Express Resorts and Hotels Limited Vs Amit Jain (NCLAT Delhi)
Summary: Express Resorts and Hotels Limited, the successful resolution applicant (SRA) in the corporate insolvency resolution process of Neesa Leisure Limited, challenged the National Company Law Tribunal (NCLT), Ahmedabad order dated 4 March 2024 rejecting its CoC-approved resolution plan. The appeal arose from IA No. 851 of 2020 in CP (IB) No. 127 of 2017. The NCLT had expressed concerns about transparency, valuation, disputed properties, treatment of government dues, creditor distributions and compliance with Section 31(1) of the Insolvency and Bankruptcy Code, 2016. The NCLAT examined whether those objections established a statutory ground for refusing approval under Section 30(2).
The corporate debtor entered CIRP on 26 April 2019. Following an expression-of-interest process and consideration of competing bids, the CoC approved the Express Resorts consortium plan on 24 October 2020 with a 67.85% voting share. The plan proposed ₹143.83 crore, with an additional ₹250 crore envisaged for capital expenditure through equity, quasi-equity or debt. The successful applicant furnished a ₹50 crore performance bank guarantee, and the resolution professional filed the plan-approval application in November 2020. Competing offers and settlement proposals emerged after the approved plan became known.
The dispute had already undergone two rounds of appellate intervention. In February 2023, the NCLAT set aside an order reopening the process for fresh resolution plans, holding that belated higher offers could not justify restarting CIRP after the CoC had exercised its commercial judgment. That decision was upheld by the Supreme Court. In December 2023, the NCLAT again intervened when the NCLT directed renewed CoC consideration of the impact of the Rainbow Papers judgment and litigation concerning Rajasthan properties. The appellate tribunal directed the adjudicating authority to decide the pending plan-approval application on its merits.
Before the NCLAT, the successful applicant maintained that the plan satisfied the statutory requirements and that the CoC had lawfully negotiated and evaluated competing plans. It argued that the valuation exercise had been undertaken through registered valuers under the CIRP Regulations, that disputes concerning properties were disclosed in the information memorandum, and that the plan proceeded on an as-is-where-is basis. The applicant also offered approximately ₹2.33 crore in additional payment to address the treatment of secured statutory claims following the Supreme Court ruling in State Tax Officer v. Rainbow Papers, without reducing distributions to existing CoC creditors.
The appellate tribunal considered the NCLT’s observations about negotiations, net present value, equity allocation, disputed leased assets, valuation discrepancies, government dues, dissenting creditors, employee claims, CIRP costs and the suspended management’s settlement proposals. It assessed those observations against the record and the statutory test for plan approval. The NCLAT stressed that negotiations with resolution applicants and consideration of commercial features of a plan are within the CoC’s sphere, subject to compliance with the Code and applicable regulations; judicial disagreement with the economic merits is not itself a ground to reject an approved plan.
The Tribunal relied on the Supreme Court’s jurisprudence concerning CoC commercial wisdom and the restricted jurisdiction of adjudicating authorities, including K. Sashidhar, Essar Steel, Pratap Technocrats, Ebix Singapore and other decisions discussed in the judgment. Under Sections 30 and 31, the NCLT must determine whether a plan approved by the requisite CoC majority complies with Section 30(2). It cannot exercise a free-standing equitable power to substitute its commercial assessment for that of financial creditors. The NCLAT found that the NCLT had not identified a specific violation of Section 30(2) and that its objections were legally unsustainable or factually incorrect.
Accordingly, the NCLAT allowed the appeal, set aside the NCLT order dated 4 March 2024 and approved the resolution plan submitted by Express Resorts and Hotels Limited. It directed the NCLT to pass consequential orders within 15 days of production of the appellate judgment, disposed of pending applications and made no order as to costs. The ruling illustrates that a CoC-approved plan may be rejected for an identified statutory non-compliance, but not merely because the adjudicating authority would prefer a different valuation, negotiating strategy or commercial outcome.
Cases Discussed
- Ebix Singapore Private Limited Vs Committee of Creditors of Educomp Solutions Limited — Binding nature of a CoC-approved plan and constraints on reopening the CIRP.
- Committee of Creditors of Essar Steel India Limited Vs Satish Kumar Gupta — Commercial wisdom of the CoC and statutory limits on judicial review.
- Pratap Technocrats Private Limited Vs Monitoring Committee of Reliance Infratel Limited — No general equity jurisdiction to reject an otherwise compliant plan.
- K. Sashidhar Vs Indian Overseas Bank — Primacy of financial creditors’ commercial judgment.
- State Tax Officer Vs Rainbow Papers Limited — Treatment of statutory dues and proposed additional allocation.
- Ramkrishna Forgings Limited Vs Ravindra Loonkar — Need for legally sustainable reasons when withholding plan approval.
- Vallal RCK Vs Siva Industries and Holdings Limited — Restricted intervention in CoC commercial decisions.
- Maharashtra Seamless Limited Vs Padmanabhan Venkatesh — Valuation and liquidation-value principles.
- Kalpraj Dharamshi Vs Kotak Investment Advisors Limited — Judicial deference to the commercial wisdom of the CoC.
- Jindal Stainless Limited Vs Shailendra Ajmera — CoC powers to negotiate with applicants; link is a discussion in another judgment.
- Vistra ITCL (India) Limited Vs Torrent Investments Private Limited — Negotiation and challenge-process discretion; link is a discussion in another judgment.
