Gonugunta Murali, RP of Sai Krishna Minerals Pvt. Ltd. Vs. Income Tax Department, CIT, Circle -1, Ballari and Ors. - In view of the above settled position of law, this Authority is of the considered view that the manner of raising and meeting CIRP expenses squarely falls within the domain of the CoC and CoC in its commercial wisdom has approved the raising of interim finance with 67.25% share which crosses the threshold of 66% approval required from CoC under Section 28(3) of the Code to raise interim Finance and therefore, does not warrant interference by this Authority in exercise of its jurisdiction under Section 60(5) of the Code.

 NCLT Bangaluru (2026.04.15)  in Gonugunta Murali, RP of Sai Krishna Minerals Pvt. Ltd. Vs. Income Tax Department, CIT, Circle -1, Ballari and Ors. [(2026) ibclaw.in 1314 NCLT, I.A. No. 840/2025 in C.P. (IB) No. 136/BB/2023] held that;-

• In the 3rd CoC meeting on 05.08.2025, various options for meeting the CIRP expenses were considered and it was resolved, by requisite voting share, to raise interim finance for meeting such expenses, while rejecting the options of direct contribution by CoC members.

• In view of the above settled position of law, this Authority is of the considered view that the manner of raising and meeting CIRP expenses squarely falls within the domain of the CoC and CoC in its commercial wisdom has approved the raising of interim finance with 67.25% share which crosses the threshold of 66% approval required from CoC under Section 28(3) of the Code to raise interim Finance and therefore, does not warrant interference by this Authority in exercise of its jurisdiction under Section 60(5) of the Code.

Excerpts of the order;

# 1. This Application is filed by Sh. Gonugunta Murali, Resolution Professional of the Corporate Debtor (“Applicant”) on 27.10.2025 seeking the following reliefs:

• a. to direct the Respondents i.e., the members of the Committee of Creditors of Sai Krishna Minerals Limited to contribute towards the cost of CIRP for smooth conduct of CIRP.

• b. to pass such other order/directions as this Hon’ble Bench may deem fit and proper in the facts and circumstances of the case.

# 2. Brief facts relevant for adjudication of the present Application are as follows:

a. The Company Petition bearing C.P. (IB) No. 136/BB/2023 has been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 and was admitted on 04.09.2024, initiating CIRP against the Corporate Debtor. The Applicant was appointed as IRP on 27.05.2025 and later continued as RP.

b. In the 3rd CoC meeting held on 05.08.2025, three options for meeting CIRP expenses were placed; however, the CoC rejected contribution-based options and approved raising interim finance and despite repeated requests by the Applicant to CoC members for providing interim finance, no member has come forward to contribute any funds.

c. In the 4th CoC meeting held on 26.08.2025, the Applicant apprised the CoC of the urgent requirement of funds and informed that only Rs. 2,00,000/- received from the Operational Creditor had been utilised, which is insufficient to meet CIRP expenses.

d. The suggestion of the Operational Creditors to adjust CIRP costs from sale proceeds was not accepted, and the Applicant reiterated that CoC members are required to contribute towards CIRP costs.

e. The Applicant has been constrained to incur expenses from his own resources and is facing serious difficulties in conducting the CIRP due to lack of funds, despite making efforts for value maximization.

# 3. The reply in the form of statement of objections has been filed by respondent No. 4 which, in brief, is discussed as follows:

a. The Respondent No.4, Proprietor of Guru Rajendra Minerals Trading Company submits that he has already complied with the direction to deposit Rs. 2, 00,000/- towards initial CIRP costs. The CoC comprises multiple statutory and operational creditors namely Income Tax Department, CIT, Circle-1, Ballari, Deputy Commissioner of Commercial Taxes (Audit), Bellary, Seenam Bhat & Co Chartered Accountants, A Seenam Bhat and Assistant Commissioner of Central Tax and the CIRP costs ought to be borne by all CoC members collectively, and not selectively by Respondent No.4 only.

b. It is further submitted that CoC in its 3rd meeting held on 05.08.2025, resolved by vote of 67.25% that CIRP costs be met through interim finance, and therefore, the Resolution Professional should raise interim finance and if the Resolution Professional wants to raise interim finance from CoC members, all CoC members should be directed to raise such interim finance for CIRP costs in their voting ratio.

# 4. The Assistant commissioner of Income Tax Department, CIT, Circle -1, Ballari has filed reply on behalf of Respondent No.1 stating as under

a) The factual statement regarding admission of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiation of CIRP against the Corporate Debtor, and appointment of the Interim Resolution Professional / Resolution Professional are matters of record and therefore no specific comments are required on those aspects.

b) In the 3rd meeting of the Committee of Creditors held on 05.08.2025, the CoC had considered three options for meeting the CIRP expenses, namely 

• i) Contribution by CoC members towards CIRP expenses in proportion to their voting share; 

• ii) Contribution towards estimated CIRP expenses for a period of six months; and 

• iii) Raising interim finance for CIRP expenses from operational creditors, banks or financial institutions. 

The CoC members had rejected the first two options and approved the third option of raising interim finance for meeting the CIRP expenses for six months with simple interest and the Respondent No.1 through its authorised Representative was present as a member of the CoC in the meeting and the decision approving the third option was duly recorded. However, being a Central Government Department, it does not have any statutory or budgetary provision to provide funds or advance finance towards CIRP expenses as claimed by the Applicant.

c) Though the Applicant has stated that no CoC member has contributed funds towards the CIRP expenses and that the funds provided by the Operational Creditor amounting to Rs. 2,00,000/- have already been exhausted towards CIRP related expenses including fees of the IRP/RP, Valuers, Forensic Auditor, legal expenses and other incidental costs but there is no legal provision enabling it to provide such financial contribution.

d) The Department submits that the CIRP expenses can be met through other private members of the Committee of Creditors, who may contribute their share of funds, or the Applicant may raise interim finance from banks or financial institutions, which option has already been approved by the CoC in its meeting to meet operational expenditure during the continuation of the CIRP until realization of the Corporate Debtor’s assets.

e) In view of the above, Respondent No.1 submits that no directions can be issued against the Department to contribute towards CIRP costs, as it lacks the statutory authority and budgetary provision to provide such funding.

f) Accordingly, it is prayed that the application seeking directions against the CoC members for contribution towards CIRP expenses be dismissed, insofar as it seeks contribution from the Income Tax Department.

# 5. The Other Respondents have not filed their reply nor came forward to address arguments.

# 6. Heard Learned Counsels for the attending Parties and perused the material on record

# 7. The Corporate Insolvency Resolution Process against the Corporate Debtor was initiated pursuant to admission of the instant Petition and the Applicant is presently functioning as the Resolution Professional. In the 3rd CoC meeting on 05.08.2025, various options for meeting the CIRP expenses were considered and it was resolved, by requisite voting share, to raise interim finance for meeting such expenses, while rejecting the options of direct contribution by CoC members.

# 8. The record further shows that despite the aforesaid decision, no effective interim finance has been raised, and the amount of Rs. 2,00,000/- deposited by Respondent No. 4 towards initial CIRP expenses has exhausted in CIRP-related expenditure, resulting in difficulty in carrying on the CIRP. At the same time, Respondent No.1 i.e. Income Tax Department CIT, Circle 1, Ballari has specifically contended that, being a Central Government Department, it has no statutory authority or budgetary provision to provide funds towards CIRP expenses, and Respondent No.4 has submitted that any direction, if at all issued, ought to be against all CoC members in proportion to their voting shares and not selectively.

# 9. On hearing the Learned Counsel for the attending parties and perusal of the material available on record, we find that the issue involved in the present Application pertains to the mechanism for meeting the CIRP expenses.

# 10. The Regulation 16 of the CIRP Regulations, 2016, states as under:

“16. Committee with only operational creditors.

(4) A committee formed under this Regulation and its members shall have the same rights, powers, duties and obligations as a committee comprising financial creditors and its members, as the case may be.”

# 11. Thus, all the Operational creditors, members of CoC, have same rights and duties as in a Committee comprising of financial creditors. The CoC, in its commercial wisdom, has already deliberated upon the issue and consciously resolved to raise interim finance for meeting the CIRP costs, instead of contribution in proportion to voting share. It is pertinent to note that CoC members have approved by a vote of 67.25 % for the applicant to raise Interim finance of estimated budgeted CIRP expenses for 6 months period of Rs.34,14,910/- (Thirty four lakhs fourteen thousand nine hundred ten rupees only) with simple rate of interest from any operational creditors or any others like banks, financial institutes etc.

# 12. At this juncture, it is relevant to note that the Hon’ble Supreme Court in K. Sashidhar v Indian Overseas Bank and Ors (2019) 12 SCC 150 has categorically held that the commercial wisdom of the CoC is paramount and is not amenable to judicial review, except on limited grounds as provided under the Code.

# 13. In view of the above settled position of law, this Authority is of the considered view that the manner of raising and meeting CIRP expenses squarely falls within the domain of the CoC and CoC in its commercial wisdom has approved the raising of interim finance with 67.25% share which crosses the threshold of 66% approval required from CoC under Section 28(3) of the Code to raise interim Finance and therefore, does not warrant interference by this Authority in exercise of its jurisdiction under Section 60(5) of the Code.

# 14. Accordingly, I.A. No. 840 of 2025 is Dismissed.

# 15. The Applicant says that since the CoC members are not prepared to extend him interim finance, he has come up in this application without exercising the option of generating finance from outside sources, which he should be now doing for estimated budgeted CIRP expenses for 6 months, period of Rs.34,14,910/- (Thirty four lakhs fourteen thousand nine hundred ten rupees only) with simple rate of interest, as approved by the CoC.

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Lamba Exports Pvt. Ltd. Vs. Dhir Global Industries Pvt. Ltd. and Ors - Likewise, in Vallal RCK v. Siva Industries & Holdings Ltd. (2022) 9 SCC 803], this Court reiterated that where a withdrawal under Section 12A of the IBC has received the requisite approval, the scope of interference remains narrow and the commercial decision of the CoC is not to be displaced except on grounds known to law.

  SCI (2026.03.23) in Lamba Exports Pvt. Ltd. Vs. Dhir Global Industries Pvt. Ltd. and Ors.[   (2026) ibclaw.in 129 SC,  Misc. Application No. 1256 & 1257 of 2025 in Special Leave Petition (Civil) No. 12264 of 2024] held that;- 

• At this stage, we may also clarify that we are not inclined to accept the broad submission that the dismissal of the SLP on 25.02.2025, by itself, attracted the doctrine of merger. The law is clear that an order refusing special leave to appeal, whether speaking or non-speaking, does not attract merger.

• There can be no quarrel with the principle that fraud vitiates all proceedings and that a Court is not powerless where its order has been procured by fraud. But the exception is a serious one and cannot be invoked on the basis of assertion alone.

• The material now relied upon, even if taken at its highest, may at best furnish the applicant with a separate grievance arising out of subsequent or parallel proceedings. It does not persuade us to hold, in the present proceedings, that the order dated 25.02.2025 itself was procured by practicing fraud on this Court.

• The statutory scheme of Section 12A of the IBC contemplates withdrawal of the insolvency process, after constitution of the CoC, only upon approval by the requisite voting share of the CoC. Once the matter enters that domain, the decision whether to accept a settlement, whether to continue with the process, or whether to adopt one commercial course over another, falls essentially within the realm of the collective commercial wisdom of the CoC.

• In K. Sashidhar v. Indian Overseas Bank [(2019) 12 SCC 150], this Court emphasized that the legislature has consciously made the commercial wisdom of the financial creditors non-justiciable and that the adjudicating and appellate authorities do not sit in appeal over such business decisions.

• Likewise, in Vallal RCK v. Siva Industries & Holdings Ltd. (2022) 9 SCC 803], this Court reiterated that where a withdrawal under Section 12A of the IBC has received the requisite approval, the scope of interference remains narrow and the commercial decision of the CoC is not to be displaced except on grounds known to law.

• It is necessary to state that primacy of commercial wisdom does not mean that every action taken in the insolvency process is altogether immune from scrutiny in every situation. Where a challenge is laid in an appropriate proceeding on a legally sustainable foundation, such as statutory illegality or a jurisdictional infirmity, the matter would naturally be considered in accordance with law.

Excerpts of the Order;

# 1. The present Miscellaneous Application No. 1256 of 2025 (hereinafter referred to as the “MA”) has been filed in Special Leave Petition (Civil) No. 12264 of 2024 (hereinafter referred to as the “SLP”) seeking recall of whereby the SLP filed against the judgment and order  dated 06.05.2024 passed by the High Court of Punjab and Haryana at Chandigarh in Civil Revision No. 3916 of 2022 came to be dismissed. The case set up in the MA is that subsequent developments, including the alleged non-disclosure of the proposal for a One Time Settlement (hereinafter referred to as the “OTS”), the eventual settlement arrived at between the secured creditor and the corporate debtor, and the withdrawal of the Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) under Section 12A of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”), have a material bearing on the foundation on which the matter proceeded earlier and warrant reconsideration of the order dated 25.02.2025.

# 2. The facts giving rise to the present MA are as follows:

2.1. The dispute between the parties arises out of an Agreement to Sell dated 13.08.2021 in respect of the subject property owned by Respondent No. 1.

The applicant claims rights on the basis of the said agreement. The respondents, on the other hand, dispute the enforceability of the said arrangement and contend that the agreement did not survive in the manner asserted by the applicant.

2.2. The applicant instituted Civil Suit No. 1248 of 2022 seeking specific performance of the Agreement to Sell dated 13.08.2021, along with consequential reliefs of declaration, mandatory injunction, and permanent injunction. The case set up by the applicant was that the suit property, bearing UV- 375, Udyog Vihar, Phase-IV, Gurugram, was agreed to be sold for a total sale consideration of Rs.21,00,00,000/-. It was alleged that the applicant had paid Rs.30,00,000/- as earnest Bank towards the upfront amount for the proposed OTS, and a further sum of Rs.30,00,000/- to Respondent Nos. 1 to 3. According to the applicant, Respondent Nos. 1 to 3 thereafter sought to resile from the Agreement to Sell by legal notice dated 25.03.2022 on the ground that the proposed OTS had not been accepted by the Bank, whereas the applicant maintained that the Agreement to Sell was not liable to be rescinded on that basis and that it had always been ready and willing to perform its part of the contract.

2.3. Along with the suit, the applicant moved an application seeking interim injunction restraining Respondent Nos. 1 to 3 from selling, alienating,  encumbering, or otherwise creating third party rights in respect of the suit property during the pendency of the suit. By order dated 19.07.2022, the Civil Judge (Junior Division), Gurugram allowed the said application and granted interim protection in favour of the applicant. Aggrieved thereby, Respondent Nos. 1 to 3 preferred an appeal, which came to be allowed by the learned Additional District Judge, Gurugram by order dated 06.09.2022, whereby the order dated 19.07.2022 passed by the Trial Court was set aside.

2.4. The applicant thereupon challenged the appellate order before the High Court of Punjab and Haryana at Chandigarh in Civil Revision No. 3916 of 2022. By judgment and order dated 06.05.2024, the High Court dismissed the revision petition. The High Court held, in substance, that the Agreement to Sell dated 13.08.2021 was itself contingent in nature, inasmuch as its performance was predicated upon the acceptance of the OTS by the Bank. The High Court noted that the suit property was mortgaged, that the Bank was not a party to the Agreement to Sell, and that without the Bank’s approval to the OTS, Respondent Nos. 1 to 3 were  not in a position to convey title in respect of the property. On that reasoning, the High Court held that no prima facie case for grant of interim injunction was made out and that, at the highest, the applicant could claim recovery of the amounts paid by it, but could not, at that stage, insist upon specific performance of an agreement the performance of which had become uncertain in the absence of the Bank’s approval.

2.5. It appears that the underlying suit for specific performance, being Civil Suit No. 1248 of 2022, continues to remain pending, the proceedings before this Court having arisen from orders passed on the interlocutory application seeking interim protection.

2.6. When the SLP came up before this Court on 04.06.2024, notice was issued. This Court also directed the applicant to deposit a sum of Rs.13,00,00,000/- (Rupees Thirteen Crores Only) with the Registry of this Court within four weeks and to file an undertaking to deposit an additional amount of Rs.13,00,00,000/- (Rupees Thirteen Crores Only) within four weeks after Respondent No. 4 entered appearance. It is the case of the applicant that, in compliance with the said order, a  total sum of Rs.26,00,00,000/- (Rupees Twenty-

Six Crores Only) came to be deposited with the Registry of this Court.

2.7. The SLP was ultimately dismissed by order dated 25.02.2025. The present MA has thereafter been filed seeking recall of the order dated 25.02.2025 on the basis of subsequent events which, according to the applicant, have a direct bearing on the matter. The respondents have raised a preliminary objection to the maintainability of the MA and contend that no such recall application would lie after dismissal of the SLP.

2.8. The subsequent events relied upon in the MA are that during the pendency of the SLP, Respondent No. 1 is stated to have addressed a proposal dated 14.02.2025 to Respondent No. 4 for an OTS and for withdrawal of the CIRP under Section 12A of the IBC. It is further the case of the applicant that an OTS was thereafter concluded on 21.03.2025 for an amount of Rs.34.85 crore, and that the Committee of Creditors (hereinafter referred to as the “CoC”), in its meeting dated 05.04.2025, approved withdrawal of the CIRP under Section 12A of the IBC. The applicant also relies upon an email dated 23.03.2025 addressed by it to the Resolution  Professional expressing its willingness to participate in the process.

2.9. It is on the strength of the aforesaid developments that the applicant alleges suppression of material facts and seeks recall of the order dated 25.02.2025. The respondents dispute the said allegations. Their stand is that the proceedings before the National Company Law Tribunal were independent of the proceedings arising from the suit for specific performance, that the MA is not maintainable after dismissal of the SLP, and that the OTS has already been acted upon.

# 3. Having heard learned counsel for the parties and having perused the material placed on record, we are of the considered view that the present MA does not merit acceptance.

# 4. The first obstacle in the way of the applicant is one of maintainability. The order dated 25.02.2025, recall of which is sought, is not an executory order. It merely records that this Court was not inclined to interfere with the impugned judgment and order and, accordingly, dismissed the SLP. The present MA does not seek correction of any clerical or arithmetical error. Nor is it a case where directions contained in an  executory order of this Court have become impossible of implementation by reason of subsequent events. The settled position is that a post-disposal miscellaneous application can be entertained only in rare situations of that nature. The present case does not fall within that limited class.

# 5. In Jaipur Vidyut Vitran Nigam Ltd. v. Adani Power Rajasthan Ltd.[(2024) 19 SCC 353], this Court has held in clear terms that, once a matter stands disposed of, the Court becomes functus officio and does not retain jurisdiction to entertain an application except in the narrow situations recognized by law. The same position was reiterated in Ajay Kumar Jain v. The State of Uttar Pradesh & Anr.[2024 INSC 958], where this Court deprecated the growing practice of filing miscellaneous applications in disposed of proceedings and clarified that such an application would be maintainable only in the limited situations already noticed above. The maintainability objection, therefore, goes to the root of the matter and cannot be brushed aside merely because notice had been issued in the present MA.

# 6. That apart, the controversy which is now sought to be projected in the present MA travels well beyond the four corners of the proceedings from which the SLP had arisen. The SLP arose from a suit-based dispute concerning the Agreement to Sell dated 13.08.2021 and the correctness of the order passed by the High Court in Civil Revision No. 3916 of 2022. The present MA, however, seeks to found a case for recall on the basis of later developments said to have taken place in the insolvency proceedings, including the proposal for One Time Settlement, the subsequent settlement, the decision of the Committee of Creditors, and the order passed by the National Company Law Tribunal under Section 12A of the IBC. Whether those later steps were proper or otherwise cannot be examined collaterally in an MA filed in a disposed of SLP arising out of a civil revision. If the applicant is aggrieved by any act done or order passed in that separate statutory framework, it is always open to the applicant to avail of such remedy as may be permissible in law before the competent forum.

# 7. At this stage, we may also clarify that we are not inclined to accept the broad submission that the dismissal of the SLP on 25.02.2025, by itself, attracted the doctrine of merger. The law is clear that an order refusing special leave to appeal, whether speaking or non-speaking, does not attract merger. However, that  does not carry the matter any further for the applicant. The absence of merger does not mean that a disposed of SLP can be reopened through a miscellaneous application on grounds which do not satisfy the settled parameters of maintainability.

# 8. Much emphasis was placed by the applicant on alleged suppression and on the submission that the order dated 25.02.2025 deserves to be recalled on the ground that fraud was practiced upon this Court. There can be no quarrel with the principle that fraud vitiates all proceedings and that a Court is not powerless where its order has been procured by fraud. But the exception is a serious one and cannot be invoked on the basis of assertion alone. In the present case, the order dated 25.02.2025 is a non-speaking order dismissing the SLP. The order dated 25.02.2025 does not indicate that the dismissal turned upon any specific representation which is now alleged to have been suppressed. The material now relied upon, even if taken at its highest, may at best furnish the applicant with a separate grievance arising out of subsequent or parallel proceedings. It does not persuade us to hold, in the present proceedings, that the order dated 25.02.2025 itself was procured by practicing fraud on this Court.

# 9. There is yet another aspect of the matter. The challenge to the judgment and order dated 06.05.2024 passed by the High Court had to be considered on the record and circumstances as they then stood. Subsequent developments in another forum, howsoever strongly relied upon by the applicant, cannot retroactively render the earlier adjudicatory exercise vulnerable in a disposed of SLP. A later event may, in a given case, furnish an independent cause of action. It cannot, by itself, be used to reopen finality in proceedings of a different character and origin.

# 10. Even otherwise, we are unable to accept the applicant’s attempt to invite this Court, in the present MA, to comparatively assess the alleged superiority of its offer vis-à-vis the settlement which came to be accepted in the insolvency process. The statutory scheme of Section 12A of the IBC contemplates withdrawal of the insolvency process, after constitution of the CoC, only upon approval by the requisite voting share of the CoC. Once the matter enters that domain, the decision whether to accept a settlement, whether to continue with the process, or whether to adopt one commercial course over another, falls essentially within the realm of the collective commercial wisdom of the CoC. In K. Sashidhar v. Indian Overseas Bank [(2019) 12 SCC 150], this Court emphasized that the legislature has consciously made the commercial wisdom of the financial creditors non-justiciable and that the adjudicating and appellate authorities do not sit in appeal over such business decisions.

# 11. The same principle was reiterated and explained in Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta [(2020) 8 SCC 531], where this Court held that it is the commercial wisdom of the majority of the CoC which determines, through negotiations and assessment of viability, how and in what manner the corporate insolvency resolution process is to proceed. More particularly, this Court observed that the adjudicating authority cannot make any inquiry beyond the limited statutory parameters, nor can it issue directions in relation to the exercise of commercial wisdom of the CoC, whether in approving, rejecting, or otherwise dealing with a proposal. Likewise, in Vallal RCK v. Siva Industries & Holdings Ltd. (2022) 9 SCC 803], this Court reiterated that where a withdrawal under Section 12A of the IBC has received the requisite approval, the scope of interference remains narrow and the commercial decision of the CoC is not to be displaced except on grounds known to law.

# 12. At the same time, it is necessary to state that primacy of commercial wisdom does not mean that every action taken in the insolvency process is altogether immune from scrutiny in every situation. Where a challenge is laid in an appropriate proceeding on a legally sustainable foundation, such as statutory illegality or a jurisdictional infirmity, the matter would naturally be considered in accordance with law. However, that is not the exercise which can be undertaken in the present MA. In these proceedings, which arise out of a disposed of SLP in a civil revision concerning an Agreement to Sell, this Court cannot be called upon to sit over the comparative financial attractiveness of rival offers or to substitute its own view for the business decision taken by the CoC in the statutory process under the IBC. The mere assertion by the applicant that its offer was higher would not, by itself, furnish a ground to reopen the dismissal of the SLP or to unsettle steps taken in a separate insolvency framework.

# 13. For all the aforesaid reasons, we are not persuaded to entertain the present MA as a vehicle either for reopening the dismissal of the SLP dated 25.02.2025  or for examining the legality of the subsequent steps taken in the insolvency proceedings.

# 14. Accordingly, Miscellaneous Application No. 1256 of 2025 is dismissed. In view of the same, MA No. 1257 of 2025 for ad-interim relief is not required to be dealt with.

# 15. It is, however, clarified that we have expressed no opinion on the merits of any proceedings undertaken under the Insolvency and Bankruptcy Code, 2016, including the order dated 14.05.2025 passed by the National Company Law Tribunal, or on the merits of Civil Suit No. 1248 of 2022, which, as per the record before us, remains pending. All rights and contentions of the parties in such proceedings are left open to be urged before the competent forum in accordance with law.

# 16. Pending application(s), if any, shall stand disposed of.

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C. Flowers Asset Reconstruction Pvt. Ltd. Vs Harish Kant Kaushik (RP) and Anr. - The Adjudicating Authority does have jurisdiction to interfere with the decision of the Committee of Creditors taken in commercial wisdom, in event the plan violates any of the statutory provisions and is not in compliance with Section 30(2) the Adjudicating Authority can interfere.

 NCLAT (2025.07.29) in J.C. Flowers Asset Reconstruction Pvt. Ltd. Vs Harish Kant Kaushik (RP) and Anr. [(2025) ibclaw.in 565 NCLAT, Company Appeal (AT) (Ins) No. 966 of 2025] held that;

• The Adjudicating Authority does have jurisdiction to interfere with the decision of the Committee of Creditors taken in commercial wisdom, in event the plan violates any of the statutory provisions and is not in compliance with Section 30(2) the Adjudicating Authority can interfere.

• There being very limited scope of interference by the Adjudicating Authority in the commercial wisdom of the CoC in approving the plan, we are of the view that order passed by Adjudicating Authority is unsustainable. In result, the order passed by the Adjudicating Authority is set aside. The plan approval application is revived before the Adjudicating Authority for passing a fresh order in accordance with law at an early date.

Excerpts of the Order;

29.07.2025: Heard counsel for the appellant as well as Ld. Counsel for the Resolution Professional.

# 2. This appeal has been filed against the order passed by the Adjudicating Authority dated 03.06.2025 in IA No. 62 of 2024 by the impugned order Adjudicating Authority has disposed of I.A. 62/2024 and sent the plan back to the Committee of Creditors (“CoC”) on the ground that the plan does not comply the statutory provisions that is Section 30(2) of the IBC. The CoC aggrieved by the order has come up in this appeal.

# 3. Ld. Counsel for the appellant challenging the order impugned submits that there was no non-compliance of Section 30(2). The Adjudicating Authority has observed that non-compliance of Section 30(2)(a) on the grounds that plan provides for payments of CIRP cost out of internal accruals of the Corporate Debtor and no separate amount for the same has been provided in the plan. It is submitted that the Adjudicating Authority has not adverted to the clause both in the original Resolution Plan and in the addendum that if internal accruals are not sufficient SRA shall make the payment towards CIRP Cost without effecting the payouts of the Financial Creditors. It is further submitted that finding that there is a non-compliance of Section 30(2)(a) is not correct. Committee of Creditors after considering all aspects of the matter has approved the plan. It is further submitted by the counsel for the appellant that although in the addendum the plan value was increased from Rs.92.15 Crores to Rs.110.10 Crores but equivalent changes have not been carried out in the fund infusion clause. It is submitted that when the addendum clearly has increased the amount to Rs.110.10 Crores that was commitment of the SRA on the basis of negotiation by the CoC and in the clause of fund infusion mention of figure Rs.92.15 is inconsequent and in any case its plan value has to be treated as Rs.110.10 Crores.

# 4. It is further submitted that another discrepancy pointed out by the Adjudicating Authority is that in Form-H for Operational Creditor amount mention was Rs.12.63 Crores whereas in addendum the amount admitted towards same category is Rs.12.05 Crores. It is submitted that above is only typographical mistake, the SRA accepts the figure of Rs.12.63 Crores and in the admission as well as the payment there is no change.

# 5. Ld. Counsel for the Resolution Professional (“RP”) supported the submissions of the CoC and submits that plan fully complied with Section 30(2) and Adjudicating Authority ought not to have interfered with the plan.

# 6. We have considered the submission of counsel for the parties and perused the records.

# 7. The Resolution Plan has been approved by the CoC who is appellant before us questioning the order impugned. The Adjudicating Authority has proceeded to hold the plan non-compliance of Section 30(2)(a) for the reasons as noticed in the paragraphs- 36 to 41.

• “36. At this juncture, it is pertinent to refer the relevant clauses of Resolution Plan submitted by the Successful Resolution Applicant. In the Resolution Plan the treatment for the CIRP Cost is mentioned as follow:

• “Treatment of CIRP Costs.-

• As per the Code, the CIRP Costs are accorded highest priority amongst the creditors of a Company and the CIRP Costs shall, amongst other things, include the costs, fees and charges incurred by the Resolution Professional, in running the operations of the Company as a going concern. It is evident from the records that during the CIRP period internal accruals and/or other cash flows of the Company will be sufficient to pay the CIRP Costs as approved by the CoC. The CIRP Costs will be paid in full and in priority to and other creditor of the Company upon the Resolution Plan becoming effective, out of the internal accruals of the Company. If the internal accruals of the Company are not sufficient to meet the CIRP Costs, the Resolution Applicant will make the payment towards the balance unpaid portion of the CIRP Costs (“Unpaid CIRP Costs”} out of the Total Resolution Amount on the Closing Date. It is clarified that any interim finance raised by the Resolution Professional from the Financial Creditors which has been utilized towards the payment of CIRP Costs shall be treated as part of the Unpaid CIRP Costs.”

• further as per Form -H and the Resolution Plan, the plan value is INR 110. 10 Crores, for clarity bifurcation is provided hereunder:

Particulars	Amount in Crore
Cash Component
(a) CIRP Cost	–
(b) Secured Financial Creditors	101.58
(c) Unsecured Financial Creditors	8.37
(d) Operational Creditors (Statutory Authorities)	0.02
(e) Other Operational Creditors	0. 13
Total Resolution Plan Value	110.10

• 37. On bare perusal of the aforementioned clauses under the Resolution Plan it transpires that the CIRP Cost will be paid out of the internal accruals of the Corporate Debtor and no separate amount for the same has been provided in the plan value. Further, the instant Resolution Plan does not give any specifics about the internal accruals of the Corporate Debtor from which the payment will be made and whether the same will be sufficient to provide complete payment towards the CIRP Cost.

• 38. Further, the clause under the Resolution Plan qua CIRP Cost mentions that if the internal accruals of the Corporate Debtor are not sufficient to meet the CIRP Cost, the SRA will make the payments towards the balance unpaid portion out of the total Resolution Plan value. Thus, the SRA will not introduce any additional funds in case the internal accruals are insufficient for meeting out the CIRP Cost. Further, the scheme proposed by the SRA for the payment of the CIRP Cost in case of insufficiency of the internal accruals will affect the whole disbursement as proposed in the plan towards other creditors of the Corporate Debtor. Hence, changing the very fundamentals of the Resolution Plan on the basis of which the plan was approved by the COC.

• 39. Henceforth, we are of the opinion that the Resolution Plan submitted by the SRA is in non-compliance of Section 30(2)(a) of the Code, 2016.

• 40. Besides the aforementioned non-compliance of the mandatory provisions of the Code, there are other discrepancies in the Resolution Plan and the addendum to the Resolution Plan. We have noticed that, the Resolution Plan value as provided under the Resolution Plan initially was Rs. 92.15 Cr. and the same was to be introduced through fund infusion. Further, the definition of the fund infusion as provided in the Resolution Plan stated that “INR 92.15 Cr [Indian Rupees Ninety Two Crores Fifteen Lakhs Only] to be infused in the CD through SPV(s) to make specified payments as per the Resolution Plan in the form of equity, debt or any other instrument as decided by the RA in its sole discretion.” There is no other mechanism provided in plan for making the payment to the creditors. Subsequently, the plan value was enhanced from Rs. 92.15 Crores to Rs. 110.10 Crores via the addendum to the Resolution Plan. However, requisite equivalent changes have not been carried out in the “Fund Infusion” clause of the Resolution Plan which still reflects the fund infusion to the extent of Rs. 92.15 Cr. Thus, there remains an ambiguity towards the introduction of the enhanced amount in the Resolution Plan i.e., Rs. 17.95 Cr.”

The ambit and jurisdiction of the Adjudicating Authority while considering the plan approved by Committee of Creditors is too limited. The Adjudicating Authority does have jurisdiction to interfere with the decision of the Committee of Creditors taken in commercial wisdom, in event the plan violates any of the statutory provisions and is not in compliance with Section 30(2) the Adjudicating Authority can interfere. It is submitted by the appellant and Ld. Counsel for the RP that there was no non-compliance of the Section 30(2). We thus need to examine the plan in above reference as to whether there is non-compliance of Section 30(2) or not?

# 8. The first main ground which has been given by the Adjudicating Authority is with regard to non-providing for payment of CIRP cost in priority. The Adjudicating Authority in paragraph-36 has noted the clause in the Resolution Plan with regard to CIRP cost paragraph-36 is as follows:-

• “36. At this juncture, it is pertinent to refer the relevant clauses of Resolution Plan submitted by the Successful Resolution Applicant. In the Resolution Plan the treatment for the CIRP Cost is mentioned as follow:

• “Treatment of CIRP Costs.-

• As per the Code, the CIRP Costs are accorded highest priority amongst the creditors of a Company and the CIRP Costs shall, amongst other things, include the costs, fees and charges incurred by the Resolution Professional, in running the operations of the Company as a going concern. It is evident from the records that during the CIRP period internal accruals and/or other cash flows of the Company will be sufficient to pay the CIRP Costs as approved by the CoC. The CIRP Costs will be paid in full and in priority to and other creditor of the Company upon the Resolution Plan becoming effective, out of the internal accruals of the Company. If the internal accruals of the Company are not sufficient to meet the CIRP Costs, the Resolution Applicant will make the payment towards the balance unpaid portion of the CIRP Costs (“Unpaid CIRP Costs”} out of the Total Resolution Amount on the Closing Date. It is clarified that any interim finance raised by the Resolution Professional from the Financial Creditors which has been utilized towards the payment of CIRP Costs shall be treated as part of the Unpaid CIRP Costs.”

• further as per Form -H and the Resolution Plan, the plan value is INR 110. 10 Crores, for clarity bifurcation is provided hereunder:

• 
  

Particulars	Amount in Crore
Cash Component
(a) CIRP Cost	–
(b) Secured Financial Creditors	101.58
(c) Unsecured Financial Creditors	8.37
(d) Operational Creditors (Statutory Authorities)	0.02
(e) Other Operational Creditors	0. 13
Total Resolution Plan Value	110.10

9. The Ld. Counsel for the appellant has referred to the addendum of the Resolution Plan as well as similar clause in the original plan. It is useful to notice the clause-4 of the addendum which is brought on record as Annexure A-15. Clause-4 of the addendum provides as follows:-

• “4. It is evident from the records that during the CIRP period internal accruals and/ or other cash flows of the Company will be sufficient to pay the CIRP Costs as approved by the CoC. The CIRP Costs will be paid in full and in priority to any other creditor of the Company upon the Resolution Plan becoming effective out of the internal accruals of the Company. If the internal accruals of the Company are not sufficient to meet the CIRP Costs, the Resolution Applicant will make the payment towards the balance unpaid portion of the CIRP Costs (“Unpaid CIRP Costs”) at actuals without any deduction from the Upfront FC Debt Payment amount in terms of this Resolution Plan.”

The above clause clearly provides that in event internal accruals of the Company are not sufficient to meet the CIRP cost resolution applicant will make the payment towards the balance unpaid portion of CIRP Cost at actual without any deduction from the amount payable to Financial Creditor in terms of Resolution Plan. The above clause is clear and categorically makes provision for payment of CIRP Costs. It cannot be held that the above clause in any manner violates Section 30(2) or provisions of Regulation, 2016 which provides requirement of provisions for CIRP cost. We thus are of the view that Adjudicating Authority committed error in holding the plan non-compliance on the above ground.

# 10. Now we come to the next ground given by the Adjudicating Authority is that initially the plan value was Rs. 92.15 Crores which was increased to Rs.110.10 Crores vide addendum but the requisite equivalent changes have not been carried out in the fund infusion clause of the Resolution Plan which still reflects fund infusion to the extent of Rs.92.15 Crores. Paragraph-40 of the judgment is as follows:-

• “40. Besides the aforementioned non-compliance of the mandatory provisions of the Code, there are other discrepancies in the Resolution Plan and the addendum to the Resolution Plan. We have noticed that, the Resolution Plan value as provided under the Resolution Plan initially was Rs. 92.15 Cr. and the same was to be introduced through fund infusion. Further, the definition of the fund infusion as provided in the Resolution Plan stated that “INR 92.15 Cr [Indian Rupees Ninety Two Crores Fifteen Lakhs Only] to be infused in the CD through SPV(s) to make specified payments as per the Resolution Plan in the form of equity, debt or any other instrument as decided by the RA in its sole discretion.” There is no other mechanism provided in plan for making the payment to the creditors. Subsequently, the plan value was enhanced from Rs. 92.15 Crores to Rs. 110.10 Crores via the addendum to the Resolution Plan. However, requisite equivalent changes have not been carried out in the “Fund Infusion” clause of the Resolution Plan which still reflects the fund infusion to the extent of Rs. 92.15 Cr. Thus, there remains an ambiguity towards the introduction of the enhanced amount in the Resolution Plan i.e., Rs. 17.95 Cr.”

There is no dispute from the addendum which have been brought on the record the plan value has been increased to Rs.110.10 Crores after negotiation between CoC and the SRA. There is no dispute that increased plan value is Rs.110.10 Crores. The mere fact that in the Clause of fund infusion by mistake the mention Rs.92.15 Crores is there the said mention is in consequential since it is not the case of anyone that enhanced plan value is not Rs.110.10 Crores. Further, present is a case where no objection have been raised by any stakeholder before the Adjudicating Authority pointing out any non-compliance of provisions on any other reason. We thus, are of the view that said cannot be any ground for not approving the plan.

# 11. The third ground taken by the Adjudicating Authority is that in Form-H amount admitted towards the operational creditor is Rs.12.63 Crores and in the addendum the amount admitted is the shown as Rs.12.05 Crore. Ld. Counsel pointed out that the mention of admitted claim of Rs.12.05 Crore was only a typographical mistake since the payout in the plan is the same i.e; Rs.0.13 Crores which is not changed. Hence, the said in no manner effect the validity of the plan. Ld. Counsel for the appellant has submitted that in the addendum payment as part of the Resolution Plan is clearly mentioned which is as page-507 of the paper book where the payout to the Operational Creditor other than workman employee is same i.e. Rs.0.13 Crores. It is submitted that mention by typographical error with regard to admitted claim as Rs.12.05 Crores instead of Rs.12.63 Crores was also in consequential. No Operational Creditor has also raised any objection before the Adjudicating Authority with regard to any discrepancy in the Resolution Plan, the said mistake was only clerical error not effecting the validity of the plan and nor the above in any manner violates the provisions of Section 30(2) or payout being not in accordance with the requirement of Section 30(2).

# 12. In view of the above, we are of the view that none of the grounds given by the Adjudicating Authority for not approving the plan can be sustained. We found that the Resolution Plan is not in violation of Section 30(2). There being very limited scope of interference by the Adjudicating Authority in the commercial wisdom of the CoC in approving the plan, we are of the view that order passed by Adjudicating Authority is unsustainable. In result, the order passed by the Adjudicating Authority is set aside. The plan approval application is revived before the Adjudicating Authority for passing a fresh order in accordance with law at an early date.

With the above, Appeal is disposed of.

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