Case Digest on Directors’ Liability: Key Rulings from NCLAT

Directors play a pivotal role in corporate governance, as fiduciaries entrusted with the management and affairs of the company. Under financial distress the law obliges directors to take their accountability towards shareholders, creditors and regulatory authorities. Their duty encompasses broadly as statutory and fiduciary in nature. The multi-faceted role is scrutinized in cases such as mismanagement and fraudulent transactions to breach of fiduciary duty of good faith. This case digest highlights rulings of the National Company LawAppellate Tribunal (NCLAT) where directors’ accountability have been examined legally.

Rejection of Resolution Plan by Suspended Director cannot be Interfered in Absence of Expression of Interest: NCLAT
Sanjeev Agarwal & Anr vsAvishek Gupta & Ors CITATION : 2025 TAXSCAN (NCLAT) 163

The National Company Law Appellate Tribunal (NCLAT) has upheld the approval of the resolution plan submitted by Pinax Group with 97% CoC approval, dismissing an appeal filed by the suspended director of the corporate debtor. The appellant challenged the rejection of his resolution plan by the Committee of Creditors (CoC), contending that the process violated Regulation 36A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The NCLAT observed that the appellant, despite being present in all CoC meetings, never submitted an Expression of Interest (EoI) or a resolution plan within the prescribed or extended timelines. It was further observed that his belated offer appeared to be an attempt to obstruct the CIRP rather than a bona fide effort to resolve the debtor’s insolvency. The Tribunal held that the CoC’s commercial wisdom could not be interfered with under Section 61(3) of the Insolvency and Bankruptcy Code, 2016. Accordingly, the appeal was dismissed, affirming the NCLT’s order approving the resolution plan.

Directors who Invested ₹5.5 Cr in Corporate Debtor Cannot Claim to be Unaware of CIRP: NCLAT Upholds Denial of Exclusion/Extension
Bimal Kumar Jejani vs M/s StarMineral Resources Pvt. Ltd. CITATION : 2025 TAXSCAN (NCLT) 172

The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by the suspended directors of Star Mineral Resources Pvt. Ltd., holding that directors who had invested ₹5.49 crore in the company could not credibly claim ignorance of the initiation of the Corporate Insolvency Resolution Process (CIRP). The case arose from an order dated December 7, 2023, wherein the Adjudicating Authority made certain observations affecting the CIRP process. The bench held that it was implausible for directors with substantial financial stakes and MCA registered contact details to be unaware of the CIRP. Finding no violation of natural justice, the NCLAT upheld the lower authority’s findings and dismissed the appeal, affirming that directors bear an active duty of awareness and cooperation during insolvency proceedings.

NCLAT Finds Insolvency Plea Within Limitation Citing Debt Acknowledgment and COVID Exclusion
Rohit Suri VS RajasthanFinancial Corporation CITATION : 2025 TAXSCAN (NCLAT) 192

The Delhi Bench of the National Company Law Appellate Tribunal (NCLAT), upheld the maintainability of an insolvency petition filed by the financial creditor, ruling that it was within the limitation period. The suspended director, Rohit Suri, argued that the petition filed in August 2021 was time-barred, as the loan had been recalled in 2010. However, the Tribunal noted that multiple one-time settlement (OTS) proposals made by the borrower between 2011 and 2017 constituted acknowledgments of debt, with the last acknowledgment dated 16.05.2017 extending the limitation period until May 2020. The NCLAT further applied the Supreme Court’s suo motu COVID-19 extension order, which excluded the period from 15.03.2020 to 28.02.2022 from computation, thereby bringing the petition within limitation. Finding no error in the NCLT’s admission order, the appellate tribunal dismissed the appeal, holding that the insolvency proceedings were lawfully initiated.

NCLAT Dismisses Appeal by Suspended Company Director: Upholds Insolvency Against the Company Anil Biyani vs Axis TrusteeServices Ltd. & Anr CITATION : 2025 TAXSCAN (NCLAT) 222

The National Company Law Appellate Tribunal (NCLAT) has dismissed the appeal filed by suspended director Anil Biyani against the Mumbai Bench of the NCLT, which admitted a Section 7 petition against Future Ideas Company Ltd. The case concerned ₹122.83 crore in unpaid non-convertible debentures, and Biyani argued that the debt had been transferred to Rivaaz Trade Ventures Pvt. Ltd. without trustee consent, rendering the insolvency application invalid. The NCLAT held that the Debenture Trust-cum-Mortgage Deed required written consent from the debenture trustee for any assignment a condition not met and that the emails and financial records did not constitute approval. The Tribunal also ruled that the default occurred after the COVID-19 Section 10A protection period, and affirmed that the Adjudicating Authority was correct in admitting the Section 7 petition, dismissing the appeal.

NCLAT Sets Aside NCLT Order in IL&FS Case: Parties Succeed in Appeal Over Unauthorised Amendment
Deloitte Haskins & Sells LLPvs Union of India & Ors. CITATION : 2025 TAXSCAN (NCLAT) 226

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has allowed appeals filed by former auditors and executives of IL&FS Financial Services Ltd. (IFIN), including Deloitte Haskins & Sells LLP, Kalpesh Mehta, Rajesh Kotian, Milind Patel, Udayan Sen, and Manu Kochhar, against an NCLT Mumbai order. The appeals challenged the Union of India’s unilateral insertion of a new relief (clause e) in its amended petition under Sections 241 and 242 of the Companies Act, 2013, without judicial approval. The NCLAT held that the 2019 NCLT order permitting amendment via “further applications” required a separate application and Tribunal leave for any new relief, which the government had not sought. Setting aside the NCLT’s order, the Tribunal directed deletion of clause (e) from the petition but clarified that the government could file a fresh application to seek the relief through proper procedure.

NCLAT Dismisses Indian Bank's Appeal to Initiate Insolvency Proceedings Against MBL Infra Director
INDIAN BANK vs ANJANEE KUMARLAKHOTIA CITATION : 2025 TAXSCAN (NCLAT) 228

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi upheld the NCLT’s rejection of Indian Bank’s application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of personal insolvency proceedings against Anjanee Kumar Lakhotia, former director and promoter of MBL Infrastructure Ltd. The Tribunal observed that since Lakhotia had submitted and implemented the approved resolution plan which included execution of a fresh personal guarantee replacing the earlier one the previous guarantee stood extinguished. It was further noted that the Supreme Court had already upheld the resolution plan and protected dissenting creditors through payment of liquidation value. Consequently, the NCLAT ruled that Indian Bank could not invoke personal insolvency proceedings based on a guarantee superseded by the resolution plan, dismissing the appeal.

NCLAT Dismisses Appeal of Suspended Directors: Upholds ₹2.65 Cr Recovery Order of NCLT
Praful Satra & Ors. vsVaishali Patrikar CITATION : 2025 TAXSCAN (NCLAT) 229

The National Company Law Appellate Tribunal (NCLAT), Principal Bench dismissed an appeal filed by suspended directors of Satra Properties (India) Ltd., including Praful Satra, upholding the NCLT Mumbai Bench’s order directing them to refund ₹2.65 crore with 15% interest to the company. The appeal challenged an order passed under Section 66 of the Insolvency and Bankruptcy Code, 2016, based on findings that the amount advanced in 2006 for a property purchase in Bandra was wrongfully written off without supporting documentation or recovery efforts. The NCLAT noted the absence of any agreement, clarity about the property, or legal action to recover the amount, affirming that the directors’ failure to justify the transaction amounted to a fraudulent act causing loss to creditors.

Resolution Plan does not discriminate based on Type of creditors to give preference to secured creditors both having first charge or having residual charges: NCLAT
Shankar Mukherjee vs Badri KumarTulsyan CITATION : 2025 TAXSCAN (NCLAT) 230

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi held that a resolution plan does not discriminate among creditors based on the nature of their security interests and cannot prefer secured creditors with first charge over those with residual charges. The ruling came in an appeal filed by Shankar Mukherjee and Badri Kumar Tulsyan, suspended directors of Suasth Healthcare Foundation, challenging the Kolkata NCLT’s order approving the resolution plan for the corporate debtor. The Tribunal clarified that the resolution plan complied with Sections 30(2)(b) and 31 of the IBC and that the allocation made was within the CoC’s commercial wisdom. It was further observed that the plan did not discriminate against unsecured or related party financial creditors, all of whom were treated equally with nil allocation. Accordingly, the NCLAT found no illegality or procedural lapses on the part of the resolution professional and dismissed the appeal as devoid of merit.

Threshold u/s 4 of IBC should be met at time of Filing of CIRP application: NCLAT
Devika Resources Pvt. Ltd vs MAAManasha Devi Alloys Pvt. Ltd. CITATION : 2025 TAXSCAN (NCLAT) 233

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi held that the threshold limit under Section 4 of the Insolvency and Bankruptcy Code (IBC), 2016 must be determined at the time of filing the application, not at the time of its admission. The case arose when an operational creditor’s Section 9 application, involving a default of ₹1.16 crore, was rejected by the Adjudicating Authority after the respondent deposited ₹20 lakh during the pendency of proceedings, bringing the claim below the threshold. The NCLAT ruled that such post-filing payments cannot affect the maintainability of a validly instituted application, emphasizing that the relevant date for assessing the default is the date of filing. The Tribunal found that the NCLT had erred in dismissing the case and restored the Section 9 application for reconsideration in accordance with law.

NCLAT Upholds Insolvency Against Jaypee Cement, Dismisses Appeal by Suspended Director Alok Gaur vs State Bank of India& Anr CITATION : 2025 TAXSCAN (NCLAT) 235

The National Company Law Appellate Tribunal (NCLAT), Principal Bench dismissed the appeal filed by suspended director Alok Gaur and upheld the commencement of insolvency proceedings against Jaypee Cement Corporation Ltd. (JCCL). The appeal challenged the NCLT Allahabad’s order admitting a Section 7 application filed by the State Bank of India (SBI) over a default exceeding ₹363 crore. The NCLAT rejected the contention that the debt had been novated or transferred to Jaiprakash Associates Ltd. (JAL) under the 2017 Master Restructuring Agreement, holding that the agreement’s conditions such as creation of security and formal debt transfer were never fulfilled. The Tribunal observing that the restructuring plan had failed and JCCL continued acknowledging its debt obligations until 2022, therefore JCCL’s original liability stood revived, thereby affirming the initiation of the Corporate Insolvency Resolution Process (CIRP).

NCLAT Upholds Private Sale of Liquidation Asset Despite Higher Withdrawn Offers
Bhavik Bhimjyani vs UdayVinodchandra Shah CITATION : 2025 TAXSCAN (NCLAT) 236

The National Company Law Appellate Tribunal (NCLAT) has dismissed Bhavik Bhimjyani’s appeals against the private sale of an 80-acre land parcel owned by Neelkanth Township & Construction Pvt. Ltd. (NTCPL) to Leisure Enterprises LLP for ₹58.51 crore. The appeals challenged the NCLT Mumbai Bench’s approval of the sale, alleging undervaluation, conflict of interest, and procedural lapses under the IBBI (Liquidation Process) Regulations, 2016. The Tribunal upheld the NCLT’s findings that multiple public auctions had failed, the sale price was reasonable, and competing offers had not materialized due to non-deposit of earnest money. It was further ruled that the private sale complied with regulatory requirements, including Regulation 33, and that the liquidation process could not be indefinitely delayed. Taking into account prior findings of Bhimjyani’s unjust enrichment, the NCLAT affirmed the sale and dismissed the appeal.

NCLAT Orders NCLT to Consider Former Gensol Director Harsh Singh's Argument Against Probe Harsh Singh vs Union of India& Ors. CITATION : 2025 TAXSCAN (NCLAT) 239

The National Company Law Appellate Tribunal (NCLAT) has directed former independent director Harsh Singh of Gensol Engineering Ltd. to approach the National Company Law Tribunal (NCLT), Ahmedabad, for consideration of his objections against an investigation order. The case stems from the NCLT’s May 28 order mandating an inquiry into the conduct of the company’s present and past officers, including directors and key managerial personnel, following SEBI’s allegations of financial irregularities against co-founders Anmol Singh Jaggi and Puneet Singh Jaggi. The Tribunal declined to interfere and directed Singh to file objections or a stay vacation application within two days, which the NCLT must consider and decide through a reasoned order.

NCLAT Sets Aside Status Quo Order in TIIPL Voluntary Liquidation; Affirms Shareholders’ Right to Replace Liquidator VINOD SINGH vs CHANDRA PRAKASHJAIN CITATION : 2025 TAXSCAN (NCLAT) 245

The National Company Law Appellate Tribunal (NCLAT) has allowed shareholders and directors of Transmissions International India Pvt. Ltd. to replace liquidator Chandra Prakash Jain with Arun Gupta, setting aside the NCLT Ahmedabad’s status quo order. The case arose from allegations of opacity and statutory breaches against the former liquidator. The Tribunal held that under Section 59 of the IBC and Voluntary Liquidation Regulations, the corporate debtor and its shareholders have the right to appoint or replace a liquidator without judicial approval. NCLAT directed the former liquidator to cooperate with Arun Gupta and hand over all necessary documents to ensure a smooth continuation of the voluntary liquidation process.

NCLAT Upholds Resolution Plan Providing Contingencies being lawful Anuj Gaur & Ors. vs RabindraKumar Mintri RP of Som Resorts Pvt. Ltd. & Anr. CITATION : 2025 TAXSCAN (NCLAT) 250

The National Company Law Appellate Tribunal (NCLAT), New Delhi, upheld a resolution plan containing lawful contingencies, affirming its compliance with Section 30(2)(b) of the Insolvency and Bankruptcy Code (IBC) and the CIRP Regulations, 2016. The appeal was filed by Anuj Gaur & Ors., suspended directors of Som Resorts Pvt. Ltd., who challenged the plan’s approval on grounds of bias and procedural irregularities. The Tribunal noted that the homebuyers’ association, Casa Italia Social Welfare Association, met the eligibility criteria and submitted a genuine plan aimed at reviving the stalled project. It held that the plan’s multiple alternatives were not speculative but valid contingencies ensuring regulatory compliance. The Bench observing that the appellants had delayed objections and lacked standing as suspended directors, dismissed the appeal, emphasizing that the resolution plan was legally sound and duly evaluated by the Adjudicating Authority.

NCLAT Upholds Fraud Finding Against Former Director: Orders ₹3.18 Cr Contribution for Sham Transactions Mr. Gopal Kalra vs Mr. AkhileshKumar Gupta CITATION : 2025 TAXSCAN (NCLAT) 258

The National Company Law Appellate Tribunal (NCLAT) upheld the order of the NCLT, New Delhi, directing former director Mr. Gopal Kalra to contribute ₹3.18 crore to the assets of Easytech Global Pvt. Ltd. under Section 66(1) of the Insolvency and Bankruptcy Code, 2016. The Tribunal found that Kalra was knowingly involved in sham LED bulb trading transactions with fictitious entities, causing actual financial loss to the company and its creditors. The Tribunal held that the fraudulent nature of the transactions was evident from the fabricated turnover and diversion of funds. The NCLAT clarified that fraud under the IBC may be inferred from circumstantial evidence and patterns of fictitious trading. It was concluded that the ₹3.18 crore represented real cash loss traceable through bank transfers and upheld the NCLT’s order directing Kalra to contribute the same to the corporate debtor’s estate.

Default occurred beyond outer limit of S.10A of IBC, Insolvency Application can be files Afresh: NCLAT GANGADHAR A. KOTIAN SUSPENDEDDIRECTOR OF BOMBAY RAYON CLOTHING LTD vs CATALYST TRUSTEESHIP LTD. CITATION : 2025 TAXSCAN (NCLAT) 265

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that when a default occurs beyond the outer limit of Section 10A of the Insolvency and Bankruptcy Code, 2016, a fresh insolvency application under Section 7 can be validly filed. The case arose from an appeal by Gangadhar A. Kotian, suspended director of Bombay Rayon Clothing Ltd., challenging NCLT Mumbai’s order admitting a Section 7 petition filed by Catalyst Trusteeship Ltd. as the financial creditor. The dispute originated from defaults under debenture and guarantee agreements linked to a restructuring arrangement dated 27.12.2022, wherein the corporate debtor failed to pay the second instalment due on 25.03.2023. The tribunal observed that the financial creditor had lawfully exercised its option to revoke the restructuring and invoke the corporate guarantee, giving rise to a fresh cause of action. Upholding the NCLT’s order, the NCLAT clarified that Section 10A introduced as a temporary COVID-19 relief does not restrict parties from entering or enforcing restructuring arrangements and that the default in this case, having arisen after the Section 10A period, validly attracted Section 7 proceedings.

NCLAT Rejects Financial Creditor Claim as No Valid Guarantee Was Executed or Invoked Under IBC Moneywise Financial ServicesPvt. Ltd vs Mr. Arunava Sikdar CITATION : 2025 TAXSCAN (NCLAT) 266

The Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by Moneywise Financial Services Pvt. Ltd. under Section 61 of the Insolvency and Bankruptcy Code, 2016, holding that the appellant failed to prove the existence of a valid and binding corporate guarantee executed by the corporate debtor, Dream Procon Pvt. Ltd. The appellant had extended loans to Indirapuram Habitat Centre Pvt. Ltd. (IHCPL), a group entity of Dream Procon, and claimed that Dream Procon had guaranteed repayment through a Master Loan Agreement (MLA) and a Joint Declaration. However, the NCLAT found no standalone or board-approved guarantee, noting that Clause 28 of the MLA merely indicated an assurance and had never been invoked. Consequently, the tribunal ruled that the appellant could not qualify as a financial creditor based on the alleged guarantee, as the corporate debtor’s liability under Section 5(8)(i) of the IBC was not substantiated.

NCLAT Allows CIRP Withdrawal After Lenders Agree to Govt-Backed Revival Plan
Udit Harish Seth vs Bank ofBaroda & Anr. CITATION : 2025 TAXSCAN (NCLAT) 270

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, permitted the withdrawal of insolvency proceedings against SE Transstadia Pvt. Ltd. after the lead lender, Bank of Baroda, along with other financial creditors, agreed to a government-backed revival plan supported by the Government of Gujarat. The appeals, filed by suspended director Udit Harish Seth, challenged the NCLT’s April 8, 2024 order admitting the company into Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Tribunal observing that the settlement had been formalized through consent terms dated July 5, 2025, directed that Bank of Baroda may move an application under Section 12A of the IBC for formal withdrawal and ordered the Interim Resolution Professional to assist in the process, maintaining the stay on the CIRP admission order.

NCLAT Dismisses Appeal, Grants Liberty to Seek Withdrawal of CIRP Under Section 12A; CoC Constitution Deferred for Two Weeks Lal Chand Morani vs SatyendraPrasad Khornia & Ors. CITATION : 2025 TAXSCAN (NCLAT) 274

The Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by suspended director Lal Chand Morani challenging the NCLT’s order admitting Kotak Mahindra Bank’s Section 7 application under the Insolvency and Bankruptcy Code, 2016. The Tribunal, while upholding the NCLT’s finding of debt and default, granted the appellant liberty to file a withdrawal application under Section 12A within two weeks. It was further directed that the Committee of Creditors (CoC) not be constituted during this period, failing which the CIRP would proceed in accordance with law.

NCLAT Refuses to Interfere in Liquidation Process, Dismisses Suspended Director’s Appeal
THE AUTHORISED REPRESENTATIVEFOR GRANITE GATE PROPERTIES PRIVATE LIMITED MS. RAKESH VERMA vs MR. DEVENDRASINGH CITATION : 2025 TAXSCAN (NCLAT) 277

The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by Rakesh Verma, the suspended director of Vasudeva Buildcon Pvt. Ltd., challenging the company’s liquidation. The Tribunal held that once liquidation is ordered under the Insolvency and Bankruptcy Code, 2016, individual objections from suspended directors cannot obstruct the process, especially when the Corporate Insolvency Resolution Process (CIRP) has concluded without an approved resolution plan. Finding no procedural irregularity or violation of natural justice, the NCLAT ruled that the liquidator’s actions were in accordance with IBBI regulations and that the appeal was merely an attempt to re-litigate settled issues.

NCLAT Clears ICICI Bank of Wrongdoing: Reverses NCLT Order Directing Refund of Loan Payment Received During Moratorium ICICI Bank Ltd.vs Chanchal Dua& Ors CITATION : 2025 TAXSCAN (NCLAT) 282

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, set aside an NCLT, New Delhi order directing ICICI Bank to return ₹8.92 lakh received during the CIRP of Trend Flooring Pvt. Ltd., holding that the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, did not apply. The payment, made by Mr. Amit Narayan Singh, a co-applicant and relative of the corporate debtor’s director, was not from the corporate debtor’s account and therefore did not constitute a preferential transaction under Section 43. The bench observed that the bank had acted in good faith by issuing a No Objection Certificate for the vehicle, and no benefit or preference accrued to it. Accordingly, the Tribunal held that the NCLT erred in ordering a refund and dismissed the claim, providing relief to ICICI Bank.

NCLAT Rejects Suspended Director’s Challenge to CIRP, Asserts Timely Resolution over Procedural Technicalities Sushil Jejani vs Mr. PasadDharap CITATION : 2025 TAXSCAN (NCLAT) 283

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, dismissed an appeal filed by Sushil Jejani, a suspended director of Nova Steels (India) Ltd., challenging the initiation of the Corporate Insolvency Resolution Process (CIRP) by the NCLT, Kolkata Bench under Section 7 of the Insolvency and Bankruptcy Code, 2016. The CIRP was triggered based on a loan of ₹4 crores disbursed by the financial creditor, Prateek Gupta, which the appellant claimed involved intercompany transfers and alleged suppression of facts. The bench held that the financial creditor had sufficiently established the disbursement and default, and that subsequent use of funds or complex intercompany transactions did not negate the debt. The Tribunal also rejected claims of improper notice, observing that the corporate debtor had ample opportunity to participate in the proceedings. The NCLAT ruled that raising belated procedural objections amounted to a tactic to derail the CIRP and would defeat the purpose of the Code, and therefore, upheld the NCLT’s order admitting the Section 7 application and initiating the CIRP.

No Valid Set-Off Based on Unauthorised Correspondence or Fit-Out Delays: NCLAT holds appellant liable to pay licence fee Wakai Hospitality PrivateLimited vs Ms. Palak Desai CITATION : 2025 TAXSCAN (NCLAT) 284

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, upheld the order of the NCLT, Mumbai, holding that Wakai Hospitality Pvt. Ltd. was liable to pay the licence fee to the corporate debtor, Rajmal Jewellers Pvt. Ltd., and that no valid set-off could be claimed based on unauthorised correspondence or delays in fit-out work. The Tribunal found that the correspondence relied upon by the appellant emanated from unauthorised communications by the suspended director and lacked the corporate debtor’s seal or approval. Observing that the LLA clearly stipulated a 60 day fit out grace period after which the licence fee was payable, the NCLAT concluded that the appellant’s reliance on informal agreements was contrary to the terms of the contract and affirmed that the appellant remained liable for the outstanding licence dues.

Corporate Guarantee Invoked Not Protected u/s.10A IBC After Stipulated Period: NCLAT Dismisses Appeal in ₹104 Cr HDFC Bank Loan Dispute Mani Gupta vs HDFC Bank Ltd CITATION : 2025 TAXSCAN (NCLAT) 291

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, dismissed an appeal challenging the admission of insolvency proceedings against M/s Mountain Meadow Holidays Pvt. Ltd., holding that the invocation of a corporate guarantee outside the suspension period under Section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC) is not barred by the provision. The appeal was filed by Mani Gupta, suspended director of the corporate debtor, against the order of the NCLT dated 30 November 2023, which admitted HDFC Bank’s Section 7 application for recovery of a financial debt exceeding ₹104 crore. The Bench held that those notices were not final in nature and that the final demand notice dated 11 June 2022 constituted the actual default, falling outside the suspension window. Referring to the precedent in Harish Raghavij Patel v. Clearwater Capital Partners Singapore Fund IV Pvt. Ltd. (2023), the Tribunal upheld HDFC Bank’s application and affirmed that the corporate debtor’s default was validly invoked, thereby dismissing the appeal as meritless.

No concept of “provisional constitution” of CoC under IBC: NCLAT Dismisses Byju's Plea Byju Raveendran vs AdityaBirla Finance Ltd CITATION : 2025 TAXSCAN (NCLAT) 295

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT), clarified that a Resolution Professional (RP) holds no adjudicatory powers under the Insolvency and Bankruptcy Code, 2016 (IBC) and further emphasized that there exists no concept of “provisional constitution” of the Committee of Creditors (CoC) under the Code. Once constituted, the CoC attains finality and can only be modified by the Adjudicating Authority (NCLT). The observation came while hearing an appeal filed by Byju Raveendran, suspended director and promoter of Think and Learn Pvt. Ltd., challenging the NCLT Bengaluru’s order. The dispute revolved around the reclassification of creditor claims and the irregular reconstitution of the CoC by the RP, which the Tribunal noted was beyond his authority and carried out in a “mischievous” manner. Upholding the sanctity of procedural compliance under the IBC, the NCLAT reiterated that the RP’s role is administrative and facilitative not adjudicatory ensuring that the balance of power in insolvency proceedings remains firmly with the Adjudicating Authority and the CoC as lawfully constituted.

Once a Case is Filed Against Borrower, Guarantor’s Case Must Go to the Same NCLT: NCLAT Says Filing Counts as Pendency, Not Just Admission S. VASUDEVAN vs IDBI TRUSTEESHIPSERVICES LIMITED CITATION : 2025 TAXSCAN (NCLAT) 296

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) upheld the admission of a Section 7 application against Tuscan Consultants and Developers Pvt. Ltd., ruling that once insolvency proceedings are initiated against a borrower, proceedings against the guarantor must also be filed before the same NCLT under Section 60(2) of the Insolvency and Bankruptcy Code, 2016. The case arose after IDBI Trusteeship Services Ltd. filed a Section 7 petition against Ozone Projects Pvt. Ltd., the principal borrower, and subsequently against Tuscan Consultants, the corporate guarantor, both before NCLT Chennai. The tribunal held that pendency under Section 60(2) commences from the date of filing, not admission, to ensure consolidation and avoid conflicting outcomes. Finding that the appellant had also participated in the proceedings without timely raising jurisdictional objections, the NCLAT dismissed the appeal and upheld Tuscan’s admission into the Corporate Insolvency Resolution Process.

Application u/s 9 of IBC against Appointment of IRP: NCLAT remands Matter for Reconsideration Dr. Ghanshyam BhambhaniSuspended Managing Director of Cardiac Care and Allied Health Pvt. Ltd vs AceCardiopathy Solutions Pvt. Ltd CITATION : 2025 TAXSCAN (NCLAT) 305

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) remanded a matter back to the NCLT Jaipur for reconsideration after finding that the Adjudicating Authority failed to take into account several key documents indicating a possible pre-existing dispute between the parties before admitting a Section 9 application under the Insolvency and Bankruptcy Code, 2016. The appeal was filed by Dr. Ghanshyam Bhambhani, suspended Managing Director of Cardiac Care and Allied Health Pvt. Ltd., challenging the NCLT’s order dated 11 September 2024, which had admitted the operational creditor’s petition and appointed an IRP. The bench held that the NCLT erred by not considering multiple letters and affidavits forming the basis of the defense. Setting aside the impugned order, the NCLAT directed the NCLT to re-examine the case afresh by passing a speaking order after evaluating all relevant documents.

Limitation Period can be reset When Pleadings regarding Part Payments supported by Written Acknowledgment: NCLAT Paresh K. Mehta Investment Pvt.Ltd vs State Bank of India CITATION : 2025 TAXSCAN (NCLAT) 307

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that part payments made by a Corporate Debtor and duly acknowledged in writing can reset the limitation period under Section 19 of the Limitation Act, 1963. The suspended director of M/s MKM Diamonds Pvt. Ltd. had challenged the NCLT Mumbai order admitting State Bank of India’s Section 9 application for default amounting to ₹16.77 crore. The Tribunal noted that part payments made in 2017 and acknowledged in the reply to the demand notice fulfilled the conditions of Section 19, thereby extending the limitation period. Consequently, the NCLAT upheld the maintainability of the Section 9 application but, noting that the entire principal amount had since been liquidated, directed closure of the CIRP and discharged the Corporate Debtor from insolvency proceedings.

NCLAT Allows IDBI Trusteeship to Initiate CIRP as there is Valid Authorization from Assignee of Debt Deepak Raheja & IDBITrusteeship Services Ltd. & Anr CITATION : 2025 TAXSCAN (NCLAT) 310

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, upheld the initiation of the Corporate Insolvency Resolution Process (CIRP) against Advantage Raheja Hotels Pvt. Ltd., the corporate guarantor, finding that IDBI Trusteeship Services Ltd. was duly authorized by the assignee of debt, Omkara Assets Reconstruction Pvt. Ltd., to file the Section 7 application. The appeal, filed by the suspended director of the corporate debtor, challenged the NCLT Mumbai’s order dated 17 December 2024, admitting the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The bench observed that the principal borrowers’ CIRP had since been reaffirmed and finalized, and that IDBI Trusteeship had both contractual and written authorization to initiate proceedings. Concluding that the authorization was valid and duly established, the NCLAT dismissed the appeal, upholding the CIRP against the corporate guarantor.

Termination of Concession Agreement does not Discharge Corporate Debtor's Obligation to Repay: NCLAT Vikram Bhawanishankar Sharma vsUnion Bank of India & Anr CITATION : 2025 TAXSCAN (NCLAT) 311

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that the termination of a Concession Agreement does not extinguish the Corporate Debtor’s liability to repay its financial dues when such termination is unrelated to the debtor’s default. The case arose from an appeal filed by the suspended director of Supreme Manor Wada Bhiwandi Infrastructure Pvt. Ltd. challenging the NCLT order admitting Union Bank of India’s Section 7 application under the Insolvency and Bankruptcy Code, 2016, for a default of ₹168.83 crore. The Tribunal noted that the Corporate Debtor had acknowledged its liability in a revival letter and failed to discharge its debt despite multiple restructuring efforts. It was ruled that the liability to repay remained with the Corporate Debtor, and mere termination of the Concession Agreement could not absolve it of its financial obligations. Consequently, the appeal was dismissed, and the initiation of the Corporate Insolvency Resolution Process was upheld.

NCLAT Permits Major Shareholders to Buy Company Property as Directors Breached Interim Order Restraining Sale of Immovable Asset Ashok Kumar Jain & Other vsSh Manoj Kumar Gupta CITATION : 2025 TAXSCAN (NCLAT) 316

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, upheld an order of the NCLT allowing the majority shareholders of M/s. Vardhman Roller Flour Mills Pvt. Ltd. to purchase the company’s sole immovable property after finding that the directors had breached an interim order restraining its alienation. The Bench observed that Ashok Kumar Jain and his group, holding 36.69% shares, had attempted to sell the Meerut property to Arihant Roller Flour Mills, later assigning rights to Hotage India, despite a subsisting restraint order dated 28 February 2023. The NCLT had permitted the majority shareholders, holding 52.66% shares, to buy the asset for ₹16.75 crore, allocating ₹15.75 crore towards a One-Time Settlement (OTS) with Punjab National Bank and ₹1 crore as infusion into the company. Dismissing the appeal, the NCLAT held that the appellant’s conduct violated his undertaking and that Hotage India had no vested rights since no approval was obtained under the OTS sanction. Both appeals filed by Ashok Kumar Jain and Hotage India were consequently dismissed.

Alleged Bias by Technical Member Not Proven: NCLAT declines to recall Dismissal Order Entegra Ltd. vs Maheshwar HydelPower Corporation Ltd. CITATION : 2025 TAXSCAN (NCLAT) 319

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT), in Entegra Ltd. v. Power Finance Corporation Ltd., dismissed an application filed under Rule 11 of the NCLAT Rules, 2016, seeking recall of a prior order, holding that a belated plea of bias against a Technical Member constituted an abuse of process. The appellant, a promoter of Shree Maheshwar Hydel Power Corporation Ltd., had challenged the admission of a Section 7 application filed by Power Finance Corporation for a default of ₹2,789.42 crore, which was earlier dismissed by the NCLAT and subsequently by the Supreme Court. Alleging bias, the appellant claimed that the Technical Member had previously served as a nominee director of HUDCO, a lender to the corporate debtor. Rejecting the plea, observed that the allegation was an afterthought raised only after the Supreme Court’s dismissal of the appeal. The Tribunal held that the member’s former role as a non-remunerated government nominee director did not meet the “real danger” test for bias, and that the Pinochet (No. 2) precedent was inapplicable.

NCLAT Rules Monetisation of Unsold Units of Real Estate Project Impermissible without Revalidated Building Plan in Reverse CIRP Anoop Kumar Srivastava vs NeeravBhatnagar & Ors. CITATION : 2025 TAXSCAN (NCLAT) 322

The National Company Law Appellate Tribunal (NCLAT) dismissed the Interim Resolution Professional’s (IRP) plea to monetise unsold units of “The Belvedere” project under a reverse Corporate Insolvency Resolution Process (CIRP) against Sequel Buildcon Pvt. Ltd., observing that such monetisation would serve no purpose without a revalidated building plan. The Bench noted that the construction could not legally proceed as the building plan had not been revalidated by the Noida Authority and a related writ petition had been dismissed by the Allahabad High Court, with the matter pending before the Supreme Court. Despite Noida’s conditional consent, the Tribunal held that monetisation without a valid plan would not fulfil the objective of completing the project and thus rejected the IRP’s application, directing the matter to be listed on 6 October 2025 to decide whether the reverse CIRP should continue or be converted into a regular CIRP under the Insolvency and Bankruptcy Code, 2016.

NCLAT Upholds CIRP Initiation by Central Bank Against Corporate Guarantor Despite Stamping and Novation Contentions, Dismisses Appeal of SEPL’s Ex Director Siddharth Satish Katariya vsCentral Bank of India CITATION : 2025 TAXSCAN (NCLAT) 323

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, in Siddharth Satish Katariya v. Central Bank of India, dismissed an appeal filed by the ex-director of Superfine Extrusions Pvt. Ltd. (SEPL) challenging the initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016, on the ground of insufficient stamping of the deed of guarantee. Upholding the order of the NCLT, the Tribunal held that an insufficiently stamped deed of guarantee is a curable defect, and the obligation to pay the requisite stamp duty lies with the principal borrower or the corporate guarantor. Rejecting the argument that a new guarantee deed executed in 2020 had novated earlier contracts, the NCLAT found that the subsequent deed did not extinguish prior guarantees, as the sanction letters expressly preserved existing securities. The Tribunal held that technical objections cannot override the substantive right of a financial creditor to seek insolvency proceedings, thereby affirming the NCLT’s admission of the Section 7 application.

NCLAT Confirms Bid-Rigging in UP Soil Testing Tenders, Upholds Penalties on Companies and Directors Austere Systems Pvt. Ltd. vsCompetition Commission of India CITATION : 2025 TAXSCAN (NCLAT) 324

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, in Austere Systems Pvt. Ltd. & Ors. v. Competition Commission of India, upheld the CCI’s order holding several companies and their directors liable for bid-rigging in soil testing tenders issued by the Uttar Pradesh Agriculture Department. The Tribunal observed that the companies, including Austere Systems Pvt. Ltd. and Fimo Infosolutions Pvt. Ltd., had engaged in collusive bidding practices under Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Competition Act, 2002, creating a “facade of competition” through closely coordinated bids. The NCLAT noted that direct evidence of an agreement is not necessary in cartel cases, as circumstantial evidence and conduct suffice, and found the appellants’ involvement clearly established from documents and their behavior. The Bench upheld the cease-and-desist directions and penalties imposed by the CCI, rejecting the contention that fines should be based on “relevant turnover” alone, and observed that Austere Systems, as the leader of the cartel, warranted a higher absolute penalty. Accordingly, the appeals were dismissed, affirming the CCI’s findings and sanctions.

Corporate Debtor Failed to Prove Pre-Existing Dispute over ₹8L Packaging Material Debt: NCLAT Upholds CIRP Ramniwas B Somany vs AnushriPaper Pack Pvt. Ltd CITATION : 2025 TAXSCAN (NCLAT) 326

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, in Ramniwas B. Somany v. Anushri Paper Pack Pvt. Ltd., upheld the initiation of the Corporate Insolvency Resolution Process (CIRP) against Indian Denim Ltd., observing that the corporate debtor failed to establish any pre-existing dispute regarding an operational debt of ₹8.48 lakh claimed by the operational creditor. The Tribunal noted that although the suspended director alleged issues with the quality and fitment of the packaging materials supplied, no contemporaneous evidence such as letters, emails, or complaints was produced to substantiate this claim. Holding that the alleged dispute was an afterthought raised merely to evade insolvency proceedings, the NCLAT dismissed the appeal and affirmed the NCLT Ahmedabad’s order admitting the Section 9 application filed by the operational creditor.

Part Payment by Corporate Debtor Extends Limitation Period for Filing Insolvency Application: NCLAT Ramniwas B Somany vs AnushriPaper Pack Pvt. Ltd CITATION : 2025 TAXSCAN (NCLAT) 326

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has dismissed the appeal of suspended director Ramniwas B. Somany against the Ahmedabad NCLT’s admission of a Section 9 application by Anushri Paper Pack Pvt. Ltd. against Indian Denim Limited. The tribunal held that a part payment of ₹40,000 made by the corporate debtor in May 2016 constituted an acknowledgment of debt under the Limitation Act, 1963, thereby restarting the limitation period. Since the insolvency application was filed in May 2019, it was within the extended limitation period. The NCLAT upheld the NCLT’s order, confirming that the operational creditor’s claim was timely and valid under the IBC.

Employees’ State Insurance Amount Lying with Corporate Debtor Not Part of Liquidation Estate: NCLAT Regional Director vs ManishKumar Bhagat Liquidator CITATION : 2025 TAXSCAN (NCLAT) 327

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, in Regional Director, ESI Corporation v. Manish Kumar Bhagat, Liquidator of Gupta Dyeing & Printing Mills Pvt. Ltd., clarified that Employees’ State Insurance (ESI) contributions held by a corporate debtor during liquidation do not form part of the liquidation estate under Section 36(4)(a)(i) of the Insolvency and Bankruptcy Code, 2016. The Tribunal observed that such amounts are deemed to be held in trust for employees under Section 40(4) of the Employees’ State Insurance Act, 1948, thereby excluding them from the pool of assets available for distribution to creditors. Relying on its earlier decision in Nurani Subramanian Suryanarayanan, Liquidator of M/s Care IT Solutions Pvt. Ltd. v. ESI Corporation (2020), the Bench allowed the appeal.

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