Suspended Director Status Alone Cannot Justify Harsher Standard For His Resolution Plan: NCLT Kochi

The National Company Law Tribunal (NCLT), Kochi, has recently ruled that a Resolution Plan cannot be subjected to a more onerous standard merely because it has been submitted by a suspended director.

A bench of Judicial Member Vinay Goel and Technical Member Ravichandran Ramasamy observed that the plan must instead be assessed on whether the applicant is otherwise eligible under the Insolvency and Bankruptcy Code of 2016.

“The mere fact that the Applicant is the Suspended Director shall not, by itself, be treated as a disqualification or a ground to apply a different or more onerous standard, if he is otherwise eligible under the provisions of the Insolvency and Bankruptcy Code, 2016,” the bench observed.

The NCLT directed the Committee of Creditors (CoC) of Mangomeadows Agricultural Pleasure Land Private Limited to reconsider the revised Resolution Plan submitted by suspended director N.K. Kurian.

The exercise must be fair, objective and meaningful, keeping in view revival of the Corporate Debtor and maximisation of the value of its assets.

The bench clarified that it had not expressed any opinion on the commercial merits of Kurian's proposal. It said the plan would have to be considered on an equal footing if it was substantially on par with or better than the earlier approved plan, or substantially comparable with the scheme previously considered, with similar financial terms, timelines, implementation framework and compliance requirements.

The case arose from two applications concerning Mangomeadows. Kurian challenged the conduct of the Corporate Insolvency Resolution Process (CIRP) and rejection of his revised plan, while Resolution Professional K. Easwara Pillai sought liquidation of the company.

Mangomeadows was admitted into CIRP by an order dated January 25, 2023. Kurian described it as a functioning and revenue-generating Agri-theme park.

He alleged that the CIRP period expired on February 22, 2024 and that the Resolution Professional continued the process without a valid extension.

Following the NCLT's March 6, 2026 order, Kurian submitted a revised Resolution Plan, which was considered and rejected by the CoC. He alleged inconsistencies in the minutes of the 16th and 17th CoC meetings concerning the extension of the CIRP.

He contended that proceedings after expiry of the CIRP period were therefore without lawful authority.

Kurian also alleged that the Resolution Professional failed to comply with statutory obligations relating to audits, GST filings and approval of CIRP costs. He further alleged that the process was unnecessarily prolonged in collusion with the Financial Creditor.

The Resolution Professional denied these allegations and maintained that Kurian's revised plan had been duly considered by the CoC. He contended that questions of feasibility, viability and commercial risk fell within the CoC's commercial wisdom.

The NCLT found that its March 6 order required more than simply placing Kurian's proposal before the CoC.

The earlier order had permitted the suspended director to submit a proposal substantially identical to, or better than, the plan earlier approved by the CoC or the scheme previously considered, with fair and objective consideration where the relevant terms were comparable.

“The emphasis was not on extending any special privilege to the Suspended Director but on ensuring that a potentially better proposal, if otherwise compliant with law, was not rejected merely because it originated from the Suspended Management,” the bench observed.

The bench said the Insolvency and Bankruptcy Code primarily seeks resolution of insolvency and revival of viable corporate persons. Liquidation is contemplated as a last resort after reasonable and legally permissible efforts at resolution have failed.

“The entire scheme of the Code, beginning from admission of the insolvency application till approval of a Resolution Plan, demonstrates the legislative preference for preserving the Corporate Debtor as a going concern rather than bringing its existence to an end,” it observed.

The bench also clarified that it was not deciding the dispute over the expiry, extension or exclusion of the CIRP period.

It directed the Resolution Professional to place the revised plan before the CoC forthwith, with the CoC required to complete the reconsideration within 15 days from the date of receipt of the order

For Applicant: Advocate Harikumar G Nair

For Respondents: Advocate Pranoy Harilal and K Easwara Pillai, RP