Insolvency Application against Personal Guarantor is Maintainable u/s 60(1) of IBC even in Absence of Pending CIRP against CD: NCLAT

Anita Goyal vs Vistra ITCL (India) Ltd. & Anr CITATION : 2025 TAXSCAN (NCLAT) 141

The National Company Law Appellate Tribunal ( NCLAT ) bench in New Delhi has ruled that, even in cases where the National Company Law Tribunal ( NCLT ) has not yet started or is in the process of liquidating a corporate debtor, an application under section 95 of the Insolvency and Bankruptcy Code (Code) against the personal guarantor may be maintained before the NCLT under section 60(1) of the code.

The tribunal held that the applicability of section 60(1) of the code cannot be ruled out which means that the Adjudicating Authority for the purpose of entertaining the application against the personal guarantor shall be the NCLT even if under section 60(2) of the code

The tribunal noted that the aforementioned completely addresses the current situation, meaning that even in cases where the corporate debtor is not facing insolvency or liquidation proceedings before the NCLT, an application under section 95 may be made against the personal guarantor.

A two member bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) concluded that “from the above it is clear that with regard to maintainability of Application under Section 95 by a Financial Creditor against a Personal Guarantor, even if no insolvency resolution process or liquidation proceedings of a Corporate Debtor is pending

Moratorium period u/s 101 of IBC cannot be Extended Beyond 180 Days: NCLAT

Anil Kumar vs Mukund Choudhary CITATION : 2025 TAXSCAN (NCLAT) 142

The National Company Law Appellate Tribunal ( NCLAT ) New Delhi has held that the moratorium period under section 101 of the Insolvency Bankruptcy Code ( IBC ), 2016 cannot be extended beyond 180 days.

According to section 101(1) of the code, the moratorium will start as soon as the application under section 94 is accepted and will last for 180 days, or until the Adjudicating Authority issues an order on the repayment plan under section 114 of the code, whichever comes first.

It was decided that when the statutory scheme is unambiguous and clear, no interpretive procedure can determine the NCLT's jurisdiction to extend the moratorium period. When the statute specifies a date for the moratorium to end, neither the Adjudicating Authority nor this Tribunal can extend it against the statutory intent under Section 101(1).

While section 101 of the code explicitly states that the moratorium will end 180 days after the date of admission of the insolvency application, the tribunal consisting of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member), and Mr. Arun Baroka (Technical Member) held that the judgment in "Vikas Gautamchand Jain" was rendered while interpreting section 54D of the code, which provides no automatic termination of the PPIRP after the expiration of the time period provided under this section.

Appeal Delayed Beyond 15 Days Not Condonable as Per Proviso of Section 61(2) of IBC: NCLAT refuses to Condone 19 Days Delay by Kotak Mahindra

Kotak Mahindra Bank Ltd vs Mohit Kumar Legal Heir of Naresh Kumar CITATION : 2025 TAXSCAN (NCLAT) 143

In a recent ruling , the New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that delay in filing an appeal beyond 15 days as per section 61(2) proviso of the Insolvency and Bankruptcy Code cannot be condoned and refused to condone 19 days delay by Kotak Mahindra Bank Ltd.

Kotak Mahindra Bank Ltd, the appellant file application seeking condonation of delay of 19 days in filing the appeal.

The tribunal observed that the law as provided in the Limitation Act as well as Rule 3 of the NCLAT Rules, 2016 is that when the last day of the limitation falls on a public holiday, the said period shall be excluded from the computation of the limitation period.It further added that as the limitation period of filing an appeal is 30 days, if the 30th day falls on a public holiday, such day shall not be counted for the purpose of the limitation period.

While applying the above law to the facts of the present case, the tribunal comprising of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member) and Mr. Arun Baroka (Technical Member) observed that the submission of the Appellant that all Saturdays and Sundays which are falling within 45 days should be excluded is clearly an absurd argument and not as per the benefit available in Limitation Act as well as Rule 3 of the NCLAT Rules, 2016.

Claims u/s 11E of Central Excise Act does not Amount to Secured Debt: NCLAT

Assistant Commissioner CGST vs Pradeep Kabra CITATION : 2025 TAXSCAN (NCLAT) 144

In a recent ruling, the New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that claims arising under section 11E of the Central Excise Act, 1944 not amounts to secured debt.The Tribunal viewed that the adjudicating authority had not erred in considering the appellant's claim as an operational debt, and that the operational creditor was entitled to payment under section 30(2)(b) of the IBC.

The tribunal consisting bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mita (Technical Member) and Mr. Arun Baroka (Technical Member),noted that in the Supreme Court in Rainbow Papers Limited while interpreting section 48 of the Gujarat Value Added Tax Act held that the dues of the State Tax Officer were secured debt. The NCLAT in the Assistant Commissioner of Central Tax, CGST Division vs. Mr. Sreenivasa Rao Ravinuthala (2021) while interpreting section 11E of the Central Excise Act, 1944 held that on a bare perusal of this provision, it is clear that it carves out an exception to the provisions of the IBC therefore any claims arising out of the Central Excise Act will have to be dealt with as per the scheme of the IBC.

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

K. Lakshmi Narayana vs Hindustan Unilever Ltd CITATION : 2025 TAXSCAN (NCLAT) 145

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 NCLAT panel, consisting of Technical Member Arun Baroka and Chairperson Justice Ashok Bhushan, upheld the contested ruling. It was seen that the invoices that fell inside the three-year statute of limitations were significantly less than the Rs. 1 crore threshold.

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 bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) noted that the corporate debtor lacked assets and records which demonstrated that the revival of the CD was not a viable option therefore, the CoC with 100 percent voting rights decided to liquidate the corporate debtor.

It further added that section 33(2) of the code leaves no option for the Adjudicating Authority when the CoC has taken a decision with 66 percent voting rights except to order liquidation. In the present case, since the decision to liquidate the corporate debtor was taken unanimously,it cannot be said that any error was committed by the Adjudicating Authority in ordering the liquidation of the corporate debtor.

Distribution of Liquidation Proceeds to Secured Creditors Must Be Based on Admitted Claims under IBC S. 53: NCLAT

State Bank of India vs IDBI Bank Ltd. CITATION : 2025 TAXSCAN (NCLAT) 148

According to a ruling by the National Company Law Appellate Tribunal ( NCLAT ) in New Delhi, liquidation profits cannot be allocated based on the security interests of various secured creditors; rather, they must be allocated in accordance with section 53 of the IBC based on the acknowledged claims of the individual secured creditors.

The State Bank of India filed an application under section 7 of the code, which led to the corporate debtor being admitted into insolvency. The CD was ordered to be liquidated when no plan was approved.

The two member bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mita (Technical Member)observed that there can be no dispute with regard to proceedings which arose out of the Order of the NCLT Ahmedabad in 'Technology Development Board of India' Vs. 'Anil Goel, Liquidator of M/s. Gujarat Oleo Chem Ltd. & Ors.'2017 where it was held that inter se priority amongst the Secured Creditors will remain valid and prevail in the distribution of assets in Liquidation, is pending consideration before the Supreme Court.

BCCI's Plea for Settlement & Withdrawal of CIRP Against Byju's Within One Week: NCLAT directs NCLT to Decide [PENDING]

Riju Ravindran Suspended Director vs Pankaj Srivastava CITATION : 2025 TAXSCAN (NCLAT) 150

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT), have directed the National Company Law Tribunal (NCLT) to decide the application filed by Board of Control for Cricket in India (BCCI) to withdraw the corporate insolvency resolution process (CIRP) against Byju's within a week's time

The Tribunal resolved the appeal of former Byju promoter Riju Raveendran, who contested the reinstatement of Aditya Birla Finance and Glas Trust in Byju's Committee of Creditors (CoC).

The bench comprising Justice (retd) Rakesh Kumar Jain (Judicial Member) and Jatindranath Swain (Technical Member) directed the NCLT to decide the application (for withdrawal by BCCI) preferably in a week's time. The National Company Law Tribunal (NCLT) has directed the BCCI to approach Byju's lenders to negotiate a settlement regarding the insolvency proceedings initiated against the edtech company.

The insolvency procedures were revived when the Supreme Court of India overturned the previous agreement between Byju's and the BCCI. The court stressed that rather than going straight to the appeals tribunal, the settlement ought to have gone via the National Company Law Tribunal (NCLT) and the company's insolvency administrator. The NCLT has now directed the BCCI to speak with Byju's lenders in order to try to find a solution in light of the Supreme Court's ruling.

Resolution Professionals Cannot Admit Claims Based on Uninvoked Guarantee: NCLAT

Ankur Kumar vs Sustainable Agro-Commercial Financial Ltd CITATION : 2025 TAXSCAN (NCLAT) 151

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench has held that the guarantee given by the corporate debtor cannot be invoked after initiation of the CIRP. The Resolution Professional cannot admit any claims based on such guarantee.

According to the ruling of the bench consisting of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), no claim could have been accepted in the CIRP on the grounds that the Respondent invoked the guarantee on September 18, 2020, which was after the CIRP had begun.

The tribunal ruled that on September 18, 2020, the Respondent was not permitted to use the guarantee provided by the corporate debtor

Liquidator can Decide to Proceed With Private sale by 'Swiss Challenge Method': NCLAT

M/s Power Mech Projects Ltd vs Essar Power (Jharkhand) Ltd CITATION : 2025 TAXSCAN (NCLAT) 152

The National Company Law Appellate Tribunal's (NCLAT) New Delhi bench has ruled that the liquidator's choice to move forward with a private sale by using the Swiss Challenge Mechanism cannot be regarded as a decision outside of its purview or authority, especially since the Stakeholders Consultation Committee approved the decision.

The Adjudicating Authority approved an application that the liquidator filed under Regulation 35(h), according to the bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member). In RK Industries (above), the Supreme Court ruled that the court should not reconsider the reasonableness of the liquidator's judgment or replace it with their own opinions once the stakeholders have approved it. According to the tribunal's findings, "the Liquidator's decision to proceed with a private sale by using the Swiss Challenge Mechanism cannot be said to be a decision beyond the Liquidator's jurisdiction or authority."

Deposit of Security under Memorandum of Understanding in absence of Effect of Borrowing Cannot be Categorised as Financial Debt: NCLAT

Global Indian School Education Services Pvt. Ltd vs Mr. Abhay Narayan Manudhane CITATION : 2025 TAXSCAN (NCLAT) 153

The New Delhi bench of the National Company Law Appellate Tribunal ( NCLAT) has ruled that, in accordance with section 5(8) of the Insolvency and Bankruptcy Code, 2016 ( C ), the security amount deposited under a Memorandum of Understanding (the "MoU") without any intention of commercial effect of borrowing and time value of money cannot be classified as financial debt.

The Quorum,comprising Mr. Naresh Salecha, a technical member, Justice Rakesh Kumar Jain, a judicial member, and Mr. Indevar Pandey, a technical member, noted that for commercial effect, the lenders' and the corporate debtor/borrower's intent should be clear and should specify the purpose of such financial facilities. These types of financial facilities and loans are common when financial creditors lend money with conditions that specify the loan's duration, its intended use, and the interest and other repayment obligations.

The tribunal viewed that in order to maintain commercial effect and "time value of money," the corporate debtor cannot rely on the appellant terminating the "MoU" because the corporate debtor has not fulfilled certain requirements in the past.

Debt of Related Party Cannot Assign to Refrain From Participating in CoC: NCLAT

Greenshift Initiatives Pvt. Ltd. vs Sonu Gupta CITATION : 2025 TAXSCAN (NCLAT) 154

The National Company Law Appellate Tribunal (NCLAT) has ruled that a "related party" cannot transfer its debt solely to get a position on the Committee of Creditors (CoC) in order to influence the rights and interests of other creditors.

The Resolution Professional (RP) argued that the Appellant had entered into the Assignment Agreement after the commencement of CIRP with the motive to come to the CoC.

The Bench comprising Arun Baroka, technical member, Barun Mitra, and Justice Ashok Bhushan, the chairperson noted that a financial creditor who is not a connected party in praesenti would not be prohibited from joining the CoC. There is a catch to this proposal, though: it cannot be done with the goal of using the CoC to undermine the CIRP by reducing the other creditors' voting share. According to the intent and goal of Section 21(2)'s first proviso, such a party ought to be barred from CoC.

On the grounds that "one cannot assign a better right than he himself possesses" and that "disqualification that existed at the time of initiating the CIRP cannot be removed by a mere assignment," the RP had rejected the appellant's request for a seat in the CoC. The Tribunal determined that the assignment was made in order to obtain a seat in the CoC and so influence the rights and interests of other creditors.

Non-Registration of “Charge” u/s 77 of Companies Act does not remove “Secured Creditor” Under IBC during CIRP: NCLAT

Home Kraft Avenues vs Jayesh Sanghrajka CITATION : 2025 TAXSCAN (NCLAT) 155

The National Company Law Appellate Tribunal (NCLAT), New Delhi held that a creditor may be considered a "Secured Creditor" under section 3(30) of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Resolution Professional (RP) even if they have not registered a "charge" in accordance with Section 77 of the Companies Act, 2013.

The Tribunal noted that because "secured creditors" and "security interests" are treated completely differently in the liquidation process than they are during the CIRP, the legislature never intended for Section 77 of the Companies Act to be applied to the CIRP. Further clarified that under the liquidation process, a secured creditor has an indefeasible right to realize its security interest by excluding its assets from the Liquidation Estate per Section 52.

The bench comprising of Mr. Arun Baroka, a technical member, and Justice Yogesh Khanna, a judicial member, noted that although Regulation 21 of the IBBI ('Liquidation' Process) Regulations, 2016 specifies evidence to prove "security interest," the IBBI (CIRP) Regulations, 2016 did not contain a similar clause. "The question of charge under section 77 only arises during the liquidation process, and it has nothing to do with "CIRP."

Any dispute even Pending Arbitration does not Prohibit Financial Creditors to avail remedy u/s 7 of IBC: NCLAT

Sandeep Jain vs IDBI Trusteeship Services Ltd. & Anr. CITATION : 2025 TAXSCAN (NCLAT) 156

The National Company Law Appellate Tribunal ( NCLAT ) New Delhi has ruled that a financial creditor's ability to seek redress under Section 7 of the law is not in any way restricted by a dispute that is still unresolved in arbitration. According to the bench, the creation of a Project Management Committee in accordance with a Settlement Agreement that includes representatives from corporate debtors and financial creditors does not release the CD from its repayment responsibilities.

It was asserted that the company already had an occupancy certificate for the eight buildings and that only minor finishing work was needed before the units could be turned over to the buyers. Due to the Settlement Agreement dated 04.11.2019, Financial Creditors became co-promoters and were equally accountable for project completion and payback.

The bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) , after analysing the settlement agreement's provisions, it was noted that the PMC was established to keep an eye on the project, improve sales and collections, and supervise construction. Since the PMC's role was restricted to enhancing the business's operations in relation to the project, it cannot be claimed that it also took on the obligors' repayment obligations.

It was viewed that “The default in repayment of the obligation by obligors cannot in any manner be put on the financial creditor nor constitution of PMC in any manner affect the obligation or absolve the corporate debtor from its default for repayment of the debt.”

No Bar on Corporate Debtor from Contesting Application u/s 9 of IBC even in absence of Demand Notice: NCLAT

Spik Enviro Management Pvt. Ltd. VS Vision Earthcare Pvt. Ltd. CITATION : 2025 TAXSCAN (NCLAT) 157

The National Company Law Appellate Tribunal (“NCLAT”) New Delhi bench has held that the Corporate Debtor cannot be prevented from opposing the application submitted under section 9 of the Insolvency and Bankruptcy Code, 2016 (Code), simply because the Debtor did not respond to the Operational Creditor's demand notice issued under section 8 of the Code.

The judicial member, Justice Rakesh Kumar Jain, the technical member, Mr. Naresh Salecha, and the technical member, Mr. Indevar Pandey, noted that the code's scheme requires the operational creditor to send a demand notice upon the occurrence of default, claiming unpaid operational debt. Along with the demand notice, the invoice requesting payment of the relevant sum should be included.

The Operational Creditor can submit an application under section 9 of the Code to the Adjudicating Authority to start the Corporate Insolvency Resolution Process (CIRP) if the Corporate Debtor does not pay them or if they do not receive a notice of dispute within ten days of the notice being served.The Tribunal rejected the submission of the respondent that the corporate debtor was barred from contesting the application under section 9 of the code on the ground that no reply to the demand notice sent under section 8 of the code was given by the Corporate Debtor.

Possession of Machinery Hypothecated Remains to Corporate Debtor in absence of Lease Deed By Third Party: NCLAT

Saturn Ventures & Advisors Pvt. Ltd. vs S. Gopalkrishnan & Anr. CITATION : 2025 TAXSCAN (NCLAT) 158

The National Company Law Appellate Tribunal (NCLAT) New Delhi has held that if no lease deed is presented that would allow a third party to claim ownership of the machinery, the corporate debtor will continue to be the owner of the machinery in its possession. As a result, the Resolution Professional is permitted to include such machinery in the information memorandum.

In this case, RP filed an intervention application against the suspended directors of the corporate debtor, requesting that certain of their business dealings be declared fraudulent and that they be ordered to contribute appropriately from the corporate debtor's assets.

The tribunal observed that the appellant's main contention is that the machinery was provided on lease, which must be proven by a lease deed since it involves a business-to-business transaction and the lease amount must be specified. According to the bench comprising of Mr. Naresh Salecha, a technical member, and Justice Rakesh Kumar Jain, a judicial member, the corporate debtor, have created charge over the machinery and declared that it has already been purchased and will be included in the promoter's contribution to the loan approved by the financial creditor. Additionally, it noted that the corporate debtor had acknowledged that it had claimed depreciation on the machinery as an owner.

Lone Homebuyer has no right to Challenge Approval of Resolution Plan: NCLAT

Jai Prakash Keswani vs MB Malls Pvt. Ltd & Ors. CITATION : 2025 TAXSCAN (NCLAT) 159

The National Company Law Appellate Tribunal's (NCLAT) New Delhi bench has ruled that a single homebuyer cannot contest the Resolution Plan's approval and must accept the majority decision of the homebuyers. He must follow the majority's decision or perish.

The ruling by which the Adjudicating Authority accepted the Corporate Debtor's Resolution Plan was challenged in the appeals filed by the appellants, Jai Prakash Keswani (Promoter) and Harvinder Singh (Homebuyer). Additionally, the Promoter contested the Adjudicating Authority's order in an I.A. in which the Appellant objected to the Resolution Plan.

According to the bench consisting of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member), and Arun Baroka (Technical Member). With a 100% vote in favor of the proposal, the CoC was judged to have demonstrated the resolution plan's practicality and feasibility.

The Tribunal noted that the well-established Appellate Tribunal and the Adjudicating Authority have too little power to interfere with an order approving a Resolution Plan. As a result, the Tribunal declined to get involved in the Resolution Plan's approval.

Relief under IBC 60(5) on Liquidator Rejection of Claims Unavailable when Remedy under IBC 42 is not Used: NCLAT

Asean International Limited vs Sanjeev Maheshwari CITATION : 2025 TAXSCAN (NCLAT) 160

The National Company Law Appellate Tribunal (NCLAT) has held that relief under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (Code) cannot be claimed against rejection of claims by the liquidator when the remedy provided under section 42 of the code against such decision has not been resorted to.

The Tribunal noted that the liquidator has the right to review the creditors' claims in accordance with section 42 of the code. Within 14 days, the creditors have the opportunity to contest the liquidator's decision to accept or reject the claims.. Based on the aforementioned, it was noted that the appellant in this case had not only neglected to submit their claim to the liquidator on time, but also had not taken any action to contest the liquidator's judgment even after their late claim was denied.

The Tribunal comprising Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member)viewed that when section 42 of the code provided a clear remedy against the rejection or acceptance of the claims by the liquidator which has not been availed of, the Appellant cannot now seek the same relief by invoking the provisions of 60(5) of the code.

Electricity is Essential Supply, cannot Disconnected during CIRP Period under IBC: NCLAT

Maharashtra State Electricity Distribution Company Ltd. & Anr vs Ravi Sethia Resolution Professional of Morarjee Textiles Ltd CITATION : 2025 TAXSCAN (NCLAT) 161

The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that electricity being an essential supply cannot be disconnected during moratorium periods under section 14 of the Insolvency and Bankruptcy Code, 2016 (Code) .

The bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) while referring to Regulation 32 of the CIRP Regulations, observed that electricity qualifies to be an essential supply unless it is a direct input to output of the corporate debtor.

The Tribunal observed that under section 14 of the code, providers of necessary products or services are not permitted to stop or reduce their delivery during the moratorium period. It further noted that, as promised to the appellant, the resolution professional must take action to collect the electrical debt; nevertheless, failure to do so cannot serve as justification for cutting off the electricity, as stipulated in Section 14(2).

NCLT Empowered to Decide Whether Successful Resolution Applicant is Liable to Pay Pre-CIRP Electricity Dues u/s 60(5) of IBC: NCLAT

Punjab State Power Corporation Limited vs Akums Lifesciences Limited CITATION : 2025 TAXSCAN (NCLAT) 162

The National Company Law Appellate Tribunal (NCLAT) has held that the National Company Law Tribunal (NCLT) is empowered to decide an issue whether Successful Resolution Applicant (SRA) is liable to pay Pre-Corporate Insolvency Resolution Process (CIRP) electricity dues after the approval of the resolution plan and taking over of the corporate debtor under section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 (Code).

According to section 60(5) of the code, the NCLT has the authority to decide any matter pertaining to priorities, laws, or facts that arise from or are connected to the settlement of the corporate debtor's insolvency.

The bench of Justice Yogesh Khanna (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member) observed that the SRA has assumed responsibility for the corporate debtor and that the resolution plan authorized by the adjudicating authority does not require the SRA to reimburse the corporate debtor for pre-CIRP power payments. According to the code's structure, creditors who owe money to the corporate debtor must present their claims to the Resolution Professional. The appellant in this case did not file such a claim, and there was no mention of such payments in the resolution plan either.

Rejection of Resolution Plan by Suspended Director cannot be Interfered in Absence of Expression of Interest: NCLAT

Sanjeev Agarwal & Anr vs Avishek Gupta & Ors CITATION : 2025 TAXSCAN (NCLAT) 163

The National Company Law Appellate Tribunal (NCLAT) has held that the rejection of the resolution plan submitted by the suspended director of the corporate debtor by the Committee of Creditors (CoC) cannot be interfered with when the concerned director was present in all the meetings of the CoC and had still not submitted the plan in pursuance of the Invitation to Expression of Interest (EoI).

The Tribunal, New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) noted that the appellant could not have any grievances regarding the Resolution Plan received after the extension of time.

The Tribunal further observed that the Appellant, as a Suspended Director, attended all of the CoC's sessions and was informed of its ruling. The Appellant never showed interest or submitted an EoI, even after the CoC issued Form G and extended the deadline. Only on July 13, 2023, did the appellant write a letter asking to be allowed to submit an offer.

The Tribunal added that the CoC decided not to move forward with the Appellant's plan because it believed that the Appellant's goal was solely to interfere with the CIRP process and not to actually submit a plan. Given the foregoing, it cannot be claimed that the appellant's plan was overlooked.

Application u/s 9 of IBC must not be Entertained when Debt is not Unequivocally Admitted by Corporate Debtor: NCLAT

NAVIN MADHAVJI MEHTA vs JALDHI OVERSEAS PTE LTD CITATION : 2025 TAXSCAN (NCLAT) 164

In a recent case, the New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that the application under section 9 of the Insolvency and Bankruptcy Code, 2016 (Code) cannot be entertained when the debt is not unequivocally admitted by the Corporate Debtor.

The two member bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that a demand notice under section 8 of the code must be issued by the Operational Creditor upon default which can be disputed by the Corporate Debtor within 10 days from the date of receipt of the notice. In the present case, the demand notice was issued on February 2, 2020 which was replied to on March 9, 2020 in which a dispute with regard to the debt was raised.

The Tribunal further decided that if the corporate debtor does not respond or pay within 10 days under section 8(2) of the code, the Operational Creditor may submit an application under section 9 of the code. According to the bench, the application must be denied if the Operational Creditor receives a notice of dispute or if a dispute is noted in the Information Utility in accordance with section 9(5)(ii) of the code.

While allowing the appeal, the Tribunal concluded that “when Operational Creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the two which is not so borne out given the facts of the present case.

Issuance of Demand Notice to Personal Guarantor u/r 7 of Personal Guarantors Rules not Amounts to Invocation of Guarantee: NCLAT

State Bank of India vs Mr. Deepak Kumar Singhania CITATION : 2025 TAXSCAN (NCLAT) 165

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench has ruled that a Notice served to the personal guarantor under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 ("2019 Rules") cannot be regarded as a "Invocation of Guarantee."

The bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) noted that in accordance with section 95(4) of the code, an application under section 95 needs to be submitted with the necessary information and supporting documentation. Additionally, section 95(7) specifies that the information and documentation that must be provided under section subsection 4 must be as described. Furthermore, the bankruptcy resolution procedure for personal guarantors of corporate debtors is governed by Rule 2 of the 2019 Rules.

The Tribunal determined that the Notice under Rule 7 (1), which was sent to the Guarantor in Form-B and demanded repayment of the default amount, had to be interpreted as a Notice for invoking guarantee in order to reject the appeal.

NCLAT upholds Invocation of Performance Bank Guarantee on Failure to Comply with Timely Implementation of Resolution Plan

Darwin Platform Infrastructure Limited vs Union Bank of India CITATION : 2025 TAXSCAN (NCLAT) 166

The National Company Law Tribunal (NCLT) in Mumbai issued a decision restoring the Corporate Insolvency Resolution Process (CIRP), which was upheld by the Principal Bench of the National Company Law Appellate Tribunal (NCLAT) in New Delhi. The case started when the appellant's Performance Bank Guarantee (PBG) was invoked because it failed to carry out the resolution plan within the allotted period.

The Appellant failed to implement the Resolution Plan and was unable to infuse the necessary amount of Rs 100 crore within 90 days of the effective date, according to the bench comprising Justice Ashok Bhushan [Chairperson] along with Barun Mitra and Arun Baroka [ Technical member], which dismissed the appellant's appeal and upheld the National Company Law Tribunal, Mumbai's decision. Additionally, the tribunal determined that the Performance Bank Guarantee (PBG) invocation was appropriate and supported by the Joint Lenders Meeting's (JLM) majority ruling.

The Tribunal further emphasized the need for the CIRP process to be implemented on time, adding that the SRA and everyone else must adhere to the CIRP process timeframe and that IBC must be finished on time.

Application u/s 95 of IBC can be Filed by Beneficiaries of Personal Guarantee: NCLATKrishan Kumar Jajoo vs Piramal Enterprises Ltd CITATION : 2025 TAXSCAN (NCLAT) 167

In a recent case, the New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that beneficiaries of personal guarantee can initiate Personal Insolvency Resolution Process (PIRP) against Personal Guarantor under section 95 of the Insolvency and Bankruptcy Code, 2016 (Code).

The bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) noted that the security trustees are keeping "Security" for the advantage of the financial creditor or lender, not for their own benefit. Therefore, even if he is not a party to the trusteeship arrangement, the lenders can nonetheless enforce the security documents.

The Appellant could not attempt to avoid his obligations under the Assignment Agreement or the transfer of rights and obligations under the Facility Agreement since they were binding on the Corporate Debtor, the Tribunal noted after consulting the pertinent provisions of the Agreement.

It further noted that a simple reading of the agreement's provisions establishes the separate rights of creditors in addition to the trust. The appellant (as guarantor) cannot, by any means, claim that a creditor, including its assignee, cannot exercise his rights against the appellant.

Existence of Financial Debt and Corresponding Default is a Sine Qua Non for Initiating Proceedings u/s 7 of IBC: NCLAT

M/s Santoshi Finlease Private Limited vs State Bank of India CITATION : 2025 TAXSCAN (NCLAT) 168

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, upheld the adjudicating authority's ruling and dismissed a Section 7 petition under the Insolvency Bankruptcy Code (IBC), 2016, finding that the petition was submitted maliciously

The tribunal considered the reasons made by each party and maintained the Adjudicating Authority's ruling that the Appellant's Section 7 petition was malicious and fraudulent. The Tribunal initially examined whether a legitimate default under the 2016 Insolvency and Bankruptcy Code existed, as well as if there was genuine intent when submitting a Section 7 petition. It was a self-serving transaction, the tribunal said, because the same people controlled the corporate debtor and the appellant at the time of the loan agreement.

The bench comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Member (Technical) concluded that the entire Section 7 application was a strategic attempt to take control over the Corporate Debtor. The tribunal also relied on the judgement of Wave Megacity Centre Private Limited vs Rakesh Taneja & Ors. stating that the principles highlighted in the case for Section 10 application shall also be extended to Section 7 application under the code.

Approved Resolution Plan Cannot be Reopened based on Belatedly agitated Claims: NCLAT

SHRI KRISHAN vs AMIT SINGH CITATION : 2025 TAXSCAN (NCLAT) 169

The National Company Law Appellate Tribunal, Principal Bench, New Delhi dismissed the appeals filed under Section 61 of Insolvency and Bankruptcy Code 2016 due to failure of appellant to exercise due diligence on protecting their rights within the prescribed timelines. It was observed that an approved resolution plan cannot be reopened based on belatedly agitated claims.

All four of the appellants' appeals were dismissed by the bench, which was made up of Justice Ashok Bhushan (Chairperson), Barun Mitra (Member (Technical), and Arun Baroka (Member (Technical)). The bench stated that the appellants had filed their claims after an excessively long delay of several years, despite the fact that the corporate insolvency resolution process had already begun.

According to the court, the facts of the subsequent case were entirely different, the adjudicating body had not authorized the resolution plan, and the parties had filed their claims a year late. The NCLAT upheld the decision of the Adjudicating Authority stating that the appellants had failed to exercise due diligence on protecting their rights with the prescribed timelines.

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.

The decision was given by the NCLAT in a company appeal filed by Asset Reconstruction Company (India) Limited against Mr. Ebenezar Inbaraj, Resolution Professional of Regen Powertech Private Limited & Anr.

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 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), since there was an existing dispute between the corporate debtor and the operational creditor.

The National Company Law Tribunal (NCLT), New Delhi, issued a judgment that is the subject of this appeal. It permits M/s Ambassador Logistics Pvt. Ltd. (Corporate Debtor) to participate in the Corporate Insolvency Resolution Process (CIRP) in accordance with Section 9 of the Insolvency and Bankruptcy Code, 2016.

After reviewing both parties' submissions, the bench of Justice Yogesh Khanna (Member (Judicial) and Mr. Ajai Das Mehrotra (Member (Technical) concluded that there was a clear disagreement over the claim based on the email exchanges between the parties. According to the tribunal, the NCLAT found that the NCLT had erred in admitting the CIRP case because the operational creditor had not replied to the email in which the corporate debtor rejected any culpability.

Allottee cannot be considered as Financial Creditor on Cancellation of Unit by Own Request: NCLAT

Gaurav Jindal vs Debashish Nanda CITATION : 2025 TAXSCAN (NCLAT) 172

The National Company Law Appellate Tribunal (NCLAT) New Delhi has ruled that if a unit was cancelled at the request of the unit's allottee and the loan used to buy the apartment was paid off with the lending bank, the unit's allottee cannot be regarded as a financial creditor.

The Resolution Professional and SRA were not informed of the aforementioned truth regarding the amount that the appellant paid to the bank. Additionally, it was contended that, in the interest of justice, the money that the appellant paid to the bank should be reimbursed to the appellant from the funds set aside in the resolution plan.

The bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) held that the appellant's unit was cancelled at his own request, and he has filed a claim for the amount paid to the corporate debtor for the unit's allocation as mentioned above. The allocation took place on June 4, 2025, and the corporate debtor received the full amount from UCO Bank that day. The Appellant failed to make any payment to the Corporate Debtor.

Since the appellant and the bank settled and the appellant paid Rs. 17 lakhs to pay the outstanding balance, there are no bank debts about the unit in question. The Resolution Professional will make sure that the Rs. 17 lakhs that the appellant paid is reimbursed from the funds set aside in the Resolution Plan.

Security Interest becomes Part of Liquidation Estate if Amount is Not Deposited within 90 days: NCLAT

Phoenix ARC Pvt. Ltd. vs Kuldeep Verma Liquidator of KS Oils Ltd. & Ors. CITATION : 2025 TAXSCAN (NCLAT) 173

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench held that a secured creditor's security interest will become part of the liquidation estate if, within ninety days of the liquidation commencement date, if they do not deposit the sum required by Regulation 21A(2) of the Liquidation Regulations, despite having chosen to realize it under Section 52 of the Insolvency and Bankruptcy Code, 2016 (Code).

The Tribunal found that as per Regulation 37 of the Liquidation Regulations, it is the duty of the secured creditor to inform the liquidator the price at which he proposes to realise his security interest. It is thereafter the responsibility of the liquidator to see whether any other person is offering a higher price than the proposed price within 30 days from the date of intimation.

The bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) found that the Appellant failed to take steps under Regulation 37 of the Liquidation Regulations and did not communicate the estimated payment required to be made under Regulation 21A(2) to the liquidator. As a secured creditor, the Appellant was under an obligation to make the payment within 90 days from the liquidation commencement date.

The bench viewed that when obligation is linked with the time period, the Appellant cannot fall back on the argument that the Liquidator has not communicated the estimated amount to the secured creditor. It further added that when secured, the creditor at no point of time even asked for an estimated amount from the Liquidator and no steps were taken under Regulation 37 by the Appellant.

Lease Hold Rights Existing in Favor of Corporate Debtor Cannot be Terminated During Moratorium Period u/s 14 of IBC: NCLAT

Divyesh Desai RP of GPT Steel Industries Ltd. vs Gujarat Industrial Development Corporation Bhuj CITATION : 2025 TAXSCAN (NCLAT) 174

The National Company Law Appellate Tribunal (NCLAT) New Delhi has ruled that lease hold rights existing in favour of corporate debtors cannot be terminated during moratorium period under section 14 of the Insolvency Bankruptcy Code (IBC), 2016.

The Tribunal noted that the Supreme Court in Rajendra K. Bhutta vs. Maharashtra Housing and Area Development Authority and Anr. (2020) held that “when it comes to any clash between MHADA Act and the Insolvency Code, on the plain terms of Section 238 of the Insolvency Code, the Code must prevail.

The Tribunal bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that it does not help the GIDC to have the authority to terminate the lease and give the CD notice to vacate during the above-mentioned moratorium. In addition to being addressed in the Resolution Plan, the GIDC's claim was partially admitted to the extent of Rs. 1.54 crores.

The Tribunal found that GIDC's show cause notice, which was utilized to end the lease, clearly breached section 14 of the Code. By denying the RP's interlocutory request to overturn the show-cause notice order,the adjudicating authority erred. It further stated that when the GIDC order was in violation of Section 14(1).

Application u/s 9 of IBC Cannot be Admitted When Debt is Discharged by Corporate Debtor: NCLAT

Mr. Pankaj Kalra vs Greeka Greens Solution (India) Limited CITATION : 2025 TAXSCAN (NCLAT) 175

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of has held that Insolvency proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 (Code) cannot be initiated if the debt in question has been discharged and settled between the parties after the issuance of demand notice under section 8 of the Code.

Since the Corporate Debtor has discharged its liability and the last installment could not be paid due to some calculation errors, the appellant argued that there was no reason to initiate any Section 9 proceedings at this time. The sum was also paid while the Section 9 application was pending. Additionally, the Respondent acknowledged that all of the liability had been released.

The two member bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member)that in the circumstances of the case, it was unnecessary to start CIRP proceedings because the corporate debtor had already reached a settlement and paid 20 of the 21 installments after receiving a demand notice under section 8 of the code. Due to disagreements over calculations, only the twenty-first installment was unable to be paid.

Demand Notice Delivered to Last Known Address of Personal Guarantor is Valid Service u/s 95(4) of IBC: NCLAT

Paresh Rastogi vs M/Omkara Assets Reconstruction Pvt. Ltd. CITATION : 2025 TAXSCAN (NCLAT) 176

The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that, for the purposes of Section 95(4) of the Insolvency and Bankruptcy Code, 2016 (Code), delivering a demand notice to the personal guarantor's last known address as listed in the deed of guarantee will be considered valid service.

The Tribunal bench, which was made up of Justice Ashok Bhushan (Chairperson), Barun Mitra (Member (Technical), and Arun Baroka (Member (Technical), pointed out that Clause 22 of the Guarantee Deed clearly stipulates that any correspondence, including a Notice of Demand, addressed to the last known address or the address specified in the Guarantee Deed will be deemed sufficient service.

The Tribunal noted that notice is considered effective when it is sent by registered mail to the correct address in accordance with section 27 of the General Clauses Act, 1897. The notice is deemed served at the moment it would typically arrive at its destination in the regular course of business, unless the addressee can demonstrate otherwise.

The Tribunal observed that Respondent No. 1 had sent the Demand, Invocation, and Recall Notices to the personal guarantor's last known address as specified in the Deed of Guarantee.

The Tribunal observed that the Resolution Professional's Report, as required by section 99 of the Code, attested to adherence to section 95, which includes the appropriate issue and delivery of the Demand Notice.The claims that the statute was properly followed are supported by evidence such as email exchanges and speed post receipts. The documentary record does not support the appellant's claim that the proceedings are compromised by the notices' non-receipt.

Google Play Violates S. 4(2)(e) of Competition Act through Restrictive App Store Billing Policy: NCLAT Reduces Penalty to ₹216 Cr

Alphabet Inc. & Ors. vs Competition Commission of India & Anr CITATION : 2025 TAXSCAN (NCLAT) 177

The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT), affirmed the Competition Commission of India's (CCI) ruling that Google violated section 4(2)(e) of the Competition Act, 2002 by using its dominance in the Play Store ecosystem to promote Google Play and reduced the penalty from Rs.936.44 crores to Rs. 216.69 crore based on 'relevant turnover' of Google's Play Store, rather than the turnover of the entire company.

the tribunal concluded that there was no breach of section 4(2)(c) because Google's actions did not prevent payment processors and aggregators from accessing the market. It was noted that market access cannot be denied if market share is reduced by less than 1%.

The Tribunal came to the conclusion that both existing and potential forms of competition restriction are covered by effect-based analysis under Section 4. According to the Tribunal, an effect analysis was carried out by the Commission in its order. The ruling stated that Google failed to meet the competition by adopting the mandatory requirement of using GPBS. The Tribunal maintained the CCI's ruling that Google had breached Section 4(2)(a)(i) by requiring app developers to use GPBS, which was an unfair and discriminatory requirement

The bench of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) held that CCI erred in imposing a penalty on Google's entire turnover rather than restricting it to the relevant turnover, i.e. revenue generated from the Google Play Store.

Adjudicating Authority cannot Accept Report of RP without Independent Assessment u/s 100 of IBC: NCLAT

Mrs. Rajani Ajay Gupta vs Stressed Assets Management (SAM) Branch CITATION : 2025 TAXSCAN (NCLAT) 178

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench has held that the Adjudicating Authority, while considering the report of the Resolution Professional, must conduct its own independent assessment under section 100 of the Insolvency Bankruptcy Code (IBC), 2016 .

The Tribunal noted that the bank must notify the personal guarantor in "Form-B" prior to submitting the application under section 95 of the code. Notice was given in this instance on March 16, 2024, and the application was submitted using 'Form-C,' which includes all required documentation pertaining to the debt details.

The Tribunal found that the adjudicating authority's order makes it clear that no independent assessment has been conducted by the adjudicating authority.

The bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that when the principal borrower defaults, the surety is held accountable to the creditor on a joint and several basis. In this instance, the bank received ₹5,92,92,750/-from the sale of the corporate debtor's and personal guarantors' properties under the SARFAESI Act. The personal guarantor also wrote an email stating that the bank's property was adequate to pay off the debt.

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.

The bench of Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member) observed that the Adjudicating Authority committed a mistake in holding that a dissenting financial creditor is entitled only to the minimum amount prescribed under section 30(2) of the code based on the liquidation value under section 53 of the code.

It further added that 30(2)(b)(ii) of the code mandates that the amount must not be less than the liquidation value and the amount should also be fair and equitable. Since the resolution value exceeds the liquidation value in the present case, the dissenting financial creditor should receive a pro rata share 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.

Breach of Settlement Agreement Does Not Bar Financial Creditors from Filing Application u/s 7 of IBC: NCLAT

Bahadur Ram Mallah, Ex-Director vs Assets Reconstruction Company CITATION : 2025 TAXSCAN (NCLAT) 180

The bench of the National Company Law Appellate Tribunal (NCLAT) in New Delhi has ruled that financial creditors who have signed a settlement agreement with the corporate debtor that was later broken are not barred from applying Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code). Even if the parties have signed a settlement agreement, the substance of the obligation has not altered.

The tribunal comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) found that the ARC in a letter has in clear and unambiguous terms stated that No Dues Certificates (NDCs) have been issued for those companies whose settlement amount has been paid while the amounts payable by Uniworth Textiles Ltd of Rs. 21.40 crore as per terms of GSA had still not been paid.

Further viewed that since there was no objection to the outstanding settlement amount claimed by the ARC for Uniworth Textiles or the resultant default. Given that the Corporate Debtor failed to make the required payments under the GSA, allowing them to argue against the ARC's revocation of the settlement is both illogical and absurd.

The Tribunal held that if the Corporate Debtor had genuinely contested the revocation, they would have referred to payments made towards the entire settlement amount or demanded their NDC. The letter contains no objections regarding the ARC's alleged non-compliance with the GSA or the unilateral revocation which clearly establishes that the revocation was impliedly accepted.

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