Tribunal Highlights Lack of Bona Fide in Insolvency Process; Plan Rejected Over Insufficient Payout Against Admitted Claims
In a significant decision, the Kolkata bench of the National Company Law Tribunal (NCLT) has dismissed the resolution plan proposed for Bengal Emta Coal Mines Limited, citing serious discrepancies and a lack of bona fide in the conduct of the Corporate Insolvency Resolution Process (CIRP). The judgment, delivered by members Smt. Bidisha Banerjee and Cmde. Siddharth Mishra, came after an extensive review of the resolution plan submitted by Mrs. Sarika Maiwall, the Successful Resolution Applicant.
The tribunal's decision came in response to an application filed by the Resolution Professional (RP) for approval of the resolution plan. The plan proposed to settle an admitted claim of Rs. 299 Crores with a payout of only Rs. 86 Lakhs, which the tribunal found unsatisfactory and inadequate. The NCLT noted significant irregularities in the process, including discrepancies in receivables amounting to Rs. 197 Crores and unresolved contingent liabilities.
Key points of contention included a lack of cooperation from Bengal Emta Coal Mines Limited's debtors, particularly the West Bengal Power Development Corporation Limited (WBPDCL), which has been unable to provide updated reconciliation statements for substantial outstanding dues. Furthermore, the tribunal highlighted that the Committee of Creditors (CoC) initially expressed dissatisfaction with the financial proposals, although a revised plan was approved hastily without adequate deliberation.
The NCLT also pointed out the unresolved issue of an additional levy of Rs. 1,752 Crores imposed by the Supreme Court, which remains a pending liability affecting the company's financial stability. As a result, the tribunal determined that the resolution plan was not feasible or viable, leading to its dismissal.
The tribunal has scheduled further proceedings for the main corporate insolvency case on July 21, 2026, and directed the registry to communicate the order to all parties involved.
Bottom line:-
Corporate Insolvency Resolution Process (CIRP) - Approval of Resolution Plan - Discrepancies and lack of bona fide in the process of preparing the Resolution Plan noted - Resolution Plan providing a meagre payout against admitted claims dismissed.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 31, 19(2); Coal Mines (Special Provisions) Act, 2015 Sections 8(4), 16(4)
