A Turning Point in Shareholder Locus under IBC: From Park Energy to Balkishan Shrikisan Baldawa
This article traces the timeline of the cases, their facts, arguments, and rulings, situating Baldawa as a turning point in shareholder rights under the IBC.
The Insolvency and Bankruptcy Code, 2016 (IBC), was enacted to consolidate India’s insolvency framework, prioritising creditor rights, speedy resolution, and maximisation of asset value. Its design is creditor‑driven, often leaving shareholders with little say once a corporate debtor enters insolvency. For years, tribunals reinforced this view, holding that equity investors...
The Insolvency and Bankruptcy Code, 2016 (IBC), was enacted to consolidate India’s insolvency framework, prioritising creditor rights, speedy resolution, and maximisation of asset value. Its design is creditor‑driven, often leaving shareholders with little say once a corporate debtor enters insolvency. For years, tribunals reinforced this view, holding that equity investors cannot challenge insolvency proceedings.
Two prominent NCLAT rulings, Park Energy Pvt. Ltd. and Peninsula Holdings, entrenched this restrictive stance, denying locus to shareholders under Section 61. However, the recent judgment in Balkishan Shrikisan Baldawa v. Agri‑Tech (India) Ltd. marks a watershed moment.
NCLAT expressly recognised shareholder locus in cases alleging collusive and fraudulent initiation of CIRP, distinguishing its earlier precedents and harmonising with the Supreme Court’s purposive interpretation in Independent Sugar Corporation.
Statutory Framework
● Section 5(8), IBC defines “financial debt” as a debt disbursed against consideration for the time value of money, including loans, debentures, bonds, and other instruments with a commercial effect of borrowing.
● Section 61, IBC provides that “any person aggrieved” by an order of the Adjudicating Authority (NCLT) may prefer an appeal to NCLAT.
Tracing the Jurisprudential Arc
1. Park Energy Pvt. Ltd. v. State Bank of India (2025)
Facts: Park Energy, a shareholder entity, attempted to challenge the admission of CIRP against a corporate debtor.
Arguments:
- Appellant: Claimed locus as an “aggrieved person” under Section 61, arguing that shareholder interests were directly affected by insolvency admission.
- Respondent: Contended that insolvency is creditor‑driven, the Resolution Professional or liquidator represents shareholders, and allowing shareholder appeals would delay resolution.
Tribunal Ruling: NCLAT rejected shareholder standing. It held that insolvency proceedings are creditor‑centric, and shareholders lose authority once CIRP is admitted. The Tribunal highlighted that permitting shareholder appeals would undermine the Code’s objective of speedy resolution.
Impact: This ruling established a restrictive precedent: equity investors, even majority shareholders, lack standing to challenge CIRP admission. It became a touchstone for subsequent cases denying shareholder locus.
Read more: Company Appeal at Behest ofShareholder not Maintainable: NCLAT
2. Peninsula Holdings v. JM Financial Credit Solutions Ltd. (2025)
Facts: Peninsula Holdings, a majority shareholder, sought to appeal against admission of CIRP.
Arguments:
- Appellant: Claimed majority shareholding conferred locus to challenge insolvency orders.
- Respondent: Asserted that equity investors have only profit interest, not debt rights. Once CIRP is admitted, management shifts to IRP, extinguishing shareholder authority.
Tribunal Ruling: NCLAT reiterated its stance from Park Energy. It held that even majority shareholders cannot maintain appeals under Section 61. The Tribunal underscored that insolvency proceedings are in rem, but shareholders are represented through the RP and cannot individually intervene.
Impact: Together, Park Energy and Peninsula Holdings entrenched a restrictive view: shareholders lack locus under IBC, regardless of their stake or majority control.
3. Balkishan Shrikisan Baldawa v. Agri‑Tech (India) Ltd. (2025)
Facts: Agri‑Tech (India) Ltd. (Financial Creditor) and Techindia Nirman Ltd. (Corporate Debtor) are related parties under common management. In September 2024, public shareholders rejected promoter‑backed resolutions in AGMs of both companies. Immediately thereafter, Agri‑Tech filed a Section 7 petition against Techindia Nirman, claiming ₹65 crore loan at 12% interest under an agreement dated 11 May 2021.
The appellant, Balkishan Shrikisan Baldawa, a shareholder in both entities, alleged that the loan was operational in nature, interest‑free, and unsupported by audited financials. He contended that the petition was collusive, filed to bypass shareholder rejection and wipe out public shareholding.
Arguments:
- Appellant: Asserted fraud under Section 65, pointing to inconsistencies in financials, auditor reports negating the existence of a loan agreement, and non‑disclosure under SEBI LODR Regulation 30. Claimed locus as an aggrieved shareholder.
- Respondent (FC): Defended the validity of the loan agreement, citing board approval and banking records. Argued that interest‑free loans qualify as financial debt (Orator Marketing, Swiss Ribbons). Denied shareholder locus, relying on Park Energy and Peninsula Holdings.
- Resolution Professional: Outlined the CIRP process, distancing himself from initiation.
The main issues before the tribunal were:
o Whether the Appellants, as shareholders, have locus standi and, in the facts and circumstances of the case, the appeal is maintainable or not?
o Whether the initiation of CIRP has been done fraudulently or not.
Tribunal Ruling: NCLAT distinguished Park Energy and Peninsula Holdings, noting they did not consider the Supreme Court’s broader interpretation in Independent Sugar Corporation. It held that Section 61 explicitly allows appeals by “any person aggrieved,” and shareholders alleging fraud are directly affected.
It was observed that in the Park Energy case, the “aggrieved person” was held to mean one without any other legal forum to protect their rights, with shareholder interests ordinarily safeguarded by the RP or liquidator.
That ruling was distinguishable in the present case. In this case, the appellant, as a shareholder, filed an IA under Sections 60(5) and 65 alleging fraudulent initiation of CIRP, which the Adjudicating Authority dismissed. The present appeal challenges that dismissal, with allegations of collusion between the corporate debtor and financial creditor. Hence, the earlier judgment does not aid the respondent.
Also, the case of Peninsula Holdings was opined to be of no assistance in the current matter.
The tribunal, on the other hand, placed its reliance on the Supreme Court judgement on Independent Sugar Corporation Limited Vs. Girish Sriram Juneja & Ors. (2025)
It was observed that,
“We note that the Hon’ble Supreme Court has interpreted any aggrieved person to be not in a restricted manner but widely, as it says that “the term "any person aggrieved" appearing in Section 62 IBC and Section 53-T of the Competition Act must be understood widely and not in a restricted fashion.” “
It was concluded by the three-member bench of the Tribunal that,
We have noted the contentions of both sides and find that the arguments presented by Respondent do not come in the way of the Appellant to be considered as an aggrieved person. The Code doesn’t bar the Appellant to file an appeal. Section 61 of the Code clearly states that notwithstanding anything to the contrary contained under the Companies Act, 2013, “any person aggrieved” by the order of the AA under this part may prefer an appealto the NCLAT.
The shareholders are the Appellant in this case and they are aggrieved by the order of the AA and interpreting the law in it widest terms and not in a restricted manner, we come to conclusion that the appellants have the locus to file an appeal and their appeal is maintainable. Even otherwise, we find that there are serious allegations of fraudulent initiation of CIR proceedings, which should be looked into by us. Accordingly.
The NCLAT expressly affirmed shareholder locus, declaring the appeal maintainable. On merits, it found the Section 7 petition collusive, filed to circumvent Section 10 requirements of shareholder approval. CIRP was set aside, and a penalty of ₹25 lakh was imposed on Agri‑Tech under Section 65.
Impact: This ruling marked a jurisprudential pivot: shareholders, previously excluded, were recognised as aggrieved persons under Section 61 when alleging fraud.
Supreme Court’s Perspective
Independent Sugar Corporation Ltd. v. Girish Sriram Juneja (2025)
The issue in the case started with the insolvency resolution of Hindustan National Glass and Industries Ltd., i.e., whether approval from the Competition Commission of India (CCI) for a corporate combination is mandatory for the approval of the Committee of Creditors (CoC) under the IBC.
The Supreme Court held that,
“24. Once the CIRP is initiated, the nature of proceedings are no longer in personam but rather become in rem. In light of the same, the expression "any person aggrieved" in the context of IBC has been held to be indicative of there being no rigid locus requirements to institute an appeal challenging an order of NCLT before NCLAT or an order of NCLAT before this Court.
Similarly, in the context of the Competition Act, even those persons who bring to CCI information of practices that are contrary to the provisions of the Competition Act, could be said to be "aggrieved". Therefore, the term "any person aggrieved" appearing in Section 62 IBC and Section 53-T of the Competition Act must be understood widely and not in a restricted fashion.”
This ruling provided the jurisprudential foundation for NCLAT in Baldawa to depart from its earlier restrictive precedents.
Timeline of Jurisprudence
- July 2025 : Park Energy: Shareholders denied locus; insolvency deemed creditor‑driven.
- October 2025 : Peninsula Holdings: Reiterated Park Energy; majority shareholders also excluded.
- December 2025: Baldawa: NCLAT distinguishes earlier rulings, affirms shareholder locus, quashes collusive CIRP.
- January 2025: Supreme Court Ruling, Independent Sugar: Broader interpretation of “any person aggrieved,” reinforcing purposive reading.
Significance
The Baldawa ruling represents a turning point in shareholder locus under IBC. By affirming shareholder standing in cases of fraud, NCLAT has widened the scope of “aggrieved person” under Section 61, ensuring that public investors retain a voice when insolvency is misused to override shareholder will.
It underscores that while the IBC is creditor-driven, it cannot be weaponised by promoters through related-party collusion. The judgment strengthens safeguards for minority shareholders and reinforces the principle that insolvency law must serve genuine resolution, not corporate manipulation.
While ending this, from Park Energy to Peninsula Holdings, NCLAT had consistently denied shareholder locus, entrenching a restrictive view of Section 61. The Baldawa judgment marks a decisive break, aligning with Supreme Court jurisprudence in Independent Sugar and EPC Constructions. It affirms that shareholders, as “any person aggrieved,” can challenge fraudulent initiation of CIRP.
This landmark ruling will likely influence future insolvency disputes, ensuring that shareholder rights are not extinguished by collusive tactics. It represents a critical step in balancing creditor primacy with investor protection, reinforcing the integrity of India’s insolvency framework.
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