The Hyderabad bench of the National Company Law Tribunal (NCLT) has dismissed JM Financial ARC’s plea for release of escrow funds linked to KSK Mahanadi Power’s resolution, holding that the ARC had already recovered more than its admitted dues and could not seek recovery beyond the approved plan.
The bench held that once a resolution plan is approved, all creditor rights against the company are governed by that plan. A creditor cannot later enlarge its admitted claim or seek recovery outside the treatment provided in the approved plan, it said.
JM Financial ARC argued that despite a settlement in KSK Water Infrastructure, an ancillary company that supplies water to the power plant, it was entitled to recover an alleged outstanding balance of ₹583 crore from KSK Mahanadi as a corporate guarantor.
JM Financial ARC said withdrawal of insolvency proceedings against KSK Water Infrastructure after the settlement revived its contractual rights and allowed it to pursue the remaining debt from KSK.
The tribunal rejected the plea, saying the issue was not whether a creditor could, in principle, proceed against a guarantor after settlement with the principal borrower.
The narrower question was whether JM Financial ARC could seek further recovery after KSK Mahanadi itself had undergone insolvency resolution and its plan had been approved and implemented.Last year, JSW Energy acquired KSK Mahanadi for ₹15,985 crore, outbidding Adani Power.
The tribunal noted that JM Financial ARC had received ₹130 crore as interim distribution in the insolvency process of KSK Water Infrastructure and ₹925.4 crore under the settlement involving that entity, taking its total recovery to ₹1,055.57 crore. This exceeded its combined admitted claims in KSK Water Infrastructure and KSK Mahanadi, the tribunal said.