NCLAT Upholds Liquidation of Go Airlines

Busy Bee Airways Pvt. Ltdvs Dinkar T Venkatasubramanian CITATION : 2025 TAXSCAN (NCLAT) 182

The National Company Law Appellate Tribunal (NCLAT), New Delhi bench upheld the liquidation by finding that, in the absence of a compliant resolution plan, the Committee of Creditors (CoC), acting in accordance with Section 33(2) of the Insolvency and Bankruptcy Code, 2016, and using its commercial judgment, was within its rights to decide to liquidate the CorporateDebtor, Go Airlines (India) Ltd.

The Tribunal comprising of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) have held that the decision of the CoC to liquidate the Corporate Debtor was clearly in exercise of powers vested in the CoC under Section 33(2).

It was mentioned that "Assessment of sale as a going concern" is covered under Regulation 39C. In accordance with Regulation 39C(1), the CoC may suggest that the Liquidator first look into selling the corporate debtor as a going concern or selling the company as a going concern in accordance with Regulation 32(e) of the IBBI (Liquidation Process) Regulation 2016.

The Tribunal rejected the appeal, but allowed the appellant to submit a compromise and arrangement plan in accordance with Regulation 2B of the Liquidation Process Regulation. Within ninety days of the date of the liquidation decision.

Appeal u/s 61 of IBC can be filed by Personal Guarantors against order Initiating PIRP: NCLAT

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).

The bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that section 60(1) of the code explicitly states that the NCLT with territorial jurisdiction over the location of the corporate person's registered office shall serve as the adjudicating authority with regard to insolvency resolution and liquidation for corporate persons, including corporate debtors and personal guarantors.

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.”

The Tribunal noted that, according to the Operational Creditor, the dates of default for the outstanding debt are 3 May 2020, 15 August 2020, and 1 January 2021. Additional information about these dates can be found in Form 3 of the demand notice dated January 27, 2022.

The bench comprising, Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) found that the defaults took place between March 3, 2020, and January 1, 2021, which is obviously within the time frame that is forbidden under section 10A of the code.

The tribunal held that no liability can be fastened on the corporate debtor for default committed during Section 10A period. The adjudicating authority has, therefore, not committed any error in holding the Section 9 application as non-maintainable.

Application u/s 9 of IBC cannot be rejected solely on ground of Decree Obtained by Operational Creditor: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi has ruled that an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (Code) cannot be denied based only on the fact that the operational creditor no longer qualifies as such after receiving a debt decision.

The Adjudicating Authority relied on the TripuraHigh Court in Sri Subhankar Bhowmik v. Union of India and Anr. where it was held that Decree Holders are classified separately from financial and operational creditors under the code with no further subdivisions within this category. The Code explicitly recognizes decree holders as a distinct class based on their decree but does not allow for their reclassification as either financial creditors or operational creditors.

The bench comprising Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) ruled that an operational creditor does not automatically stop being an operational creditor merely because they have acquired a decree.

No Bar on CoC’s from Seeking Multiple Modifications or Revisions of Resolution Plans: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench has ruled that the Committee of Creditors (CoC) has the authority to request changes or revisions to the Resolution Plans that the Resolution Applicants have submitted on more than one occasion. This is because Regulation 39(1A) of the CorporateInsolvency Resolution Process (CIRP) Regulations, 2016 (CIRP Regulations) only prohibits the Resolution Professional from allowing changes to the plan more than once; the CoC is not subject to this restriction.

The bench comprising, Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that the legality of the CoC's decision is unaffected by the lack of a formal notification of the rejection of the appellant's resolution plan. After giving careful thought to the appellant's strategy, the CoC used its business acumen to approve the SRA's Resolution strategy. At the Appellant's request, such permission cannot be altered.

While dismissing the appeal, the Tribunal held that the CoC is not bound by Regulation 39(1A) of the CIRP Regulations, even though it forbids the Resolution Professional from allowing multiple modifications to a Resolution Plan.

Liquidation Order u/s 33 of IBC Cannot be Set Aside Once Successful Auction Purchaser Taken Possession of Property of Corporate Debtor: NCLAT

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has held that once the Successful Auction Purchaser has acquired the corporate debtor's assets as a result of the liquidator's sale, the order issued under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 (Code) directing the corporate debtor's liquidation cannot be revoked.

In order to contest a decision issued under section 33(2) of the Code that ordered the liquidation of the corporate debtor and designated Respondent No. 1 as the liquidator, the appellant, P. Navcen Chakravarlhy, filed this appeal.

The bench comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Jatindranath Swain (Technical Member) observed that the appellant did not contest the liquidation's conclusion. The resolution adopted by the CoC at its ninth meeting, which recommended liquidation, was logically followed by the contested decree dated January 27, 2021. The Adjudicating Authority ordered the liquidation based on the CoC's judgment and the Resolution Professional's permission; this decision was made without violating any Code requirements.

While dismissing the appeal, the Tribunal held that since the liquidator has completed the sale creating third party interest.

Relief for Zee Entertainment: NCLAT Dismisses IDBI’s Insolvency Plea Citing S.10A COVID-Time Default Protection

The Bench of the National Company Law Appellate Tribunal (NCLAT) ruled that an insolvency application filed by IDBI Bank Limited against Zee Entertainment Enterprises Ltd. (ZEE) was not maintainable as the alleged default occurred during the COVID-19 suspension period protected under Section 10A of the Insolvency and Bankruptcy Code (IBC), 2016.

In its appeal, IDBI Bank argued that the default should be traced back to an earlier date when the borrower, Siti Networks, failed to make repayments, and hence, the bar under Section 10A would not apply.

The two-member bench comprising Justice Rakesh Kumar (Judicial Member) and Dr. AlokSrivastava (Technical Member) observed that the corporate guarantee provided by ZEE was a demand guarantee, and the default could only be established upon the date of invocation. Since the invocation was on 5 March 2021, within the one-year protection window of Section 10A, the application was barred.

The tribunal held that a guarantor's default cannot be assumed before formal demand, even if the principal borrower defaulted earlier. The tribunal explained that Section 10A creates a complete bar on the filing of insolvency applications for defaults occurring during the COVID-19 window, and such defaults cannot be resurrected even after the suspension period ends.

Mortgagee Bank cannot Seek Exclusion of Property from Resolution Plan Approved by Unit Holders Having Conveyance Deeds: NCLAT Dismisses Appeal of HDFC

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench, while dismissing the appeal of HDFC Bank, has held that the bank in whose favor mortgage rights were created over the property of the Corporate Debtor cannot seek exclusion of the property from the ResolutionPlan, especially when the unit holders, possessing either a conveyance deed or builder-buyer's agreements, have approved the Resolution Plan.

The Tribunal noted that the Appellant claims mortgage rights over the units sold to M/s Nayanika Holdings Pvt Ltd on 14.10.2015. However, the executed conveyance deed shows no Tripartite Agreement between the Corporate Debtor, M/s Nayanika Holdings Pvt Ltd, and the bank. The basis of the Appellant's claim is the loan agreement executed by M/s Nayanika Holdings Pvt Ltd in favour of HDFC Bank.

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that the Appellant, not being the unit holder and having no rights in the units except for mortgage rights, cannot seek exclusion of the unit. The units were already considered in the resolution plan, which was approved by unit holders possessing either conveyance deeds or builder-buyer agreements.

Based on the above, it opined that the Adjudicating Authority rightly held that the Appellant bank has no locus to object to the approved resolution plan. As per the earlier order dated 11.06.2021, no objections could be raised except regarding claims of Financial Creditors.

The Tribunal ruled, in rejecting the appeal, that the appellant's proper remedy is against M/s Nayanika Holdings Pvt Ltd, with whom the loan arrangement was signed by depositing title deeds.

CoC Abstention from Voting on Resolution Plan Leads to Liquidation: NCLAT Upholds NCLT’s Decision

The Delhi Bench of the National Company Law Appellate Tribunal(NCLAT)upheld the National Company Law Tribunal(NCLT)’s decision to approve liquidation for Sintex Plastics Technologies Ltd. following the Committee of Creditors (CoC) abstaining from voting on the resolution plan and the subsequent move for liquidation was valid.

Subh Laxmi Investment Advisory Pvt. Ltd.,appellant,filed an appeal against the NCLT Ahmedabad order dated May 3, 2024, which allowed the liquidation of Sintex Plastics Technologies Ltd. and appointed Mr. Bimal Ashok Desai as the liquidator.

The two-member bench comprising Justice Rakesh Kumar Jain(Judicial Member) and Mr Naresh Salecha(Technical Member) heard both parties and reviewed the case.It noted that RBL Bank was the sole CoC member and had the right to abstain from voting on the resolution plan, which it did. This was seen as an exercise of its commercial wisdom and couldn’t be questioned.

The appellant claimed the liquidation application lacked CoC consent. The tribunal found this incorrect, as liquidation was discussed in the sixth CoC meeting, and the RP received email consent from the bank before filing.Since the CIRP ended on 30.03.2024, the RP was required to file for liquidation, which was done on 12.04.2024 and approved on 03.05.2024.

The NCLAT also noted that the appellant did not participate in the e-auction held on 21.06.2024. Respondents 4 to 7 won the bid with ₹20.63 crore, and the sale was completed.

Waiver u/s 244(1)(b) of the Companies Act for Oppression and Mismanagement Petition: NCLAT Dismisses Appeal, Upholds NCLT's Decision

The National Company Law Appellate Tribunal (NCLAT) Delhi Bench dismissed an appeal challenging the National Company Law Tribunal (NCLT) Kolkata’s order that granted a waiver under Section 244(1)(b) of the Companies Act, 2013, in a petition alleging oppression and mismanagement in the Calcutta Cricket & Football Club, Respondent-1 noting that serious allegations and public interest considerations justified allowing the petition to proceed.

Somangsu Biswas, appellant. challenged the NCLT Kolkata order dated January 17, 2024, which allowed a waiver of eligibility under Section 244(1)(b) of the Companies Act, 2013, in a case involving allegations of oppression and mismanagement in the Calcutta Cricket & Football Club.

The two member bench comprising Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member) heard both parties and reviewed the records. It noted that the petitioners were members of the respondent company, a Section 8 entity, and had filed a case alleging oppression and mismanagement. These issues were not decided in any earlier proceedings.

The NCLT had observed internal disputes among members, particularly relating to an AGM held on 11 September 2023, and took note of the public interest involved as the company was set up to promote sports. The Tribunal found that the conditions laid down in the Cyrus Investments judgment for granting waiver under Section 244 were met.

NCLAT Finds Insolvency Plea Within Limitation Citing Debt Acknowledgment and COVID Exclusion

The Delhi Bench of National Company Law Appellate Tribunal(NCLAT) found the insolvency plea filed by Respondent No. 1 to be within the limitation period, citing debt acknowledgment and COVID-19 exclusion.

The appellant contended that the financial creditor filed the Company Petition in August 2021, which was barred by limitation. The appellant argued that the delay was wrongly condoned by the Adjudicating Authority, relying on COVID-19 extensions, even though the limitation period had expired.

The Adjudicating Authority's order, dated 17.05.2024, was deemed legally sound. The lockdown and Supreme Court rulings had extended the limitation period, further justifying the timeliness of the petition. Respondent No. 1 asserted that the homebuyers’ claims were adequately addressed within the insolvency process.

The three-member bench comprising Justice Rakesh Kumar Jain(Judicial Member),Naresh Salecha(Technical Member) and Indevar Pandey(Technical Member) noted that the only issue in the appeal was whether the company petition filed by Respondent No.1 was barred by limitation.It was observed that the loan was disbursed in July 2009, and multiple one-time settlement (OTS) proposals were made by the borrower between 2011 and 2017. The last such OTS dated 16.05.2017 was treated as an acknowledgment of debt, which extended the limitation period until 15.05.2020.

NCLAT Upholds IRP Initiation Against Personal Guarantor, Finds No Violation of Natural Justice

The Chennai Bench of National Company Law Appellate Tribunal(NCLAT) upheld the initiation of the Insolvency Resolution Process (IRP) against the personal guarantor under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, and found no violation of natural justice.

The Adjudicating Authority noted that the Appellants were given several chances to submit replies and information but did not use them. Their right to respond was forfeited after multiple extensions. The Appellants’ counsel claimed they were not heard, but the records showed they had enough time to reply.

The Appellate Authority found no violation of natural justice. The Appellants’ objections, such as issues with guarantees and jurisdiction, were not raised in time and could not be considered. The Court concluded that the strict timelines of the IBC were followed, and the Appellants had been given adequate opportunities to present their case.

Justice Sharad Kumar Sharma(Judicial Member) and Jatindranath Swain(Technical Member) after hearing the counsels and reviewing the impugned order, agreed that the Adjudicating Authority followed the principles of natural justice. The appellant were given enough opportunities, and their rights were protected by ensuring adherence to Sections 108, 109, 110, and 111 of the IBC, 2016.

Stamping of Invoices Does Not Imply Acceptance of Debt: NCLAT

Tirupati Drilling &Mining Services Private Limited vs Sadbhav Engineering Limited CITATION : 2025 TAXSCAN (NCLAT) 194

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench has held that mere stamping of tax/proforma invoices at the site office by lower functionaries of the corporate debtor only indicates receipt and does not imply acceptance by the corporate debtor.

The Tribunal bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) viewed that the amount owed by the Respondent is the subject of a disagreement that has been brought up several times before the demand notice of December 31, 2021, and has not been settled. The Tribunal noted that there is a disagreement on the amount in the facts and circumstances of this matter, which predates the appellant's demand notice of December 31, 2021.

In rejecting the appeal, it was decided that the respondent had recorded the existence of a disagreement in accordance with Section 8(2)(a) of the Code. After discovering a notice of an existing dispute, the AA has not accepted the Section 9 Application in accordance with Section 9(5).

Amendment on Application u/s 7 of IBC Not Allowable If It Amounts to Withdrawal of an Admission: NCLAT

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench held that amendments to an application under section 7 of the Insolvency Bankruptcy Code( IBC), 2016 cannot be permitted if they amount to withdrawal of admission or undermine pending judicial objections.

The Adjudicating Authority is presently considering the aforementioned Interlocutory Application (IA). Nevertheless, the Financial Creditor submitted a request for a change to the date of default specified in the Section 7 application. Without taking into account the concerns expressed in the previous application, the adjudicating authority approved this change. The corporate debtor, who is upset about the change, has filed an appeal with the NCLAT in Chennai.

The bench comprising Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical), rejected the Adjudicating Authority's order allowing the change and granted the appeal. The tribunal noted that the argument put out by the appellant in the initial application would be deemed invalid if the contested order were granted.

The tribunal noted that it is a well-established legal principle that an amendment cannot be approved if it withdraws an admission, a pleading that has already been made before the tribunal.

Approval of Resolution Plan Cannot be rejected solely based on Withdrawal of Consent by One of Coc Members: NCLAT

M/s Essar (India) Ltd vsPrabhat Technologies (India) Ltd CITATION : 2025 TAXSCAN (NCLAT) 196

The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) comprising Justice Yogesh Khanna (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member) has held that an application seeking approval of a Resolution Plan cannot be rejected solely due to the withdrawal of consent by one Committee of Creditors (CoC) member without granting the Successful Resolution Applicant (SRA) an opportunity to be heard.

The Tribunal bench comprising of Justice Yogesh Khanna [ Judicial Member] and Mr Ajai Das Mehrotra [Technical Member] concluded that the impugned ruling is non-speaking and even goes against natural justice principles because the Resolution Applicants, the party whose plan was rejected due to alleged fraud, were never given a chance to defend their position. Furthermore, the impugned order offers no justification for dismissing the appellants' resolution plan after it has been duly accepted by the Committee of Creditors with a 98.15% majority.

Non-Examination of Matter on Merits: NCLAT upholds Recall and Adjudication by NCLT

The National Company Law Appellate Tribunal ( NCLAT ), Principal Bench, New Delhi, has dismissed Marvel Landmarks Pvt Ltd’s appeal and affirmed the decision of the National Company Law Tribunal (NCLT) to recall its own ex-parte dismissal of a home-buyer insolvency petition.

In the order dated 21 January 2025, the Bench comprising Justice Ashok Bhushan (Chairperson) and Technical Members Barun Mitra and Arun Baroka ruled that the NCLT had exercised its inherent power correctly because the earlier order had not examined the dispute on merits.

The NCLAT agreed with the purchasers, distinguishing the precedents cited by the developer and emphasising that recall is justified where an order is obtained by misrepresentation or passed without hearing an affected party. It concluded that the 4 June dismissal was not a reasoned decision on merits, upheld the recall and reinstatement by NCLT, dismissed the appeal and ordered that the insolvency petition proceed, with no order as to costs.

NCLAT Dismisses Appeal Against Auction, Citing Delay and Finality of Sale Process

The National Company Law Appellate Tribunal (NCLAT), Chennai, has dismissed an appeal, stating that the appellant's delayed challenge and the completed status of the auction process left no scope for interference. The order under challenge was passed by the NCLT Division Bench II, Chennai, on 11.03.2024, in response to an application filed under Section 60(5) of the Insolvency and Bankruptcy Code read with Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016.

Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) held that the appellant had shown a lack of diligence, as the scheme under Section 230 was submitted after the sale was concluded. They noted that the delay in filing the appeal—224 days in re-filing alone had not been satisfactorily explained. The Tribunal also found no procedural irregularity in the conduct of the auction or the liquidator’s decision-making, especially given that the Stakeholders' Committee had rejected the appellant’s scheme and authorised the piecemeal sale.

NCLAT Sets Aside CIRP Admission, Citing Pre-Existing Dispute Evident in Email Exchanges

Rajendra Bisht vs M/sSatkar Logistics Pvt Ltd CITATION : 2025 TAXSCAN (NCLAT) 199

The National Company Law Appellate Tribunal (NCLAT) has set aside the admission of a Corporate Insolvency Resolution Process (CIRP) initiated against Ambassador Logistics Pvt. Ltd., holding that a pre-existing dispute was clearly evident from the email correspondence exchanged between the parties prior to the demand notice.

The Tribunal concluded that the email dated 25.05.2018 and the continuous correspondence regarding unsettled accounts demonstrated the existence of a genuine pre-existing dispute prior to the issuance of the demand notice. The Bench observed that the absence of a reply from the Operational Creditor to the email denying liability reinforced the inference of a live dispute.

Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member), who presided over the matter, relied on key precedents including the Supreme Court's decisions in 2022 and 2023 which held that the existence of any plausible contention or disagreement on debt or dues prior to the demand notice disqualifies admission under Section 9 of the Code.

Inadvertent Typographical Errors in NCLT Orders can be Corrected u/r 154 of NCLT Rules: NCLAT

In a recent case, the New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that inadvertent typographical errors in the orders passed by the National Company Law Tribunal (NCLT) can be corrected by exercising its powers under Rule 154 read with Rule 11 of the NCLT Rules, 2016.

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) found that, as was evident from the record and minutes of the SCC meeting, the Adjudicating Authority explicitly held in paragraph 15 of its judgment that the use of the word "GRANTED" rather than "NOT GRANTED" in the order dated 10.05.2024 was an unintentional typographical error. The Adjudicating Authority used Rules 154 and 11 of the NCLT Rules, 2016 to support the correction of the error, acknowledging that it lacked the authority to review its own order.

The Tribunal concluded that the appellant had not provided any substantial evidence to substantiate its claim for the extinguishment of personal or third-party guarantees, and thus dismissed the appeal. The Adjudicating Authority correctly saw the earlier reference to "GRANTED" as a typographical error because the sale was of the Corporate Debtor as a continuing concern and there was no foundation for such relief. It fixed the error by using its inherent authority under the NCLT Rules.

Issuance of Demand Notice on Registered Email Address of Corporate Debtor is Sufficient u/s 8 of IBC: NCLAT

The National Company Law Appellate Tribunal's (NCLAT) New Delhi bench has ruled that the corporate debtor's registered email address, as shown in the Company Master Data, can be used to receive a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 (Code), which is adequate to satisfy the Code's requirements.

The Tribunal, comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that the Operational Creditor is required to deliver a demand notice on the occurrence of default on the Corporate Debtor and that a demand notice under Section 8 is a forerunner to the commencement of insolvency proceedings against a Corporate Debtor.

Furthermore, it was decided that the registered email address that was used to contact the corporate debtor was identical to the one that was revealed in the company master data. The appellant's assertion that the email was non-operational because the person in charge of it left after July 2021 is untrue.

It was evident that the demand notice was properly served on the corporate debtor's registered email address following the postal delivery's failure, so satisfying the legal requirement.

Filing petition u/s 7 of IBC not barred by Majority's Consideration of Debt Restructuring with corporate debtor: NCLAT

The National Company Law Appellate Tribunal ( NCLAT ) New Delhi has held that a member may individually file for bankruptcy under Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) even while the majority of consortium lenders are thinking about restructuring debt with the Corporate Debtor.

The Adjudicating Authority, however, decided that it was forced to accept the Section 7 application and designate Shailesh Verma as the Resolution Professional because the loan account had not yet been transferred and the default was still uncontested.

The bench comprising Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) noted that JLM was well aware that each member is free to pursue recovery strategies in accordance with their individual bank's recovery policy. According to their bank's policy, all lenders are therefore free to take the actions necessary to realize their loan.

Furthermore, the Tribunal held that the message dated March 15, 2025, clearly outlines the reasons for rejecting the settlement proposal. These reasons include the absence of tied-up cash, the proposal's reliance on funds from an anonymous investor, and a long-pending insurance claim. The promoters had suggested paying Rs. 5 crores up front. After examination, NARCL has given the proposal enough thought, and there are no errors in the communication that call for additional guidance.

The Tribunal came to the conclusion that the appellant's settlement plan had not been accepted by NARCL, which is the assignee of the total debt from all consortium members, including Indian Bank.

Gratuity With Interest falls within definition of Operational Debt u/s 5(21) of IBC: NCLAT

The National Company Law Appellate Tribunal's (NCLAT) New Delhi bench has ruled that a claim for interest and gratuity falls under the definition of operational debt under section 5(21) of Insolvency and Bankruptcy Code, 2016 (IBC). This makes it completely maintainable to file an application under Section 9 of the Code, 2016 based on such a claim.

The bench of Ashok Bhushan [judicial member], and Mr. Barun Mitra [ technical member], noted that JK Jute Mazdoor Morcha had filed an application under section 9 of the Code, which had been initially denied by the adjudicating authority on April 28, 2017, and that the Appellate Tribunal had also denied the appeal.

The Tribunal while distinguishing the present case from its own judgment in Kishore K. Lonkar'Vs. 'Hindustan Antibiotics Ltd.' 2022 held that the claim before the Tribunal was based on unpaid LTC and Earned Leave Encashment. The Tribunal held that initiating CIRP on such welfare-related grounds does not align with the intent and objective of the Code.

Interim Resolution Professional Can Take Possession of Assets Owned by Corporate Debtor: NCLAT

The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that the Interim Resolution Professional (IRP) is well within his authority under Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 (Code) to take possession of assets owned by the Corporate Debtor, and applying to the Adjudicating Authority under Section 60(5) of the Code for the purpose is permissible.

The Tribunal ruled that the Appellant's claim that the IRP's application was unmaintainable lacked validity. The Corporate Debtor is without a doubt the rightful owner of the apartments, and the IRP has a responsibility to seize its property.

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) that the Adjudicating Authority rightly directed the Appellant to vacate the premises to implement the approved Resolution Plan, and the appeal was dismissed as meritless.

NCLT Can Exercise Inherent Powers to Forward a Copy of its Order for Necessary Action: NCLAT

Max Publicity & Communication Pvt. Ltd. vs Enviro Home SolutionsPvt. Ltd. CITATION : 2025 TAXSCAN (NCLAT) 205

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench stated that the NCLT may, in the exercise of its inherent jurisdiction under Rule 11 of the NCLT Rules, 2016, direct that a copy of its decision be forwarded to the relevant statutory authorities so that the required action can be taken.

The Tribunal noted that it is clear that no investigational directive was issued by the adjudicating authority. The ROC, Income Tax Department, EOW, and SFIO are among the relevant statutory authorities that are simply left to act in accordance with applicable laws under paragraphs 65 and 66 of the contested order. These observations are just facilitative in nature and should not be interpreted as instructions for further investigation.

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) found that the Adjudicating Authority had the NCLT's authority under the Companies Act in addition to its jurisdiction under Section 9 of the IBC. Under Section 213 of the Companies Act, it may order an investigation, but only after giving the parties involved a fair chance to do so. The contested order, specifically paragraphs 65 and 66, does not constitute an investigational directive. It further held that the NCLT may submit copies of orders to the appropriate statutory authorities for necessary action by using its inherent powers under Rule 11.

Adjudicating Authority cannot Reject Plan Based on Valuation Report When No Objections were Raised by Stakeholders: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi has held that when no objection to the valuation conducted of the Corporate Debtor was raised by any stakeholders, it was not open for the Adjudicating Authority to enter into the issue of valuation of assets of the Corporate Debtor and to make the said ground for rejecting the Resolution Plan under section 31 of the Insolvency and Bankruptcy Code, 2016 (Code).

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed that as instructed by the Adjudicating Authority, the SRA submitted a compliance affidavit. Since just one claim was submitted and accepted, it was mentioned in Paragraph 18(viii) that payments to specific creditors, such as statutory liabilities shown on the balance sheet, did not need to be included in the plan. Since no other creditors submitted claims, the Resolution Plan's rejection cannot be justified by omitting any reference to them.

It was held that “when no objection to the valuation conducted of the Corporate Debtor was raised by any stakeholders, it was not open for the Adjudicating Authority to enter into the issue of valuation of assets of the Corporate Debtor and to make the said ground for rejecting the Resolution Plan.”

Resolution Professional can only File Application for Avoidance of Preferential Transactions u/s 43 of IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in New Delhi ruled that, in accordance with Section 43 of the Insolvency and Bankruptcy Code, 2016 (Code), only the Resolution Professional may file an application for the avoidance of preferential transactions.

The Tribunal observed that the order dated 24.01.2025 denied the appellant's request to replace the Resolution Professional and Authorized Representative. This order has reached finality because it was not contested. Therefore, there is no need to take the Appellant's accusations against the Resolution Professional any further.

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member ) observed that the Adjudicating Authority rightly held that the Appellant, being one among 600 homebuyers, falls within the class of Financial Creditors. While individual dissent may exist, the vote of the majority prevails.

Liberty Granted to File Fresh Application does not Permit Alteration of Default Date in Application u/s 7 of IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in New Delhi has ruled that the appellant's failure to file the first appeal against the order dated 10.04.2023, which dismissed the first application under section 7 of the Code, and the fact that the NCLAT granted the appellant liberty do not give the appellant the right to change the date of default at its whim.

The bench comprising Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) held that merely the fact that the liberty was given to the Appellant by the court and he failed to pursue the first appeal filed against the order dated 10.04.2023 does not mean that the Appellant can change the date of default at its convenience alleging that after default occurred on 04.02.2021, the Appellant had served reminder to the Respondent.

While dismissing the appeal, the bench concluded that the appellant never tried to change the pleadings before the Tribunal, in contrast to the Streamcast case, which was also submitted by the appellant. They continued to use the original application, citing 04.02.2021 as the date of default, even though they knew it was within the Section 10A cut-off period, making the Section 7 application unmaintainable.

Disputes Arise out of Employment Contract Cannot be Adjudicated by NCLT/NCLAT under IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has held that a dispute arising from an employment contract concerning the determination of emoluments and salaries to be paid to an employee of a company after his termination cannot be adjudicated by the National Company Law Tribunal (NCLT) or the NCLAT under the Insolvency and Bankruptcy Code, 2016 (Code).

The Tribunal found that Form No. MR-1 is a statutory filing required under the Companies Act, 2013, upon the appointment of a director. The form does not indicate that the Appellant was receiving separate compensation for his role as 'Whole-Time Director'.

The bench comprising Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) held that the designation of 'Whole-Time Director' was selected in Form No. MR-1 among other roles including CFO solely because the form permits only one designation to be chosen. The stated annual salary of ₹86,49,600/- represents his total remuneration, not an additional payment for the directorship.

It was evident that no document was placed on record demonstrating that the Board had approved payment of remuneration to the Appellant for his position as a Director. Appellant's reliance on Article 49 of the AoA, is also misplaced as Article 49 does not provide for payment of remuneration to a Whole-time Director as a matter of course.

CoC can hold Second Challenge Process even after Declaration of Highest Bidder: NCLAT

Anuj Goyal vs AmitChandrakant Shah CITATION : 2025 TAXSCAN (NCLAT) 210

According to a ruling by the National Company Law Appellate Tribunal (NCLAT), the Committee of Creditors may still hold a second challenge process for the corporate debtor's asset auction even if the top bidder has already been decided in the first process.

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) clarified that a resolution applicant does not have the right to insist that the CoC approve their plan only because they were the highest bidder in a challenge procedure. In any given round, the CoC is not required to accept the highest bid.

The NCLAT referred to its earlier decision in Vistara ITCL India Ltd. v. Torrent Investments Pvt. 2023, which had upheld the CoC's authority to carry out several challenge procedures in order to maximize value.

An allottee who has lost trust in Management is entitled to seek resolution through CIRP : NCLAT

Jayshree Agnihotri vsNirmal Kumar Jain CITATION : 2025 TAXSCAN (NCLAT) 211

The National Company Law Appellate Tribunal (NCLAT) have upheld the admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Pushp Ratna Realty Pvt. Ltd and held that an allottee who has lost trust in the management is entitled to seek resolution through the Corporate Insolvency Resolution Process (CIRP).

The bench comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) examined the Corporate Debtor's audited balance sheet dated 31.03.2020. It found that the balance sheet mentioned “Advances from customers against flat booking”. This proved that the allottees had paid advances, which the Corporate Debtor recorded as 'other current liability'.

The Tribunal discovered that the Corporate Debtor acknowledged the debt in a balance confirmation letter sent to the Respondent-Homebuyers on November 9, 2021. It concluded that the obligation indicated in the 2020 audited balance sheet was legitimately acknowledged in this letter. As a result, the Section 7 application submitted on May 22, 2024, fell inside the three-year statute of limitations. The Tribunal concluded that the Agnihotri and Jain groups, who were involved in the management that caused the protracted delay, had totally lost the trust of the homebuyers.

Notice u/s 13(2) SARFAESI Act Demanding Payment from Guarantor Constitutes Invocation of Personal Guarantee: NCLAT

The National Company LawAppellate Tribunal (NCLAT) New Delhi bench held that where a Section 13(2) notice explicitly demands payment from the guarantor in terms of the guarantee agreement, it amounts to an invocation of the personal guarantee.

The bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) held that the Section 13(2) notice was explicitly titled “Notice to Guarantor” and was addressed to the Personal Guarantor. The notice clearly required the Personal Guarantor to discharge the outstanding liability within 60 days.

The tribunal emphasized that the invocation of a personal guarantee must be in accordance with the terms of the guarantee agreement. It observed that Clause 7 of the Guarantee Agreement in the present case did not prescribe a specific form or mode for the demand notice. Therefore, any demand made against the personal guarantor requiring repayment of dues could be construed as invocation of the guarantee.

Suspended management is unable to release corporate debtor funds after Commencement of CIRP without IRP authorization: NCLAT

MR. SUNIL GUTTE vs MR. AVILMENEZES CITATION : 2025 TAXSCAN (NCLAT) 213

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that the suspended management of the Corporate Debtor is also strictly prohibited from directly or indirectly deploying the funds of the Corporate Debtor unilaterally, without the authorisation of the Interim Resolution Professional (IRP).

The Tribunal was asked to decide whether the Appellant's payments made after the CIRP began violated the moratorium's terms and whether the impugned order ordering the Appellant and Respondent Nos. 2 to 6 to reverse the contested transactions with the Corporate Debtor's assets was invalid.

The bench comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) observed that as soon as an application of CIRP is admitted under Section 7, 9 or 10 of the IBC, it marks the commencement of insolvency. The moratorium becomes enforceable from the date the CIRP application is admitted or as indicated in the order. Once the moratorium is in effect, it is not open for any Financial or Operational creditor to recover any amount from the account of the Corporate Debtor except by filing claims through the resolution framework.

CIRP Cannot be Continued When Entire Debt Amount has Been Re-Paid: NCLAT

The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) held that when the admitted dues have been repaid by the debtor there is no point in continuing the Corporate Insolvency Resolution Process.

The two member bench comprising Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) observed the conduct of the CoC was dominant as RCPL which held a voting share of 89.54% had persistently opposed the settlement proposal without giving any credible or transparent reasons.

The tribunal determined that during the time that CIRP was legitimately suspended, the RP was not entitled to fees. Furthermore, despite the fact that there were only seven CoC sessions and no noteworthy advancements, the RP's compensation was raised from Rs. 1 lakh to Rs. 2 lakhs in the fourth meeting. The admitted debt was virtually tripled by the overall CIRP expenses, which had increased to almost Rs. 73 lakhs.

When actions are already pending against same personal guarantor, a subsequent application u/s 95 IBC is barred: NCLAT

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has ruled that if one Financial Creditor has already filed an application under Section 95 of the Insolvency and Bankruptcy Code (IBC), Section 96 of the Code prohibits another creditor from filing an application under the same provision against the same Personal Guarantor.

The bench, which included Jatindranath Swain, a technical member, and Justice Sharad Kumar Sharma, a judicial member, observed that the same matter had previously been decided in Comp App (AT) (CH) (Ins) No.121/2025, Indian Bank, SAMB, Chennai vs. T. Prabakar. As a result, the appellant's application under Section 95(1) of the IBC against another personal guarantor was denied because IDBI Trusteeship Services Limited, another Financial Creditor, had already brought Section 95 proceedings against the same personal guarantor. Because of the bar under Section 96, no further application under Section 95 may be considered against the Personal Guarantor.

NCLAT dismisses Byju's Appeal against NCLT’s Interim Order

Think & Learn Private Limited vs Aakash Educational Services Limited CITATION : 2025 TAXSCAN (NCLAT) 216

Think & Learn Private Limited (Byju's) appeal against the NCLT's interim order was denied by the Chennai bench of the National Company Law Appellate Tribunal (NCLAT). According to the Tribunal, no intervention was necessary at the appellate stage because the contested order was interlocutory in character and issued with the parties' assent.

The bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) has held that since the Impugned Order takes the shape of an interlocutory order, which is not deciding any of the rights of the parties, coupled with the fact that the order takes the shape of a consenting order, no interference is called for by the Tribunal in the exercise of its Appellate Jurisdiction at this stage. The Tribunal therefore dismissed the appeal as lacking merit.

NCLAT Dismisses Dr’s Appeal against Patanjali Hospitals Private Limited, Citing Continuous Breach of service contract

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) in a recent ruling dismissed the appeal filed by Dr and director of Patanjali Hospitals Private Limited against the hospital itself citing the Continuous Breach of service contract.

The Tribunal has further noted that, it has also come on record, that there are various other sets of litigation, which are simultaneously going on between the parties, which would be apparent from the documents which, has been placed on record, which the Appellant chose not to disclose even during oral submissions and thus has not come with clean hands.

The tribunal comprising observed that Justice Sharad Kumar Sharma, Member (Judicial) and Jatindranath Swain, Member (Technical) observed that the Appellant has to come with clean hands for grant of equitable relief, the rejection of the prayer for the grant of interim relief cannot be legally faulted with, because the actions of the Appellant have prima facie have resulted in continuous breach of service contract.

NCLAT Dismisses Appeal Against NFRA Order on Finding No Reasons for Delay of 147 days in Re-filing

Amit Somani vs NationalFinancial Reporting Authority CITATION : 2025 TAXSCAN (NCLAT) 218

In a recent case, the NCLAT New Delhi Zoheb Hossain of the National Company Law Appellate Tribunal (NCLAT) dismissed the application filed against the NFRA Order on the grounds that no reasons were mentioned justifying the delay of 147 days in re-filing.

It was viewed that no limitation prescribed for refiling of appeal and party who is exercising its right to file the statutory appeal in time has not to be shut out on procedure or technical defects; however, they should be justifiable cause for delay. The larger bench also held that representation of appeal after expiry of period of 7 days or after extended period was not to be a fresh filing and shall only be refiling/ representation.

The bench comprising Justice Rakesh Kumar Jain, Member (Judicial) and Mr. Naresh Salecha, Member (Technical) found that there are no reasonable reasons for justifying delay of 147 days in re-filing and curing the defects. Further observed that in spite of multiple intimations made by the Registry, same defects remained uncured, which shows the carelessness on the part of the Appellant. Defects that could have been cured together were unnecessarily prolonged by the Appellant, without any justifiable reason.

NCLAT Modifies NCLT Order Forwarding Case to SFIO: Holds Directions Beyond Jurisdiction

The National Company Law Appellate Tribunal (NCLAT) has allowed an appeal filed by Max Publicity & Communication Pvt. Ltd., modifying an order passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which had directed that a copy of the order be forwarded to investigative agencies including the Serious Fraud Investigation Office (SFIO), Economic Offences Wing (EOW), and other statutory authorities.

The Bench, comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member), and Arun Baroka (Technical Member), held that while NCLT can exercise powers under Section 213, such power must be exercised only after giving the concerned parties a reasonable opportunity of being heard.

It further held that forwarding of the order to statutory authorities under Rule 11 of the NCLT Rules, 2016 may be permitted in appropriate cases, but references to specific agencies like the SFIO or EOW, without due process, cannot be sustained.

NCLAT Reviews Multiple Interlocutory Applications in IL&FS Linked Applications

Union of India vsInfrastructure Leasing and Financial Services Ltd. & Ors. CITATION : 2025 TAXSCAN (NCLAT) 220

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, heard a series of interim applications in the matter involving Infrastructure Leasing and Financial Services Ltd. (IL&FS) and the Union of India, with several directions passed and matters listed for hearing in July.

The case, registered under Company Appeal (AT) Nos. 346 and 347 of 2018, continues to see active intervention from a wide range of stakeholders including central and state authorities, financial institutions, and corporateentities. Multiple interlocutory applications were taken up, with the Tribunal passing procedural directions and scheduling key matters for July 21, 2025.

The Appellate Tribunal comprising Justice Ashok Bhushan [ Judicial Member] and Mr Barun Mitra [ Technical Member] also took note of IA No. 6867 of 2024, where IL&FS sought directions to release funds for going concern expenses of MP Border Check Post Development Company Ltd. Additional directions were issued for replies in various matters concerning Indian Bank, Employees Provident FundOrganisation, CSR issues, and state-level claims from the Government of Rajasthan.

The Tribunal scheduled over 20 applications for further hearing on July 21, 2025, at 2:00 PM, indicating that important clarity on interim distributions, settlements, and operational expenses is expected in the upcoming sessions.