MBL Infrastructure subsidiary exits insolvency with approved resolution plan

MBL Infrastructure Ltd (MBL) today announced a significant development in the Corporate Insolvency Resolution Process (CIRP) of its wholly-owned subsidiary, MBL (MP) Toll Road Company Ltd (MPTRCL). The Adjudicating Authority has approved the resolution plan submitted by MBL, effectively bringing MPTRCL out of insolvency.

The approval, granted via an order dated September 12, 2025, restates the powers of MPTRCL’s Board of Directors. As part of the resolution plan, MBL will infuse Rs 9.11 crores in equity into MPTRCL. This amount includes an Earnest Money Deposit (EMD) and Performance Security of Rs 2 crores already held in an escrow account.

The funds, along with MPTRCL’s existing cash, bank balance, liquid assets (including Fixed Deposits), and annuities accruals as of the reference date of June 30, 2025, will be paid to Punjab National Bank (International) Ltd (PNBIL), the sole secured financial creditor. This payment, to be made within 30 days, will serve as a full and final settlement, extinguishing all of MPTRCL’s liabilities and making it a debt-free company.

Following the payment, neither MPTRCL nor MBL will pursue any claims against PNBIL, and PNBIL will similarly not pursue any claims against the companies. The management and control of MPTRCL will revert to its Board of Directors.

A key aspect of the approved plan is that any surplus generated from toll fees, annuities, and receivables—including proceeds from arbitration claims—will be available to MBL after ensuring MPTRCL remains a going concern. The exact amount of this surplus will be quantified and disclosed at a later date.

In January 2025, the Principal Bench of the National Company Law Tribunal (NCLT) in New Delhi had admitted a petition filed by Punjab National Bank (International) Limited (PNBIL) against MBL (MP) Toll Road Company Limited, initiating the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor.

The financial creditor, PNBIL, had filed the application on May 12, 2023, citing a default of USD 5,338,895.44 (approximately ₹44.04 crore at an exchange rate of 1 USD = ₹82.50).

The dispute stemmed from a term loan facility of USD 8.06 million sanctioned by PNBIL to MBL (MP) Toll Road in March 2012 for a road project in Madhya Pradesh. The loan was secured by a corporate guarantee from MBL Infrastructure Ltd., the parent company of the corporate debtor. According to PNBIL, the account was classified as a Non-Performing Asset (NPA) on March 3, 2023.

MBL (MP) Toll Road had contested the application on several grounds, including the existence of a pre-existing dispute related to an alleged breach of an Escrow Agreement dated March 22, 2012, for which arbitration had already been invoked. The corporate debtor also argued that the demand notice was sent to an incorrect address and that the financial claim stood extinguished as it was not part of the approved resolution plan of its parent company, MBL Infrastructure Ltd., which underwent CIRP earlier.

The tribunal, however, rejected these arguments. It held that a pre-existing dispute does not bar admission of a Section 7 application, as the scope of enquiry under the Code is limited to the existence of debt and default. It also noted that the demand notice was sent to the registered address available in the Master Data and that such notice is not a mandatory requirement for filing under Section 7.

On the issue of the resolution plan of the guarantor — MBL Infrastructure Ltd — the bench observed that since there was no default on the part of MBL (MP) Toll Road at the time of the parent company’s CIRP, PNBIL had no occasion to file a claim for this particular loan account. Therefore, the debt remained enforceable against the principal borrower.

Also Read: Apex Court allows resolution plan of MBL Infrastructure despite Section 29A breach