The National Company Law Tribunal (NCLT), Mumbai Bench, has recently held that communications from entities expressing interest in submitting resolution plans cannot themselves be treated as resolution plans under the Insolvency and Bankruptcy Code, 2016 (IBC), if they never participated in the Corporate Insolvency Resolution Process (CIRP).
A bench of Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan observed, “The said communications, therefore, cannot be accepted or considered as Resolution Plans simpliciter in substitution of the statutory process.”
However, the tribunal permitted the Committee of Creditors (CoC) and Resolution Professional (RP) of Somerset Constructions Private Limited to undertake a fresh resolution process through issuance of a new Form G. It clarified that BCAD Studies Private Limited and SR Remedial Services Private Limited, whose communications were relied upon by the CoC, would have to participate afresh along with other eligible applicants, without any preferential rights.
The tribunal regularised the CIRP period from April 22, 2024, to October 13, 2026, and granted the RP a maximum of 120 days to complete the fresh process.
Somerset Constructions was admitted into CIRP in July 2023, following an application by Unity Small Finance Bank, which initially held 100% voting share in the CoC. The bank later assigned its debt to CFM Asset Reconstruction, which became the sole CoC member.
The newly constituted CoC rejected the four resolution plans received during the earlier process, arguing that offers below ₹150 crore were lower than the liquidation and market value of the company's assets. It claimed that market research and communications from third parties, including BCAD Studies and SR Remedial Services, indicated the possibility of higher offers worth ₹180 crore to ₹200 crore.
The suspended director opposed a fresh process, pointing out that neither entity had participated in the earlier CIRP or submitted an expression of interest.
The tribunal agreed that their communications could not be treated as resolution plans. However, it allowed a fresh process, clarifying that both entities would have to compete on equal terms with other eligible applicants. Their financial credentials would be examined if they participate in the fresh process.
For CoC: Advocates Gaurav Joshi, Prateek Ratewa, Pratiksha Vdeshi and Sarvesh Agarwal
For RP: Advocate Rohit Gupta, Rubina Khan, and Parth Shah
For Respondent: Advocate Rohan Agarwal and Darshit Dave