The director of Sristi hospitality private limited, Santosh Shetty, has filed an appeal before the National Company Law Appellate Tribunal (NCLAT) challenging the July 2024 order of the National Company Law Tribunal (NCLT), Mumbai, which had approved a resolution plan submitted by the consortium of Admas Industries Pvt Ltd, Subh Ashish Exim Pvt Ltd, and Amit Jatia-led Hardcastle Restaurants Pvt Ltd for recovery of Rs 28,30,42,444.42.
Shetty, in his appeal, alleged that the entire Corporate Insolvency Resolution Process (CIRP) carried out under the supervision of the Resolution Professional (RP) was allegedly marred by gross violations of the Insolvency and Bankruptcy Code (IBC). He contended that the process involved had allegedly inflated claims of creditors, manipulated CIRP costs through valuations of non-existent assets such as plant, machinery, and financial instruments, and an alleged deliberate undervaluation of the company’s sole property asset.
Undervaluation and Alleged Violations
Shetty further argued that the plan was approved at a value “much lower than the actual fair value,” defeating the IBC’s core objective of value maximisation.
Background of Sristi Hospitality
Sristi Hospitality, incorporated under the Companies Act, 1956, operated as an MSME engaged in running restaurants, banquet facilities, permit rooms, and catering services. In 2017, the company availed a term loan from Saraswat Co-operative Bank Ltd against its sole property and personal guarantees of Shetty and his family members under two facilities namely Rs 21 crores against property and Rs 50 lakh as overdraft against property.
Due to his wife’s prolonged illness and subsequent demise, followed by the COVID-19 pandemic, Shetty defaulted on loan repayments. In March 2022, Saraswat Bank initiated insolvency proceedings under Section 7 of the IBC before the NCLT, leading to the appointment of a Resolution Professional in 2023.
As per the appeal copy, despite Shetty’s expressed willingness in 2021 to sell the property to repay dues, the CIRP proceeded, and in July 2023, the CoC approved the consortium’s resolution plan. The NCLT finally cleared the plan on July 12, 2024, ordering that the moratorium under Section 14 of the IBC cease and directing the implementation of the resolution plan.
Previous NCLT Proceedings
In his petition, Shetty claims he was denied a fair opportunity to present a competing plan backed by an investor’s commitment letter offering higher value. He had earlier moved applications before the NCLT seeking a revaluation of the property and a declaration that the CIRP was void, but his plea was dismissed as delayed in May 2024.
Shetty has now approached the NCLAT, asserting that the resolution plan undervalues the corporate debtor’s property.
