NCLAT Dismisses Tropical Ventures' Plea To Halt Distribution Of INCAB Resolution Plan Funds

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently dismissed an application filed by Tropical Ventures Company Ltd. seeking to prevent distribution of funds under Vedanta Ltd.'s resolution plan for INCAB Industries Ltd.

Tropical filed the application while its challenge to the NCLAT's June 30, 2026, judgment was pending before the Supreme Court. It wanted the amount under the resolution plan to be kept in an interest-bearing account until its ₹295 crore claim was finally adjudicated.

A bench of Officiating Chairperson Justice Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra observed that the June 30 judgment had already crystallised Tropical's admitted claim at ₹85.79 crore and had directed the Monitoring Committee to consider redistribution in accordance with the appellate findings.

The bench observed, "We are of the considered view this application is misconceived as the judgement dated 30.06.2026 not only has crystalized the amount qua the admitted claim of the Appellant but has also directed the Monitoring Committee to consider the amount allocated in the Resolution Plan for redistribution and to give effect to the orders and directions passed in the Appeal(s), subject to which the Resolution Plan was approved and has also directed the Monitoring Committee to take decision with regard to distribution of amount already deposited by the Resolution Applicant in compliance of Resolution Plan and is in the escrow account, within a period of 30 days"

Tropical relied on a resolution passed at the Committee of Creditors' 22nd meeting, convened on June 23, 2022, with voting held on June 24. Under the resolution, amounts allocated under the resolution plan to claimants whose claims were under litigation were to be kept in an interest-bearing bank account under the control of the Steering Committee headed by the Resolution Professional until the claims attained finality.

Tropical contended that its ₹295 crore claim remained under litigation before the Supreme Court in Civil Appeal Nos. 8983-8985 of 2026, where notice was issued on July 20, 2026. It argued that the amounts should therefore not be distributed until the dispute over its claim was settled.

Tropical also relied on Section 424(3) of the Companies Act, read with Rule 11 of the NCLAT Rules, 2016, to contend that the appellate tribunal could enforce its earlier directions.

The respondents, in reply, maintained that the June 30 judgment had confined Tropical's admitted claim to ₹85.79 crore, representing the principal amount paid by the guarantor to the Indian lenders. The NCLAT had also held that Tropical was not a secured creditor with respect to INCAB's immovable assets.

In its June 30 judgment, the NCLAT directed the Monitoring Committee to consider the amount allocated under the resolution plan for redistribution and give effect to the directions passed in the appeals. It also directed the committee to decide on distribution of the amount already deposited by the Resolution Applicant in the escrow account within 30 days.

The present bench noted that Tropical had challenged the June 30 judgment before the Supreme Court and had also sought a stay on the judgment and distribution of the funds. No relief, however, had been granted by the Supreme Court.

The bench held that it would not be proper to interfere with the directions issued on June 30 while the challenge remained pending before the Supreme Court, particularly when no stay had been granted against distribution.

It further held that there was no scope to revisit the June 30 directions and required only compliance with the CoC's 22nd meeting resolution. The application was held to be misconceived and dismissed.