Case Note & Summary
The appeal was filed by Mr. Vijaybhai Dhanjibhai Detroja, a shareholder and suspended director of Sanford Vitrified Pvt. Ltd., challenging the order dated 31.08.2026 from the National Company Law Tribunal, Ahmedabad, which admitted a Section 9 application and initiated Corporate Insolvency Resolution Process (CIRP) against the company. The operational creditor, Vidres India Ceramics Private Limited, claimed an operational debt of ₹2,26,40,900 for unpaid bills. During the appeal, the parties entered into a Settlement Agreement on 12.09.2026, acknowledging a remaining balance of ₹1,13,04,399 as full and final settlement. The Appellant sought to set aside the admission order based on this settlement. The Tribunal noted that the settlement occurred after the admission of the Section 9 application, raising the question of whether it could terminate the CIRP. The Tribunal referred to the amended Section 12A of the Code, which requires a resolution professional's application for withdrawal of an admitted application with the approval of the Committee of Creditors. The Tribunal emphasized that the statutory mechanism must be adhered to, even in light of the settlement, and directed the IRP to apply to the Adjudicating Authority for appropriate orders. The appeal was disposed of without examining the merits of the original grounds of challenge, and the IRP was permitted to file the settlement for consideration (Paras 1-32).
Headnote
A) Insolvency Law - Admission of CIRP - Effect of Settlement Post Admission - Insolvency and Bankruptcy Code, 2016, Section 9, Section 12A - The Appellate Tribunal held that a settlement reached after the admission of a Section 9 application does not automatically terminate the CIRP, and the statutory mechanism under Section 12A must be followed for withdrawal. The Tribunal directed the Interim Resolution Professional to apply to the Adjudicating Authority for appropriate orders regarding the settlement (Paras 12-31).
Issue of Consideration
Whether the Appellate Tribunal can set aside the admission order and end the CIRP based on a settlement reached after the admission of the Section 9 application.
Final Decision
The Appellate Tribunal disposed of the appeal and the application under Rule 11, allowing the IRP to file an application before the Adjudicating Authority under Section 12A of the Code regarding the settlement.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Section 9
- Section 12A
- CIRP process
- Settlement Agreement
- Adjudicating Authority
