Successful Resolution Applicant Fails to Resolve Land Dispute and Meet Financial Obligations, Leading to Liquidation Under IBC
In a significant ruling, the National Company Law Tribunal (NCLT) in Ahmedabad has ordered the liquidation of Shriram Cement Ltd., following the failure of the Successful Resolution Applicant (SRA) to implement the approved Resolution Plan. The tribunal's order, dated July 22, 2026, highlighted the SRA's inability to fulfill its financial obligations and resolve critical disputes concerning land transfer, leading to the contravention of the Resolution Plan under the Insolvency and Bankruptcy Code (IBC), 2016.
The case, IA/1039(AHM)2023 and IA/170(AHM)2024, revolved around the non-compliance by High Performance Products Industries Pvt. Ltd., the SRA, which had proposed a Resolution Plan for Shriram Cement Ltd. approved by the Committee of Creditors and subsequently by the NCLT on September 20, 2021. The plan entailed settling dues of Rs. 5.50 Crores, of which only Rs. 30 Lakhs was paid.
The tribunal, comprising Sh. Shammi Khan (Judicial Member) and Sh. Sanjeev Sharma (Technical Member), found that the SRA's failure to implement the plan was primarily due to unresolved disputes over land bearing Survey No. 47 and an unfulfilled bank guarantee. The SRA's repeated requests for extensions and conditional proposals to alter the Resolution Plan were deemed impermissible modifications under the IBC.
The NCLT underscored that the SRA was aware of existing disputes at the time of plan submission and could not defer obligations based on unresolved issues. The tribunal emphasized that the approved Resolution Plan is binding and cannot be unilaterally altered post-approval.
Furthermore, the tribunal dismissed the SRA's plea to quash the Collector's order dated December 10, 2021, concerning land transfer, citing lack of jurisdiction to adjudicate land revenue disputes under the Gujarat Land Revenue Code. This aspect was deemed beyond the NCLT's purview and left to be resolved by the competent authorities.
The tribunal appointed Mr. Bihari Lal Chakravarti as the Liquidator to oversee the liquidation process, directing him to conduct the proceedings in accordance with the IBC and the Insolvency and Bankruptcy Board of India (IBBI) regulations. The liquidation order marks a crucial step in the resolution process, with the tribunal reiterating the need for a time-bound insolvency process to prevent prolonged non-implementation of Resolution Plans.
This decision highlights the NCLT's commitment to uphold the integrity of the insolvency process and ensure adherence to the approved Resolution Plans, setting a precedent for future cases involving similar disputes.
Bottom Line :
The Successful Resolution Applicant (SRA) cannot alter obligations under an approved Resolution Plan by making implementation contingent upon resolution of disputes known at the time of plan submission. Contravention of the Resolution Plan attracts liquidation under Section 33(4) of the Insolvency and Bankruptcy Code, 2016.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 31, 33(3), 33(4), 60(5), 74(3); Companies Act, 2013 - Section 213; Gujarat Land Revenue Code; IBBI (Liquidation Process) Regulations, 2016
