Full Debt Settlement During Appeal Leads NCLAT to Close CIRP Against Corporate Debtor
- REEDLAW
- Jul 31
- 3 min read
Updated: Aug 12
REEDLAW Legal News Network reports that the NCLAT has closed the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor after noting that the entire debt was settled during the pendency of the appeal.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating a Company Appeal, held that when the entire debt amount claimed in a Section 7 IBC application, including interest, is fully paid and accepted by the financial creditor during the pendency of the appeal, the continuation of the Corporate Insolvency Resolution Process (CIRP) becomes unwarranted and the proceedings must accordingly be closed.
The National Company Law Appellate Tribunal (NCLAT) disposed of an appeal filed against the admission of a Section 7 IBC application by the Adjudicating Authority, which had initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor by order dated 26.06.2025. The appeal was filed on the ground that the total amount claimed by the Financial Creditor, including principal and interest, amounted to ₹2,43,97,659, although there was no written agreement stipulating payment of interest. The Appellant submitted that, despite offering to pay the entire amount through post-dated cheques within nine months, the Financial Creditor unreasonably refused to accept the payment.
During the pendency of the appeal, the Appellant expressed willingness to settle the entire claim by bank draft or RTGS amounting to ₹2,62,00,000. By an interim order dated 10.07.2025, the NCLAT directed a stay on further proceedings pursuant to the NCLT’s admission order and recorded that the Financial Creditor would provide bank details to facilitate payment. When the matter was taken up again, the Tribunal was informed that the Financial Creditor had received the entire amount. However, the issue of the TDS certificate remained pending, which the Appellant undertook to furnish in due course.
Upon review, the NCLAT observed that since the entire amount claimed under Part IV of the Section 7 application had been paid and received during the appeal proceedings, there existed no basis for continuation of the CIRP. The Tribunal held that this was not a fit case for maintaining the insolvency proceedings and accordingly directed the closure of the CIRP. The appeal was thus disposed of.
Mr. Arvind Kumar, Ms. Purti Gupta, Ms. Henna George and Ms. Sunidhi Sah, Advocates, represented the Appellant.
For the Respondent/ Defendant: Mr. Kapil Prakash Shah, Advocates, appeared for Respondent No. 1 to Respondent No. 5.
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