Ahmedabad: National Company Law Appellate Tribunal (NCLAT) in New Delhi has set aside an NCLT-approved resolution plan involving 1,500 acres of Gujarat Industrial Development Corporation land near Bharuch, after GIDC objected to proposed sub-plotting and sub-leasing without being given any benefit.The land at Vilayat near Bharuch was allotted by GIDC in 2007 to Gujarat Hydrocarbons & Power SEZ Ltd (GHPSL) for developing a special economic zone. Part of the parcel was notified as an SEZ. After GHPSL entered insolvency proceedings, Zaveri & Co Pvt Ltd submitted a resolution plan, which was approved by the NCLT in 2023 following support from the resolution professional and the committee of creditors.The plan proposed sub-plotting and sub-leasing the land to third parties for non-SEZ activities to generate revenue. GIDC opposed the proposal, saying the plan did not provide for any charge or gain to GIDC. The NCLT rejected the objection and approved the plan submitted by Zaveri & Co Pvt Ltd.GIDC then moved the NCLAT, arguing that land owned by a govt entity could not be dealt with in such a manner without its approval. GIDC’s counsel, Arjun Sheth, submitted that the land had not been de-notified as an SEZ by the SEZ development commissioner. Though a de-notification process had been initiated, it was not completed. The resolution plan, however, proceeded on the assumption that the land had been de-notified and could be used for non-SEZ business activities, effectively overriding the original lease deed with GIDC.During the appellate proceedings, it also emerged that the resolution professional and Zaveri & Co were aware of the land’s status. The NCLAT held that when land owned by a govt body is leased to a corporate debtor, any resolution plan based on such land requires the consent of that govt body and greater scrutiny.The tribunal ruled that the plan was “not a feasible or viable plan” under Section 30(2)(e) of the Insolvency and Bankruptcy Code and Regulation 38 of the CIRP Regulations. It remanded the matter to the committee of creditors for a fresh process to approve a resolution plan.
