NCLAT Ruling on Neptune Developers Insolvency
The National Company Law Appellate Tribunal (NCLAT) has rejected an appeal filed by the Central Bank of India challenging the approval of a resolution plan for the bankrupt real estate company Neptune Developers Pvt. Ltd.
The appellate tribunal ruled that the bank, as a dissenting financial creditor, cannot block a resolution plan endorsed by the Committee of Creditors (CoC) in its “commercial wisdom.”
The judgment comes as a major relief to over 2,000 homebuyers who have been waiting for possession of their flats in Neptune’s long-delayed Project Swarajya in Kalyan, Mumbai.
Background of the Case
Neptune Developers had defaulted on loans from the Central Bank of India and mortgaged its 26.05-acre project land in Kalyan to the lender. After the bank’s insolvency petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), the NCLT admitted the case in July 2021 and appointed Bijendra Kumar Jha as Interim Resolution Professional (IRP).
In March 2023, the NCLT approved a ₹390 crore resolution plan submitted by Shree Naman Developers Pvt. Ltd., which had secured 85.35% creditor approval. Competing bids had earlier been filed by KGK Realty (India) and Ess Gee Real Estate Developers.
This acquisition marked Shree Naman Developers’ second major deal after it bought Radius Infra Holdings in May 2024.
Dispute Over Valuation
During the Corporate Insolvency Resolution Process (CIRP), the IRP appointed valuers who initially pegged liquidation value at just ₹8.39 crore and ₹2.21 crore.
The Central Bank of India strongly disagreed, claiming the liquidation value should be closer to ₹26.83 crore. A third valuer later reported a fair value of ₹13.85 crore and liquidation value of ₹11.08 crore—still far below the bank’s claim.
The bank also argued that certain assets, including 23 KDMC flats and 66 barter flats for contractors, were wrongly excluded from the valuation. However, the valuer clarified that barter flats had already been exchanged for payments and could not be treated as realizable assets.
To address the dispute, the CoC set aside ₹26.83 crore as a disputed value for the bank. While the bank initially appeared agreeable during a January 2025 NCLT hearing, it later challenged the arrangement.
NCLAT’s Observations
The Central Bank argued that the NCLT prematurely approved the resolution plan before properly considering the third valuation report, and that a fresh round of CoC voting was required.
However, counsel for the Resolution Professional and other stakeholders countered that:
- The third valuation was conducted at the bank’s own request and could not be ignored after submission.
- Under Section 30(2)(b) of the IBC, dissenting creditors are entitled only to their liquidation value.
- Further delays would unfairly harm homebuyers who have already waited over a decade.
The NCLAT bench of Justices Ashok Bhushan and Barun Mitra upheld the NCLT’s approval, stressing that valuation reports are prepared by registered experts and cannot be replaced with creditors’ subjective estimates.
The tribunal further noted that the bank could not “indirectly achieve what it could not directly” by attempting to block the resolution plan.
Key Takeaways
- NCLAT dismissed Central Bank of India’s appeal against Neptune Developers’ resolution plan.
- CoC’s commercial wisdom prevails under IBC, binding on dissenting creditors.
- Homebuyers’ interest protected, with over 2,000 families set to finally receive delayed possession.
- Shree Naman Developers will take over Neptune Developers under the ₹390 crore plan approved by NCLT.
✅ This case reinforces that CoC’s commercial wisdom is supreme in insolvency resolution under IBC, and dissenting creditors cannot derail approved plans. It also underscores the judiciary’s emphasis on protecting homebuyers’ rights in stalled real estate projects.
