Power To Modify Scheme Can Be Used If Unworkable, Not As 'Lever' To Alter Scheme: NCLT Mumbai In NSEL Case

The National Company Law Tribunal (NCLT) at Mumbai has held that its power to modify a sanctioned scheme under Section 231 of the Companies Act, 2013 can be used where the scheme is unworkable.

It cannot be used to extend the scheme's benefits to a defaulter when there is no allegation that the scheme is not being properly implemented.

“In our considered view, this provision can be used to seek modification where the scheme seems to be unworkable and not where there was no allegation that the sanctioned scheme was not working properly and the appellants had merely sought an order for realising an alleged debt and thereby attempting to use the provisions of s. 231 as a lever, something which was futile and frivolous. Further, this Court cannot alter the basic fabric of the Scheme,” the tribunal observed.

The bench comprised Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar. It made the observation while dismissing an application filed by Shree Radhey Trading Company.

The firm sought to settle its decretal liability to National Spot Exchange Ltd (NSEL) at the rate offered under the NSEL Settlement Scheme.

The NSEL crisis unfolded in 2013 after the exchange shut its electronic trading operations. This resulted in defaults by 24 members. A complaint was subsequently registered with the Economic Offences Wing, Mumbai. The Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 was invoked in January 2014.

A High-Powered Committee appointed by the Bombay High Court determined an alleged liability of ₹32.77 crore against Shree Radhey. Based on the committee's report, NSEL obtained a Bombay High Court decree dated October 4, 2021 for ₹32.77 crore, along with interest of up to 12% per annum. Shree Radhey's appeal against the decree is pending before the high court.

NSEL's scheme of arrangement with its specified creditors was sanctioned by the Mumbai tribunal on November 28, 2025. Under the scheme, NSEL agreed to pay ₹1,950 crore to specified creditors. This amounted to 42% of their principal claims without interest.

Shree Radhey, which was named as a defaulter under the scheme, sought to pay 41.94% of its decretal liability. This amounted to around ₹13 crore. It also sought other benefits under the scheme, including lifting of property attachments and withdrawal of civil proceedings.

The tribunal noted that the scheme was an arrangement between NSEL and its specified creditors. Shree Radhey, meanwhile, was a defaulter against whom NSEL had obtained a decree.

The firm argued that Section 231(1)(b) empowered the tribunal to issue directions or make modifications necessary for the proper implementation of the sanctioned scheme. It also claimed that allowing it to settle at the scheme rate would help generate funds for payments to specified creditors.

NSEL opposed the application. It argued that Shree Radhey was a third party to the sanctioned scheme and could not use Section 231 to impose a separate payment arrangement on NSEL.

The tribunal found that there was no allegation that the sanctioned scheme was failing. There was also no claim that it could not be properly implemented without Shree Radhey's proposal. The scheme had already specified the amounts payable to the creditors. The additional payment proposed by Shree Radhey would not assist its implementation.

The tribunal also held that the scheme did not confer any benefit on defaulters merely because they were named in its schedule. Shree Radhey, it observed, was a third party to the scheme. It was seeking its benefits for its own advantage.

“This is nothing but an attempt by the Applicant to get an advantage of the Scheme which is an arrangement between the NSEL and its Specified Creditors and not for the Defaulters. NSEL has obtained a lawful decree against the Applicant which would be executed and the recoveries would be made by the Respondent independent of the Scheme,” the tribunal ruled.

The tribunal further held that allowing Shree Radhey to enter the scheme would alter its basic structure. The sanctioned scheme allowed 63 Moons Technologies Ltd to pursue recovery against the defaulters. The outstanding dues had been assigned to 63 Moons.

It therefore held that Section 231(1)(b) could not be used to bring Shree Radhey into the scheme. It also could not be used to reduce the liability payable under the decree.

The tribunal clarified that it was not deciding the applicant's other legal remedies concerning the extent of its liability to 63 Moons under the law of subrogation.

The application was accordingly dismissed.

The tribunal also dismissed an application filed by Aastha Minmet (India) Ltd seeking to settle its outstanding decretal liability at 42%. The amount was ₹97.89 crore, based on parity with the NSEL scheme.

For Applicant: Fredun Devitre, Sr. Advocate i/b Gitika Khanchandani, Advocate

For Original Petitioner: . Rohit Gupta, Manik Joshi, Kashvi Obhan, Vrushab Vig, Advocates i/b M/s. Crawford Bayley and Co.

For 63 Moons Technologies Ltd: Mihir Kamdar, Advocate