Manish Bagrodia v. Anil Kohli ARCK RESOLUTION PROFESSIONALS LLP RP

7 of Code, in a Company Petition filed by Edelweiss Asset Reconstruction Company Limited (Financial) and some of issues raised in these Applications are common, both these IA s are disposed of by this Common order.

I.A. No. 855 of 2025

1. 1) This application is filed by some of the Employees of the Corporate Debtor, (hereinafter referred to as the "Applicants") under Section 60(5) of the Code, against Sh. Anil Kohli, ("Resolution Professional" or "RP") by inter-alia seeking to allow the application by directing the Resolution Professional to accept and admit the claims of the applicant Employees being statutory payments payable by the CD with all consequential reliefs,

. to direct the Resolution Professional to supply a copy of the Resolution Plan submitted by the SRA and as approved by the Committee of Creditors to the extent where dues of the employees have been taken care of. Etc

2) The applicants, in their capacity as employees of the corporate debtor, hold vested rights that are statutorily protected by a framework of industrial and labour laws, including the Industrial Disputes Act and the Payment of Wages Act. These statutory protections enforce their fundamental right to livelihood as guaranteed by Article 21 of the Indian Constitution. Accordingly, they have filed claims before the RP with proof of the monetary claims of the Employees/Workmen. Accordingly, a sum of Rs.54,79,977/- claimed as detailed below:

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3) However, the RP failed to appreciate that statutory employee dues- including Provident Fund, Pension, and Gratuity—are expressly excluded from the Corporate Debtor's assets under Section 36(4)(a)(iii) of the Code. Consequently, these funds are not part of the liquidation estate and are exempt from the waterfall mechanism in Section 53. The RP was therefore obligated to ensure the Successful Resolution Applicant's (SRA) plan provided for these dues in full for all employees who were employed, terminated, or resigned during the CIRP. They have relied upon on the Judgement passed by this Bench in the matter of Employees Provident Fund Organization Vs. Sh. Darshan Singh Anand

The IRP (2023) ibclaw.in 25. wherein it is inter-alia observed that the payment of Provident Fund (PF) arrears is a mandatory legal compliance. Since the Employees Provident Funds and Miscellaneous Act, 1952 (EPF Act) and the Code don't conflict, the latter cannot override the former in this matter. PF dues are explicitly excluded from the company's assets under Section

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36(4)(a)(iii) of the Code. Therefore, the new entity taking over the company is responsible for paying all dues raised by the EPFO, including interest and penalties, as required by Section 17B of the EPF Act. Any disputes regarding the demanded amount must be challenged through the channels provided within the EPF Act itself.Reliance is placed on the decision of Hon'ble NCLAT in the matter of Association of aggrieved Workmen of Jet Airways (India) Ltd. v. Jet Airways (India) Ltd. and Ors. (2022) ibclaw.in

66 NCLAT, wherein it is inter-alia held that an Insolvency Professional must ensure that confidentiality of the insolvency resolution process, liquidation or bankruptcy process, as the case may be, is maintained at all times. However, this shall not prevent him from disclosing any information with the consent of the relevant parties or required by law.

2. The Application was opposed by RP by filing his reply by inter-alia contending as follows:

1) The instant application is fundamentally flawed and should be rejected for two primary reasons: The application's sole basis is the allegation that the applicants were not informed of the admission or rejection of their claims. The applicants have deliberately suppressed communication from the RP dated 11.06.2024 which clearly informed them of their claim's status. Following this communication, the applicants remained silent and raised no objections for over a year. Further, the application

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is filed on behalf of only 6 individuals out of approximately 250 employees, without providing any supporting authorization. The affidavit attached is unsubstantiated by any documentary proof, rendering the application invalid.

2) The details of the employees and the amount of claim filed as well admitted as per the dues in the books of account of the Corporate Debtor as on Insolvency Commencement Date ("ICD") is provided as below:

The claim of the employee and workmen have been verified from the data provided by the ex-management of the Corporate Debtor as appearing in the books of accounts of the Corporate Debtor as on 22.12.2023 and accordingly admitted the same.

3) The updated list of creditors is not only available for inspection of all the creditors in terms of the Regulation 13 of the CIRP Regulations but also is available in the public domain. The

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company's ex-management prepared a provisional balance sheet as on ICD i.e., 22.12.2023, which the previous IRP, Mr. Sanjay Gupta, handed over to the current RP. To support this, the ex- management also prepared audited quarterly financials for 31.12.2023. These were officially published on the stock exchanges (BSE/NSE) to comply with SEBI rules. Since this report was for a date just nine days after insolvency started, and the ex-management confirmed no major financial impact occurred during that brief period, it serves as a reliable account of the company's assets and liabilities. The financial statements as on 31.03.2024 of the CD have been duly audited. Further, there has been regular filing of quarterly results on the portal of BSE and NSE.

4) The employee and workmen dues as of the ICD (22.12.2023) are considered audited and verified, as the amount is identical to the figures in the subsequent audited financials of 31.12.2023 and 31.03.2024. In compliance with the NCLT's order dated 26.05.2025, the RP sent an email on the same day requesting audited financial statements as of 22.12.2023. In response, on 31.05.2025, the auditor specified the information required for the audit. On the same day, the representative for the ex- management asked for an extension to gather and provide these details.

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5) The total claim amounting to Rs. 108,982,589.03/- was claimed by employees/workmen, out of which a sum of Rs. 60,776,629.00/- has been admitted. RP received the claim from the EPFO and admitted a claim of Rs.4,82,04,174/- from the EPFO department. The dues of the employees and workmen for an amount of Rs.30,00,000/- has been proposed by the SRA in the Resolution Plan. In addition to Rs.30,00,000/- the SRA has proposed to settle 100% EPFO by contributing an additional fund of Rs.4,82,04,174/-.RP has already submitted an affidavit with respect to the claims received from statutory authorities and treatment of the claim under the Resolution Plan.

6) It is a settled position of law that till the approval of the plan by the Adjudicating Authority, the Resolution Plan remains a confidential document and is not accessible to other parties. The Hon'ble NCLAT in the matter of Association of Aggrieved Workmen of Jet Airways (India) Ltd. vs. Jet Airways (India) Ltd. and Ors. Company Appeal (AT) (Insolvency) Nos. 643 of 2021 & I.A. No.1700 of 2021 Company Appeal (AT) (Insolvency) Nos. 915 of 2021, (2022) ibclaw.in 66 NCLAT, held that the Resolution Plan till the approval by the Adjudicating Authority remains a confidential document. The plan copy can only be shared with the participants in the CoC.

7) The company's former management and sales teams continued to draw salaries during the insolvency period but were unable to

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generate any new orders. The RP persuaded the former operator, Bharti Syntex Limited, to resume work at the Derabassi Plant. Despite significant challenges left by the ex-management, including worker unrest and a lack of orders, the RP successfully restarted operations at both plants. This allowed for the payment of salaries and wages, thereby restoring workforce stability and business continuity. No employees or workers were terminated. However, due to a lack of orders at the Mohali Plant since December, workers were temporarily asked not to report for duty. To mitigate their hardship pending the resolution plan's approval, a one-time compensation payment equivalent to 15 days' wages was provided.

8) On 03.05.2025, Bharti Syntex Limited, the operator of the Derabassi Plant, terminated its job work contract. Despite this leading to a work stoppage at the plant, all employees and workmen were paid their dues up to the end of April 2025. Going forward, any remaining unpaid wages from the CIRP period will be resolved as per the provisions of the IBC, 2016, and the legal precedent set by the Supreme Court in Sunil Kumar Jain and others.

2. Heard the Ld. Counsels for both Parties and pursued the records.

3. The first issue is whether these 6 Applicants maintain the Application for all 250 ex- employees of the CD. As per the Applicants herein can maintain this Application for themselves only. Secondly, the allegation that they are not informed anything about

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their issue by the RP is no longer relevant now as they are duly informed by the RP vide communication dated 11.06.2024.

4. The Second issue whether the claim of Applicants along others similarly situated employees have been duly considered by the RP or not, and whether they are entitled for full claim. As stated supra, out of total claim Rs. 108,982,589.03/- made by employees/workmen, a sum of Rs. 60,776,629.00/- has been admitted. The RP also admitted a claim of Rs.4,82,04,174/- from the EPFO department. The dues of the employees and workmen for an amount of Rs.30,00,000/- has been proposed by the SRA in the Resolution Plan. In addition to Rs.30,00,000/- the SRA has proposed to settle 100% EPFO by contributing an additional fund of Rs.4,82,04,174/-.RP has already submitted an affidavit with respect to the claims received from statutory authorities and treatment of the claim under the Resolution Plan. When the Company suffered losses and went into CIRP, nobody including secured Financial Creditors will get their full claim and it depends on ultimate assets of CD assessed and offer made by Resolution Applicants. All claimants have to accept haircut basing on the ultimate financial assets of CD. Since the dues of Applicants fall under priority category as per law, their claims have been duly considered by the RP and SRA.

5. We are fully satisfied that the claims of Applicants along with similarly situated employees have been duly considered. And finally, the Adjudicating Authority will consider the Resolution plan, as per law, when it comes for adjudicating.

6. In the result, I.A. No. 855/2025 in CP (IB) No. 291/Chd/Chd/2018 is hereby dismissed.

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I.A. No. 1187 of 2025:

(I) 1) The present Application is filed by Mr. Manish Bagrodia, Promoter and Suspended Director and a personal guarantor of the Corporate Debtor, (hereinafter referred to as "Applicant") U/s 60(5) of the Code R/w Rule 11 of NCLT Rules, 2016 by inter-alia seeking to take on record the objections in the approval of the Resolution Plan, submitted by Mohini Health & Hygiene Limited.; to direct the Resolution Professional and the Successful Resolution Applicant to address and rectify the material and legal infirmities identified herein, ensuring strict compliance with the provisions of the Code and settled legal principles etc.

2) Brief facts of the case are submitted as under:

a) The Resolution Plan submitted for this Tribunal's approval is fundamentally flawed and contains several significant material and legal defects, which are detailed below. The Director's systematic exclusion from the 14th, 15th, and 16th CoC meetings—held on 03.10.2024, 16.10.2024, and 29.10.2024 respectively—raises serious concerns about procedural fairness. This is particularly troubling as he was removed during the critical discussion and finalization of Resolution Plans, despite having submitted his own settlement proposal under Section

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b) The Resolution Plan is procedurally flawed on two major counts. Firstly, it fails to incorporate claims received after 03.05.2024, despite the Resolution Professional acknowledging at least four such claims in the 18th CoC meeting. Secondly, the CoC's composition changed materially when ICICI Bank assigned its debt to Phoenix ARC on 29.11.2024, while

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voting was still pending. Both the exclusion of claims and the mid-vote change in the CoC's constitution cast serious doubt on the fairness and validity of the resolution process.

c) A significant legal infirmity exists within the Resolution Plan, which proposes a "full and final settlement and extinguishment" of all liabilities and litigations against the Corporate Debtor. This provision directly prejudices the Objector, in his capacity as Promoter and personal guarantor, by nullifying his pre-existing counterclaims against Edelweiss Asset Reconstruction Company Ltd. (EARC) and other lenders before the Debt Recovery Tribunal (DRT). The plan's overreach into the Promoter's distinct legal remedies is contrary to the Corporate Debtor's best interests and renders this clause legally untenable.

d) A Clarification is required to resolve a discrepancy in the stated Earnest Money Deposit (EMD). The figure of Rs.5,00,00,000/- mentioned in the Resolution Plan conflicts with the Rs.5,50,00,000/- cited in the Performance Security section of the Request for Resolution Plan (RFRP). These two amounts must be reconciled. There are lingering concerns regarding whether the creditor profile is accurate as per the last statement filed with the Insolvency and Bankruptcy Board of India ("IBBI"). The RP states an updated list including belated claims was attached as of 16.12.2024, but the infirmity highlights a need for verification.

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e) The Resolution Plan suffers from a material legal infirmity due to its non- compliant treatment of employee liabilities. It fails to adequately provide for gratuity, provident fund, and pension obligations, which, as established by a catena of NCLAT judgments, must be paid in their entirety and are not to be considered assets of the corporate debtor. The plan is further deficient as it omits provisions for employees who separated from the company post-CIRP initiation. Critically, it inadequately addresses EPFO dues by capping them at ₹2.5 crores, despite a 7A order assessing the liability at approximately ₹6 crores (including interest and damages)

(II) The Application has been opposed by the RP by filing his reply by inter- alia contending as follows:

a) Every effort has been made in accordance law, while approving Resolution Plan by COC and the Adjudicating Authority will have ultimate authority to scrutinize it before approval. There is requisite majority for approval of Resolution plan in question, which is non- justiciable unless it can be demonstrated to be in contravention of Section 30(2) of the Code. The plan is structured to ensure the Corporate Debtor's revival and provides for all stakeholders in conformity with the statutory waterfall. As per established legal precedent, the former management lacks the requisite locus standi to assail a resolution plan duly approved by the CoC. The function of the suspended board is statutorily circumscribed to a supportive role, mandating their full cooperation and assistance to the Resolution Professional for an

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efficient resolution. The Suspended Director lacks the standing to challenge the CoC's commercial wisdom at this late stage. Despite attending all CoC meetings and being privy to all information, he failed to raise any objections before the resolution plan was approved. His silence at the appropriate time constitutes a waiver of his right to object now. In this regard, decision was relied decision rendered in Anuj Gaur and Ors. Vs Rabindra Kumar Mintri (RP) (2025) ibclaw.in 413 NCLAT, wherein it is inter-alia held it is not tenable to raise objection after the approval plan. Similarly, the Hon'ble Supreme Court of India in K. Sashidhar v. Indian Overseas Bank & Ors. (2019) 12 SCC 150 and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. (2020) 8 SCC 531, has inter-alia uphold the supremacy of commercial wisdom of the CoC in approving a resolution plan.

b) The Applicant tendered a settlement proposal U/s 12A via email on 26.09.2024. This proposal was deliberated upon during the 14th through 18th CoC meetings, concurrently with the Resolution Plans tabled by the RP. As of the conclusion of the 18th CoC meeting, the Applicant's Section 12A proposal remained without a conclusive outcome. The CoC, in its 14th meeting on 03.10.2024, resolved that the Applicant's presence was impermissible during the discussion of the financial components of the Resolution Plans. This decision was predicated on a conflict of interest arising from his pending settlement proposal under Section 12A of the Code. It is a matter

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of record that the Applicant acquiesced to this procedure, having raised no objection to his recusal throughout the entire process.

c) Allegations of a flawed or exclusionary claim review process are unfounded. On the contrary, all claims were solicited and processed in strict accordance with the Code and its regulations. Four claims were submitted subsequent to the deadline. These belated claims were verified by the Resolution Professional and presented to the CoC, which, in its meeting of 12.11.2024, resolved to recommend their inclusion. Pursuant to this, the RP filed an application for condonation of delay before this Authority on 06.12.2024, which is presently pending adjudication.

d) The assignee, Phoenix Asset Reconstruction Company Private Limited, merely stepped into the shoes of the assignor, ICICI Bank, and continued to exercise the rights and obligations as a financial creditor from the date of reconstitution of the CoC. The assignment of debt from ICICI Bank to Phoenix ARC was a legitimate commercial transaction that did not invalidate the CoC. Phoenix simply assumed ICICI's rights and obligations. Upon receiving the assignment deed on 02.12.2024 (after ICICI had voted on the plan), the RP filed an application on 03.12.2024 to reconstitute the CoC, which was approved by the Tribunal on 26.03.2025.

e) The Resolution Plan was unanimously approved with 100% of the vote. Given this total consensus, the 4.03% voting share held by ICICI Bank (now Phoenix ARC) had no material bearing on the outcome. The

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Resolution Plan, upon approval, operates on the "clean slate" principle, extinguishing claims against the Corporate Debtor for the pre-CIRP period, as affirmed by the Hon'ble Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021) ibclaw.in 54 SC. While the Corporate Debtor receives a clean slate, the Resolution Plan explicitly states that personal guarantees are not affected, allowing the Objector to pursue or defend personal claims independently. Furthermore, if the Corporate Debtor has any right to pursue any claim against any person, those rights also get transferred to the SRA and the SRA can take independent steps in that regard.

f) There is no material discrepancy regarding the EMD as alleged by the Applicant. The process involved two distinct stages as clearly outlined in the documents. Initially, the Invitation for EOI dated 18.07.2024 required a deposit of Rs.50,00,000/- for eligibility, which the SRA paid in full. Subsequently, the RFRP mandated an additional deposit of Rs.5,00,00,000/- as performance security for the submission of a plan, which the SRA also duly provided. The Applicant has therefore misplaced the fact by claiming the performance security was specified to be Rs.5,50,00,000/-. In reality, the RFRP clarifies that the final Performance Security is to be calculated as 15% of the proposed payment to financial creditors, with the Rs.5,50,00,000/- already deposited by the SRA being adjusted against this amount. Consequently, the SRA has

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fully complied with the deposit requirements at every stage, and the Applicant's claim of a discrepancy is unfounded.

g) It is totally unfounded concerns expressed regarding the accuracy of the creditor profile are unfounded. The RP has fully complied with Regulation 13 of the CIRP Regulations by maintaining a list of creditors that was consistently available for inspection. Crucially, the Applicant has acknowledged in his own application that this list was properly maintained and publicly accessible. Despite having ample opportunity to review the updated claims, the Applicant raised no objections until now. For the record, the creditor profile was last updated on 16.12.2024, to include all claims and was presented to the CoC.

h) The plan addresses the admitted claims of Rs.6,07,76,629.00/- crore as compared to the submitted claim of Rs.Rs.108,982,589.03/- which were verified from the company's books. Specifically for gratuity, the plan proposes Rs.30 lakhs, which exceeds the admitted claim of Rs.21.5 lakhs. Since the company is a going concern and no employees were terminated, the SRA will manage all ongoing employee liabilities in the normal course of business and in accordance with applicable laws. The Resolution Plan ensures that these statutory dues are treated in accordance with the waterfall mechanism prescribed under Section 53 of the Code and the principles laid down by the Hon'ble NCLAT and the Supreme Court.

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III) We have heard the respective Counsels on record, have carefully perused all the pleadings, extant provisions of Code along with rules and settled position of law on the issue in question

IV) The first issue to considered is whether the Applicant has locus standi to maintain the Application by raising several un-substantiated grounds, which are contrary to law on the issue. As stated supra, the law is very much settled as to what is scope of litigation in this case. In the lead decisions rendered in Anuj Gaur and Ors. Vs Rabindra Kumar Mintri (RP) (2025) ibclaw.in 413 NCLAT, and K. Sashidhar v. Indian Overseas Bank & Ors. (2019) 12 SCC 150 and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. (2020) 8 SCC 531, it is inter-alia held objections are not tenable after approval of Resolution plan, uphold the supremacy of commercial wisdom of the CoC in approving a resolution plan. Since the allegations are un-founded, the instant Application is hardly maintainable.

V) As detailed supra, admittedly, the Applicant was present in numerous CoC meetings but failed to protest his recusal from specific discussions at the relevant time. Raising this objection now, after the plan has been approved, is a clear afterthought. By his silence, he waived his right to object and is now estopped from doing so. The CoC's decision to recuse him to avoid a conflict of interest, given his competing Section 12A proposal, was a reasonable procedural safeguard. Therefore, objection in this regard is un-tenable.

VI) When the RP has filed appropriate Application by seeking condonation, which is pending adjudication. And it is for the Adjudicating Authority to

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take a decision on the issue and the Applicant cannot find fault with and pre-judge the issue. As far as assignment of debt is concerned , it is permitted under Regulation 28 of the CIRP Regulations. The assignee (Phoenix ARC) simply stepped into the shoes of the assignor (ICICI Bank). This Authority approved the CoC reconstitution on March 26, 2025. Critically, with the plan being approved by a 100% majority, the vote of this 4.03% stakeholder was not decisive, rendering this objection moot. As far the objection on extinguishing counter claim is concerned, , it is totally not tenable in the light of decision of Apex Court rendered in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021) ibclaw.in 54 SC, wherein, it is inter-alia held personal rights and liabilities of a promoter or guarantor against third parties do not extinguish. The applicant remains free to pursue his independent legal remedies against the lenders in his personal capacity, as per provisions of law. This objection is therefore unfounded.

VII) The Applicant being suspended Director cannot plead other employees or claimants' grievances. The grievances of 250 employees, at the instances of 6 employees, have already been considered in the above IA No. 855 of 2025 and rejected them with cogent reasons. And the Adjudicating Authority, being ultimate competent to approve resolution plan, would consider all relevant factors when the Application filed seeking for approval Resolution plan listed before it. And the Applicant cannot and do not have any authority to pre-judge the issue.

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VIII) For the aforesaid reasons and circumstances of the case and by taking into settled position of law on the issue in question, we are of considered view that the instant Application also lacks merits and it liable to be dismissed.

IX) In the result, the application bearing I.A. No.1187 of 2025 in CP (IB) No. 291/Chd/Chd/2018 is also dismissed as devoid of any merits. No order as to costs.

Both the I.A. Nos. 855/2025 and 1187/2025 are dismissed and disposed of.

Sd/- Sd/-

(Shishir Agarwal) (Khetrabasi Biswal)

Member (Technical) Member (Judicial)

November 28, 2025

ASG

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