NCLT Mumbai Approves Resolution Plan in Cosmos Co-operative Bank Ltd. v. Shubhada Tool Industries Pvt. Ltd.

The National Company Law Tribunal, Mumbai Bench (Court III), by its order dated 24 March 2026, approved the resolution plan submitted by CIAN Agro Industries & Infrastructure Limited in the CIRP of Shubhada Tool Industries Private Limited, reaffirming the primacy of creditor commercial wisdom under the Insolvency and Bankruptcy Code, 2016.

CIRP Background and Resolution Process

The Corporate Insolvency Resolution Process commenced on 17 January 2025 upon admission of a Section 7 application filed by Cosmos Co-operative Bank Limited, which constituted the sole member of the Committee of Creditors. The admitted financial debt stood at approximately ₹56.85 crore, while operational liabilities were limited to statutory dues. The Corporate Debtor, engaged in manufacturing hand tools, had ceased operations since FY 2021–22.

The resolution process was competitive and iterative. Six expressions of interest were received, ultimately narrowing down to two serious applicants—CIAN Agro Industries and Industrial Asset Transaction Services Pvt. Ltd. Multiple rounds of negotiations and extensions were granted to enhance value. After successive revisions, CIAN emerged as the highest bidder with a plan value of ₹9.75 crore. The plan was approved by the CoC with 100 percent voting share on 6 October 2025, following extensions that took the CIRP to 270 days. The plan reflects a significant haircut, with secured financial creditors recovering approximately 16.7 percent of admitted claims. Government dues are settled at a nominal amount, while CIRP costs are fully provided. Importantly, the plan value exceeds the liquidation value, satisfying viability requirements under the Code.

Tribunal Reasoning and Legal Implications

The Tribunal held that the resolution plan complies with Sections 30(2) and 31 of the Code and reiterated that its jurisdiction is limited to statutory scrutiny. Relying on K. Sashidhar and Essar Steel, it emphasized that commercial decisions of the CoC, even where consisting of a single creditor, are non-justiciable on merits. The plan provides for complete capital restructuring, extinguishment of existing shareholding, and transfer of management to the resolution applicant, with interim oversight by a monitoring committee. Implementation is structured over 360 days with phased payments.

A notable feature is the allocation of avoidance transaction recoveries to secured financial creditors, who will also bear litigation costs. This reflects flexibility in structuring contingent value within resolution plans. The ruling reinforces the IBC’s emphasis on finality, feasibility, and creditor autonomy, even in cases involving deep haircuts and single-creditor dominance.