'Shocking And Bewildering': NCLT Mumbai Bench Rejects VAS Infrastructure Resolution Plan, Orders IBBI Probe Into RP

Describing the Resolution Professional's explanation for wrongly portraying VAS Infrastructure Ltd.'s development rights as ownership rights as "shocking and bewildering," the National Company Law Tribunal rejected a ₹85.05 crore resolution plan for the company.

It also directed the Chairman of the Insolvency and Bankruptcy Board of India (IBBI) to investigate the Resolution Professional's conduct and consider disciplinary action.

A bench of Judicial Member Ashish Kalia and Technical Member Sanjiv Dutt held that the Resolution Professional's conduct reflected gross negligence, deliberate concealment, misrepresentation of material facts, non-adherence to the Corporate Insolvency Resolution Process (CIRP) Regulations and active collusion with the suspended management of the Corporate Debtor.

"To sum up, the overall conduct of the Applicant/ RP throughout the insolvency resolution process betrays not only gross negligence, deliberate concealment and misrepresentation of material facts and non-adherence to relevant CIRP Regulations but also active collusion and connivance with the suspended management of the Corporate Debtor. We find it to be a fit case for making reference to the IBBI to investigate into the conduct of the Applicant/RP in the matter and initiate appropriate disciplinary action against the Applicant/RP as warranted under the Code and the relevant Regulations.", the tribunal observed.

Canara Bank's insolvency application against VAS Infrastructure was admitted on March 11, 2024, triggering the company's insolvency resolution process. Ashok Kumar Golechha was first appointed as the Interim Resolution Professional and was confirmed as the Resolution Professional less than a month later.

Canara Bank, the sole member of the committee of creditors, approved Authum Investment and Infrastructure Ltd.'s resolution plan worth ₹85.05 crore with a 100% vote on March 27, 2025. The Resolution Professional subsequently placed the plan before the tribunal for approval.

While considering whether to approve the plan, the tribunal closely examined the Information Memorandum, the resolution plan and additional affidavits filed by the Resolution Professional and Canara Bank.

The tribunal found that the Resolution Professional had described the Corporate Debtor as the owner of Borivali land in the Information Memorandum even though the company only held development rights over the property.

It held that had the Resolution Professional exercised due diligence while taking custody of the Corporate Debtor's assets, he would have discovered that the company had no ownership rights over the land.

"The aforesaid response of the RP, to say the least, is shocking and bewildering.", the tribunal observed.

The tribunal observed that portraying the land as an owned asset led to it being considered while valuing the Corporate Debtor's assets. It held that the incorrect description distorted the valuation and undermined the fairness and transparency of the insolvency resolution process.

The tribunal also held that the Resolution Professional attempted to mislead it by claiming that the successful resolution applicant was aware of the true nature of the Corporate Debtor's rights over the Borivali land. However, it found that the resolution plan itself proceeded on the assumption that the land formed part of the Corporate Debtor's assets.

"Secondly, it is noted that the Applicant/RP has made brazen attempts to mislead the Adjudicating Authority by resorting to blatant misrepresentation of facts. For example, the averment made by the Applicant/RP in the Additional Affidavit dated 01.01.2026 that Authum 'is aware of the correct nature of the rights of the Corporate Debtor' is found to be totally contrary to the evidence available on record.", the court observed.

The tribunal further observed that the Resolution Professional had initially produced commencement certificates relating to another housing project. When questioned, he later admitted that no development work had been carried out by the Corporate Debtor under the redevelopment agreements relating to the Pushp Vinod-6 project. He also admitted that no commencement or occupation certificates existed in the company's name.

After examining the redevelopment agreements, the tribunal observed that they were essentially agreements granting redevelopment rights and not ownership of the Borivali land. It held that the Resolution Professional failed to accurately disclose the nature of those rights in the Information Memorandum prepared for prospective resolution applicants.

The tribunal also made observations regarding Canara Bank's conduct. It noted that the bank had not initiated proceedings against the suspended management for allegedly making false representations regarding ownership of the Borivali land to obtain term loans.

"It is also pertinent to note that the Canara Bank has so far not taken any steps to initiate any proceedings against the suspended management of the Corporate Debtor under Section 73 of the Code for committing the offence of making false representation regarding 'ownership' of aforesaid Borivali land prior to the insolvency commencement date for the purpose of obtaining Term Loans against mortgage of the said land. The Chairman, Canara Bank may like to look into this matter and take such necessary corrective steps in this behalf as deemed fit.", the tribunal observed.

Holding that the CIRP stood vitiated by material irregularities, the tribunal rejected the resolution plan. It directed the Registry to forward a copy of the order to the IBBI Chairman for investigation into the Resolution Professional's conduct and consideration of disciplinary action.

The tribunal also directed the committee of creditors to consider replacing the Resolution Professional. It ordered that the CIRP should recommence from the stage of preparing a fresh Information Memorandum and issuing a fresh Form G. The process has been directed to be completed within 120 days without any extension.

For Applicant/RP/Respondent in IAs: Advocate Yahya Batatawala

For Canara Bank: Advocate Mahesh Haridas Chandanshiv

For Applicant in IA 2818/2025 : Advocate Ajit Anekar

For Applicant in Invp No.74/2025 : Advocate Vandana Sehgal