IBC- NCLAT FORTNIGHTLY
SUMMARY
(March 16, 2025 – March 31, 2025)
MUMBAI I DELHI I BENGALURU I KOLKATA
INTRODUCTION
The following is a snapshot of the important orders passed by the National Company Law
Appellate Tribunal (“NCLAT”), under the Insolvency and Bankruptcy Code, 2016 ("Code”), during
the period between March 16, 2025, to March 31, 2025. For ease of reference, the orders have
been categorized and dealt with in the following categories i.e., Pre-admission stage, Corporate
Insolvency Resolution Process (“CIRP”) stage, post-CIRP stage, and Liquidation.
A. PRE-ADMISSION STAGE
1. In Aquarius H2O Dynamics Private Limited v. Riddhi Siddhi Metals (Company Appeal (AT)
(Insolvency) No. 39 of 2025), the NCLAT set aside the order of admission of the Corporate
Debtor into CIRP by observing that, in the instant case, the threshold of Rs. 1 crore
prescribed under section 4 of the Code was met by adding interest liability, which addition
was inappropriate due to absence of any contractual provision or past practice of interest
payment.
2. In IL&FS Financial Services Limited v. Adhunik Meghalaya Steels Private Limited (Company
Appeal (AT) (Insolvency) No. 1379 of 2024), the NCLAT observed that an acknowledgment of
debt in a balance sheet is calculated from the date of signing the balance sheet, and not
from the date of its upload to the Ministry of Corporate Affairs portal.
3. In Madhubala Chauhan v. Phoenix Arc Private Limited (Company Appeal (AT) (Insolvency)
No. 604 of 2024), the NCLAT held that omission to mention a specific date of default in the
section 7 application was not fatal when sufficient documentary evidence established the
default. It was observed that while dealing with a section 7 application, neither the
Adjudicating Authority nor the NCLAT is required to interfere with contractual terms of
interest commercially agreed between the parties to ascertain whether the rate of interest
was unreasonable or inflated, when the existence of debt and default had been established.
4. In Mukul Somany v. DBS Bank Limited (Company Appeal (AT) (Insolvency) No. 999 of 2024),
the NCLAT considered the effect of pendency of CIRP against the Corporate Debtor on the
admission of insolvency resolution process in relation to a personal guarantor under section
95 of the Code and went onto observe that the Adjudicating Authority is not required to defer
the proceedings under section 95 merely to await the outcome of the CIRP of the Corporate
Debtor. It went onto further observe that the quantification or deduction of any amount
received by a creditor from the Corporate Debtor, which may have a bearing on the liability
of the personal guarantor, is a matter to be considered at the stage of finalizing the
repayment plan, and not at the threshold stage of admitting the section 95 application. It
may however be noted, the NCLAT eventually remanded the matter back to the Adjudicating
Authority to examine if the guarantee was properly invoked, which was a sine qua non for
issuance of notice under rule 7 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority Insolvency Resolution Process for Personal Guarantors to Corporate
Debtors) Rules, 2019.
5. In Rahee Jhajharia E to E JV v. MB Power (Company Appeal (AT) (Insolvency) No. 2279 of
2024), the NCLAT observed that, due to lack of privity of contract, a section 9 application is
not maintainable against a Corporate Debtor on account of dues owed by its sister concern,
merely because the Corporate Debtor had tried to reconcile between the appellant-
Operational Creditor and the sister group company against whom the invoices were raised,
or on account of it signing work completion certificates as the project owner.
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6. The NCLAT, in Paresh Rastogi v. Omkara Assets Reconstruction Private Limited (Company
Appeal (AT) (Insolvency) No. 2053 of 2024), went onto observe that notices sent by way of a
speed post to the last known or registered address as stipulated in the guarantee deed
would constitute a valid service, even without proof of receipt, under section 27 of the
General Clauses Act, 1897, and failure to update the address cannot invalidate such
service. It was also observed that the failure of the personal guarantor to submit a repayment
plan despite adequate opportunity can justify the termination application by the Resolution
Professional.
B. CIRP STAGE
1. The NCLAT, in Authum Investment and Infrastructure Limited v. Ashdan Properties Private
Limited (Company Appeal (AT) (Insolvency) No. 1566 of 2024), went onto observe that the
decision of the Adjudicating Authority to direct the Committee of Creditors (“CoC”) to
consider a resolution plan, the consideration of which was refused by the CoC on account
of the Plan being received one day after the stipulated deadline under regulation 39(1B) of
the CIRP Regulations, 2016, amounted to interference with the commercial wisdom of the
CoC, which was not warranted.
2. In Divyesh Desai v. Gujarat Industrial Development Corporation Bhuj (Company Appeal (AT)
(Insolvency) No.1103 of 2024), the NCLAT observed that the Adjudicating Authority had the
jurisdiction to entertain a challenge to the termination of a lease agreement under which the
Corporate Debtor had been granted a lease and the consequent issuance of eviction
notices, during the moratorium period, as such action violated the provisions of section 14
of the Code.
It was also observed that, while the Adjudicating Authority had the jurisdiction to interfere
with the decision of the CoC approving the resolution plan or remit the plan for making it
compliant with section 30(2) of the Code, such remission was not allowed without
identifying any specific non-compliance of section 30(2) of the Code.
3. In Findoc Finvest Private Limited v. Surendera Raj Gang (Company Appeal (AT) (Insolvency)
No.249 of 2025) and Sagar Stone Industries v. Sajjan Kumar Dokania (Company Appeal (AT)
(Insolvency) No. 524 of 2025), the NCLAT considered the issue of whether a CoC could be
faulted for not adopting Swiss Challenge Mechanism for improving the value being offered
by the prospective Resolution Applicants, and went onto observe that Swiss Challenge
Mechanism being a discretionary mechanism and considering regulation 39(1A) of CIRP
Regulations, 2016 (prohibits modification of resolution plans more than once) does not
impose an obligation to permit modifications, the CoC cannot be faulted for not allowing the
prospective Resolution Applicants to enhance the financial offer after the revised resolution
plan had been finally submitted.
Additionally, in Sagar Stone Industries the NCLAT held that the mere absence of written
communication regarding the rejection of a resolution plan does not affect the decision of
the CoC to approve another resolution plan. It further clarified that regulation 39(1A) of the
CIRP Regulations, 2016 binds only the Resolution Professional and not the CoC, which
retains an unfettered right to request plan revisions or negotiate with resolution applicant
multiple times.
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C. POST CIRP STAGE
1. In State Bank of India v. Santoshi Hyvolt Electricals Private Limited (Company Appeal (AT)
(Insolvency) No. 62 of 2025), the NCLAT upheld the decision of the Adjudicating Authority,
confirming that a resolution plan cannot be sent back for reconsideration once it has been
submitted for approval, following a decision of the CoC. This ruling was based on regulation
18(2) of the CIRP Regulations, 2016, which prohibits CoC meetings from making decisions
that would affect resolution plans already submitted to the Adjudicating Authority. The
NCLAT emphasized that upon submission, the resolution plan becomes binding between
the CoC and the successful Resolution Applicant. While the plan cannot be remitted back,
parties can still raise concerns about its viability and implementability during the review
process of the Adjudicating Authority. Additionally, once the plan is submitted to the
Adjudicating Authority, no decision can be taken that affects the plan, including any prayer
to send it back for reconsideration.
2. In RBL Bank Limited v. Sical Logistics Limited (Company Appeal (AT) (CH) (Ins) No.36/2024),
the NCLAT held that where the resolution value exceeded the liquidation value, the
dissenting Financial Creditor was entitled to receive its proportionate share of the resolution
value rather than the liquidation value, as this was deemed fairer and more equitable.
Regarding priority in payment, the NCLAT clarified that ‘priority’ means that whenever funds
are distributed, the dissenting Financial Creditors must be paid first before assenting
Financial Creditors, although payments may still occur in installments.
3. The NCLAT, in Phoenix Arc Private Limited v. KS Oils Limited (Company Appeal (AT)
(Insolvency) No. 592 of 2024), went onto observe that the obligation of the secured creditor
to make the payment of the amount payable under regulation 21A(2) of the IBBI (Liquidation
Process) Regulations, 2016 is not dependent upon the sharing of an estimate by the
liquidator, nor does the failure of the liquidator to send such estimate constitute a defence
for the secured creditor who had failed to make the relevant payment within the prescribed
time limit of 90 days, especially when the secured creditor never requested for such
estimate or took any steps under regulation 37. It was further observed that failure to make
payment of share of cost within the stipulated timeline results in the secured assets
becoming a part of the liquidation estate.
D. LIQUIDATION STAGE
1. In Rajabhau Shinde v. S.M. Electric Works (Company Appeal (AT) (Insolvency) No. 826 of
2024), the NCLAT held that the mandatory time period for payment prescribed under clause
12 of schedule 1 of the Liquidation Process Regulations, 2016 (cancellation of a sale if
payment is not received within 90 days) can be extended by the Adjudicating Authority, under
its inherent powers under section 35 of the Code read with rule 11 of the NCLT Rules, 2016,
upon showing sufficient cause.
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Contributed by:
Arka Majumdar
Partner
Vikram Chaudhuri Aakriti Garodia
Senior Associate Associate
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