NCLAT upholds Rs 390-crore resolution plan for Neptune Developers

The National Company Law Appellate Tribunal (NCLAT), Principal Bench in New Delhi, has dismissed two appeals filed by the Central Bank of India, upholding the orders of the Adjudicating Authority that approved a resolution plan for Neptune Developers Private Limited. The Central Bank of India had challenged two orders, dated January 21, 2025, and March 25, 2025, issued by the National Company Law Tribunal (NCLT) in Mumbai.

The case, which involved two appeals, Company Appeal (AT) (Insolvency) No. 713 of 2025 and Company Appeal (AT) (Insolvency) No. 486 of 2025, centered on the Corporate Insolvency Resolution Process (CIRP) of Neptune Developers, a real estate company. The Central Bank of India, which had initiated the CIRP, holds an 11.83% voting share in the Committee of Creditors (CoC) but was a dissenting financial creditor, as it did not vote in favour of the resolution plan.

The Rs 390-crore resolution plan, submitted by Shree Naman Developers Pvt. Ltd., was approved by the CoC with an 85.35% vote share on March 31, 2023. The Central Bank of India raised objections to the valuation of the corporate debtor’s assets, leading to the appointment of a third valuer by the Adjudicating Authority on January 21, 2025.

Valuation Dispute and NCLAT’s Stance

The Central Bank of India argued that the third valuation report, which determined the liquidation value of the “Project Swarajya” at Rs. 11.08 Crore, was incorrect because it failed to value certain assets, specifically 23 KDMC Flats and 66 Barter Flats. However, the NCLAT noted that the third valuer, in their report, had acknowledged the 66 Barter Flats but did not assign them a value because they had been given to contractors in lieu of outstanding payments. The Tribunal found this approach to be non-perverse and acceptable.

The NCLAT’s judgment, delivered by Justice Ashok Bhushan, emphasized that the commercial wisdom of the CoC should not be interfered with by the Adjudicating Authority or the Tribunal. The court cited precedents from the Supreme Court, affirming that when a resolution plan is approved with the requisite majority, a dissenting financial creditor cannot challenge it.

Background of the Case

The CIRP for Neptune Developers began on July 16, 2021. During the process, two valuers were appointed: Kunal Kantilal Vikamsey and Adroit Appraisers and Research Pvt. Ltd. Their liquidation values were Rs. 8.39 Crore and Rs. 2.21 Crore, respectively. The third valuer, Jayesh Mohan Kamat, was appointed after the Central Bank of India’s objection and valued the liquidation at Rs. 11.08 Crore. The NCLAT directed that the average of the two closest liquidation values, in this case, the first and third reports, should be used to determine the payout for the dissenting financial creditor.

The Tribunal also heard from homebuyers, who are interveners in the case. They expressed their long wait for the delivery of their homes, some for over a decade, and noted that the resolution plan had not yet been implemented despite a previous order not to stay it.

Ultimately, the NCLAT found no merit in the appeals and dismissed them, concluding that there were no grounds to interfere with the approval of the resolution plan.

Also See: Shree Naman Developers buys out insolvent Neptune Developers for Rs 391 crore