Aretha Legal is pleased to announce a favorable order secured before the Hon’ble National Company Law Tribunal (NCLT), New Delhi Bench–VI, in CA 1159 of 2020 and IA 5119 of 2023 concerning Rathi TMT Saria Pvt. Ltd.

The matter was argued by Mr. Kunal Tandon, Senior Advocate, briefed by the Insolvency team led by Ms. Aanchal Tandon, Senior Partner, along with Ms. Niti jain, Principal Associate, on behalf of Indian Overseas Bank (IOB).

The case revolved around a resolution plan approved by the Committee of Creditors (CoC), with IOB holding a 98.61% voting share. The plan, submitted by a consortium comprising NIFS Steels (Kamal Kishore Aggarwal), Premlata Yadav, and Pradeep Gupta, later encountered internal conflicts, one member failed to deposit his share of the performance security, revoked powers were challenged, and criminal complaints were filed among consortium members. Despite multiple opportunities and specific directions from the NCLT, no amicable settlement was reached, resulting in a prolonged deadlock.

It was contended on behalf of IOB that such unresolved consortium disputes rendered the approved resolution plan unworkable and stalled the effective revival of the corporate debtor. IOB further argued that these disputes violated the IBC’s requirement of plan feasibility and enforceability. The Tribunal concurred, holding that implementability and cooperation are essential under Sections 30 and 31 of the Insolvency and Bankruptcy Code (IBC) and Regulations 38 and 39 of the CIRP Regulations. Referring to recent NCLAT precedents, the Bench observed that any change in the consortium’s constitution raises eligibility concerns and must be placed before the CoC for fresh consideration.

This order reinforces the centrality of consortium cohesion and practical viability in resolution plans, reiterates the CoC’s vital role, and affirms that the Code favors resolution over liquidation in the interest of all stakeholders.

Accordingly, the NCLT remanded the plan to the CoC for fresh reconsideration within 90 days, prioritizing the statutory objective of value maximization and corporate revival.