The NCLAT has dismissed a challenge from former promoters against the sale of Sristi Hospitality. The tribunal confirmed the ₹32.41 crore resolution plan approved by the Committee of Creditors, stressing that financial decisions made by creditors are final.
The National Company Law Appellate Tribunal (NCLAT) has finalized the insolvency resolution process for Sristi Hospitality, rejecting an appeal filed by the company’s former promoters. The tribunal upheld the sale of the firm to a consortium comprising Admas Industries, Subh Ashish Exim, and Amit Jatia of Hardcastle Restaurants for ₹32.41 crore.
Conflict Over Property Valuation
The former promoters had challenged the resolution plan, arguing that the valuation of the company's property in Vile Parle, Mumbai, was unfairly low. They claimed that previous valuations suggested the assets were worth as much as ₹76.72 crore. However, the NCLAT bench clarified that historical valuations conducted before the insolvency proceedings carry no weight in the official Corporate Insolvency Resolution Process (CIRP).
According to the tribunal, only valuations performed by registered professionals appointed after the insolvency process began are legally relevant. The NCLAT further emphasized that it does not have the authority to override the commercial decisions made by the Committee of Creditors (CoC). This principle, supported by Supreme Court rulings, reinforces that creditors have the final say in accepting or rejecting financial bids during insolvency.
Resolution Process Context
The insolvency proceedings for Sristi Hospitality began in February 2023 after Saraswat Co-operative Bank filed a plea to recover unpaid debt exceeding ₹28 crore. The NCLT Mumbai bench approved the successful resolution plan in July 2024. The NCLAT noted that the plan has already been fully implemented, and no evidence of procedural irregularities by the Resolution Professional was found. By dismissing the promoters' appeal, the tribunal has effectively cleared the path for the new owners to proceed with their operations without further legal uncertainty regarding the acquisition.
Investors and stakeholders should monitor the future operational stability of the acquired assets, as the transition to new ownership is now legally settled. The outcome serves as a reminder of the legal priority given to creditors' decisions in the Indian insolvency framework, which often limits the ability of previous management to regain control once the resolution process is complete.