A losing bidder raised its offer by ₹42 crore after the auction had closed, and the bank would still have been paid less
Justice Mohammad Faiz Alam Khan and Naresh Salecha dismissed five appeals against the Mastana Foods resolution plan, holding that the e-auction date fixes the bid and that a unilateral second plan is non-responsive.
The Principal Bench of the National Company Law Appellate Tribunal has upheld the resolution plan for Mastana Foods Pvt. Ltd. and dismissed five connected appeals, brought by a losing bidder and two suspended directors who said an offer of ₹133.91 crore should have been preferred to the ₹131.91 crore bid that won the electronic auction. Two things were wrong with the argument on the Tribunal's reading of the record. The higher figure arrived a week after the auction had closed. And it would have paid the only creditor in the room ₹2 crore less.
The dispute
Mastana Foods was admitted into the corporate insolvency resolution process on 18 September 2019, on a Section 7 petition by the State Bank of India. The bank was the sole secured financial creditor and constituted 100 per cent of the Committee of Creditors, the body of lenders that votes on what becomes of the company. Mr Ashok Kumar Juneja was appointed interim resolution professional and confirmed in the role at the first meeting of the Committee; he was replaced by Mr Amit Agarwal under an order of November 2023.
The valuers put the company's fair value at ₹70,16,94,723 and its liquidation value at ₹48,95,06,043. Form G, the public invitation to prospective resolution applicants, went out on 3 December 2019. The first round produced a single plan, from a consortium of three individuals, and the Committee voted it down. Form G was issued again in February 2020, and again in January 2025. The process ran, in all, almost six years before a plan was approved.
The last round is the one that matters. Plans came in by 17 February 2025. The Committee then asked every applicant to improve its financial proposal by 25 March. Amba Grains Private Limited went from ₹35.99 crore to ₹59.70 crore; the consortium of HR Commercials Private Limited and Crown Steels went from ₹54.55 crore to ₹74.91 crore. At its 26th meeting on 27 March the Committee decided, relying on Regulation 39(1A)(b) of the insolvency resolution process regulations, to run a competitive electronic bidding round for price discovery.
That round was held on 15 April 2025. Of the eight shortlisted applicants, five punched a bid. The consortium came out highest at ₹131.91 crore. Amba bid ₹91.91 crore. Krishan Mohan Mendiratta, a suspended director and personal guarantor who was bidding for the company himself, offered ₹77.91 crore. The auction had, in a single afternoon, taken the best offer on the table from ₹74.91 crore to ₹131.91 crore.
The resolution professional then asked each participant to file a revised plan carrying the figure it had punched. Amba filed one at ₹91.91 crore, as directed. On 22 April it filed a second, at ₹133.91 crore — ₹42 crore above its own auction bid, and ₹2 crore above the consortium's.
Five appeals reached the Tribunal from three sets of appellants, against orders of the Delhi bench of the National Company Law Tribunal passed between February and June 2026. Amba Grains brought two, one against the rejection of its objections and one against the approval of the plan itself. Anil Khurana, a suspended director of the company and a guarantor of its debt, brought a third. Krishan Mohan Mendiratta brought the remaining two, and his position is the most tangled of the three: he was at once a prospective resolution applicant who had bid ₹77.91 crore, a suspended director of the company being bid for, and a personal guarantor of its borrowings. On 20 July 2026, with the consent of all counsel, the Bench heard the five together and disposed of them by a common judgment, the parties agreeing to file written submissions within two or three days and to lead no fresh documentary evidence.
The doctrinal anchor
The Tribunal fixed on the auction date and would not be moved off it. The 15th of April is the significant date, it held, and no applicant was entitled, under the request for resolution plans or under the resolution professional's communication of 8 April, to quote any figure other than the one it bid that day unless the Committee or the professional asked it to. Clause 10.1(V)(i) of the request document said in terms that submitting more than one plan may render a plan non-responsive. On that footing the professional was right to write to Amba on 2 May refusing the revised bid.
Amba's explanation for not bidding higher on the day was that it had been uncertain whether its rivals were eligible under Section 29A of the Insolvency and Bankruptcy Code, which bars defaulting promoters and other disqualified persons from submitting plans, and that it would have negotiated upward once eligibility was settled. The Bench found two things wrong with that. The due diligence report confirming the eligibility of every applicant had gone to the Committee on 10 April, five days before the auction. And Amba's own correspondence raising Section 29A was sent after 15 April, not before it. Eligibility under Section 29A, the Tribunal held, bore no relation to an auction whose only purpose was transparent price discovery.
On the Committee's side the reasoning is orthodox and firmly put. The second plan was in fact placed before the Committee, with the whole correspondence and the professional's objection that a unilateral revision and the filing of two plans were not acceptable. The Committee knew exactly what it was looking at and approved the consortium's plan anyway. A committee of creditors is not bound to accept a plan merely because the number on its face is larger; it is entitled to weigh feasibility, and it was entitled here to negotiate with the highest bidder rather than reopen the bidding. The minutes of the 28th meeting record the choice being put in precisely those terms — negotiate further with an applicant, or put the matter to vote.
For the limits of its own jurisdiction the Bench went to Pratap Technocrats Private Ltd. v. Monitoring Committee of Reliance Infratel Limited, where the Supreme Court held that the adjudicating authority's jurisdiction under Section 31(1) is confined to whether the requirements of Section 30(2) are met, is statutorily defined, and cannot be equated with a jurisdiction in equity. There is no residual equity-based power in either the adjudicating authority or the appellate authority to enter upon the merits of a business decision taken by the requisite majority of the Committee.
It also drew on the Supreme Court's recent judgment in Torrent Power Ltd., which adds a warning the Bench evidently thought apt here: that unsuccessful bidders will always try to recast commercial decisions of the Committee as procedurally faulty in order to secure a second shot through litigation. The passage sets out the economics on both sides of the clock. Looking backwards, expansive review lengthens timelines, raises transaction costs and erodes the going-concern value of the company. Looking forwards, it changes how people bid: future applicants price legal uncertainty into their offers, discounting them or staying away altogether, which weakens competition and reduces what creditors recover. And it invites stakeholders with little or no economic interest in the company to litigate as a bargaining tool.
The resolution professional's duty, and a regulation that moved
A separate line of attack was that the professional should never have put a non-compliant plan before the Committee at all, in breach of Regulations 30(2)(e), 30(3) and 39(1b)(c). The appellants relied on Canara Bank v. Ms. Mamta Binani, where this Tribunal set out the professional's scrutiny obligation: to examine each plan for conformity with Section 30, to confirm that it violates no provision of law including Section 29A, to determine whether the eligibility criteria are satisfied, and to offer the Committee an ex facie opinion that the law has not been broken. On that reading a plan failing Section 30(2) need not be presented at all.
The answer was a change in the rules. Regulation 39(2) was amended with effect from 26 May 2025 to require the professional to submit all resolution plans received, with the details of the non-compliant ones. The Board's press release of 30 May 2025 gave the reasoning: that the Committee should have comprehensive information before it, which may lead to better-informed choices. The 28th meeting of this Committee sat on 1 July 2025. The amended regulation was in force when the plans were considered, and on the Bench's view the controversy is now settled — the professional places everything before the Committee, and the Committee evaluates under Regulation 39(3) against the evaluation matrix.
The money question
This is where the appeal comes apart. Under the approved plan the secured financial creditors stood to receive ₹127.30 crore. Under Amba's late ₹133.91 crore plan they would have received ₹125.18 crore. The larger headline figure distributed less to the only creditor with a vote, because of how the two plans allocated between classes and across time. The successful applicant had in any event moved during negotiation from ₹131.91 crore, with a net present value of ₹124.43 crore, to ₹135.24 crore with a net present value of ₹127.52 crore. That is the number the Committee voted on.
Against a liquidation value of ₹48.95 crore, ₹127.30 crore for the bank is a little over two and a half times what breaking the company up would have realised. A performance security of ₹8 crore was furnished by bank guarantee.
The excise department's admitted claim was ₹12,05,07,027. Following Rainbow Papers, which treats certain statutory dues as secured, the successful applicant filed an addendum on 2 July 2025 adding ₹3,32,27,872 to its offer for that claim, taking the payment from ₹4,06,10,868 to ₹7,38,38,740. The Bench rejected the contention that only the successful applicant had been given the chance to make its plan Rainbow-compliant: the opportunity was open to every applicant, and the addendum was considered by the Committee alongside the other plans.
The suspended directors ran a separate attack on the valuation itself. Mastana Foods owns roughly 34.30 acres, and they said the land had been converted from agricultural to industrial use well before the insolvency began, yet the valuers applied the agricultural circle rate of about ₹62 lakh an acre rather than the industrial rate of roughly ₹15,400 a square yard, which works out at about ₹7.45 crore an acre. The justification offered was that industrial rates were not available on the government website. A valuer engaged by one of the appellants produced a fair value of ₹154.24 crore and a liquidation value of ₹131.10 crore; the Enforcement Directorate's provisional attachment order had valued the land at ₹90 crore. The respondents answered that suspended directors are not entitled to the valuation reports at all, those going only to members of the Committee, and that they are not entitled to appeal against approval of the plan.
Outcome
Neither the adjudicating authority nor the Appellate Tribunal sits as a court of appeal over a plan the Committee has approved. The jurisdiction is confined to statutory compliance — Section 30(2) for the adjudicating authority, Section 32 read with Section 61(3) for the Appellate Tribunal. Finding no ground to interfere with the impugned judgment, the Bench dismissed all five appeals as devoid of force, made no order as to costs, and disposed of the pending applications.
The plan of the HR Commercials and Crown Steels consortium stands, seven years and one month after the company was admitted to insolvency. An appeal lies to the Supreme Court under Section 62 of the Code.