NCLT Kolkata Refuses Consolidation Of Group Companies' CIRPs Over Advanced Stage Of One Insolvency Process

The Kolkata Bench of the National Company Law Tribunal (NCLT) has refused to consolidate the corporate insolvency resolution processes (CIRPs) of Sarita Steel & Power Limited and Ankit Metal & Power Limited, holding that Ankit Metal's resolution process had already reached an advanced stage with multiple plans evaluated.

“The assets are interconnected, but the CIRP of Ankit Metal has reached an advanced stage with multiple resolution plans already evaluated. The CIRP of Sarita Steel is yet to progress much, or maybe it is getting deliberately delayed,” the tribunal observed.

The bench of Judicial Member Bidisha Banerjee and Technical Member Siddharth Mishra was dealing with an application filed by the suspended board of Sarita Steel, seeking substantive consolidation of the CIRPs of both companies.

The applicant argued that both companies belonged to the same group, had common promoters, common lenders, interlinked liabilities and overlapping assets. It submitted that Sarita Steel had leased 10.49 acres of land to Ankit Metal for 50 years, and part of Ankit Metal's factory had been constructed on that land without physical demarcation.

The applicant further submitted that both CIRPs were being handled by the same resolution professional and involved common lenders, making consolidation necessary for value maximisation and effective resolution.

The Committee of Creditors (CoC) opposed the plea, arguing that the suspended director lacked locus standi to seek consolidation after the commencement of CIRP. It also contended that an earlier tribunal order had left the question of consolidation to the commercial wisdom of the CoC, which later rejected the proposal.

According to the CoC, Ankit Metal's CIRP had already reached an advanced stage, with multiple resolution plans under consideration and bids exceeding ₹550 crore, while Sarita Steel's CIRP remained at a nascent stage.

The tribunal acknowledged that the companies were group entities with interconnected assets and liabilities.

“The land of Sarita Steel leased to Ankit Metal forms part of the operational footprint of the Ankit Metal plant and is subject matter of both the CIRPs,” it noted.

However, the tribunal held that consolidation at this stage would delay Ankit Metal's ongoing resolution process.

“The CoC has deliberated and taken a decision against consolidation as the ground that the bidding in Ankit Metal matter has fetched a value of more than Rs. 550 Crores and any consolidation would affect the bidding process of Ankit Metal. The same cannot now be reopened through repetitive litigation,” the tribunal said.

The NCLT ultimately rejected the application and directed that both CIRPs continue independently in accordance with law.