The National Company Law Tribunal (NCLT) has dealt a significant blow to Wadhwa Buildcon LLP by declaring their submitted resolution plan as invalid. This decision, made by the bankruptcy court's Mumbai bench, comes amidst mounting concerns over irregularities and the status of the company's promoters as wilful defaulters.

The matter was brought to light by the financial creditor Bank of India, which underscored various irregularities in the approval process of the resolution plan. These irregularities ultimately led to its rejection by the NCLT.

The court found substance in the arguments put forth by the lender, particularly concerning the conduct of the resolution professional. It was revealed that there was a drastic decrease in the voting percentage of the financial creditor, while the voting rights of homebuyers substantially increased.

Highlighting the vulnerability of homebuyers, the NCLT bench, presided over by judicial member Reeta Kohli and technical member Madhu Sinha, emphasized the importance of prioritizing their interests in such cases.

The actions of the resolution professional, including delays in presenting the plan and the failure to disclose crucial information about the promoters' wilful defaulter status, were deemed detrimental to the interests of the lender.

The court stressed the significance of Section 29A of the Insolvency and Bankruptcy Code (IBC), which aims to prevent defaulting promoters from participating in the resolution process. It ruled that no resolution plan from a wilful defaulter can be accepted or approved.

Moreover, concerns were raised about the composition of the Committee of Creditors (COC), which appeared to be dominated by homebuyers lacking commercial wisdom and legal acumen.

In response to these findings, the court has set aside the resolution plan submitted by the promoters and granted an extension of 180 days for the Corporate Insolvency Resolution Process (CIRP) to invite fresh expressions of interest.

This ruling underscores the imperative of transparency and fairness in the insolvency resolution process. It serves as a reminder for resolution professionals to uphold their duties impartially and ensure compliance with the law.