NCLAT orders fresh scrutiny of Appu Ghar Gurgaon resolution plan

In a significant ruling that may reshape the corporate insolvency landscape for large-scale real estate projects, the National Company Law Appellate Tribunal (NCLAT) on September 26, 2025, directed the Committee of Creditors (CoC) to re-examine the contentious resolution plan for the stalled Appu Ghar Gurgaon project at Sector 29, Gurugram.

The tribunal, headed by Justice Ashok Bhushan, was hearing two appeals, one filed by financial creditor Beeram Singh and the other by the Appu Ghar Gurgaon Shop Buyers Association, against the August 20, 2025, order of the NCLT, New Delhi, which had remitted the resolution plan to the CoC for reconsideration.

At the core of the dispute is the resolution plan submitted by HGAS-Apex JV, initially approved by the CoC in May 2019 with 58.19% votes, falling short of the statutory 66% threshold. Over the years, the constitution of the Successful Resolution Applicant (SRA) has undergone dramatic changes. Parklane Investment and Securities Pvt. Ltd., the foreign JV partner providing key finances, withdrew from the consortium. Hari Global Advisory Services, the other partner, converted into an LLP and later sought to induct Rapid Buildtech Pvt. Ltd., linked with Paras Buildtech.

Buyers and creditors argued that such reconstitution amounted to an impermissible “sale of resolution plan” and rendered the applicant ineligible. They also raised questions about the financial capacity of the new entities, pointing out that their declared annual profit was a mere ₹12.7 lakh compared to the ₹700 crore plan value.

Another flashpoint is the conduct of the Resolution Professional, Pramod Kumar Sharma, who was suspended for three years by the Insolvency and Bankruptcy Board of India (IBBI) for misconduct in this very case. Although the Allahabad High Court granted him interim relief, homebuyers pressed for his replacement, citing a lack of confidence and alleging procedural violations.

The NCLAT upheld the NCLT’s decision to remit the matter back to the CoC, but with crucial clarifications. It directed:

1. The CoC must first determine the eligibility of the reconstituted SRA before considering its plan.


2. The SRA must furnish complete details of its financial strength, composition changes, and supporting documents.


3. The CoC may consider replacing the Resolution Professional if 33% of creditors in class requisition a meeting under Section 27 of the IBC.


4. Any further steps on the plan would depend on whether the SRA is found eligible.

Effectively, the ruling has reset the clock on the six-year-old insolvency process, offering homebuyers another chance to seek a credible resolution but prolonging uncertainty.

Abhishek A Rastogi, founder of Rastogi Chambers, explained the legal significance of the ruling, saying, “The NCLAT has highlighted that the eligibility of a resolution applicant is not frozen in time but must be reassessed if its constitution changes materially after CoC approval. This strikes at the core of the IBC framework, where the identity, capability, and credibility of the applicant are central to protecting stakeholders’ interests.”

Rastogi further observed, "The tribunal has also highlighted the delicate balance between commercial wisdom of the CoC and judicial oversight. While courts cannot ordinarily interfere with CoC decisions, they can certainly ensure that the basic eligibility conditions under the Code are not diluted. The insistence on fresh scrutiny of the SRA’s financial and legal standing demonstrates judicial sensitivity towards the rights of homebuyers and minority creditors.”

On the issue of the Resolution Professional’s role, legal experts say that the findings reiterate that resolution professionals, as fiduciaries, must maintain the highest standards of transparency. The possibility of replacing the RP where confidence is eroded is a reminder that accountability under the Code is non-negotiable.

In all, legal experts concluded that the judgment will serve as a precedent in cases where resolution applicants attempt to alter their structure post-CoC approval, ensuring that such changes cannot be smuggled in without scrutiny.

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