NCLAT Grants Conditional Relief from CIRP Based on Undertaking to Settle Debt Within One Month
- REEDLAW
- Jun 14
- 3 min read
The NCLAT granted conditional relief from the Corporate Insolvency Resolution Process (CIRP) to the appellant, based on an undertaking to settle the outstanding debt within one month.
On 2 June 2025, the National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member), reviewed a company appeal along with a connected interlocutory application and held that, based solely on the appellant’s affidavit undertaking to settle all liabilities arising from the admitted Section 9 IBC proceedings within one month, the appeal stood closed. The Tribunal made it clear that failure to fulfil the undertaking would automatically result in the revival of the NCLT’s admission order and its consequential proceedings. It further clarified that this conditional closure was limited strictly to the Section 9 proceedings and would have no bearing on any other legal proceedings before other forums.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, dealt with Company Appeal (AT) (CH) (Ins) No. 428 of 2024, filed by the erstwhile director of M/s. Vivin Drugs & Pharmaceuticals Pvt. Ltd., challenging the order dated 11.11.2024 passed by the NCLT, Hyderabad Bench, in CP (IB) No. 87/9/HDB/2024. Through the impugned order, the NCLT had admitted a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.
During the appellate proceedings, HDFC Bank was impleaded as Respondent No. 3 pursuant to the NCLAT’s order dated 27.02.2025 on IA No.1172/2024. When the matter came up for hearing, the appellant submitted an affidavit, stating that he had approached a financial institution—M/s. Grow Lotus Fintech Pvt. Ltd.—which had principally agreed to extend the required financial assistance to enable the settlement of liabilities arising from the CIRP proceedings.
The affidavit, dated 30.05.2025, contained an express undertaking in Paragraph 12, wherein the appellant sought time from the Tribunal to settle the dues of all creditors and requested the respondents to consider an amicable resolution in the interest of all stakeholders, including the Corporate Debtor and its creditors.
Taking note of the undertaking made in the affidavit, the NCLAT closed the appeal with specific directions. It clarified that the present order would have no judicial bearing on proceedings pending between the parties before any other forum. It further directed that the undertaking given by the appellant be fulfilled within one month from the date of the order. In case of failure to honour the settlement terms, the NCLT’s order dated 11.11.2024 admitting the Section 9 application would automatically revive, along with all consequential processes under the IBC. The Appellate Tribunal also reiterated that its present order was confined exclusively to the Section 9 proceedings.
Mr. Prithviraj JS and Ms. A. Parnica, Advocates for Mr. A.K. Mylsamy, Advocate, represented the Appellant.
Mr. Pranava Charan, Advocate, appeared for the Respondent No. 1.
Mr. V. Appa Rao, Advocate, appeared for the Respondent No. 2.
Mr. Indraprateek Naidu, Advocate, represented the Respondent No. 3.
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