Surendra Seth vs. Ashish Singh, RP of Ferrous Infrastructure Pvt. Ltd. and Ors. - We are, therefore, of the considered view that the Applicant has failed to establish that the NIL provision made towards his admitted claim is in violation of the Code. The Applicant, being a related-party Financial Creditor, cannot claim parity with unrelated Financial Creditors merely on the ground that his claim has been admitted. The commercial decision of the CoC, in the absence of any violation of the mandatory provisions of the Code, does not warrant interference by this Adjudicating Authority.

  NCLT ND (2026.08.25) in Surendra Seth vs. Ashish Singh, RP of Ferrous Infrastructure Pvt. Ltd. and Ors. [(2026) ibclaw.in 3407 NCLT, IA-4128/2025 in IB-20(ND)/2022] held that; 

• We are, therefore, of the considered view that the Applicant has failed to establish that the NIL provision made towards his admitted claim is in violation of the Code. The Applicant, being a related-party Financial Creditor, cannot claim parity with unrelated Financial Creditors merely on the ground that his claim has been admitted. The commercial decision of the CoC, in the absence of any violation of the mandatory provisions of the Code, does not warrant interference by this Adjudicating Authority.

Excerpts of the Order; 

# 1. The present Application has been filed by the Applicant, Mr. Surender Seth, Financial Creditor of the Corporate Debtor, challenging the Resolution Plans submitted by Amrut Homes Homebuyers Association (Respondent No. 2) and Consortium Of Genetic Construction (Respondent No. 3), the Successful Resolution Applicants (“SRA”), which were approved by the Committee of Creditors (“CoC”) in its 37th Meeting.. The Applicant seeks the following reliefs:

• a) Allow the Objections of the Applicant and accordingly, set aside the decision of the COC approving the Impugned Resolution Plans of the Respondent Nos. 2 and 3;

• b) Direct COC to reconsider the Impugned Resolution Plans and invite additional resolution plans for maximization of value, which are compliant, implementable and commercially viable; and

• c) Pass any other Order(s) as this Hon’ble Court may deem fit in the facts and circumstances of the case.

# 2. Brief Background of the Case:

The facts that are relevant for the determination of the issues involved in this application are stated as follows:

i. The Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor was initiated vide order dated 02.02.2023 passed by this Adjudicating Authority under Section 7 of the Code. Mr. Narendra Kumar Sharma was appointed as the Interim Resolution Professional, who was subsequently confirmed as the Resolution Professional and was later replaced by Mr. Ashish Singh vide order dated 19.09.2023.

ii. Pursuant to the CIRP, the Resolution Professional invited Expressions of Interest from prospective resolution applicants. Respondent Nos. 2 and 3 submitted Resolution Plans, and the Resolution Plan submitted by the Successful Resolution Applicants came to be approved by the CoC. The present Application assails the said approved Resolution Plans.

# 3. Submissions of the Applicant:

i. The Applicant submits that pursuant to the initiation of CIRP, the erstwhile Resolution Professional issued a public announcement in Form A on 09.02.2023 inviting claims from creditors. In response thereto, the Applicant submitted a claim of Rs. 2,90,32,766/-, comprising principal of Rs. 2,57,39,839/- and interest of Rs. 32,92,927/-. However, the Resolution Professional admitted only the principal amount of Rs. 2,57,39,839/-.

ii. It is submitted that Respondent No. 1 invited Expressions of Interest (“EOI”) for resolution of the Corporate Debtor and its projects at Faridabad and Dharuhera, pursuant to which Respondent Nos. 2 and 3 submitted Resolution Plans. The Resolution Plan of the Successful Resolution Applicants were approved by the Committee of Creditors (“CoC”) in its 37th meeting, though the same was opposed by the erstwhile management.

iii. The Applicant contends that the impugned Resolution Plans cannot be said to have been approved in the valid exercise of the commercial wisdom of the CoC, as such commercial wisdom cannot override the mandatory provisions of the Code. It is submitted that the Resolution Plan violates Sections 30(2), 30(4) and 53 of the Code by extinguishing the Applicant’s admitted claim without assigning any reason and without balancing the interests of all stakeholders.

iv. The Applicant submits that the admitted claim arose from financial assistance advanced to the Corporate Debtor for its day-to-day affairs. Despite the Resolution Professional admitting the claim, no payment has been provided under the Resolution Plan and no justification has been furnished for excluding the Applicant.

v. It is further submitted that the Resolution Professional and the CoC have deliberately approved the impugned Resolution Plans while denying the Applicant’s admitted dues. Reliance has been placed on Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors., (2020) 8 SCC 531 to contend that a Resolution Plan providing ‘Nil’ payment to an admitted creditor does not balance the interests of stakeholders and cannot be sustained in law.

vi. The Applicant further contends that the Resolution Plans gives undue preference to Operational Creditors over the Applicant, who is an Unsecured Financial Creditor, thereby defeating the waterfall mechanism under Section 53 of the Code and violating Sections 30(2) and 30(4). It is submitted that the Respondents have arbitrarily exercised the purported commercial wisdom of the CoC in disregard of the statutory scheme.

vii. The Applicant also alleges that Respondent No. 1 acted in collusion with Respondent Nos. 2 and 3 and committed material irregularity in the conduct of the CIRP by facilitating approval of the Resolution Plans which extinguishes the admitted claims of related parties, including the Applicant, while proposing payments to other creditors without any justification. It is, therefore, prayed that the impugned Resolution Plan be set aside or remitted to the CoC for reconsideration in accordance with law.

# 4. Submissions of the Respondent No. 1:

i. The Resolution Professional opposes the Application on the ground that the Applicant is an admitted related party Financial Creditor of the Corporate Debtor and, therefore, cannot claim parity with unrelated Financial Creditors. It is submitted that while the Applicant’s principal claim of Rs. 2,57,39,839/- was admitted, the interest component was rejected and the Applicant never challenged such rejection.

ii. The Resolution Professional submits that the Insolvency and Bankruptcy Code does not require related party creditors to be treated at par with unrelated financial creditors under a Resolution Plan. Reliance is placed upon the judgment of the Hon’ble Supreme Court in K. Rajagopalan vs. Dr. Periasamy Palani Gounder andAnr [2023 SCC OnLine SC 574], wherein it was held that there is no statutory mandate requiring parity of payment to related party creditors and that differential treatment is permissible subject to compliance with the provisions of the Code.

iii. The RP submits that the Applicant has erroneously relied upon the judgment in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, as the observations therein pertain to operational creditors and cannot be extended to related party financial creditors, who constitute a distinct class under the Code.

iv. The Resolution Professional further relies upon the judgment of the Hon’ble NCLAT in Manav Investments and Trading Co. Ltd. Vs. Pratim Bayal and Ors. [Company Appeal (AT) (Insolvency) No. 1501 of 2023], reiterating that there is no obligation under the Code to provide payment to related party creditors at par with unrelated creditors.

v. It is further submitted that the Resolution Plan was approved by the Committee of Creditors after due deliberation and in exercise of its commercial wisdom. The Applicant, being a related party financial creditor and not a member of the Committee of Creditors, has no locus to challenge the commercial decision of the CoC.

vi. Reliance has also been placed upon the judgments of the Hon’ble Supreme Court in K. Sashidhar Vs Indian Overseas Bank and Ors., (2019) 12 Supreme Court Cases 150 and Maharashtra Seamless Limited v. Padmanabhan Venkatesh and Ors. (C.A. No. 4242 of 2019”), wherein it has been held that the commercial wisdom of the Committee of Creditors is non-justiciable and judicial review is confined to examining compliance with Section 30(2) of the Code.

vii. The Resolution Professional accordingly submits that the approved Resolution Plan fully complies with the provisions of the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations and does not warrant any interference by this Adjudicating Authority. It is, therefore, prayed that the present Application be dismissed.

# 5. Submission of Respondent no. 2:

i. The Respondent No. 2, the Successful Resolution Applicant has filed written statement where he has denied the averments made in the Application and adopts the submissions advanced by the Resolution Professional. He submits that the Applicant is admittedly a related party of the Corporate Debtor and, therefore, forms a distinct class under the statutory framework of the Code. It is contended that related parties are expressly excluded from the Committee of Creditors under Section 21(2) of the Code and cannot seek treatment at par with unrelated financial creditors.

ii. The SRA submits that the approved Resolution Plan lawfully extinguishes the claims of related parties in accordance with the commercial wisdom of the CoC and the law laid down by the Hon’ble Supreme Court in M.K. Rajagopalan case. Reliance is also placed upon West Coast Paper Mills Ltd. v. Bijay Murmuria and Ors. [CA (AT)(INS) No. 1272 of 2019 to contend that no infirmity arises merely because no provision has been made for payment to related party creditors.

iii. The SRA further submits that the allegations of fraud, collusion, undervaluation and material irregularity are bald, unsupported by any evidence and have been raised only to challenge the commercial decision of the CoC. Since the Resolution Plan has been approved by an overwhelming majority of 98.77% of the CoC after due consideration, the present Application is liable to be dismissed.

# 6. Finding and Analysis

i. We have heard the submissions of Ld. Counsel appearing for the Applicant, Ld. Counsel appearing for the Resolution Professional and Ld. Counsel appearing for the Successful Resolution Applicants and have perused the records.

ii. At the outset, it is not in dispute that the Corporate Debtor was admitted into CIRP by this Adjudicating Authority vide order dated 02.02.2023 under Section 7 of the Code. The Applicant submitted a claim of Rs. 2,90,32,766/-, comprising principal amount of Rs. 2,57,39,839/- and interest of Rs. 32,92,927/-. The Resolution Professional admitted the principal amount of Rs. 2,57,39,839/- and did not admit the interest component. It is also undisputed that the Applicant did not challenge the rejection of the interest component.

iii. It is submitted by the Applicant that the Resolution Plans submitted by the Successful Resolution Applicants were considered and approved by the Committee of Creditors in its 37th meeting with a voting share of 98.77%. The Applicant has challenged the said approval primarily on the ground that no amount has been provided towards his admitted claim and that the Resolution Plans allegedly violate Sections 30(2), 30(4) and 53 of the Code.

iv. On the contrary, the Resolution Professional has submitted that the Applicant is a related party Financial Creditor of the Corporate Debtor and, therefore, cannot claim parity with unrelated Financial Creditors. It is submitted that although the principal claim of Rs. 2,57,39,839/- was admitted, no provision was required to be made towards the said claim under the Resolution Plan. Reliance has been placed upon the judgment of the Hon’ble Supreme Court in M.K. Rajagopalan v. Dr. Periasamy Palani Gounder & Anr., 2023 (SCC OnLine SC 574), to contend that the Code does not mandate parity of payment between related party and unrelated creditors.

v. The Resolution Professional has further submitted that the Applicant cannot seek to question the commercial wisdom of the CoC, particularly when the Resolution Plan has been approved by an overwhelming majority of 98.77%. It is contended that the jurisdiction of the Adjudicating Authority is confined to examining the Resolution Plan within the parameters prescribed under Section 30(2) of the Code. Reliance has also been placed upon the judgments of the Hon’ble Supreme Court in K. Sashidhar v. Indian Overseas Bank & Ors., (2019) 12 SCC 150 and Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh & Ors.

vi. Respondent No. 2, being one of the Successful Resolution Applicants, has also submitted that the Applicant is a related party of the Corporate Debtor and falls within a distinct category under the Code. It is contended that the Applicant, being a related party, was not entitled to participate in the CoC and cannot seek parity with unrelated Financial Creditors. It is further submitted that the allegations of collusion, fraud and material irregularity are bald allegations unsupported by any material placed on record.

vii. From the aforesaid facts and contentions, the issue that requires determination is whether the Resolution Plans approved by the CoC in its 37th meeting are liable to be interfered with on the ground that NIL payment has been provided towards the admitted claim of the Applicant, who is an unsecured related-party Financial Creditor.

viii. It is an admitted position that the Applicant’s principal claim of Rs. 2,57,39,839/- was admitted by the Resolution Professional. However, admission of a claim by the Resolution Professional does not, by itself, confer upon the creditor an absolute right to receive payment of the admitted amount under a Resolution Plan. The admission of a claim determines the claim of the creditor for the purposes of the CIRP, whereas the extent of payment under a Resolution Plan is subject to the provisions of the Code and the commercial decision of the CoC.

ix. It is also not in dispute that the Applicant has been classified as a related party Financial Creditor of the Corporate Debtor. The Applicant has placed on record the status of the claims approved by the Resolution Professional reflecting the status of the claim of the Applicant, wherein the Applicant is shown as a related party. The Applicant has not questioned the decision of the Resolution Professional treating the Applicant as a Related Party nor challenged such classification during the CIRP. Therefore, the Applicant has to be considered as a related-party Financial Creditor for determining his entitlement under the Resolution Plans.

x. The Hon’ble Supreme Court in M.K. Rajagopalan v. Dr. Periasamy Palani Gounder & Anr., 2023 SCC OnLine SC 574, has considered the issue of treatment of related-party creditors and has held that there is no statutory mandate under the Code requiring payment to related-party creditors in parity with unrelated Financial Creditors. The distinction between related-party and unrelated creditors is recognised under the statutory scheme of the Code itself, including in the constitution of the CoC under Section 21(2).

xi. The Hon’ble NCLAT in Manav Investments and Trading Co. Ltd. v. Pratim Bayal & Ors., Company Appeal (AT) (Ins.) No. 1501 of 2023, has also reiterated that a related-party Financial Creditor cannot claim parity with unrelated Financial Creditors merely on the ground that the latter have been provided payment under the Resolution Plan. Similarly, in West Coast Paper Mills Ltd. v. Bijay Murmuria & Ors., Company Appeal (AT) (Ins.) No. 1272 of 2019, the Hon’ble NCLAT has held that merely because no payment has been provided to a related-party creditor under a Resolution Plan, the same would not, by itself, render the Resolution Plan contrary to the provisions of the Code.

xii. In the present case, the Applicant has placed reliance upon Section 53 of the Code and submitted that, being a Financial Creditor covered under Section 53(1)(d), the Applicant stands on a higher footing than the Operational Creditors covered under Section 53(1)(f), and therefore, providing payment to the Operational Creditors while providing NIL payment to the Applicant amounts to a violation of the waterfall mechanism. However, the Applicant is a related-party Financial Creditor and is thus not similarly situated to unrelated Financial Creditors who constitute the CoC. The fact that the Applicant’s claim was admitted does not efface his status as a related party. Therefore, the contention that the Applicant ought to have been provided payment merely because payments have been proposed to the Operational Creditors cannot be accepted.

xiii. The Hon’ble Supreme Court in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. (2020) 8 SCC 531 Has held that equitable treatment is to be accorded to similarly situated creditors and that the CoC is entitled to take into consideration the different classes of creditors. The said judgment does not lay down that every creditor is required to be paid an identical amount or percentage of its admitted claim. The distinction between similarly situated creditors and creditors belonging to different categories is material.

xiv. The Applicant has further alleged that the Resolution Professional and the CoC acted in collusion with Respondent Nos. 2 and 3 and committed material irregularity in approving the Resolution Plans. However, except for making such allegations, the Applicant has not placed any material before us to establish collusion, fraud or any act on the part of the Resolution Professional which would constitute material irregularity in the conduct of the CIRP. The mere fact that the Applicant has not been provided any amount under the Resolution Plans cannot, in the absence of any other material, lead to an inference of collusion or mala fide.

xv. It is pertinent to note that the Resolution Plans have been approved by the CoC with an overwhelming majority of 98.77%. The commercial wisdom of the CoC in approving a Resolution Plan is not ordinarily amenable to judicial review. The jurisdiction of this Adjudicating Authority while considering a Resolution Plan is limited and cannot substitute its own commercial assessment for that of the CoC. The Hon’ble Supreme Court in K. Sashidhar v. Indian Overseas Bank & Ors.,2019 (12 Supreme Court Cases 150) has held that the commercial wisdom of the CoC in approving or rejecting a Resolution Plan is not to be interfered with by the Adjudicating Authority except within the limited statutory parameters.

xvi. In the present case, the Applicant has not pointed out any specific provision of Section 30(2) which has been violated by the Resolution Plans. No material has been placed before us to establish that the Resolution Plans do not satisfy the statutory requirements or that the approval thereof was vitiated by fraud, material irregularity or any other illegality warranting interference by this Adjudicating Authority.

xvii. We are, therefore, of the considered view that the Applicant has failed to establish that the NIL provision made towards his admitted claim is in violation of the Code. The Applicant, being a related-party Financial Creditor, cannot claim parity with unrelated Financial Creditors merely on the ground that his claim has been admitted. The commercial decision of the CoC, in the absence of any violation of the mandatory provisions of the Code, does not warrant interference by this Adjudicating Authority.

xviii. In view of the foregoing discussion, we are of the considered view that no ground has been made out by the Applicant for setting aside the Resolution Plans approved by the CoC or for directing reconsideration thereof. The allegations of material irregularity and collusion are unsupported by any cogent material and the challenge to the commercial wisdom of the CoC is not sustainable.

xix. Accordingly, the reliefs sought by the Applicant cannot be granted and the present Application is liable to be dismissed.

# 7. It is ordered as follows:

i. In view of the reasons recorded hereinabove, and bearing in mind the provisions of the Insolvency and Bankruptcy Code, 2016, IA-3975/2025 stands dismissed.

ii. Let a certified copy of this order be issued, if applied for, upon compliance with all requisite formalities. There shall be no order as to costs.

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