Suspended shareholder's recall plea dismissed; unauthorized occupation by related party delays possession handover but does not modify approved resolution plan
In a significant ruling dated 5th October 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, dismissed the recall application filed by Mr. B.D. Agarwal, a shareholder and personal guarantor of Krystal Stone Exports Ltd., seeking to overturn the appellate order that granted an extension of time for the payment and possession under the approved resolution plan of the Corporate Insolvency Resolution Process (CIRP).
The controversy arose when the Successful Resolution Applicant (SRA) made an upfront payment of Rs. 4.20 crores as mandated under the resolution plan, but the possession of the corporate debtor's key property situated at SP-2, RIICO Industrial Area, Kilkipura, Jaipur, could not be handed over on time due to unauthorized occupation by a tenant company, "Countertops & Cabinets India Pvt. Ltd.", which is owned and controlled by Mr. Agarwal and his family members.
Mr. Agarwal, acting as a suspended director and erstwhile promoter, challenged the extension of time granted by the NCLAT to the SRA for payment of the balance amount of Rs. 14.60 crores and exclusion of the delay caused by non-handover of possession from the implementation timeline. He contended that the resolution plan was unconditional with a fixed 90-day timeline for full payment and that the appellate order effectively modified the plan without proper authority.
The NCLAT bench, led by Mr. Justice Yogesh Khanna, Officiating Chairperson, held that a suspended management or shareholder has no unqualified right to be heard on matters concerning the implementation of an already approved resolution plan once the Committee of Creditors' (CoC) commercial wisdom has been exercised. The tribunal observed that Mr. Agarwal was neither a financial nor an operational creditor and was not impleaded as a proper party in the earlier proceedings. Mere appearance of counsel without intervention did not confer party status.
Crucially, the tribunal emphasized that the delay in handing over possession of the subject property was attributable entirely to the tenant's unauthorized occupation-a company controlled by the applicant's family. The SRA had fulfilled its upfront payment obligations timely and was entitled to an extension of time for the balance payment and implementation period without penalty or interest for delays beyond its control.
The tribunal further clarified that the exclusion or extension of timelines for financial obligations under an approved resolution plan does not amount to modification of the plan. This principle was supported by precedents including GP Global Energy Pvt Ltd v. Mr. Sandeep Mahajan and Ashok Dattaray Atre v. State Bank of India, where it was held that the adjudicating authority (NCLT/NCLAT) has jurisdiction to grant such reliefs without CoC concurrence.
Additionally, the tribunal noted that the obligation to hand over possession upon receipt of upfront payment is inherent and does not require separate concessions from statutory authorities. The NCLT Mumbai Bench had also directed the tenant to vacate the property, but possession remained unhanded due to non-compliance.
The application for recall was thus dismissed as vexatious and an attempt to frustrate the resolution process. The judgment reinforces the principle that the suspended management cannot use procedural tactics to delay insolvency resolution and that possession-related delays caused by third-party occupation can justify reasonable extensions without altering the resolution plan's essence.
This ruling upholds the sanctity of the resolution plan process under the Insolvency and Bankruptcy Code, 2016, ensuring timely completion of CIRP while balancing practical difficulties arising from possession disputes.
Bottom Line:
Insolvency and Bankruptcy Code - Suspended management/shareholder/personal guarantor has no unqualified right to seek recall of appellate order concerning implementation of approved resolution plan - Exclusion/extension of timeline for payment under approved resolution plan, where delay in handing over possession is attributable to unauthorized occupation of corporate debtor's property, does not amount to modification of resolution plan.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016; National Company Law Appellate Tribunal Rules, 2016; Rent Control Act, 2001
