Mumbai, October 9, 2026: The National Company Law Tribunal (NCLT) has held that the State Bank of India (SBI), a dissenting secured creditor in the insolvency proceedings of AA Estates Pvt Ltd, is entitled to receive at least the liquidation value attributable to its security interest. The tribunal has ruled that this entitlement cannot be capped at the total amount offered under the resolution plan.
In an order pronounced on October 7, the Mumbai bench directed the resolution professional (RP) to determine the liquidation value payable to SBI and inform the tribunal whether the approved resolution plan provides for payment of this amount in cash.
SBI Opposed Resolution Plan
SBI, which holds a 21.37% voting share in the Committee of Creditors (CoC), had opposed the resolution plan submitted by a consortium of Authum Investment and Infrastructure Ltd and Cosmos Prime Projects Ltd. The plan was approved on January 30, 2026, with 78.62% voting support, despite SBI's dissent.
The resolution plan envisages a total financial outlay of approximately Rs 579.95 crore. Of this, around Rs 543.95 crore represents the estimated market value of flats proposed to be handed over to homebuyers, assuming all of them opt for flats instead of the cash alternatives offered under the plan.
Tribunal Rejects Payment Cap
The tribunal held that a CoC resolution seeking to restrict the minimum payment to a dissenting financial creditor to the total value of the resolution plan was contrary to Section 30(2)(b) of the Insolvency and Bankruptcy Code (IBC).
The disputed CoC resolution stated that, since the value offered under the resolution plan was lower than the corporate debtor's liquidation value, dissenting financial creditors would be paid an amount not exceeding the value of the approved resolution plan.
“The said paragraph shall result into determination of minimum liquidation value available to the operational creditor as well as dissenting financial creditor subject to maximum of resolution plan value, instead of value of its security interest,” the tribunal observed.
SBI had sought a direction that the amount payable to it should not be less than the liquidation value attributable to its security interest, determined in accordance with the distribution mechanism under Section 53 of the IBC. It also sought the removal of the clause capping its entitlement at the maximum amount available under the resolution plan.
The tribunal directed the RP to calculate the amount payable to SBI in accordance with its observations and report whether the approved plan provides for payment in cash.
Dispute Over Project Valuations
The tribunal also considered the dispute over the valuation of AA Estates' four real estate projects — RNA Grandeur, RNA Address, RNA Bizz and RNA Kandivali. The company holds contractual development rights over land owned by the Maharashtra Housing and Area Development Authority (MHADA) and leased to cooperative housing societies. The valuation reports submitted during the insolvency proceedings showed a substantial difference in the estimated value of the company's assets.
A tribunal-appointed independent valuer, KKCA Valuers LLP, assessed the company's consolidated fair value at Rs 267.94 crore and its liquidation value at Rs 214.34 crore. In comparison, valuers Bhavin Patel and Vinit Sangoi assessed the consolidated fair value at Rs 101.05 crore and the liquidation value at Rs 76.65 crore.
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Performance Security And Homebuyers’ Interests
The tribunal also upheld the performance security of Rs 1.80 crore, calculated at 5% of the Rs 36-crore cash component of the resolution plan. However, it flagged concerns regarding the protection of homebuyers' interests, particularly in relation to potential future cash payouts and other commitments under the plan.
The tribunal directed the resolution professional to place the findings regarding SBI's minimum entitlement before it for further consideration of the resolution plan.
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