Case Note & Summary
The appeal was filed by a member of the suspended board of directors of Raja Udyog Private Limited against an order dated 20th July 2026 by the National Company Law Tribunal, Kolkata, which admitted an application under section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The respondents, financial creditors, had claimed that the corporate debtor required immediate financial assistance during the Covid-19 pandemic and had defaulted on payments after initially servicing the debt until April 2022. The corporate debtor had borrowed Rs. 3,18,88,305.66, but by the time of the impugned order, it had repaid Rs. 2,25,00,000, leaving only Rs. 93,88,310 due, which was below the threshold of Rs. 1 crore. The appellant argued that the Adjudicating Authority acted hastily without allowing adequate time for settlement, which was in progress. The respondents admitted to receiving the settlement amount before the impugned judgment, and the court found that the debt was below the threshold at the time of the order. Consequently, the appeal was allowed, and the impugned order was set aside, with the CIRP costs to be borne by the appellant.
Headnote
A) Insolvency Law - Admission of Application - Threshold Debt Requirement - Insolvency and Bankruptcy Code, 2016, Section 7 - The Adjudicating Authority admitted the application despite the corporate debtor having paid a substantial amount, leaving only a sum below the threshold. Held that the impugned order was not sustainable as the debt was below the required threshold at the time of the order (Paras 18-19).
Issue of Consideration
Whether the admission of the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was justified given the payments made by the corporate debtor.
Final Decision
The appeal was allowed, and the impugned order passed by the Adjudicating Authority was set aside. The CIRP costs were to be paid by the appellant.
Law Points
- Insolvency proceedings
- Corporate Debtor
- Financial creditors
- Settlement
- Admission of application
