NCLAT Invokes Inherent Jurisdiction to Set Aside CIRP Admission Without Requiring Section 12A Withdrawal in Absence of Other Claims
- REEDLAW
- Jul 3
- 3 min read
The National Company Law Appellate Tribunal (NCLAT) invoked its inherent jurisdiction to set aside the admission of the Corporate Insolvency Resolution Process (CIRP) without requiring a withdrawal under Section 12A of the IBC, upon finding that the matter had been fully settled with the sole financial creditors and no other claims had been received.
On 1 July 2025, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Rakesh Kumar Jain and Justice Mohammad Faiz Alam Khan (Judicial Members) and Mr. Naresh Salecha (Technical Member), while adjudicating a batch of two company appeals, held that where the sole financial creditors initiating the CIRP have received full payment from the corporate debtor and no other claims have been submitted despite public notice, the insolvency proceedings may be set aside without requiring a withdrawal under Section 12A of the IBC. The Tribunal underscored that in such circumstances, it is empowered to exercise inherent jurisdiction to resolve the dispute, placing reliance on its earlier decision in Sachin Malde v. Hemant Nanji Chheda.
The National Company Law Appellate Tribunal (NCLAT), while deciding Company Appeals (AT) (Insolvency) No. 880 and 881 of 2025, allowed the appeals filed by the suspended director of the Corporate Debtor challenging the admission orders dated 13.06.2025 passed by the Adjudicating Authority under Section 7 of the Insolvency and Bankruptcy Code, 2016. These orders had admitted applications filed by Respondents No. 1 to 3 for initiation of the Corporate Insolvency Resolution Process (CIRP) for default amounts of ₹21.50 crores and ₹5.35 crores, respectively.
During the preliminary hearing held on 18.06.2025, the Appellate Tribunal recorded the joint submissions of all parties regarding their intent to settle the matter, with the appellant expressing willingness to pay the entire defaulted amount within three days. The Tribunal, in light of the parties’ consensus, stayed the operation of the impugned orders, subject to payment compliance. The appellant subsequently confirmed payment within the stipulated timeline.
The appellant relied upon the NCLAT’s earlier decision in Sachin Malde v. Hemant Nanji Chheda and Another, REEDLAW 2025 NCLAT Del 04536, to argue that in the absence of any other financial creditor and where the entire claim amount has been settled, the appeal may be disposed of without necessitating a Section 12A application. The Tribunal accepted the argument that the precedent set in GLAS Trust Company LLC v. BYJU Raveendran and Others (3), REEDLAW 2024 SC 10545, which requires withdrawal only under Section 12A, was inapplicable in the absence of any other creditor.
It was noted that the Interim Resolution Professional (IRP) had issued a public notice inviting claims with a deadline of 27.06.2025, but no other claims were received. Considering these facts and applying the Sachin Malde v. Hemant Nanji Chheda and Another, REEDLAW 2025 NCLAT Del 04536 principle, the Tribunal exercised its inherent powers to dispose of the matter. Consequently, the impugned orders of admission were set aside, and the CIRP was nullified.
The Tribunal further directed that the IRP’s fees and expenses be shared equally by both parties within 15 days, granting liberty to the IRP to seek recall of the order in case of non-payment.
Mr. K. Datta, Sr. Advocate with Assem Chaturvedi, Kunal Mehta, Milind Jain, Niharika Sharma, Advocate, represented the appellant.
Ms. Atul Knsal, IRP, Mr. Swapnil Gupta, and Vaibhav Mediratta, Advocate, appeared for the Respondents.
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