The National Company Law Tribunal (NCLT) has issued a landmark judgment clarifying that approved resolution plans are binding and prevent creditors from seeking duplicate recoveries across group companies. According to reports from The Economic Times, the Hyderabad bench dismissed JM Financial ARC's plea for release of escrow funds linked to KSK Mahanadi Power's resolution, holding that the ARC had already recovered more than its admitted dues and could not seek recovery beyond the approved plan. The ruling signals to creditors that they should refrain from seeking duplicate recoveries across group companies after a resolution plan becomes final.
The tribunal noted that JM Financial ARC had received ₹130 crore as interim distribution in the insolvency process of KSK Water Infrastructure and ₹925.4 crore under the settlement involving that entity, taking its total recovery to ₹1,055.57 crore. As reported by The Economic Times, this exceeded its combined admitted claims in KSK Water Infrastructure and KSK Mahanadi. The ARC had argued it was entitled to recover an alleged outstanding balance of ₹583 crore from KSK Mahanadi as a corporate guarantor despite a settlement with the principal borrower.
Last year, JSW Energy acquired KSK Mahanadi for ₹15,985 crore, outbidding Adani Power, according to The Economic Times. The tribunal held that once a resolution plan is approved, all creditor rights against the company are governed by that plan, and a creditor cannot later enlarge its admitted claim or seek recovery outside the treatment provided in the approved plan. The ruling demonstrates the tribunal's commitment to maintaining the integrity of approved resolution plans and preventing creditors from circumventing the established framework.
In a related development, the Allahabad Bench of NCLT has held that it cannot determine unadjudicated claims for interest under the Micro, Small, and Medium Enterprises Development (MSMED) Act during corporate insolvency resolution processes. As reported by The Economic Times, the bench of Judicial Member Praveen Gupta and Technical Member Ashish Verma observed that interest liability must be adjudicated by a competent forum before insolvency proceedings commence. The ruling came while dismissing an operational creditor's plea seeking to enhance its admitted claim and challenge an approved resolution plan for Hind Agro Industries Ltd., where the company had sought to raise its claim from ₹29.21 crore to ₹241.29 crore by adding MSMED Act interest.
