'Callous': NCLAT Pulls Up NCLT For Ignoring MCA Communication On Removal Of Promoter's Disqualification

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench set aside an order passed by the National Company Law Tribunal (NCLT) by which it had declared promoters of JC World Hospitality Pvt. Ltd. ineligible under section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC) and quashed their resolution plan. The Bench comprising Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) held that the NCLT had erred in declaring the promoters ineligible without appreciating the material on record and applying the principles under Section 25A(3A) of the IBC correctly. The appeals arose out of the NCLT's order dated 22 July 2025 in the CIRP of JC World Hospitality Pvt. Ltd., an MSME real estate developer. The Adjudicating Authority had declared the promoters — Dr. Vijay Kant Dixit, Ms. Rita Dixit, and Ms. Vasudha Dixit — ineligible under clauses (c), (e), (g), (i), and (j) of Section 29A of the IBC, set aside their resolution plan approved by the Committee of Creditors (CoC), and directed consideration of the plan submitted by the rival applicant, Amrapali Fincap Ltd. The promoters, Amrapali Fincap Ltd., the Resolution Professional, and a homebuyer (financial creditor in class) had filed cross appeals before the NCLAT. The Tribunal observed that the CIRP voting process was valid. It held that once 50% of the financial creditors in a class vote in favor of the plan, authorized representative's 100% vote for that plan must be treated as a valid approval under Section 25A(3A) of the IBC. Accordingly, It observed that approval of promoters' plan by the CoC was valid. The Tribunal held that “the CoC and RP has rightly come to the conclusion that on the basis of re-voting result on Resolution Plan, the same was approved with 100% vote shares, since more than 50% of vote shares of the CoC were cast by Financial Creditor in a class.” The Bench further observed that the NCLT erred in declaring the promoters ineligible under section 29A of the IBC. The Tribunal observed that “the e-mail dated 07.03.2025 from the Ministry of Corporate Affairs, confirming removal of disqualification of Mrs. Rita Dixit and Dr. Vijay Dixit w.e.f. 13.08.2018 and 29.05.2018, was wrongly rejected by the Adjudicating Authority. This communication was sufficient to negate disqualification under Section 29A(e), yet the Authority, in a callous and perverse manner, ignored the record and erroneously held them disqualified under Section 164(2).” The Tribunal observed that the NCLT acted in a callous and selective manner by accepting documents from the rival resolution applicant while refusing to consider relevant materials submitted by the Successful Resolution Applicant. It held that “the Adjudicating Authority has not adverted to the pleas and materials brought on record by SRA. SRA was fully eligible. Resolution Professional has done his due-diligence and has submitted reports finding the SRA qualified. CoC has also examined the eligibility of the SRA. It is an Unsuccessful Resolution Applicant- Amrapali Fincap which has been raising objections one after another and the CIRP process has been not permitted to proceed at the instance of Amrapali Fincap.” The Tribunal further observed that the alleged non-performing asset classification and connected person allegations were not supported by evidence and the plan met all the eligibility and viability requirements under the IBC. The Tribunal further observed that performance guarantee deposited by the investor Rishikesh Hire Purchase and Leasing Pvt. Ltd did not violate Regulation 36B(4A) as the investor had been identified in the plan. It held that “When the Resolution Plan itself provided that PBG shall be given by the Investor, we fail to sustain the observation of the Adjudicating Authority in the impugned order that there is violation of Regulation 36B(4A) of the CIRP Regulations when the PBG is submitted by third party. The Adjudicating Authority has not even adverted to the clauses of Resolution Plan, which specifically provides the PBG to be deposited by the Investor.” The Tribunal further observed that the NCLT wrongly held that the SRA had failed to disclose criminal proceedings under Regulation 38(3) of the CIRP Regulations. It observed that this regulation had been substituted in 2018 and no longer required such disclosure. The Tribunal held that the SRA had properly disclosed the registration of FIRs and chargesheets which were filed subsequent to filing of the resolution plan. Accordingly, the Tribunal allowed the present appeals holding that the NCLT failed to advert to the materials on record while deciding the eligibility of the promoters to submit the resolution plan. Case Title: Dr. Vijay Kant Dixit & Anr. Versus Amrapali Fincap Ltd. & Ors.Case Number: Comp. App. (AT) (Ins) No. 1149 – 1151 of 2025Judgment Date: 07/11/2025For Appellants :Mr. Krishnendu Datta and Mr....

'Callous': NCLAT Pulls Up NCLT For Ignoring MCA Communication On Removal Of Promoter's Disqualification

Mohd Malik Chauhan

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