NIL-Valued Assets Under CIRP Must Benefit the Financial Creditor, Not the Resolution Applicant: NCLT Ahmedabad

Overview of the Judgment

The National Company Law Tribunal, Ahmedabad Bench, delivered a significant ruling on 24 September 2026 in In re Jigar Tarunkumar Bhatt (NCLT Ahmedabad), bearing Appeal Number C.P.(IB)/271(AHM)2025, approving the resolution plan for Raninga Paper Mills Private Limited ("Corporate Debtor") while imposing a consequential direction that recoveries from assets which had been assigned NIL valuation during the Corporate Insolvency Resolution Process ("CIRP") must flow exclusively to the financial creditor — State Bank of India ("SBI") — and cannot inure to the benefit of either the Corporate Debtor or the Successful Resolution Applicant ("SRA").

The application before the Tribunal — IA(Plan)/9(AHM)/2026 — was preferred by the Resolution Professional under Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016 ("the Code"), read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations").

Background: How the CIRP Unfolded

Admission and Constitution of the Committee of Creditors

The Corporate Debtor was admitted into CIRP on 29 July 2025 pursuant to a Section 7 application filed by SBI. Following public announcement in terms of Section 15 of the Code read with Regulation 6 of the CIRP Regulations, claims were received, collated and verified. The Committee of Creditors ("CoC") was constituted on 26 August 2025 with SBI as the sole financial creditor, holding 100% voting share. SBI's admitted financial claim stood at ₹29,58,96,052/-. Two authorised representatives for operational creditors — one for government dues and one for others — were also nominated.

Claims Summary

By 9 February 2026, the final updated list of creditors reflected the following position:

Total claims received numbered 69, aggregating ₹58,25,26,776/-, of which 64 claims aggregating ₹46,16,67,043/- were admitted.

Resolution Plan Process

The CIRP involved an extensive and multi-stage resolution plan process:

1. Form G inviting Expressions of Interest was published on 26 September 2025 in Financial Express (English and Gujarati) and Sandesh.
2. Ten Prospective Resolution Applicants ("PRAs") were included in the final eligible list following Section 29A verification and CoC-approved eligibility criteria.
3. Five resolution plans were initially received by 23 December 2025.
4. A revised Form G was published on 12 January 2026 in Business Standard, Financial Express and Sandesh with 12 March 2026 as the revised plan submission deadline. The CIRP period was concurrently extended by 90 days from 25 January 2026 vide IA/133(AHM)/2026.
5. By the 6th CoC meeting on 16 March 2026, six PRAs had submitted plans under the revised Form G.
6. An inter-se challenge mechanism was conducted on 31 March 2026, following which Mr. Chandresh Lalitbhai Soni emerged as the H1 bidder.
7. Revised resolution plans were submitted on 7 April 2026 by Mr. Chandresh L. Soni, Deep Chemical, and Ajaybhai Chandulal Bhajda.
8. The 9th CoC meeting on 11 May 2026 assessed the three compliant plans on feasibility, viability, source of funds, implementation capability, stakeholder treatment, reliefs/concessions and revival potential:

Estimated liquidation costs of ₹18,00,000/- were also approved by the CoC.

9. On 21 May 2026, SBI — as the sole CoC member with 100% voting share — approved the resolution plan submitted by Mr. Chandresh Lalitbhai Soni with 100% majority following e-voting between 14 May 2026 and 21 May 2026.

MSME Status

On 7 May 2026, the MSME Certificate and Compliance Certificate were issued. Since the Corporate Debtor qualified as an MSME, the SRA asserted eligibility under Sections 29A read with 240A of the Code.

Compliance Affidavits and Tribunal Queries

Following filing of the plan application on 23 May 2026, the Tribunal issued directions on 3 June 2026 seeking information, details and clarifications. The Resolution Professional filed a Compliance Affidavit dated 15 June 2026 annexing:

• Financial statements of the Corporate Debtor as on the CIRP commencement date (29 July 2025) with FY 2024–25 comparatives;
• Latest financial statements as on 31 March 2026;
• A re-cast balance sheet giving effect to the resolution plan; and
• Last available audited financial statements for FY 2022–23.

By a subsequent order dated 15 June 2026, the Tribunal called for details and reasons behind the resolution adjustments in the re-cast balance sheet. The RP's further Compliance Affidavit dated 20 July 2026 explained that the re-cast balance sheet was prepared on the basis of proposed implementation of the resolution plan including reliefs/concessions sought, subject to final statutory audit and approvals from the Tribunal and statutory authorities.

Objections by Deep Chemical: An Unsuccessful Resolution Applicant

Mr. Harnesh Nareshbhai Mehta, sole proprietor of M/s Deep Chemical — an admitted operational creditor and unsuccessful resolution applicant — filed an Affidavit-in-Reply-cum-Objections on 8 July 2026, raising statutory, procedural and factual challenges across five grounds.

Ground I — Transaction Audit and the NIL Valuation Finding

Deep Chemical challenged the Resolution Professional's finding of NIL under Sections 43, 45, 50 and 66 of the Code in the transaction audit, contending that: