Value Wise Consultancy Private Limited Vs. The Deputy Director Directorate of Enforcement & Ors. - The writing is on the wall for the appellant: whether to attach or not to attach the properties of a corporate debtor is for the Enforcement Directorate to decide, and where there has been any such attachment by the ED, the adjudicatory mechanism created under the PMLA alone will have jurisdiction to deal with any challenge to it.

 NCLAT (2026.06.30) in Value Wise Consultancy Private Limited Vs. The Deputy Director Directorate of Enforcement & Ors. [Company Appeal (AT) (Ins) No. 1226 and 1227 of 2022] held that;

• This in turn leads to a concomitant conclusion that, if the purpose behind Sec.14 is to freeze the existing liability of the corporate debtor as on the date when it is admitted to CIRP as part of the legislative strategy to preserve the status quo for a convenient resolution of insolvency of the CD, then operation of Sec.14 must be limited to those litigations and proceedings, both pending and prospective, either civil or criminal, which hold the likelihood of adding on to the existing debt liability of the corporate debtor and not others.

• Needless to state that those crimes which spring from penal statutes of public law nature, with no prospect of adding to the debt-liability of civil nature of the CD, cannot be allowed to be impacted by the moratorium, even if they affect the net asset of the CD available for CIRP or liquidation.

• Supreme Court in Embassy Property Developments Private Limited Vs State of Karnataka and Others [(2020)13 SCC 308], where it was held that the jurisdiction of the Adjudicating Authority is limited by the extent to which it is required to be exercised for the purposes of working of the IBC and no more. After all, both IBC and the PMLA, are legislations of the Parliament and as shown earlier, they operate in different domains with different objectives to achieve, and do not overlap in their respective operations.

• Indeed, the IBBI has also taken note of the issue on jurisdiction, and hence in paragraph 2 of its Circular No. IBBI/CIRP/87/2025, dated 04th November, 2025, it has advised the resolution professionals that “where the assets of the corporate debtor are attached by the ED under the provisions under PMLA, the Insolvency Professional may file an application before the Special Court under Sections 8(7) or 8(8) of the PMLA for restitution of such assets”. Necessarily, the tribunals constituted under the IBC are not the forums which can entertain any plea against the ED.

• The writing is on the wall for the appellant: whether to attach or not to attach the properties of a corporate debtor is for the Enforcement Directorate to decide, and where there has been any such attachment by the ED, the adjudicatory mechanism created under the PMLA alone will have jurisdiction to deal with any challenge to it.

Blogger’s Comments; All said and done, the principal objectives of attachment & confiscation of tainted property in PMLA is that a person/company is not able to enjoy the proceeds of crime. Under IBC, as soon as the application under section 7, 9 or 10 is accepted, the control of the company is divested from its promoters/directors/existing management & the promoters/directors are prevented from taking back the control of the company (Section 29A & section 32A) either during insolvency proceedings or during liquidation process, thus fulfilling the principal objectives of PMLA.

Rather, attachment of company’s property (particularly liquid assets i.e. bank accounts etc.) under the provisions of PMLA, during insolvency/liquidation proceedings frustrate the principal objectives of the IBC, to put the assets of insolvent companies in the beneficial use of the society. In contrast due  to protracted proceedings in PMLA the value of the assets gets diminished, which ultimately is the loss of the society.

In my view, the IBC may provide for deemed suspension of PMLA attachment orders during the CIRP & Liquidation process, for smooth conduct of CIRP & Liquidation process.

Excerpts of the Order; 

# 1. The present set of twin appeals are preferred by the Liquidator of M/s Siddhi Vinayak Logistics Ltd., challenging the Common Order dated 19.07.2022 passed by the Adjudicating Authority (NCLT, Ahmedabad) dismissing his applications in IA No. 453 of 2019 and IA No. 773 of 2021 in CP (IB) No. 89 of 2017.

# 2. To provide a brief overview of this case, the issue involved in these appeals relates to the authority of the Enforcement Directorate to withdraw the amount from a bank account of the CD which the former had attached earlier prior to the commencement of CIRP of the CD, but transferred it during the subsistence of moratorium. Liquidator contends that this sum must be part of the liquidation asset of the CD, but it was negated by the Adjudicating Authority principally on the ground of perceived lack of jurisdiction in the Adjudicating Authority.

Facts:

# 3. The genesis of the dispute lies in the investigation which the Directorate of Enforcement has commenced pursuant to the FIRs registered againstthe Corporate Debtor, alleging bank-fraud and diversion of loan funds by the Corporate Debtor and its promoters. In furtherance thereof, vide communications dated 24.04.2017 the ED issued a notice under Section 50 of the Prevention of Money Laundering Act (PMLA, for short) to various debtors/customers of the Corporate Debtor and directed them not to transact with or release monies to the Corporate Debtor. In short, this is the setting:

a) On 08.06.2017, ED issued an Order of provisional attachment, attaching movable and immovable assets of the CD and related entities/persons.

b) On 24.10.2017, this provisional order of attachment was confirmed by the Adjudicating Authority constituted under the PMLA in terms of Sec.8(4) of the said Act.

c) In between, i.e., after the provisional order of attachment and the subsequent order of confirmation of the said Order, on 12.09.2017, the CD was drawn into CIRP pursuant to an Order of the Adjudicating Authority under the IBC in CP (IB) No. 89 of 2017. Consequently, moratorium under Sec. 14 of the IBC came into operation. In effect, the second mentioned Order confirming provisional attachment of the CD’s assets was passed during the moratorium.

d) Subsequently, on 12.12.2018, the Appellate Tribunal under the PMLA, set aside the earlier order of attachment. The Enforcement Directorate promptly challenged this before the Bombay High Court and it is pending. It may however, be mentioned that the High Court did not stay the operation of the Order of the Appellate Tribunal under the PMLA.

e) While things stood thus, on 02.08.2018, during the subsistence of the moratorium of the CD, the Enforcement Directorate withdrew a sum of ₹.2,29,10,131.06 from the account of the corporate debtor with M/s ICICI Bank.

f) The CIRP against the CD failed and on 19.11.2018 its liquidation was ordered.

g) When the liquidation process was underway, on 18.06.2019, the Enforcement Directorate issued a fresh order of Provisional Attachment of 6,170 vehicles belonging to the Corporate Debtor. This Order of attachment came to be partially confirmed vide its order dated 03.12.2019, when the Adjudicating Authority under the PMLA approved the attachment of only 1,344 vehicles and not the remaining 4,826 vehicles which were already traced by the

Liquidator and have not been taken possession of.

# 4. The Liquidator would now file two applications under Sec.60(5) of the IBC, the details whereof are:

a) I.A No. 453 of 2019, inter alia, for the withdrawal of the provisional orders of attachment dated 08.06.2017 and 18.06.2019 and for remittance/refund of ₹2.29 crores withdrawn by the ED from the account of the Corporate Debtor.

b) I.A No. 773 of 2021, for quashing and setting aside the communications of the ED, dated 24.04.2017 issued under Sec.50 of the PMLA and consequential directions to the debtors/customers of the Corporate Debtor, including Ashok Leyland Ltd., Haldia Petrochemicals Ltd., Sonalika International Tractors Ltd. and Hindustan Coca Cola Beverage Pvt. Ltd. to release the admitted outstanding dues payable to the Corporate Debtor. The ground on which the liquidator rested his plea is that the actions of ED were in direct violation of the moratorium under Section 14 of the IBC and that they had the effect of frustrating CIRP/liquidation by depriving the Corporate Debtor of its receivables and assets.

# 5. The ED opposed these applications and contended that the proceeding under the PMLA are independent criminal proceedings relating to “proceeds of crime”, that the PMLA is a special statute with overriding effect on the IBC and that the tribunals constituted under the IBC lacked jurisdiction to interfere with the attachment proceedings or actions undertaken under the PMLA. 

# 6. The defence of the ED prevailed with the Adjudicating Authority and accordingly, both applications of the liquidator came to be dismissed vide the common order with a direction to the liquidator to approach the appropriate forum, which is now under challenge.

Arguments

# 7. The learned Counsel for the appellant contended:

a) that the Adjudicating Authority committed a manifest error in declining jurisdiction under Section 60(5) of the IBC, despite the dispute arising directly out of the alleged violation of the moratorium imposed under Section 14 of the Code.

b) that the present proceedings do not require adjudication upon the legality or validity of proceedings under the PMLA but are confined only to the issue whether the Directorate of Enforcement could lawfully withdraw monies from the account of the Corporate Debtor during the subsistence of the moratorium.

c) that once the CIRP commences, all assets and receivables of the Corporate Debtor will be under the statutory protection of Section 14 and consequently no authority could continue coercive action against the assets of the Corporate Debtor. The withdrawal of ₹.2,29,10,131.06 from the bank account of the Corporate Debtor during the currency of the moratorium was ex facie contrary to Section 14(1)(a) of the Code and constituted unlawful depletion of the insolvency estate. The Hon’ble Supreme Court in P. Mohanraj and Sundaresh Bhatt [(2021) SCC 258] has held that while statutory authorities may continue adjudicatory proceedings, coercive recovery or enforcement actions in violation of Sections 14 or 33(5) of the Code are impermissible in law, but the impugned Order however, overlooked both the effect of Sec.14 and also the ratio in Mohanraj case.

d) on facts, the Adjudicating Authority has failed to appreciate that vide its order dated 12.12.2018, the Appellate Tribunal under the PMLA has set aside the earlier Order of attachment made under Sec.8(5) of the said Act. And, the Bombay High Court before which the Enforcement Directorate has challenged the aforesaid order of the appellate authority, has not stayed the operation of the said order either. Therefore, in the absence of any subsisting attachment, the Respondent could not continue to retain the monies withdrawn during the moratorium.

e) that the subsequent coercive actions initiated by the ED were barred on principles analogous to res judicata, since the basis of the proceedings had already been considered by the Appellate Tribunal under the PMLA.

f) so far as that the communications issued under Section 50 of the PMLA had the effect of preventing debtors/customers of the Corporate Debtor from releasing admitted dues payable to the Corporate Debtor and thereby frustrated the CIRP/liquidation process.

g) that despite repeated requests and representations made by the Liquidator, the Respondent failed to withdraw the restraint  communications issued to the debtors/customers of the Corporate Debtor.

h) the conduct of the Respondent defeated the object of the IBC by depriving the Corporate Debtor of its receivables and diminishing the value of the insolvency estate;

i) At any rate, the appellant has not sought adjudication upon attachment proceedings under the PMLA but only enforcement of the statutory consequences flowing from Section 14 of the IBC, which falls within the jurisdiction of the Adjudicating Authority.

# 8. Learned Counsel for the Respondent Contended:

a) that the proceedings initiated by the Directorate of Enforcement arose out of serious allegations of bank fraud, forgery, criminal conspiracy and diversion of loan funds involving an amount exceeding ₹.1600 crores and therefore constituted proceedings relating to “proceeds of crime” under the PMLA. Hence, the Corporate Debtor and its promoters were accused in multiple FIRs registered by the CBI concerning fraudulently availing credit facilities and diversion of fund from multiple banks which justify invoking the PMLA. And, the investigation under the PMLA revealed generation, layering and integration of proceeds of crime through various entities controlled by the promoters of the Corporate Debtor and therefore the attached properties represented tainted assets liable for attachment and confiscation under the PMLA.

b) that the Provisional Attachment Order dated 08.06.2017 was issued prior to commencement of CIRP and was subsequently confirmed by the Adjudicating Authority under the PMLA on 24.10.2017. And, the withdrawal of ₹2,29,10,131.06 on 02.08.2018 was effected pursuant to powers available under the PMLA in respect of attached properties and therefore could not be treated as an unlawful recovery action. 

c) that proceedings under the PMLA are independent criminal proceedings relating to proceeds of crime and operate in a completely distinct field from insolvency proceedings under the IBC.

d) Neither the Adjudicating Authority nor this Appellate Tribunal possesses jurisdiction to interfere with attachment proceedings initiated under the PMLA or with actions taken by authorities constituted thereunder. Section 60(5) of the IBC at no time be interpreted as conferring an all-pervasive jurisdiction upon the NCLT/NCLAT to examine decisions taken by statutory authorities exercised in public law. Reliance was placed on the ratio in Embassy Property Developments Pvt. Ltd. Vs State of Karnatka & Others [2019 SCC OnLine SC 1542], Gujarat Urja Vikas Nigam Limited v. Amit Gupta & Ors., [(2021) 7 SCC 209].

e) Not only the IBC and the tribunals constituted thereunder have different purposes to achieve from that which is intended by IBC, by no stretch of interpretation can the Enforcement Directorate be termed as a creditor within the meaning of Sec.5(20) and (21) of the IBC for the tribunals to invoke its jurisdiction in matters concerning the working of PMLA. At any rate, Section 14 of the IBC has no application to criminal proceedings or penal actions having the character of proceedings concerning proceeds of crime and therefore attachment proceedings under the PMLA remain unaffected by moratorium. Reliance was placed on Embassy Property Developers case, Directorate of Enforcement Delhi V. Axis Bank [2019 SCC Online Delhi 7854], Kiran Shah, R.P. of KSL Industries Vs Enforcement Directorate, Kolkata, [Com. Appeal (AT)(Ins) 817 of 2021].

f) Section 41 of the PMLA expressly bars jurisdiction of civil courts and other authorities in matters falling within the competence of authorities constituted under the PMLA.

Discussion & Decision

# 9. The facts and the arguments being what they are (as stated above), the critical aspect of the controversy relates to the legality of attaching the assets of the corporate debtor by the Enforcement Directorate either during the moratorium clamped under Sec.14 of the Code, or during liquidation process in the context of Sec.33(5) thereof. In short, the dispute is not appellant Vs the Enforcement Directorate, but IBC Vs PMLA, when both the legislations are in action. 

# 10. The facts in controversy give rise to three issues:

• a) Whether the Order of attachment and physical removal of certain assets of the CD by the Enforcement Directorate when the CD was under moratorium is legally sustainable?

• b) whether in view of the appellate authority constituted under the PMLA vacating the Order of attachment whose correctness though being challenged before the High Court, yet inasmuch as the High Court has not stayed the operation of the Order of the appellate authority, is it justifiable for the Enforcement Directorate to continue to retain the amounts of the CD that it has taken possession of?

• c) The last issue is the sustainability of the notice issued by the Enforcement Directorate under Sec.50 of the PMLA to the debtors of the corporate debtor directing them not to make payments to the CD.

# 11. It requires to be reminded with a strong dose of emphasis that the PMLA, 2002, was enacted to fulfill India’s obligations under the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, the Financial Action Task Force (FATF) Recommendations, and the United Nations Convention against Transnational Organized Crime. These international initiatives required the countries to criminalize money laundering, confiscate proceeds of crime, and strengthen international cooperation. The genesis of PMLA is rooted here with an intent to prevent money laundering and to combat organized economic terrorism besides actual terrorist- financing, and to protect the integrity of our financial system. Set in the context, the attachment of proceeds of crime or relatable to it under the PMLA is in aid of its eventual confiscation, which, it may be said, is a legislative structure for tracking and hunting such ill-gotten assets. The intent is evident: there shall be no tolerance, no premium for engaging in the crime which the Parliament is keen to forbid. If this aspect of PMLA is placed alongside an analysis of the objective of the IBC, it is gatherable that notwithstanding the laudability of the objective that provides centrifugality to the functioning of the Code, it still remains only as a statute for resolving the insolvency situation of a debtridden company - just one company. If this is unlayered more, it exposes the reality of a conflict between the interest of few creditors of a company in CIRP versus the national interest. While the former is compromisable, which, at any rate happens through the haircuts imposed during the distribution of the proceeds of a successful CIRP, or liquidation, which every creditor of a CD knows, accepts, and is prepared for, national interest at all times remains uncompromisable.

# 12. This apart, the PMLA in its working neither differentiates nor discriminates the companies that are drawn into a CIRP and those which are considered financially safe by its creditors. It must be emphasised that Parliament did not legislate IBC with an intent to create a holy Ganges out of the IBC to wash the corporate debtor of its sin of criminality under the PMLA, or as a mechanism for legitimizing any ill-gotten wealth of the CD. There is nothing in the code, that enables accommodating the wealth which is sourced by and out of a crime, in the resolution or liquidation process of a corporate debtor. The legislative intent behind the scheme of IBC only aims to deal with the issue of corporate insolvency, either in a CIRP or in

a liquidation process, and to pay off the creditors of the corporate debtor through the sale proceeds of the legitimate assets of the corporate debtor either as a going concern or as liquidated assets, as the case may be, and not out of the ill-gotten wealth of the CD. Otherwise, and as indicated earlier, IBC would unwittingly become a camouflage, a shield, to save the ill-gotten wealth of the corporate debtor and create a classification within the non-discriminatory character of the PMLA. Set on this plane, if the operational space of Sec.14 of the Code during the CIRP, or Sec.33(5) during liquidation, is tested, it becomes evident that these provisions legislatively intended to gyrate around the legitimately acquired assets of the corporate debtor and not with those that fall within the shadow of crime under the PMLA. This in turn leads to a concomitant conclusion that, if the purpose behind Sec.14 is to freeze the existing liability of the corporate debtor as on the date when it is admitted to CIRP as part of the legislative strategy to preserve the status quo for a convenient resolution

of insolvency of the CD, then operation of Sec.14 must be limited to those litigations and proceedings, both pending and prospective, either civil or criminal, which hold the likelihood of adding on to the existing debt liability of the corporate debtor and not others. Needless to state that those crimes which spring from penal statutes of public law nature, with no prospect of adding to the debt-liability of civil nature of the CD, cannot be allowed to be impacted by the moratorium, even if they affect the net asset of the CD available for CIRP or liquidation. See: Deputy Director, Enforcement Directorate Vs Axis Bank [2019 SCC OnLine Delhi 7854], Varrsana Ispat Ltd., through its RP Vs Deputy Director, Directorate of Enforcement [Comp.Appeal (AT) 493 of 2018] confirmed by the Hon’ble Supreme Court in C.A.(s) 5546 of 2019, and relied on by this tribunal in Kiran Shah, R.P. of KSL Industries Vs Enforcement Directorate, Kolkata, [Com. Appeal (AT)(Ins) 817 of 2021] and Ashok Kumar Sarawagi, RP of Kohinoor Steel Private Ltd., Vs Enforcement Directorate & another [Com.Appeal (AT)(Ins) No:411 of 2022].

# 13. The appellant however, placed considerable reliance in the authority of the Hon’ble Supreme Court in P. Mohan Raj & Others Vs Shah Brothers Ispat Pvt. Ltd., [(2021)6 SCC 258], where the Court has held that a proceeding under Sec.138 of the Negotiable Instrument Act would fall within Sec.14 of the Act, but the correctness of the same is now doubted by another bench of the Supreme Court recently in Dineshchand Surana Vs UCO Bank, [(2026) ibclaw.in 402 SC], and the issue has now been referred to a larger bench. 

# 14. It now on the above plane, the controversy on jurisdiction of the tribunals constituted under the IBC to travel into the working of other statutes, more particularly the PMLA, to be tested. This is no more res integra as the issue now stands settled in the celebrated authority of the Supreme Court in Embassy Property Developments Private Limited Vs State of Karnataka and Others [(2020)13 SCC 308], where it was held that the jurisdiction of the Adjudicating Authority is limited by the extent to which it is required to be exercised for the purposes of working of the IBC and no more. After all, both IBC and the PMLA, are legislations of the Parliament and as shown earlier, they operate in different domains with different objectives to achieve, and do not overlap in their respective operations. Indeed, the IBBI has also taken note of the issue on jurisdiction, and hence in paragraph 2 of its Circular No. IBBI/CIRP/87/2025, dated 04th November, 2025, it has advised the resolution professionals that “where the assets of the corporate debtor are attached by the ED under the provisions under PMLA, the Insolvency Professional may file an application before the Special Court under Sections 8(7) or 8(8) of the PMLA for restitution of such assets”. Necessarily, the tribunals constituted under the IBC are not the forums which can entertain any plea against the ED.

# 15. In the course of arguments, Sec.32A(2) of the Code was also referred to, but for the present we do not consider a need to discuss it, since Sec.32(A) operates only where there is a successful insolvency resolution process. 

# 16. The writing is on the wall for the appellant: whether to attach or not to attach the properties of a corporate debtor is for the Enforcement Directorate to decide, and where there has been any such attachment by the ED, the adjudicatory mechanism created under the PMLA alone will have jurisdiction to deal with any challenge to it. This will also include any notice issued under Sec.50 of the PMLA. So far as those assets which have been relieved by the appellate authority under the PMLA goes, even though no order of stay has been passed by the Bombay High Court, the fact remains that the correctness of the Order of the appellate authority is being tested there, which again fall within the framework for working the adjudicatory process under the PMLA, the appellant may have to approach the High Court.

# 17. To conclude, we find no merit in the appeals and dismiss the same as we concur with the conclusion of the Adjudicating Authority. No costs. Pending I.A.s, if any, also stand disposed of.

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Raiz Bashirudeen Vs. Tata Capital Financial Services Ltd. - When a Court has to decide whether a person has really guaranteed the due performance of the contract by the principal debtor, all the circumstances concerning the transaction will have to be necessarily considered. Court cannot adopt a hyper technical attitude that the guarantor has not signed the agreement and so he cannot be saddled with the liability. Due regard has to be given to the relative position of the contracting parties and to the entire circumstances which led to the contract.”

  NCLAT (2026.06.02) in Raiz Bashirudeen Vs. Tata Capital Financial Services Ltd.  [(2026) ibclaw.in 774 NCLAT, Company Appeal (AT) (CH) (Ins) No. 400/2024 (IA No. 1089 / 2024)] held that;

• When a Court has to decide whether a person has really guaranteed the due performance of the contract by the principal debtor, all the circumstances concerning the transaction will have to be necessarily considered. Court cannot adopt a hyper technical attitude that the guarantor has not signed the agreement and so he cannot be saddled with the liability. Due regard has to be given to the relative position of the contracting parties and to the entire circumstances which led to the contract.”

Excerpts of the Order; 

The challenge in the instant company appeal as preferred by the Appellant, invoking Section 61 of the I & B Code, 2016, is to the impugned order of 01.08.2024, as it stood rendered in CP (IBC)/31/KOB/2023. By virtue of the impugned order, the proceeding of Section 95 of the I & B Code, 2016, has been directed to be admitted as against the present Appellant for initiation of the Insolvency Resolution Process in the capacity of being the Personal Guarantor, to Corporate Debtor, M/s. Furnace Fabrica (India) Limited.

# 2. There are various facets of the controversy at hand. And more importantly, what is being primarily argued by the Ld. Counsel for the Appellant, is that, the entire proceedings of admission of the application filed under Section 95 of the Code, would be vitiated because the deed of guarantee dated 30.05.2019 of the Appellant and that of the other Co-Guarantor were not placed on record. And furthermore, that the entire proceedings have been carried on the basis of letter of guarantee.

# 3. The facts that could be culled out from the records of the company appeal are that, M/s. Furnace Fabrica (India) Limited, the Corporate Debtor, is a company engaged in the manufacture of structural metal products, tanks, reservoirs and steam generators. In order to continue with their business and to augment the same, admittedly, the Corporate Debtor had approached the Respondent/Financial Creditor in 2019 for availing of the financial assistance, to the tune of Rs. 36,00,00,000/- (Rupees Thirty-Six Crores only) in the shape of a term loan and working capital facility and thereafter an additional amount of Rs. 3,60,00,000/- (Rupees Three Crore Sixty Lakhs Only), totalling to Rs. 39,60,00,000/- (Rupees Thirty-Nine Crore Sixty Lakhs Only).

# 4. It’s not a dispute or a controversy that, the aforesaid sanction of the term loan and the working capital in the year 2019 stood sanctioned by the letter as recorded by the Respondent on 30.05.2019 and the financial assistance was availed under the terms and conditions of the loan agreement that, was executed inter se between the parties on 30.05.2019, acting as to be read as a security for the financial assistance extended by the Respondent to the Corporate Debtor.

# 5. The factum of the default having been committed by the Corporate Debtor is a fact admitted by the account of the Corporate Debtor being declared NPA. The Respondent / Financial Creditor had issued a demand notice on 19.12.2022, which was followed by a loan recall notice dated 10.01.2023. Subsequently, on 14.02.2023, a demand notice in the shape of Form B as required under Section 95(4)(b) was issued raising a demand of the outstanding amount payable along with the interest payable on it, amounting to Rs. 18,95,48,246.53/-.

# 6. In an independent proceeding, the Corporate Debtor, has already been directed to be admitted into the CIRP process by an order passed on 01.11.2023 in CP(IB)/14/KOB/2023, consequent to which an application under Section 95 of the Code, for initiation of the Insolvency Resolution Process was filed against the Appellant / the Personal Guarantor which was registered as CP (IBC)/31/KOB/2023. The proceedings before the Ld. Tribunal was contested by the Appellant by filing the written submissions as well as the objection, primarily concentrating their argument from the perspective that, the entire proceedings would be vitiated for the reason being that in the absence of the guarantee deed dated 30.05.2019 having not been placed on record and in the absence of the terms of guarantee having been established, no proceedings could have been drawn against the Appellant.

# 7. The Ld. Counsel for the Appellant had restricted to press his grounds only from the perspective that, whether the proceedings under Section 95 of the Code, could not have been initiated in the absence of the security for the loan in the shape of a Guarantee Deed dated 30.05.2019, having been placed on record before the Ld. Tribunal, which alone would have established the extent of liability of the Personal Guarantors. He has also contended that in the absence of the Guarantee Deed being on record, the Appellant could not have at all been determined as to be a Personal Guarantor to the Corporate Debtor.

# 8. In response, it was submitted by the Respondent herein that, non-production of the Guarantee Deed of 30.05.2019 will not have any adverse bearing on the proceedings under Section 95 of the Code, owing to the peculiar circumstances of the instant case, where it has already been admitted by the Appellant, of his status of being the Personal Guarantor herein and when admittedly he was the signatory to the term loan agreement dated 30.05.2019 in the capacity of being the Personal Guarantor.

# 9. Hence, irrespective of whether there happens to be any independent Guarantee Agreement on record or not, the same will not override the admission made by the Appellant as regards his status as a guarantor when he himself was the executant of the loan agreement, having signed the same in the capacity of being the Personal Guarantor. The facts pertaining to the terms of the loan agreement, the existence of signatures, the extension of the financial assistance and the description of his status as a Personal Guarantor, were the facts which have not been disputed or raised as a controversy by the Appellant at any stage of the proceedings, either before the Ld. NCLT or even before this Appellate Tribunal.

# 10. Accordingly, taking a contrary stand now, that he has not executed the contract or guarantee, runs contrary to the facts, which has been pleaded on record, and established before the Ld. NCLT also, when the Appellant admits that there had been a Deed of Guarantee too dated 30.05.2019.

# 11. We are of the view that, the underlying and fundamental principles are that a Guarantor’s liability is determined by the deed of guarantees. But we cannot be oblivious and ignorant too of the fact that though the loan agreement between the Financial Creditor and the borrower and the deed of guarantee, are the two independent documents, the relevance of the deed of guarantee is only for the purposes of an assurance of extension of security for loan extended to the Corporate Debtor as given by the Guarantor to the Financial Creditor. Therefore, in case under the given circumstances the very tenements of the deed of guarantee, and the purpose for which it is executed (that is to secure a loan), stands satisfied by the contents of the loan agreement itself, that itself will meet the object and the purpose of execution of the deed of guarantee, which is the case in the instant appeal where guarantor himself is the signatory to the loan agreement.

# 12. It had never been the case for the Appellant, at any point of time that there was no deed of guarantee executed. The only exception that was being attempted to be carved out by the Appellant during the course of argument in the instant company appeal is that, the deed of guarantee was not placed on record. Although the ratio propounded by the superior courts do lay down a principle that a separate guarantee contract is necessary to establish a guarantor’s liability, but that in itself exclusively cannot be taken as to be the basis to hold the proceedings to be vitiated, because by taking into consideration the contents of the loan agreement itself, when the execution is admitted by the Appellant and particularly when it is admitted by the Appellant that they were the signatories to it, the purpose to establish the execution of deed of guarantee stands satisfied, when the germane document contains the signature of the Appellant as a guarantor.

# 13. The purpose of the deed of guarantee is to establish a liability, which will be restricted by the terms of the contract in an event of default by the principal borrower. But once the status of the Personal Guarantor itself is a fact, which stands determined and settled by the own conduct of the Personal Guarantor having signed the loan agreement, that itself will meet the object and the necessity of execution of the deed of guarantee.

# 14. The argument of the Ld. Counsel for the Appellant is, that the proceedings are vitiated due to non-production of the deed of guarantee executed by the Respondent/Financial Creditor for the purposes to determine the Appellant’s status as to be a Personal Guarantor. We could have a reference to the definition of “Personal Guarantor” as given under Section 5(22) of the Code, which reads as under: –

• “(22) “personal guarantor” means an individual who is the surety in a contract of guarantee to a corporate debtor;”

# 15. The legislature has contemplated that the Personal Guarantor is an individual who is the “surety in a contract of guarantee to the Corporate Debtor”. Thus, it has to be examined as to whether the same is satisfied in the documents filed by the Financial Creditor. It is a fact that, the Appellant has not denied that the letter of guarantee was executed. Further, the clauses pertaining to the loan agreement itself, also describe the Appellant as a Guarantor. The same is extracted hereunder: –

Signed and delivered by the within named GUARANTOR – 1 for self or through the hands of A. Basheruddin its Authorised Signatory/s.	GUARANTOR – 1 SIGNATURE
Signed and delivered by the within named GUARANTOR – 2 for self or through the hands of Raiz Basheeruddin its Authorised Signatory/s.	GUARANTOR – 2 SIGNATURE

# 16. A similar case, where the Personal Guarantor had been the signatory to a loan agreement, but no guarantee agreement was executed, came up for consideration before the Hon’ble High Court of Kerala, as to whether at all, the said Personal Guarantor could be saddled with the liability in the absence of the guarantee agreement having been signed. The Hon’ble High Court of Kerala, in the matter of PJ Rajappan vs Associated Industries Private Limited (06.11.1989-KERHC), took the following view: –

• “4. A contract of guarantee is a tripartite agreement involving the principal debtor, surety and creditor. In a case where there is evidence of the involvement of a guarantor, the mere failure on his part in not signing the agreement is not sufficient to demolish otherwise acceptable evidence of his involvement in the transaction leading to the conclusion that he guaranteed the due performance of the contract by the principal debtor. When a Court has to decide whether a person has really guaranteed the due performance of the contract by the principal debtor, all the circumstances concerning the transaction will have to be necessarily considered. Court cannot adopt a hyper technical attitude that the guarantor has not signed the agreement and so he cannot be saddled with the liability. Due regard has to be given to the relative position of the contracting parties and to the entire circumstances which led to the contract.”

# 17. Owing to the aforesaid, we need to find out whether the Personal Guarantor had, in fact, really guaranteed the due performance of the contract loan agreement by the Corporate Debtor, and this fact is borne out from his signing the letter of guarantee, from his own admission, during the course of argument and also by way of pleadings and by the contents of the document itself. When there is no plea of fraud ever raised in relation to the signature of the Applicant in the status of Personal Guarantor, appearing in the loan agreement itself, the Appellant now cannot deny the liability of his status as that being of a Personal Guarantor.

# 18. This could be further confirmed from the audited books of accounts of the Corporate Debtor, which show the existence of loan and from the clauses of the agreement of the term loan dated 30.05.2019 which records the status of the Appellant being the Guarantor for the loan facility being extended loan to the borrower as per the terms and conditions appearing in the agreement, in which the Appellant as a Guarantor has guaranteed by affixing his signature to the said document, the extension of financial assistance and the discharge of its obligations. The relevant extract from the loan agreement dated 30.09.2019 is given hereunder: –

• 8. Guarantee

• a) In consideration of the Lender, at the request of the Guarantor, granting the facility to the Borrower on the terms and conditions appearing in the T&Cs and this Agreement, the Guarantor, hereby guarantees the due payment and discharge of all the Obligors’ liabilities to the Lender and performance of the obligations of them Obligors under this Facility Documents, whether such liability is incurred before or after the date hereof, and whether incurred by the Obligors alone or jointly with other(s), and in whatever capacity whether as Obligor or surety or otherwise and whether such liabilities have matured or not, and whether they are absolute or contingent, including al liabilities in respect of advances, letters of credit, cheques, hundis, bills, notes, drafts and other negotiable or non-negotiable instruments drawn, accepted, endorsed or guaranteed by the Obligors, and in respect of interest with monthly/quarterly rests, commission and other usual or reasonable banking charges and in respect of all costs, charges and expenses which the Lender may incur in paying any rents, rates. taxes, duties, calls, instalments, legal or other professional charges, or other outgoings whether for insurance, repairs maintenance, management, realization or otherwise in respect of the Secured Assets or any other property, movable or immovable or any chattels or actionable claims of scrip securities or title deeds pledged, mortgaged or assigned to or deposited with the Lender as security for the due payment and discharge of the Obligators liability to the Lender.

• b) The Guarantor hereby undertakes and covenants to abide and comply with the Guarantor’s undertaking as more particularly given in the T & Cs.

# 19. Owing to the above, the contentions of the Ld. Counsel for the Appellant, that the letter of guarantee may not be construed as to be a deed of guarantee for the purposes of invocation of Section 95 of the Code, does not appeal to this Appellate Tribunal. If we consider the contents of the letter of guarantee, the execution of which has been admitted by the Appellant, the said contents go in consonance to the ratio propounded by the judgment of the Hon’ble High Court of Kerala, that the substantive purpose is to establish a security having been extended by the Guarantors towards the loan extended to the Corporate Debtor.

# 20. Owing to the above, we are of the view that, even if the deed of guarantee was not on record, because the Appellant, in the capacity of the Personal Guarantor, admits the execution of the letter of guarantee by him, which in itself contains the details of the liability of the Guarantors towards the loan extended to the Corporate Debtor, the said letter of guarantee in itself would suffice the purpose to establish the status of the Appellant as to be the Personal Guarantor as defined under I & B Code 2016, and also the extent of his liability.

# 21. More particularly, when under the given set of circumstances and in order to meet out the principles as propounded by the court of law that strict determination is not required to be made by virtue of an interpretation to be given to the contents of the contract of guarantee, and when the purpose of the same is served by reading other correlated documents, which establish the acceptance of guarantee by the Personal Guarantor, which in this case could be culled out from the loan agreement letter of guarantee, itself, the execution of which has been admitted, where the Appellant is also one of the signatory, having accepted his status of being that of the Personal Guarantor, in that eventuality, the very purpose stands achieved. It would not vitiate the proceeding under Section 95 of the Code. Hence, the initiation of the IRP against the Appellant, Personal Guarantor herein, by the impugned order is not vitiated in the eyes of law.

# 22. Thus, the ‘company appeal’ lacks ‘merit’ and the same is accordingly ‘dismissed’.

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Chandra Kant Khemka, vs Mr. Pratim Bayal & Anr. - It is also well settled that a suspended Board of Directors is not rendered completely remediless and may invoke the jurisdiction of this Hon’ble Adjudicating Authority under Section 60(5) in appropriate cases, especially where the case is related to conduct of the CIRP, preservation of assets, or violation of statutory duties by the RP or CoC.

 NCLT Kolkata (2026.05.04) in Chandra Kant Khemka, vs Mr. Pratim Bayal & Anr. [A (IB) No. 212/KB/2025 And IA (IB) No. 1446/KB/2025 In CP (IB) No. 1377/KB/2020 ] held that;

• It is also well settled that a suspended Board of Directors is not rendered completely remediless and may invoke the jurisdiction of this Hon’ble Adjudicating Authority under Section 60(5) in appropriate cases, especially where the case is related to conduct of the CIRP, preservation of assets, or violation of statutory duties by the RP or CoC.

• In the case of Vijay Kumar Jain vs. Standard Chartered Bank and Ors. (31.01.2019 - SC) the Hon'ble Supreme Court recognized the right of members of the suspended Board of Directors of a corporate debtor to receive insolvency resolution plans submitted before the Resolution Professional, in order to effectively participate in the meetings of Committee of Creditors (CoC).

• Further in the case of Anand Kariwala v. Mr. Partha Pratim Ghosh RP, (2022) ibclaw.in 178 NCLT, it was held that although the powers of the suspended Board of Directors of a Corporate Debtor are suspended under Section 17(1)(b) of the I&B Code and their function is limited to assisting and cooperating with the Resolution Professional (RP), but they are not barred from objecting to the acts of the RP if such acts are prejudicial to the Corporate Debtor or violate any law or procedural requirement.

Excerpts of the Order;

IA (IB) No. 212/KB/2025

# 1. The Court convened in hybrid mode.

# 2. Heard Ld. Counsels for the parties.

# 3. The IA (IB) 212/KB/2025 has been preferred under Section 60(5) of the I&B Code, by Mr. Chandra Kant Khemka, one of the Directors of the suspended Board of Directors of Nandini Impex Private Limited (CD), which is currently undergoing CIRP against the Committee of Creditors of Nandini Impex Private Limited (CD) to seek the following reliefs:

• “a. A fit and proper person be appointed as Receiver to take charge of the assets and properties of the Corporate Debtor:

• b. An Order directing the Learned Receiver so appointed to make an inventory of the machineries and equipment of the Corporate Debtor lying in the sites mentioned in paragraph 11 above and to furnish a Report on the status of the same within a period of two (2) weeks or within such time as this Hon'ble Tribunal may deem fit and proper;

• c. An Order be passed directing the Respondent No. 1/CoC to forthwith disburse funds to the Learned Receiver for the purpose of making payment of the pending wages and salaries of the employees and workers of the Corporate Debtor;

• d. An order directing the Learned Receiver to make payment of the pending wages and salaries of the employees and workers of the Corporate Debtor upon receiving the same from the Respondent No. 1/CoC;

• e. An Order be passed directing the Respondent No. 1/CoC to forthwith disburse funds to the Learned Receiver for the purpose of making payment of the arrears of rent due and owing to the landowners and yard owners at Najafgarh, Panchkula, Balasore and Bhubaneswar;

• f. An Order be passed directing the Receiver to forthwith make payment of the arrears of rent due and owing to the landowners and yard owners at Najafgarh, Panchkula, Balasore and Bhubaneswar upon receiving the same from the Respondent No. 1/CoC;

• g. Such further or other order or orders and/or direction or directions be passed as this Hon'ble Tribunal may deem fit and proper.”

# 4. Factual Matrix:

4.1. The Applicant, Mr. Chandra Kant Khemka, one of the Directors of the suspended Board of Directors of Nandini Impex Private Limited (CD), which is currently undergoing CIRP.

4.2. The Respondent No. 1, UCO Bank, is the sole member of the COC of the CD currently undergoing CIRP.

4.3. The CD was admitted into CIRP, moratorium was declared on the CD in terms of Section 14 of the I&B Code and Mr. Santanu Bhattacharjee was appointed as the RP of the CD vide an order dated 20.09.2022.

4.4. The Applicant being aggrieved by the inactions on the part of the Respondent No. 1 preferred the application under Section 60(5) of the I&B Code, 2016, to ensure that there is no further depletion in the value of assets of the CD at the hands of the R1.

 

# 5. Submissions of the Applicant:

5.1. It is submitted that the R1 has failed to take steps to protect and preserve the value of the CD and keep it as a going concern, and also contributed to the depletion of the assets of the CD.

5.2. It is submitted that even after 2.5 years passed since the order of admission, there has been no resolution forthcoming for the CD primarily due to the mode and manner by which the CIRP of the CD has been conducted at the behest of the R1.

5.3. It is further submitted that the wages and salaries of the staff, workers, and employees of the CD have not been paid since 11 months which has adversely impacted the operations of the CD and they have expressed their deep anguish at the miserable affairs of the CD.

5.4. It is submitted that this Hon’ble Tribunal had by an order dated 30.09.2024 specifically directed the R1 to provide funds for making payment of salaries and wages to the workers and employees, and the said order was communicated by the RP and Agenda No. 5 of the Minutes of the 15 COC meetings convened on 28.10.2024 specifically records it, but the R1 had failed to comply with such directions.

5.5. It is further submitted that the Applicant has been informed that the rent for the equipment store locations remain unpaid for several months and in some cases for more than a year.

5.6. Further that during the hearing of the instant petition on or about 07.01.2025, it came to the knowledge of the Applicant that the RP of the CD has resigned, but no intimation or reasons were provided for such resignation, and even after a lapse of substantial period of time, the R1 has failed to take any step for the replacement of the RP.

5.7. It is submitted that the untimely resignation of the RP of the CD has come at a crucial time in respect of the affairs of the CD since it was executing the balance pipeline works for IOCL at the West Bengal/Odisha border and the RP along with the Applicant were due to hold vital discussions with the IOCL regarding such work in December itself.

5.8. Further that the machineries and equipment of the CD are in a defunct condition at the diverse sites of the CD due to non-maintenance of the same and some equipments are lying in various locations unsheltered from the rain, resulting in rapid wear and tear.

5.9. It is alleged that the inactions on the part of R1 in preserving the machineries and equipment of the CD have severely depreciated and depleted the overall value of the assets of the CD.

5.10. Further that the falling value of the assets of the CD vitally affects the Applicant as the Applicant will have to ultimately bear the brunt of a failed resolution, which is clearly attributable to the erring conduct of the R1.

5.11. It is contended that the issue regarding the non payment of dues of the workers and diminishing value of the machines and equipment were raised by the Applicant in the 17th meeting of the COC of the CD that took place on 24.03.2025,

5.12. Further that the R1 by its wrongful conduct is acting against the interests of the CD and is causing tremendous loss to the value of the assets of the CD.

# 6. Submissions of the Respondent:

6.1. Per contra, the Ld. Counsels for the Respondent would submit that the present application is not maintainable as the Applicant has no locus to file the instant petition.

6.2. It is submitted that the role of the suspended BOD is very restricted after the CIRP commences and he is required to provide all the information, documents to the RP and is required to assist the RP in any way in the CIRP, and apart from this the suspended member of the CD does not have any other locus in the CIRP of the CD.

6.3. It is further submitted that the order dated 30.09.2025 was passed in the absence of the COC, and the order provides that “COC members may provide funds accordingly” to mean that the funds which are approved by the COC shall be paid to the new incoming RP after his appointment, and therefore denied that there was any ‘specific direction’ on COC to make the payments.

6.4. It is submitted further that the COC needs details of the statements/accounts on the income and expenditure of the funds of the CD during the CIRP period and also of the funds available as on the CIRP admission date. The justified costs shall be approved and paid by the CoC to the Resolution Professional (RP), and not the costs merely based on the statement of the suspended Board.

 

I.A. (IB) No. 1446/KB/2025

7. The IA (IB) 1446/KB/2025 under Section 60(5) of the I&B Code has been preferred by Mr. Chandra Kant Khemka, one of the Directors of the suspended Board of Directors of Nandini Impex Private Limited (CD), which is currently undergoing CIRP to seek the following reliefs:

• “a. Declaration that the Corporate Insolvency Resolution Process has depleted the value of the Corporate Debtor by causing loss calculated at Rs. 500 Crores on and from September, 2022 till date,

• b. Direction be passed on the Resolution Professional to forthwith file an affidavit, inter-alia, disclosing the present status of the steps taken by him to visit the sites of the Corporate Debtor where the assets and equipment are lying:

• c. Direction be passed on the Resolution Professional to forthwith file an affidavit, inter-alia, disclosing the steps taken by him in resolving the issues with the IOCL;

• d. Direction be passed on the Resolution Professional to forthwith provide a copy of the Information Memorandum to the Applicant;

• e. Stay of the CIRP pending disposal of the present application;

• f. Such further or other order or orders and/or direction or directions be passed as this Hon'ble Tribunal may deem fit and proper.”

# 8. Submissions of the Applicant:

8.1. It is submitted that the R2 belatedly sprang into action for the first time on or about February, 2025 by appointing the R1, Pratim Bayal, as the RP, upon apprehending that the prayers made in the IA No. 2029 of 2025 would be allowed and a Special Officer would be appointed to oversee the CIRP.

8.2. It is submitted that at the 16th COC meeting held on 06.03.2025, the RP assured the Applicant that he would prioritize the payment of the staff’s wages, but the payments were made in a whimsical and arbitrary manner as on July, 2025, a sum of Rs. 48,26,102/- was due towards unpaid salaries and wages.

8.3. It is further submitted that the RP has failed to take control and custody of the CD’s machinery and equipment lying at several locations despite repeated requests and reminders by the Applicant.

8.4. It is further submitted that the Applicant has urged the RP in several COC meetings to take possession of the assets of the CD or at least conduct an inspection of the said assets, as the last valuation was done in early 2023, but all such requests went in vain.

8.5. It is further submitted that the RP has not taken control and custody of the Najafgarh and Panchkula sites, wherein several plants and machinery of the CD are lying.

8.6. It is further submitted that the RP and the COC have proceeded to approve a resolution plan based on a valuation which does not take into account the present value of the CD’s assets, particularly the sites wherein the RP is yet to take control or custody, and thus failed to take measures to preserve the CD’s status as a going concern or maximization of the assets of the CD.

8.7. It is further submitted that the RP conducted a desktop valuation of the said sites due to its inability to access them, without seeking police assistance from this Hon’ble Tribunal for taking control and custody of the sites at an earlier stage of CIRP.

8.8. It is further submitted that the COC’s refusal to disburse funds to enable the RP to clear the outstanding rent has led to constant depletion and deterioration of the CD’s assets. Further, several assets have been stolen from the Haryana site as well.

8.9. It is further submitted that although the RP was duty-bound to ensure that the CD is run as a going concern, no steps have been taken by the RP to achieve the same or to ensure that fresh EPC contracts are awarded to the CD. In fact, the existing business relationship with IOCL has been jeopardised, and the CD has been holiday-listed by IOCL for a period of two years.

8.10. It is further submitted that though the RP in his reply affidavit has admitted that the resolution plan is yet to be approved by this Hon’ble Tribunal, the RP has already delegated the resolution of disputes with IOCL to the SRA’s representative.

8.11. It is further submitted that the negligence and failure on the part of the COC and the RP have led to depletion and erosion of the CD’s assets, and the CD has further incurred loss to the extent of Rs. 500 crores.

8.12. It is further submitted that the Applicant’s liability qua the purported personal guarantor will substantially increase due to approval of a resolution plan, which is based on a valuation conducted in 2023, due to non-accessibility of the Najafgarh and Panchkula sites.

# 9. Submissions of the Respondents:

9.1. Submission of Respondent No. 1:

9.1.1. Per contra, the ld. Counsel for the Respondent 1 would submit that upon his appointment, he undertook a detailed assessment of the financial and operational condition of the CD, reviewed the records of the CD that included a salary liability register, and found out that a significant portion of the workforce, constituting nearly 70% of the employee base as unutilised and not engaged in any productive or revenue generating functions.

9.1.2. That the R1 initiated several corrective measures, including rationalisation of employee strength, reduction of salary expenditure, and efforts to secure access to certain storage sites where machinery of the CD was locked and remained inaccessible.

9.1.3. It is submitted that the COC had also deliberated upon reduction of employees, considering the fact that the CD was not carrying any active business operations, and the majority of employees were not rendering any meaningful services, and in the absence of any cash flow of the CD, such continuation would impose undue and avoidable financial burden on the COC by way of salary and related payments.

9.1.4. That after a detailed deliberation between the COC members and the RP, in the presence of the BOD, the salary structure of the employees/workmen was found to be disproportionately high and accordingly the COC resolved to reduce the salaries of certain employees to a reasonable level commensurate with limited operational requirements of the CD and in consonance with the principle of value maximisation enshrined under Section 20(2)(e) and Section 25 of the I&B Code, 2016.

9.1.5. It is submitted that non-payment of salary beyond 30.09.2024 is not attributable to any inaction on the part of the R1, but arises solely on account of absence of work and deliberate non-cooperation by certain employees.

9.1.6. It is further submitted that in compliance with the order dated 30.09.2024 passed by this Adjudicating Authority, the R1 has already disbursed sums towards employees’ salaries and wages, and any inflated or unsubstantiated claims cannot be recognised as CIRP costs.

9.1.7. It is further contended that, though substantial rent has been paid, access to key asset sites at Najafgarh and Panchkula has been obstructed due to the non-cooperation and hostile conduct of landlords.

9.1.8. It is further submitted that to safeguard other assets, partial rent has been paid, and funding has been sought from the CoC.

9.1.9. Further that the corporate debtor was placed on a holiday list of IOCL due to pre-CIRP contractual breaches by the suspended BOD, and the RP conducted meetings with IOCL, which resulted in temporary relief and extension of time for completion of work.

9.1.10. That the delays and disputes between IOCL and the CD arose due to mismanagement and unauthorized subcontracting by the suspended Board of Directors, and not due to any lapse on the part of the RP.

9.1.11. That the IM has been duly updated from time to time and the same has been duly shared with the prospective RA as required by the I&B Code, 2016.

9.1.12. It is therefore alleged that the present application is misconceived, mala fide, and an abuse of the process of law, and is motivated by extraneous and personal considerations with the intent to exert undue pressure on the Committee of Creditors (COC) and the RP by misrepresenting facts and inflating the cost structure with the sole objective of delaying and obstructing the CIRP.

9.2. Submission of Respondent No. 2:

9.2.1. Ld. Counsels for the R2 submitted that the present application is not maintainable and challenged the locus standi of the Applicant/SBOD to file this instant application.

9.2.2. It is submitted that the order dated 30.09.2024 was passed in the absence of the COC, and the COC is not bound and will not pay whatever figures are stated by the Applicant as unpaid wages.

9.2.3. It is further submitted that there was no depletion of assets of the CD as the CD did not have any contract and assets from the starting day of the CIRP.

# 10. Analysis and Findings:

10.1. We heard the parties and perused the records.

10.2. Upon consideration of the pleadings, documents and rival submissions, the main issue that arises for determination is:

• 10.2.1. Whether the present application is maintainable at the instance of one of the erstwhile director who is part of the SBOD of the CD?

• 10.2.2. Whether there has been failure on the part of the Committee of Creditors (CoC) and the Resolution Professional (RP) in preserving and maximising the value of the assets of the CD?

I. Whether the present application is maintainable at the instance of one of the erstwhile director, who is part of the SBOD of the CD?

10.3. It is not in dispute that upon commencement of the Corporate Insolvency Resolution Process (CIRP), the powers of the Board of Directors stand suspended and vest in the Interim Resolution Professional/Resolution Professional in terms of Section 17 of the I&B Code, and the role of the suspended Board of Directors is limited to cooperation and assistance to the RP.

10.4. It is also well settled that a suspended Board of Directors is not rendered completely remediless and may invoke the jurisdiction of this Hon’ble Adjudicating Authority under Section 60(5) in appropriate cases, especially where the case is related to conduct of the CIRP, preservation of assets, or violation of statutory duties by the RP or CoC.

10.5. In the case of Vijay Kumar Jain vs. Standard Chartered Bank and Ors. (31.01.2019 - SC) the Hon'ble Supreme Court recognized the right of members of the suspended Board of Directors of a corporate debtor to receive insolvency resolution plans submitted before the Resolution Professional, in order to effectively participate in the meetings of Committee of Creditors (CoC).

10.6. Further in the case of Anand Kariwala v. Mr. Partha Pratim Ghosh RP, (2022) ibclaw.in 178 NCLT, it was held that although the powers of the suspended Board of Directors of a Corporate Debtor are suspended under Section 17(1)(b) of the I&B Code and their function is limited to assisting and cooperating with the Resolution Professional (RP), but they are not barred from objecting to the acts of the RP if such acts are prejudicial to the Corporate Debtor or violate any law or procedural requirement.

10.7. Therefore, the objection of the Respondent that the SBOD does not have locus to maintain the Application is not sustainable in law.

II. Whether there has been failure on the part of the Committee of Creditors (CoC) and the Resolution Professional (RP) in preserving and maximising the value of the assets of the CD?

10.8. Section 20 and 25 of I&B Code, 2016 mandate that the RP shall preserve and protect the assets of the Corporate Debtor and manage its operations as a going concern.

10.9. The COC though guided by the commercial wisdom is expected to take decisions that further the objectives of value maximisation of the wealth of the CD.

10.10. It is observed that certain key asset locations, including Najafgarh and Panchkula, remained beyond the effective control and custody of the RP due to landlord obstruction and access-related disputes.

10.11. The RP is expected to act promptly and take necessary legal steps, such as approaching this Tribunal to seek police assistance and safeguard the assets of the CD.

10.12. It is observed that the record does not conclusively establish wilful negligence or mala fide conduct

10.13. It is observed that the alleged depletion of value and erosion of assets of CD to the extent of Rs. 500 crores is not substantiated and involves complex factual and financial assessment, including valuation metrics, market conditions, operational viability and many others.

10.14. Further, the record does not conclusively establish wilful negligence or mala fide conduct on the part of the COC or the RP, and any diminution or depletion in value of assets of the CD cannot be attributed solely on account of delay or operational challenges.

11. Order:

11.1. In view of the foregoing discussions, the RP is directed to take steps within a period of 2 weeks, including taking police assistance if necessary, to secure access to all sites, where the assets of the CD are located and shall conduct a physical inspection of all accessible assets and prepare a comprehensive report on the same and furnish it to this Tribunal within a period of 4 weeks.

11.2. The RP shall place complete and verified details of outstanding wages/salaries, outstanding rents of assets of the CD before the COC and the COC shall consider and take a reasoned decision on this matter.

11.3. The IA (IB) No. 212/KB/2025 and IA (IB) 1446/KB/2025 thus stand partly allowed and disposed of.

# 12. The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

# 13. Certified Copy of this order may be issued, if applied for, upon compliance with all requisite formalities.

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