NCLAT Approves Express Resorts' Resolution Plan for Neesa Leisure, Sets Aside NCLT's Rejection After Six Years of CIRP

The appellate tribunal found NCLT had rejected a CoC-approved plan without identifying any specific violation of Section 30(2), overstepping its limited judicial review role.

The National Company Law Appellate Tribunal's Principal Bench at New Delhi, comprising Justice Yogesh Khanna and Mr. Ajai Das Mehrotra (Member, Technical), on 25 May 2026 set aside the NCLT Ahmedabad Bench's order dated 4 March 2024 that had rejected the resolution plan of Express Resorts and Hotels Limited for the Corporate Insolvency Resolution Process of Neesa Leisure Limited. The appellate tribunal approved the resolution plan outright and directed the NCLT to pass a consequential order within 15 days of the order being produced before it. The NCLT had rejected the plan on the ground that it did not comply with Section 31(1) of the Insolvency and Bankruptcy Code, 2016. The appellate tribunal found that the NCLT had not identified any specific violation of Section 30(2) and had instead relied on subjective observations, some of which were factually incorrect, to override the commercial wisdom of the Committee of Creditors.

The CIRP of Neesa Leisure Limited

Neesa Leisure Limited, which operated a chain of hotels under the Cambay brand across Ahmedabad, Gandhinagar, Jaipur, Udaipur, and Neemrana, was admitted to CIRP on 26 April 2019 on an application filed by Asset Reconstruction Company (India) Limited under Section 7 of the IBC. Mr. R.D. Chaudhry was appointed as the Interim Resolution Professional. A stay on the CIRP was imposed by the Gujarat High Court from 19 June 2019 to 9 October 2019. On 20 June 2020, Mr. Amit Jain took charge as the Resolution Professional appointed by the NCLT.

The Committee of Creditors was constituted with representatives of State Bank of India, Corporation Bank, Oriental Bank of Commerce, IFCI Limited, SIDBI, Bank of India, Edelweiss Asset Reconstruction Company, Saraswat Co-operative Bank, an authorised representative for fixed deposit holders, the Superintendent of CGST Gandhinagar, and an authorised representative of Golf Unit Holders.

Expressions of Interest were issued on 9 February 2020. Eight EOIs were received. The Information Memorandum was issued on 12 March 2020 to prospective resolution applicants. The properties identified for site visits included Cambay Grand Thaltej, Cambay Sapphire Vejalpur, Cambay Sapphire Gandhinagar, Cambay Grand Kukas Jaipur, Cambay Resort Jamdoli Jaipur, Cambay Resort Udaipur, and Cambay Sapphire Neemrana.

Four resolution plans were received. After negotiations, three plans — from Kundan Care Products, Pacific India Projects, and the Consortium of Express Resorts Groups — were found eligible. The plans were put to vote in the 14th CoC meeting on 19 October 2020. Express Resorts' plan received 67.85% of the voting share. The plan of Pacifica received 19.91% and that of Kundan received 0.73%.

The resolution plan had a plan value of Rs. 143.83 crores, with an additional Rs. 250 crores promised as fresh capital expenditure, taking the total plan value to approximately Rs. 400 crores. This was above the liquidation value of Rs. 141.84 crores. A Letter of Intent was issued to Express Resorts on 7 November 2020. On 13 November 2020, the appellant deposited a performance bank guarantee of Rs. 50 crores. The Resolution Professional filed IA 851 of 2020 for approval of the plan on 19 November 2020.

Three Rounds of Litigation Before the Appellate Tribunal

The plan approval application did not proceed smoothly. From February 2021 onwards, several parties filed applications seeking intervention, including fresh settlement proposals from the suspended management. The NCLT, in an order dated 6 September 2022, disposed of the plan approval application by directing the Resolution Professional to invite fresh resolution plans, including from earlier unsuccessful applicants.

Express Resorts challenged that order. The appellate tribunal, in Company Appeal (AT) (Insolvency) No. 1158 of 2022 decided on 9 February 2023, set aside the NCLT's order. It held that the CIRP period had long ended, that the CoC's approval of the plan had to be respected, and that the NCLT could not restart the CIRP process after two years. The Supreme Court upheld that order on 17 March 2023.

After the remand, the suspended board submitted a fresh proposal under Section 12A of the Code on 7 March 2023. Another proposal was submitted on 5 April 2023. Both were rejected by the CoC. The NCLT, on 28 November 2023, directed the Resolution Professional to convene a CoC meeting to apprise members of the Rainbow Papers judgment and orders of the Rajasthan High Court. Express Resorts challenged that direction as well.

In the second round, the appellate tribunal, on 18 December 2023, set aside the NCLT's direction to refer the matter back to the CoC and directed the NCLT to conclude the hearing on IA 851 of 2020 within one month from 12 January 2024. The appellate tribunal observed that the impact of the Rainbow Papers judgment had already been explained by the Resolution Professional and the SRA, and that no purpose would be served by prolonging the matter.

The NCLT then heard the plan approval application and, on 4 March 2024, rejected the plan.

Why the NCLT Rejected the Plan

The NCLT's rejection order ran across fifteen grounds. It found that the plan approval process lacked transparency, that individual CoC members had been involved in discussions that delayed approval, that the Information Memorandum had included disputed Rajasthan properties at Neemrana and Jamdoli where lessors had taken back possession, that the three valuations obtained were not comparable because they valued separate asset classes rather than the entire assets of the Corporate Debtor, and that there was a wide and unexplained variation between two reports by the same valuer, Mr. S. Dhingra.

The NCLT also found that the plan provided nil distribution to operational creditors including government statutory authorities, that the treatment of assenting and dissenting financial creditors through equity distribution was objectionable, that the plan was approved by a “wafer thin majority of 67.5” and that the CoC constitution was questionable because the claims of Rajasthan Golf Unit Holders had been rejected. It further found that the suspended management's settlement proposals had not been adequately considered, that the CIRP cost was not fully covered, that the Information Memorandum had not been filed with the plan approval application, and that operational creditors receiving nil payment had not been made parties to the application.

The NCLT concluded that the plan did not comply with Section 31(1) and rejected it under Section 31(2).

The Appellant's Case Before the Appellate Tribunal

Senior Advocate Mr. Abhijeet Sinha, appearing for Express Resorts, submitted that the resolution plan was fully compliant with Section 30(2) of the IBC and had been approved by the CoC with the requisite majority in the exercise of its commercial wisdom, which is non-justiciable. He relied on the Supreme Court's judgments in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, Pratap Technocrats Pvt. Ltd. v. Monitoring Committee of Reliance Infratel Ltd., K. Sashidhar v. Indian Overseas Bank, and Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd.

On the Rainbow Papers issue, the appellant submitted that the plan pre-dated the Supreme Court's judgment in State Tax Officer v. Rainbow Papers Limited (pronounced 6 September 2022), which came after the CoC approved the plan on 24 October 2020. The Resolution Professional had filed an affidavit identifying the statutory dues covered by the Rainbow Papers judgment as approximately Rs. 16.09 crores, with the pro-rata amount payable coming to approximately Rs. 2.33 crores. The appellant gave an undertaking, confirmed by affidavit dated 26 March 2026, to pay the additional Rs. 2.33 crores over and above the plan value.

On valuation, the appellant submitted that valuations were done by registered valuers under CoC supervision, that no stakeholder had raised any objection to the valuation at the relevant time, and that the correctness of valuation falls within the commercial wisdom of the CoC and is non-justiciable. The appellant also pointed out that valuation reports under the IBC are confidential documents not shared with the resolution applicant, and that three separate valuers are mandated under the Companies (Registered Valuers and Valuation) Rules, 2017 for the three distinct asset classes.

On the NCLT's observation about the plan being approved by a “wafer thin” majority, the appellant submitted that 67.85% crossed the statutory threshold of 66% and remained a valid majority. On the suspended management's settlement proposals, the appellant submitted that both proposals under Section 12A had been considered and rejected by the CoC, and that it is settled law that once a Section 12A proposal is rejected, fresh proposals cannot be entertained.

Respondents' Positions

The suspended management, represented by Mr. Aspi Kapadia, opposed the plan primarily on valuation grounds. It was submitted that the first valuation by Mr. Sunil Dhingra placed the value of all properties at Rs. 1,245.81 crores, while his second report reduced it to Rs. 187.27 crores (fair market value) using an income approach. A third valuation by Crest Capital Advisors arrived at Rs. 246.80 crores, and a fourth by Adroit Valuers at Rs. 180.87 crores. The suspended management submitted that the Jamdoli property in Rajasthan was initially valued at Rs. 443.24 crores by Mr. Dhingra and later reduced to zero, which amounted to fraud vitiating the entire proceedings. The suspended management also filed IA 247 of 2025 before the appellate tribunal seeking directions to the CoC to consider a fresh Section 12A settlement proposal.

Respondent No. 17, RARE Asset Reconstruction Limited (successor to ACRE and SIDBI's debts), represented by Senior Advocate Mr. Navin Pahwa, supported the NCLT's rejection order. It submitted that the plan violated Section 30(2) by not treating statutory dues as secured credits in terms of the Rainbow Papers judgment, and that the Adjudicating Authority has no power to modify a plan — it can only accept or reject.

The Ahmedabad Municipal Corporation, which filed two impleadment applications (IA 6082 and 7158 of 2025), submitted that it is a statutory body under the Gujarat Provincial Municipal Corporation Act, 1949, that it had submitted its claim in time, and that Section 141 of the GPMC Act creates a first charge on the Corporate Debtor's property for property taxes due. It relied on the appellate tribunal's judgment in Company Appeal (AT) (Ins.) No. 1833 of 2024 dated 26 September 2025, which held that a statutory corporation with a charge under its constituting statute is a secured creditor.

How the Appellate Tribunal Reasoned

The appellate tribunal began by noting the procedural history: the CIRP was initiated on 26 April 2019, the plan was approved by the CoC on 19 October 2020, the performance bank guarantee of Rs. 50 crores was deposited on 13 November 2020 and remained with the Resolution Professional, and the plan approval application had been pending before the NCLT since 19 November 2020. The plan was submitted during the COVID period when the hospitality industry was under severe strain.

On the Rainbow Papers issue, the appellate tribunal noted that the Resolution Professional's affidavit had identified the secured statutory claims covered by the judgment at Rs. 16.09 crores, with the pro-rata amount payable at Rs. 2.33 crores. The SRA had confirmed in an affidavit dated 26 March 2026 its willingness to pay this additional amount over and above the plan value. The appellate tribunal relied on its own judgment in The Cosmos Co-Op Bank Ltd. v. Mr. Kailash T. Shah in Company Appeal (AT) (Ins.) No. 774 of 2024, which had upheld an NCLT direction to release a reserved amount to the State Tax Department in view of the Rainbow Papers judgment, holding that this was implementation of the plan in accordance with binding law rather than modification of its commercial content. The appellate tribunal held that the present case was on a better footing because the SRA had voluntarily offered to bear the additional Rs. 2.33 crores, leaving the rights and benefits of the financial creditors who approved the plan entirely unaffected.

On the scope of the NCLT's power under Section 31, the appellate tribunal surveyed the Supreme Court's consistent position. In K. Sashidhar v. Indian Overseas Bank, the Supreme Court had held that the legislature consciously made the commercial wisdom of the CoC non-justiciable before the Adjudicating Authority. In Pratap Technocrats (P) Ltd. v. Reliance Infratel Ltd., the Supreme Court held that the NCLT's jurisdiction under Section 31(1) is limited to determining whether the plan as approved by the CoC complies with Section 30(2), and that there is no equity-based jurisdiction. In Ramkrishna Forgings Limited v. Ravindra Loonkar, the Supreme Court held that a plan approved by the CoC with a majority vote after repeated negotiations should not be casually interfered with. In Arun Kumar Jagatramka v. Jindal Steel & Power Ltd., the Supreme Court cautioned the NCLT and NCLAT against judicial intervention that disturbs the foundational principles of the IBC.

The appellate tribunal found that the NCLT had not given any specific finding on contravention of any provision of Section 30(2). The observations in the rejection order were described as subjective and legally unsustainable, with some being factually incorrect. The appellate tribunal noted that for each of the NCLT's fifteen grounds, there were ample explanations and documents on record that the NCLT had not adverted to. The NCLT's reference to its own earlier order dated 6 September 2022 — which had already been set aside by the appellate tribunal — was also noted as an error.

On the specific ground that the plan was approved by a “wafer thin” majority, the appellate tribunal held that 67.85% crossed the statutory threshold and remained a valid majority. On the CoC constitution, it noted that no objection had been raised since 2020 and that the Golf Unit Holders were represented by an authorised representative. On the suspended management's settlement proposals, it reiterated that both Section 12A proposals had been considered and rejected by the CoC in its commercial wisdom, and that it is settled law that once such a proposal is rejected, the suspended management cannot submit revised or fresh proposals.

On valuation, the appellate tribunal held that the correctness of valuation falls within the commercial wisdom of the CoC and cannot be examined by the NCLT at the stage of plan approval. The CoC had accepted the valuations, the appointment of the registered valuer had been ratified by the CoC, and no stakeholder had raised any objection at the relevant time. The three separate valuations for three distinct asset classes were mandated under the applicable rules.

Outcome

The appellate tribunal set aside the NCLT's order dated 4 March 2024 and approved the resolution plan submitted by Express Resorts and Hotels Limited. The NCLT was directed to pass a consequential order within 15 days of the order being produced before it. All pending applications were disposed of. No order as to costs was made.