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Informist, Wednesday, Jul. 9, 2025

 

By Surya Tripathi

 

--NCLAT junks order rejecting Univastu India IBC plan for Setubandhan Infra

--Remit Univastu India's IBC plan to lenders for Setubandhan: NCLAT to NCLT

 

NEW DELHI – The National Company Law Appellate Tribunal on Wednesday set aside a National Company Law Tribunal, Mumbai bench's order that had rejected Univastu India Ltd.'s resolution plan for debt-ridden Setubandhan Infrastructure Ltd. The appellate tribunal asked the Mumbai bench to remit Univastu India's resolution plan to the committee of creditors of Setubandhan Infrastructure for its consideration in light of the queries raised by the Mumbai tribunal.

 

The appellate tribunal extended the corporate insolvency resolution process of Setubandhan Infrastructure by 90 days. "We also expunge the observations made by the adjudicating authority on the conduct of the RP (resolution professional) and do not find any reason for referencing the RPs conduct to IBBI (Insolvency and Bankruptcy Board of India)," said the tribunal.

 

The adjudicating authority, with the limited powers of judicial review available to it, cannot deal with the merits of resolution plan or substitute its views with the commercial wisdom of the committee of creditors in rejecting the resolution plan unless it is found it to be contrary to the provisions of law and against the public interest, said the appellate tribunal. There can be no fetters on the commercial wisdom of committee of creditors and the supremacy of its wisdom has been reaffirmed time and again by the Supreme Court, the appellate tribunal added. 

 

The Mumbai tribunal had in 2022 admitted a petition by State Bank of India to start insolvency proceedings against Setubandhan Infrastructure. The debt-ridden company had admitted claims of INR 1.58 billion from SBI, IL&FS Financial Services Ltd., Kotak Mahindra Prime Ltd. and Union Bank of India. In January 2024, the committee of creditors approved Univastu India's resolution plan with 98.57% votes. 

 

However, on Mar. 24, the Mumbai tribunal rejected Univastu India's resolution plan for Setubandhan Infrastructure. The Mumbai tribunal had said that the resolution plan lacked mandatory provisions required under the Insolvency and Bankruptcy Board of India Regulations, 2016, specifically regarding separate payment provisions for non-voting creditors.

 

The Mumbai tribunal had said the resolution plan violates the 2016 regulations by failing to include specific provisions for "feasibility & viability". The resolution plan contains no specific provision for the claim of the Employees Provident Fund Organisation, the same being a statutory due that must be paid on priority, the Mumbai tribunal said.

 

The resolution professional of Setubandhan Infrastructure has miserably failed to protect, preserve, and collate all the assets of the corporate debtor and has not taken any steps towards maximisation of its assets to the detriment of the financial creditors, thus violating the Insolvency and Bankruptcy Code, 2016, the Mumbai tribunal had said. There is improper bifurcation of creditors belonging to the same class, against the mandate of the 2016 Code, the Mumbai tribunal had added.

 

On Wednesday, shares of Univastu India ended 10.3% higher at INR 262.03 on the National Stock Exchange, while shares of State Bank of India ended 0.2% lower at INR 810.95.  End 

 

Reported by Surya Tripathi

Edited by Vandana Hingorani

 

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