Suspended Director Challenges Suraksha ARC in NCLT Over Insolvency Deal

 (SLDPL). The petition alleges fraud, misrepresentation, and regulatory violations in the handling of the company’s insolvency proceedings.

Allegations of Round-Tripping and Loan Evergreening

SLDPL has been under the Corporate Insolvency Resolution Process (CIRP) since 2021 after its account was flagged as stressed. Singh, removed from the management post-CIRP initiation, claims that the insolvency proceedings were based on collusive and flawed dealings between Yes Bank and Suraksha ARC.

According to the petition, the transfer of SLDPL’s loan from Yes Bank to Suraksha ARC was not a conventional distressed asset sale but part of a circular funding mechanism. Singh alleges that Yes Bank indirectly financed Suraksha’s debt acquisition through a related entity, with the funds ultimately returning to the bank—practices he argues constitute round-tripping and loan evergreening, prohibited under Reserve Bank of India (RBI) norms. The application references an internal Yes Bank audit and a Central Bureau of Investigation chargesheet to support claims of irregularities.

Premature Asset Classification

Singh further claims that Yes Bank prematurely classified SLDPL’s account as a non-performing asset, despite timely repayments. This, he argues, created a false default scenario that enabled Suraksha ARC to push for insolvency proceedings against the company.

Questions Over Resolution Professional’s Conduct

The petition also questions the role of Resolution Professional Snehal Kamdar, asserting that Singh was denied access to essential company records and excluded from Committee of Creditors meetings. As a suspended director, Singh contends he is entitled under the Insolvency and Bankruptcy Code to stay informed about the CIRP.

RBI’s Role Challenged

Singh has also brought the Reserve Bank of India into the case, claiming that its framework on loan assignments, asset classification, and ARC funding structures was violated. He argues that such breaches compromise the integrity of the insolvency process and require urgent attention before proceedings continue.

Relief Sought

The interlocutory application seeks:

• Setting aside the original insolvency admission

• Declaring Suraksha ARC ineligible as a financial creditor

• Dissolving the Committee of Creditors

• Restoring management control of SLDPL to its board

• Staying all ongoing CIRP proceedings until the tribunal delivers a ruling

Industry Attention

The matter is expected to be heard by the NCLT in the coming weeks. Banking and asset reconstruction industry observers are closely monitoring the case, as the tribunal’s decision could set precedents for how distressed debt transfers and ARC dealings are structured and regulated.

#NCLT #SurakshaARC #YesBank #Insolvency #CIRP #CorporateLaw #BankingFraud #IBC #AssetReconstruction #LoanEvergreening #RoundTripping