NCLT Mumbai Sets Aside Reclassification of PNB from Secured To Unsecured Creditor In Arshiya CIRP

A bench of Technical Member Prabhat Kumar and Judicial Member Sushil Mahadeorao Kochey held that once PNB's claim had been admitted, the resolution professional had no authority to alter its classification. It held that any such change could only be made pursuant to directions of the adjudicating authority

“Hence, we have no hesitation to hold that the Applicant is entitled to be classified as secured financial creditor on the basis of concurrent holder of security interest as well as guarantee obligations from the Corporate Debtor in respect of same debt.”, the tribunal observed.

Arshiya Ltd was admitted into CIRP on April 23, 2024, on account of persistent default. PNB had initially sanctioned a loan of Rs. 100 crores in October 2009, followed by consortium facilities aggregating to approximately Rs. 280.37 crore, which were secured through share pledges and corporate guarantees.

PNB had approached the tribunal, challenging the RP's decision to downgrade its status during the debtor's insolvency. The bank had extended credit facilities to Arshiya Northern FTWZ Ltd, the corporate debtor's subsidiary, and held two forms of security for the same deb. One, a pledge of shares and another, a corporate guarantee issued by Arshiya

While the interim resolution professional had initially admitted the bank's claim as that of a secured financial creditor, the newly appointed resolution professional later reclassified it as an unsecured financial creditor based on a legal opinion.

Allowing the bank's application, the tribunal observed that a resolution professional is empowered to collate and verify claims but does not have the authority to alter the classification of a creditor once admitted, unless directed by the adjudicating authority. Relying on settled precedents, it held that such unilateral reclassification was beyond the RP's powers.

The tribunal accordingly directed the resolution professional to correct the list of creditors and all CIRP records.

Case Title: Punjab National Bank vs Pankaj Mahajan

Case Citation: 2026 LLBiz NCLT (MUM) 64

Case Number: IA 2913 of 2025 IN CP (IB)/ 3143 (MB) 2019

For Applicant: Advocates Ankur Kumar, Saniya Anjum, Komal

For Respondent: Advocate Ayush Rajani