & Ors. — (2026) ibclaw.in 706 (NCLAT). Cited on the limited grounds for appellate interference with a resolution plan.
- Ujaas Energy Ltd. v. West Bengal Power Development Corporation Ltd. — 2026 INSC 268, (2026) ibclaw.in 127 (SC), 20 March 2026. Applied to preserve defensive set-off in the arbitration without affirmative relief.
- National Highway Authority of India & Anr. v. O.J. Janeesh & Ors. — SLP (C) No. 22579/2025 (SC), 18 August 2025. Cited on the public’s right to safe and unhindered use of a tolled highway.
- Infrastructure Leasing & Financial Services Ltd. v. HDFC Bank Ltd. — 2024 SCC OnLine NCLAT 412 (NCLAT). Distinguished on the priority of lender and concession-related dues under a different escrow arrangement.
- Avil Menezes (RP) v. Ministry of Coal & Ors. — (2024) ibclaw.in 676 (NCLAT), 23 October 2024. Applied by analogy on the treatment of earmarked escrow funds under the Code.
- Infrastructure Leasing & Financial Services Ltd. v. HDFC Bank Ltd. & Anr. — 2023 INSC 929 (SC), 19 October 2023. Cited by the CoC on the treatment of assigned receivables in escrow.
- Sree Sankaracharya University of Sanskrit & Ors. v. Dr. Manu & Anr. — 2023 SCC OnLine SC 640 (SC), 16 May 2023. Applied on when a subsequent amendment can operate retrospectively as a clarification.
- M.K. Rajagopalan v. Dr. Periasamy Palani Gounder & Anr. — (2023) ibclaw.in 60 (SC), 3 May 2023. Cited for the requirement that CoC commercial wisdom rest on relevant information and deliberation.
- Vallal RCK v. Siva Industries and Holdings Ltd. & Ors. — (2022) 9 SCC 803 (SC), 3 June 2022. Cited for limited judicial interference with CoC commercial decisions in the context of Section 12A.
- Tata Consultancy Services Ltd. v. SK Wheels (P) Ltd. — (2022) 2 SCC 583 (SC), 23 November 2021. NHAI cited it to argue that the plan could not impose a haircut that defeated specific performance of the settlement agreement.
- Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd. & Ors. — (2022) 1 SCC 401 (SC), 24 March 2021. Cited on statutory approvals and the adjudicating authority’s role in plan approval.
- Arun Kumar Jagatramka v. Jindal Steel and Power Ltd. & Anr. — (2021) 7 SCC 474 (SC), 15 March 2021. Quoted through Vallal RCK on judicial restraint within the IBC framework.
- Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors. — (2021) 7 SCC 209, Civil Appeal No. 9241 of 2019 (SC), 8 March 2021. The CoC submitted that this judgment did not assist NHAI’s case.
- Municipal Corporation of Greater Mumbai v. Abhilash Lal & Ors. — (2020) 13 SCC 234 (SC), 15 November 2019. Distinguished because that plan created a fresh security interest in municipal property without the required consent.
- Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. — (2020) 8 SCC 531 (SC), 15 November 2019. Applied on stakeholder treatment, commercial wisdom and preserving what is essential to continued business.
- K. Sashidhar v. Indian Overseas Bank & Ors. — (2019) 12 SCC 150, Civil Appeal No. 10673 of 2018 (SC), 5 February 2019. Cited on the statutory limits of review of CoC decisions.
