Appellate Tribunal affirms primacy of CoC's commercial wisdom; dismissal of appeal by Suraksha Realty Ltd. challenging Bermaco Energy Systems' resolution plan for Mahavir Roads and Infrastructure Pvt. Ltd.
In a significant ruling dated September 17, 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, dismissed the appeal filed by Suraksha Realty Limited challenging the approval of a resolution plan submitted by Bermaco Energy Systems Limited ("SRA") for Mahavir Roads and Infrastructure Pvt. Ltd., a corporate debtor undergoing insolvency proceedings.
The appeal centered around allegations raised by Suraksha Realty Ltd., a dissenting financial creditor, that the SRA had concealed material facts related to ongoing criminal investigations and attachment proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). Suraksha Realty contended that such non-disclosure violated Regulation 39(1)(c) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), which mandates that resolution applicants must declare the truthfulness of all information provided. The Appellant further argued that the CoC's approval of the plan was flawed due to misclassification of Suraksha Realty as an unsecured creditor despite a registered charge and undervaluation of liquidation value, thereby impacting the distribution matrix adversely.
The NCLAT, comprising Justice Mohammad Faiz Alam Khan and Member (Technical) Naresh Salecha, undertook a meticulous examination of the facts and legal contentions. It noted that:
1. The pendency of criminal investigations or attachment proceedings under PMLA, which are civil in nature but relate to properties prima facie proceeds of crime, does not equate to a criminal conviction. Therefore, under Section 29A of the Insolvency and Bankruptcy Code (IBC), disqualification from submitting a resolution plan is triggered only by conviction, not by pending investigations or attachment orders.
2. The Committee of Creditors (CoC) was fully apprised of the proceedings against the SRA and deliberated extensively on the matter. The Resolution Professional had appointed a Chartered Accountant firm, Bagchi & Gupta, to independently verify the SRA's eligibility under Section 29A, which resulted in a clean chit report.
3. The NCLAT emphasized the paramount importance of the commercial wisdom of the CoC in approving resolution plans. Judicial interference is limited to ensuring compliance with the statutory requirements of Sections 30(2) and 31 of the IBC, and absence of material irregularity or illegality. The tribunal cannot substitute its judgment for that of the CoC.
4. The tribunal held that mere non-disclosure or incorrect disclosure of pending investigations, if known to and considered by the CoC, does not vitiate the resolution plan. An impact assessment of such alleged violations is necessary to determine material irregularity, which was not established in this case.
5. Issues related to the classification of Suraksha Realty as a secured creditor were found to be sub judice before the tribunal, and the resolution plan provided for modification of distribution upon final determination.
6. Regarding valuation discrepancies, the NCLAT noted that appointment of a third valuer under the CIRP Regulations is discretionary. The CoC exercised its commercial wisdom in proceeding with existing valuations, which is not a ground for rejecting the resolution plan.
The tribunal further drew upon authoritative Supreme Court judgments reaffirming that the CoC's commercial decisions on feasibility, viability, and approval of resolution plans are binding and not amenable to extensive judicial scrutiny. It cautioned against excessive judicial intervention which delays resolution, erodes value, and undermines the objectives of the IBC.
Consequently, NCLAT upheld the order of the National Company Law Tribunal, Mumbai Bench, which had approved the resolution plan submitted by Bermaco Energy Systems Limited. The appeal was dismissed with no order as to costs.
This ruling reiterates the legal principle that the insolvency resolution process prioritizes swift and commercially informed decisions by creditors' committees and limits judicial review to procedural compliance and prevention of material irregularities, thereby promoting certainty and value maximization in insolvency proceedings.
Bottom Line:
Pendency of PMLA/ED proceedings and provisional attachment of properties, by themselves, do not render a resolution applicant ineligible under Section 29A of the IBC; where the CoC was made aware of the facts, obtained independent verification, and approved the plan in its commercial wisdom, the NCLT/NCLAT will not interfere unless a clear statutory violation or material irregularity causing prejudice is shown.
Statutory provision(s):
Section 29A, Section 30, Section 31, Section 32, Section 53, Section 61 of Insolvency and Bankruptcy Code, 2016; Regulation 39(1)(c), Regulation 35(1)(b), Regulation 38 of CIRP Regulations, 2016; Sections 3, 5, 6, 8, 9, 48 of Prevention of Money Laundering Act, 2002
