Case Digest on Rulings of NCLAT under IBC

Section 410 of the Companies Act, 2013 created the National Company Law Appellate Tribunal (NCLAT) with effect from June 1, 2016, to consider appeals against the decisions of the National Company Law Tribunal(s) (NCLT). When it comes to appeals against NCLT(s) orders issued under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), NCLAT also acts as the Appellate Tribunal, effective December 1, 2016. The NCLAT acts as the Appellate Tribunal for appeals against decisions rendered by the Insolvency and Bankruptcy Board of India in line with Sections 202 and 211 of the IBC.

According to the amendment made to Section 410 of the Companies Act, 2013 by Section 172 of the Finance Act, 2017, which went into effect on May 26, 2017, the NCLAT is also the Appellate Tribunal with the authority to hear and decide appeals against any directive, decision, or order issued by the Competition Commission of India (CCI).

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According to Section 83 of the Companies (change) Act, 2017, which amended Section 410(a) of the Companies Act, 2013 and went into effect on May 7, 2018, NCLAT is also the Appellate Tribunal with the power to consider and rule on appeals against the orders of the National Financial Reporting Authority.

NCLAT sets aside Nike India’s Plea to initiate Insolvency against Dealer

The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench dismissed a petition filed by Nike India to initiate insolvency proceedings against one of its dealers. The Tribunal upheld the orders of the National Company Law Tribunal (NCLT), which on December 22, 2022, rejected the footwear and apparel maker’s plea to initiate the insolvency proceedings against its distributor on the ground of pre-existing dispute.

The Two- Member Bench of Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical) observed that the present matter is not a case, where Section 9 (insolvency) proceedings under IBC can be initiated when a dispute is raised in reply to the Section 8 notice.

Non-Consideration of Objection from Allottee of Land: NCLAT directs to Approve Resolution Plan after giving Opportunity to File Objection

The National Company Law Appellate Tribunal(NCLAT) directed to approve resolution plan after giving the opportunity to file objection to the allottee of land.The Appellant shall be satisfied if the Appellant is given an opportunity to file an objection to the Resolution Plan and they are heard by the Adjudicating Authority at the time of consideration of the approval of the Resolution Plan.  A Coram comprising Justice Ashok Bhushan,  Chairperson and Naresh Salecha, Member (Technical)  allowed two weeks’ time to file objection to the Resolution Plan. Further held that “the Application for approval of the Resolution Plan being already filed pending the same shall be considered by the Adjudicating Authority along with the objections.”

Typographical Mistakes in Order passed by NCLT: NCLAT Set aside the Order

The Delhi bench of the National Company Law Appellate Tribunal (NCLAT) set aside the order by National Company Law Tribunal (NCLT) since there were typographical mistakes in Order.

A two-member bench comprising Justice Anant Bijay Singh, Member (Judicial) and Naresh Salecha, Member (Technical) observed that a couple of clerical/ typographical errors seem to have entered into the ‘impugned order’ which are required to be corrected by the ‘Tribunal’. The Coram set aside the ‘impugned order’ and directed them to look into all issues by the law.

Monetary Relief on Fraud Committed by Oppression and Mismanagement can only be granted by NCLT u/s 242 of Companies Act: NCLAT

In a recent ruling, the Delhi bench of the National Company Law Appellate Tribunal (NCLAT) monetary relief on fraud committed by oppression and mismanagement can only be granted by National Company Law Tribunal (NCLT) under section 242 of the Companies Act, 2013.

The Tribunal viewed that NCLT was justified in granting the interim reliefs keeping in view the Report of the Advocate Commissioner and the fact that the Petition was filed under Sections 241 & 242 of the Act.

The Tribunal viewed that sufficient opportunity was given by the NCLT to the Appellants, specifically having regard to the fact that there was a direction to file a Counter to the Company Petition in the Interim Orders dated 17.01.2020 and 17.02.2020. While dismissing the appeal, the Tribunal upheld it. the NCLT Order

The settlement Entered by KNCEL and NHAI for Foreclosure of  Concession Agreement relating to Kiratpur was in Accordance with Approved Resolution Framework about ILF&S: NCLAT

The Delhi bench of the National Company Law Appellate Tribunal(NCLAT) has held that settlement entered by Kiratpur Ner Chowk Expressway Limited (KNCEL) and National Highways Authority of India (NHAI) for foreclosure of the concession agreement relating to Kiratpur was by approved resolution framework about Infrastructure Leasing & Financial Services Ltd. (IL&FS)

“The settlement entered into by KNCEL and NHAI for foreclosure of the Concession Agreement relating to the Kiratpur – Ner Chowk Project under the MoRTH Guidelines is by the approved Resolution Framework about the ILF&S and its group entities which are correctly approved by the NCLT by the Impugned Order.” Justice Ashok Bhushan, Chairperson and Dr. Alok Srivastava, Member (Technical) held.

NCLAT directs Secretary, MCA to Conduct an Inquiry on Matter of Parties Approaching Tribunal with Fabricated Documents

The New Delhi bench of the National Company Law Appellate Tribunal( NCLAT ) in the matter of Everest Pharmaceutics Pvt Ltd., directed the Secretary of Ministry of Corporate Affairs (MCA) to Conduct an inquiry on the matter of parties approaching the tribunal with fabricated documents.

 While dismissing the appeal, the Coram Comprising Justice Rakesh Kumar, Member (Judicial) and Dr Alok Srivastava, Member (Technical) observed that certain documents particularly Auditors report etc. have been brought on record in the judicial proceeding which prima facie creates serious doubts regarding their genuineness in the mind of the Court it would not be appropriate to simply shut our eyes on such issues.  Further noted that in a number of court proceedings, the parties are coming with fabricated documents. 

The NCLAT directed to conduct a detailed enquiry/investigation to ascertain the veracity of aforesaid documents which have been brought on record in the appeal particularly director’s report/auditors’ reports/Balance sheets. 

NCLT have Jurisdiction to send back Resolution Plan for Modification: NCLAT allows to Prepare Addendum to Incorporate Necessary Modification

The New Delhi bench of the National Company Law Appellate Tribunal( NCLAT ) held that National Company Law Tribunal (NCLT) have Jurisdiction to send back Resolution Plan for Modification under certain circumstance and is allowed to prepare Addendum to incorporate necessary modification.

A Coram comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical) observed that “ends of justice be served in permitting the Successful Resolution Applicant to prepare an Addendum to the Resolution Plan incorporating condition as given in the Affidavit, which Addendum be placed before the CoC for voting by the Resolution Professional.” 

“After the decision of the CoC, in the event, the CoC decides to approve the Addendum, the Addendum as well as the Resolution Plan be submitted before the Adjudicating Authority for fresh consideration.”, the NCLAT held.

Resolution Professional cannot question COC’s decision of Resolution Replacement: NCLAT

The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench observed that the Resolution Professional cannot question the decision of the Committee of Creditors (COC’s) of resolution replacement.

A Two-Member Bench comprising Justice Ashok Bhushan, Chairpersonand Barun Mitra, Member (Technical)observed that “The meeting of CoC was held on 01st September, 2023 in which Resolution to replace the Appellant with Anil Goel was passed. The Appellant himself has in the Appeal pleaded that in the meeting held on 01st September, 2023, the CoC resolved to appoint Mr. Anil Goel. The Appellant has brought on record the CoC minutes of 01st September, 2023 which according to the Appellant were circulated on 04th September, 2023. As per the appellant, apart from Resolution to replace the Appellant with Anil Goel, two other Resolutions were passed i.e. Appellant will continue to function as RP and will receive his monthly remuneration till the confirmation of appointment of another Resolution Professional.”

NCLT To Decide S.7(1) Compliance Prior to Admission: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) has held that the National Company Law Tribunal ( NCLT ) to decide Section 7(1) of the Insolvency and Bankruptcy Code, 2016 compliance prior to admission. The bench upheld the order of NCLT.

A Coram comprising Justice Ashok Bhushan, ( Chairperson ), Barun Mitra, (Member ( Technical ) ) and Arun Baroka, ( Member Technical ) that the Adjudicating Authority has not committed any error in rejecting the application as not maintainable.  While dismissing the appeal, the authority upheld the impugned order.

Claim After 738 Days Of Delay and Post Approval of Resolution Plan: NCLAT Upholds Rejection of Claim by Kotak Mahindra Bank

The Principal Bench of the National Company Law Appellate Tribunal Principal ( NCLAT ) upheld the order of the National Company Law Tribunal( NCLT ) which rejected the claim of Kotak Mahindra Bank against an approved resolution plan wherein the claim was made after 738 days of delay.

Justice Ashok Bhushan,  Chairperson, Barun Mitra, Member ( Technical ) and Arun Baroka, Member ( Technical ) held that “when the Resolution Plan was already approved on 24.12.2022 and the claim was filed by the Appellant only in August 2023, we see no error in the order of the Adjudicating Authority rejecting the application.” The Tribunal dismissed the appeal as there was no merit.

NCLAT terminates Insolvency Proceedings on acceptances of settlement proposals by Promoters

The Principal Bench of the National Company Law Appellate Tribunal ( NCLAT ) has terminated the Insolvency Proceedings on acceptance of the settlement proposal by promoters. The Tribunal observed that the decision of the Committee of Creditors ( CoC ) is arbitrary in not approving the 12A Proposal which Proposal offered to pay the entire debt of Financial Creditors as well as all other creditors

The Tribunal held that the Proposal submitted by the Appellant on 11.08.2023 as revised on 04.10.2023 acceptable to liquidate the debt of the Corporate Debtor close CIRP and make payment of debts of all Creditors. The Proposal under 12A submitted by the Appellant dated 11.08.2023 as revised on 04.10.2023 is accepted. The CIRP is closed and set aside the order admitting the Section 7 application.

Belated Claims by Creditors not to be Considered as IBC Proceedings are Time Bound: NCLAT

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that the belated claims by creditors not to be considered as the nature proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) are time bound.

A Two-Member Bench comprising Justice Ashok Bhushan, Chairperson and Arun Baroka, Member (Technical) observed that “The claim of the Appellant is that since approval of Resolution Plan is pending before the Adjudicating Authority, its claim can be considered on merits. We have examined this issue in detail basis the facts of the case, wherein the Appellant seeks condonation of 540 days and basis the current position of law. It becomes unsustainable to accede to his request to allow his belated claim to be considered, particularly in the background that there is no acceptable material on record to suggest actual disbursement of Rs.50 lakhs to the Corporate Debtor and more so when the Appellant itself has filed Form – C and not CA raising its claim.” “The appellant was sleeping over his rights. A person who sleeps over his rights ought not be given any indulgence. Close to 3 years had passed since the commencement of CIRP proceedings of the Corporate Debtor and the appellant never showed any interest with respect to the flat purchased by him. The proceedings under Code are time bound and the belated claim of the appellant cannot be considered and is liable to be rejected” the Tribunal held.

NCLT has Supervisory Role when Statutory Requirements of Amalgamation Scheme satisfied: NCLAT

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) held that the National Company Law Tribunal (NCLT) has supervisory role when statutory requirements of amalgamation scheme satisfied.

“Further we also agree the alterations in the Appointed Date would affect the calculation and would have a serious financial implication. Hence if the parameters for sanctioning the scheme are complete, then the Tribunal would only be left with supervisory jurisdiction” the Bench held.

NCLT lacks jurisdiction to question commercial judgment once Company Board finds Proposed Scheme is against Public Policy: NCLAT

The New Delhi Bench of the National Company Law Appellate Tribunal ( NCLAT ) held that the National Company Law Tribunal has no jurisdiction to question commercial judgment once Company Board finds Proposed Scheme is against the public policy.

“We thus hold there was no reason to change the appointed date as was given in the scheme of merger and even the reliance on Sterlite Port was incorrect since in the said case the definition of the term “Appointed Date” itself gave an authority to the NCLT to fix a date other than the date fixed by the Scheme but though the NCLT had fixed another date than the Appointed Date yet in the cited case this Tribunal retained the Appointed Date to be the one as fixed under the Scheme” the Tribunal noted. Subscribe Taxscan Premium to view the Judgment

NCLAT upholds Resolution Plan approved for Adico Forge Pvt Ltd which Fully Secured Workers Claim

The National Company Law Appellate Tribunal ( NCLAT ) upheld the Resolution Plan approved for Adico Forge Pvt Ltd which fully secured workers claim. The Corporate Insolvency Resolution Process ( CIRP ) against the Corporate Debtor/Respondent No. 4 commenced on 23.06.2023. Audico Forge Kamgar Sangathana (Appellant) filed a claim for dues of the workers. The Resolution Professional admitted the same.

The Tribunal observed the jurisdiction of the NCLT and NCLAT while considering the Plan approved by the CoC is limited. The remit of the jurisdiction is to examine whether the Plan is in compliance of Section 30(2) of the Insolvency and Bankruptcy Code, 2016. In this regard, the Tribunal referred to K. Sashidhar vs. Indian Overseas Bank and Ors., it was observed that the legislature has not endowed the adjudicating authority ( NCLT ) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. While dismissing the appeal, the Tribunal observed  that the gratuity and provident fund having been admitted in full and paid in full in the Resolution Plan, compliance of provisions of IBC were fully met.

NCLT cannot Decide on Legality of Closure of Factory under Industrial Dispute Act: NCLAT

The New Delhi bench of the National Company Law Appellate Tribunal ( NCLAT )  has held that the National Company Law Tribunal ( NCLT ) adjudicating authority is not the right forum to decide whether closure of the factory under the Industrial Disputes Act, 1947 was in accordance with law.

The tribunal noted that the NCLT while exercising its jurisdiction on the liquidation process of the corporate debtor is not entitled to enter into issue as to whether the closure of the factory from June 2010 was in violation of the Industrial Dispute Act, 1947. The said issue ought to have been raised by the Appellants before the Industrial Court or Labour Court.

Commercial Space Allotted By Corporate Debtor Through Unregistered Allotment cannot Excluded From Resolution Plan: NCLAT

The New Delhi bench of National Company Law Appellate  Tribunal ( NCLAT) has held that allotment of commercial spaces by the corporate debtor through unregistered documents like allotment letter, lease deed etc.cannot divest the CD of their ownership. They would continue to remain the assets of the CD therefore they cannot be excluded from the Resolution Plan.

The bench found that the claims, which were admitted pertained to the claim of the Appellant upto the date of commencement of the CIRP. There has been no consideration of the claim of the rent by the Appellant from July 2019, which was one of the prayers made in the application, therefore ends of justice will be served in granting liberty to the Appellant  to file an appropriate application for claim of rent subsequent to commencement of CIRP. Subscribe Taxscan Premium to view the Judgment

CoC has Authority to Modify Resolution Plan inorder to Comply Supreme Court’s Direction: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) has ruled that the CoC is empowered to modify the resolution plan in order to comply with the directions issued by the Supreme Court.

The tribunal held that in view of the Order of the Supreme Court, the CoC has to take a final call with regard to Resolution Plan or modification therein or to take such steps as has been directed by the  Supreme Court. Subscribe Taxscan Premium to view the Judgment

NCLT is Empowered to Allow Amending Pleadings before Final Orders in CIRP Proceedings: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) has held that the National Company Law Tribunal  (NCLT) is empowered to allow the parties to amend the pleadings before the final orders in Corporate Insolvency Resolution Process ( CIRP ) proceedings are passed.

The bench held that “the NCLT is empowered to allow the parties to amend the pleadings before the final orders in CIRP proceedings are passed”. It went on to hold that the amendment of the date of default had been correctly allowed by NCLT. While dismissing the appeal, the bench of Justice Rakesh Kumar Jain (Judicial Member), Mr Naresh Salecha (Technical Member) and Mr Indevar Pandey (Technical Member) held that the amendment was duly made during the CIRP proceedings before the NCLT, as per the laid down procedure following the principles of natural justice.

NCLAT sets aside Admission of S.7 Application upon Finding Transaction was in Nature of ‘Operational Debt’

The New Delhi bench of National Company Law Appellate Tribunal ( NCLAT ) have set aside the admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016, being not maintainable as the transaction in question constituted an ‘operational debt’ and was not covered under Section 5(8)(e) but was governed by Section 5(20) and Section 21(5) of the Code. The Tribunal allowed the appeal and set aside the impugned order. Respondents were relegated to their remedy to file an application under Section 9 of the Code.

NCLAT directs Revival of Company Petition after Appellant was Deprived of Remedies under Article 21 of Constitution

The Chennai bench of the National Company Law Appellate Tribunal ( NCLAT ) directed the revival of company petition after appellant was deprived of remedies under article 21 of the Indian Constitution. The bench viewed that Article 21 of the Constitution of India safeguards the right to judicial remedies, which includes the right to pursue legal remedies before competent courts for the redressal of grievances.

While allowing the appeal, the Tribunal quashed the impugned order  dismissing the company petition, and the company petition proceedings are revived back to be decided on merits. Further directed, the Appellant has been directed to pay Rs. 5000/- each to the three respondents as compensation for unnecessary litigation due to procedural discrepancies. Upon payment of the compensation, the company petition No. 106(CHE)/2021 would be revived and decided on merits.

Coc’s Appeal against Resolution Plan becomes Infructuous on approval of Second Resolution Plan: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) Chennai bench has held that Coc’s appeal against resolution plan becomes infructuous on approval of the second resolution plan.

In accordance with the law, which has been used as a result of the contested judgment of 03.04.2024, the appeal would be dismissed as having rendered infructuous with the liberty left open for the appellants to challenge the acceptance of the second Resolution Plan. If advised to do so, he may file an appropriate appeal challenging the acceptance of the second Resolution Plan. Subscribe Taxscan Premium to view the Judgment

NCLAT Upholds E-Auction Process, Prioritizes sale of Corporate Debtor Over S.230 Scheme

The Chennai Bench of National Company Law Appellate Tribunal ( NCLAT ) upheld the e-auction process, prioritizing the sale of the Corporate Debtor ( CD ), as a going concern over a Scheme of Arrangement proposed under Section 230 of the Companies Act, 2013.

The NCLAT upheld the NCLT’s decision, emphasizing that the sale of the Corporate Debtor as a going concern met the IBC’s objective. It noted that the appellant’s Scheme was submitted beyond the 90-day limit and that the SCC was competent to reject it. The NCLAT dismissed the appeal, stating that minor procedural discrepancies in the e-auction did not impact its validity. Subscribe Taxscan Premium to view the Judgment

NCLAT Denies Extension for Auction Deposit, Grants Partial Refund of EMD Due to COVID-19

The Chennai Bench of National Company Law Appellate Tribunal(NCLAT) The Chennai Bench of National Company Law Appellate Tribunal (NCLAT) denied the appellant’s request for an extension to deposit the remaining bid amount in a corporate auction, citing repeated failures to meet deadlines despite multiple opportunities, and granted partial refund of the Earnest Money Deposit (EMD) due to challenges arising from the COVID-19 pandemic. As a result, the appeal was partially allowed for the refund of the EMD, while the other reliefs sought were dismissed. This decision was made due to the exceptional COVID-19 situation and was not intended to set a precedent.

CoC ‘s Commercial wisdom in rejecting resolution plans and opting for liquidation is “Non-Justiciable”: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) New Delhi has held that the commercial wisdom of the Committee of Creditors ( CoC ) in rejecting a resolution plan and opting for liquidation is “non-justiciable”.

The Tribunal comprising Justice Rakesh Kumar Jain, Member ( Judicial ) and  Ajai Das Mehrotra, Member ( Technical ) observed that such a director was barred from being reappointed as a director in any business for a period of five years under Section 164 of the Companies Act, 2013. Thus, in accordance with Clause (e) of Section 29A of the IBC, 2016, the appellant corporation was not qualified. The Tribunal held that the CoC, in its commercial wisdom, had not accepted the resolution plan and had directed the liquidation of the Corporate Debtor.

Rejection of Interlocutory Application for Incomplete Process Memorandum: NCLAT Allows Appeal

The Chennai Bench of National Company Law Appellate Tribunal(NCLAT) allowed the applicant’s appeal against the National Company Law Tribunal(NCLT)’s September 13, 2024 order, which had rejected the Interlocutory Application seeking to declare the process memorandum for the Resolution Plan incomplete.

The two member bench comprising Justice Sharad Kumar Sharma(Judicial Member) and Jatindranath Swain(Technical Member) allowed the applicant’s appeal and directed that the NCLT’s September 13, 2024 order be reconsidered in light of the earlier judgment from November 13, 2024. Subscribe Taxscan Premium to view the Judgment

Application u/s 7 IBC can be Filed to Claim Remaining Amount after Selling Pledged Shares: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) New Delhi bench has held that when the entire liability of the corporate debtor after selling the pledged shares is not discharged, an application under section 7 of the IBC can be filed for claiming the remaining amount.

The tribunal concluded that the adjudicating authority did not err in admitting the application under section 7 of the code because no settlement of record was presented indicating that the dispute had been settled between the parties. According to the Supreme Court’s ruling in GLASTrust Company v. BYJU Raveendran and Ors. (2024), the tribunal further noted that if a settlement is achieved between the parties, a request to withdraw the CIRP application may be made.

Orders Obtained through Fraud may be Recalled by Adjudicating Authority u/r 11 of the NCLT Rules: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) has observed that where the adjudicating authority has been made to rely on distorted facts which the adjudicating authority became aware of belatedly, the adjudicating authority can always invoke its inherent powers under Rule 11 of NCLT Rules in order to protect itself and to prevent an abuse of its process.

The Tribunal noted that in cases where the adjudicating authority was forced to depend on misrepresented facts that it only about later, the adjudicating authority can always utilize its inherent authority to defend itself and stop misconduct. The adjudicating authority’s justification for recalling the order and reviving the petition persuaded the tribunal.

Rejection of Application u/s 9 of IBC Against Hindustan Unilever Limited: NCLAT upholds Order

The National Company Law Appellate Tribunal (NCLAT) bench upheld the order rejecting the application under section 9 of the Insolvency and Bankruptcy Code filed against Hindustan Unilever Limited on the ground that the claims were below the threshold limit, time-barred and there was a pre-existing dispute.

The Tribunal ruled that there was no Purchase Order supporting the Appellant’s contention that he was authorized to charge 24% interest. It stated that the Operational Creditor was allowed to impose a 24% penalty under the Creditor Terms in the event that payment to the Operational Creditor was delayed.

Liquidation of  Corporate Debtor cannot be Faulted when Revival is not a Viable Option: NCLAT Amrit Rajani vs Pegasus Assets Reconstruction Private Limited 55/56 CITATION: 2025 TAXSCAN (NCLAT) 147

The National Company Law Appellate Tribunal (NCLAT) in New Delhi has ruled that the CoC’s decision to liquidate the corporate debtor cannot be criticized once it becomes evident that revival is not a feasible option. The tribunal found that the corporate debtor has no assets, the CIRP Period only implies zero returns with avoidable costs such as liquidator’s fee, public notice etc.

The tribunal found that the corporate debtor has no assets, the CIRP Period only implies zero returns with avoidable costs such as liquidator’s fee, public notice etc. The Tribunal held that there is no error in the CoC decision to the Liquidator of the Corporate Debtor which was accepted by the Adjudicating Authority in the Impugned Order.

NCLAT Orders Probe into Functioning of NCLT Chennai after Noting Implausible Adjudication of Unlisted Matter from 2022 Asset Reconstruction Company (India) Limited vs Mr. Ebenezar Inbaraj CITATION:   2025 TAXSCAN (NCLAT) 170

The National Company Law Appellate Tribunal (NCLAT), Chennai, has directed an inquiry into the functioning of the National Company Law Tribunal (NCLT), Chennai, after noting serious irregularities in its adjudication of a matter that was not listed for hearing but was nonetheless disposed of in 2022.

Observing that the nature of proceedings conducted by the NCLT raises suspicion over the proper functioning of the Tribunal, the NCLAT bench of Judicial Member, Justice Sharad Kumar Sharma and Technical Member, Jatindranath Swain requested the President of the concerned NCLT to conduct and enquiry on the ‘fairness in proceedings’ and and to submit a report on the same the Honourable Chairperson of the NCLAT in New Delhi.

Operational Creditor can only Trigger CIRP on Default in Payment: NCLAT Rajendra Bisht vs M/s Satkar Logistics Pvt Ltd CITATION: 2025 TAXSCAN (NCLAT) 171

The Appeal filed by the operational creditors was dismissed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi (NCLAT), which is composed of Justice Yogesh Khanna (Member (Judicial) and Mr. Ajai Das Mehrotra (Member (Technical)) since there was an existing dispute between the corporate debtor and the operational creditor.

It is evident from  Sections 8 and 9 of the IBC that an operational creditor can only initiate the CIRP process in the event of an uncontested debt and a payment default.  Since IBC does not tolerate dishonesty or willful failure to settle an operational creditor’s obligation, CIRP must start if the operational creditor’s claim is uncontested and the operational debt is still outstanding.  The Operational Creditor’s application to start CIRP must be denied, nevertheless, if the debt is contested. In summary, the NCLAT reversed the corporate debtor’s admission into CIRP by overturning the NCLT’s contested order and granting the appeal.

Appeal u/s 61 of IBC can be filed by Personal Guarantors against order Initiating PIRP: NCLAT Aarti Singal vs State Bank of India CITATION: 2025 TAXSCAN (NCLAT) 183

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench has held that as the National Company Law Tribunal (NCLT) is the proper forum for starting insolvency proceedings against personal guarantors, personal guarantors may file an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 (Code) against an order issued by the Adjudicating Authority under Section 100 of the Code, directing the initiation of the Personal Insolvency Resolution Process (PIRP).

It was held that when SBI has invoked Section 60(1) for forum for proceeding against the personal insolvency resolution process, which order is appealable under Section 61. The Supreme Court in ‘Embassy Property Developments Pvt. Ltd.’ Vs. ‘State of Karnataka & Ors.'(2020) held that “Insofar as insolvency resolution of corporate debtors and personal guarantors are concerned, any order passed by the NCLT is appealable to Nclat under Section 61 of the IBC, 2016 and the orders of the Nclat are amenable to the appellate jurisdiction of this Court under Section 62.”

Dissenting Financial Creditors are Entitled to Receive Payments on Pro-Rata Basis of Resolution Plan Value: NCLAT RBL Bank Limited vs Sical Logistics Limited CITATION: 2025 TAXSCAN (NCLAT) 179

The National Company Law Appellate Tribunal ( NCLAT ) Chennai bench ruled that, instead of receiving the liquidation value, dissident financial creditors should be paid on pro- Rata Basis of the resolution plan. According to the Tribunal, priority in payment requires that the Dissenting Creditor be paid first, on a pro rata basis, whenever the Successful Resolution Applicant (SRA) transfers cash to Financial Creditors (FCs). It additionally mandated that the Dissenting Creditor be paid first, followed by the other FCs, in the event that the SRA pays the entire resolution plan sum up front. Disbursements, however, will also take place in phases when the SRA makes payments in increments. The Dissenting Creditor must be given priority in all distributions, even if it may not always be feasible to pay them in full before others.

 In compliance with section 30(20(b) of the code read with Regulation 38, the Tribunal came to the conclusion that Respondent No. 1 must send the sum allocated to the RP under the Resolution Plan. According to the Resolution Plan’s guidelines and the terms of this ruling, the SRA will divide the sum among the financial creditors. After SRA has received complete payment, the financial creditor will provide the Resolution Professional the title deeds to the corporate debtor’s assets, who will then give them to SRA.

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