Resolution Applicants Must Exercise Due Diligence, Cannot Fault CIRP Over Public Disclosures: NCLT Mumbai
The National Company Law Tribunal (NCLT) at Mumbai has held that Prospective Resolution Applicants (PRAs) are required to exercise due care and diligence while submitting resolution plans.
It said the applicants cannot later fault the insolvency process merely because they discovered additional information from the public domain.
A coram comprising Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar dismissed an application filed by the consortium of Ashdan Properties Pvt. Ltd., a PRA in the corporate insolvency resolution process (CIRP) of Hotel Horizon Private Ltd.
It observed, “As regards discovery of additional information from the public domain, the PRAs are required to exercise due care and diligence while submitting their plan and ought to carry out necessary public scrutiny. It is noted that 5 PRAs participated in the process, and they have not complained that the IM was deficient or inaccurate.”,
Hotel Horizon was admitted into insolvency on November 19, 2024, on a petition filed by Asset Care & Reconstruction Ltd. Ashdan Properties had alleged that certain litigations, title disputes, and asset-related information were not disclosed in the Information Memorandum (IM) or Virtual Data Room (VDR), and sought directions to revise the IM, defer the challenge process, and permit submission of a revised plan.
The applicant contended that it came across these issues during its own due diligence from public sources.
Rejecting the plea, the tribunal recorded that the IM is prepared on the basis of information available with the corporate debtor and its suspended management, and that the resolution professional cannot be compelled to disclose information not in his possession. It further noted that five PRAs had participated in the process, and none, except Ashdan, complained of any deficiency in disclosures.
Holding that such conduct disentitled the applicant from relief, the tribunal declined to interfere with the commercial wisdom of the Committee of Creditors and dismissed the application.
Case Title: Consortium of Ashdan Properties Pvt Ltd & Ors
Case Citation: 2026 LLBiz NCLT (MUM) 55
Case Number: I.A. NO. 3032 OF 2025 IN C.P. NO. (IB) 1241 (MB) OF 2022
For Applicant: Advocates N. Dave, Dhruva Gandhi
For Respondent: Advocates Gaurav Joshi, Rushabh J., Kriti Kalyani, Ansh Kumar
For CoC: Advocates Rohit Gupta, Manaswi Agrawal, Salni Kalwade