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2026 Supreme(SC) 443
SUPREME COURT OF INDIA
Pamidighantam Sri Narasimha, Alok Aradhe, JJ.
Anjani Technoplast Ltd. – Appellant
Versus
Shubh Gautam – Respondent
Civil Appeal No. 8247 of 2022
Decided On : 23-04-2026
For the Appellant(s) : Mr. Dama S Naidu, Sr. Adv. Mr. Pankaj Pandey, Adv. Mr. Girish Tripathi, Adv. Mr. Digvijay Prasad, Adv. Mr. Ashish Yadav, Adv. Ms. Ranjeeta Rohtagi, Adv. Ms. Megha Karnwal, AOR
For the Respondent(s): Mr. Kapil Sibal, Sr. Adv. Mr. S. Niranjan Reddy, Sr. Adv. Ms. Shloka Narayanan, AOR Mr. Gaurav Singh, Adv. Ms. Rajeshwari, Adv. Ms. Shubhani D Krishan, Adv.
IMPORTANT POINT
Corporate Insolvency Resolution Process – Insolvency mechanism cannot be pressed into service as a substitute for ordinary execution or recovery proceedings.
Headnote:
(A) Insolvency and Bankruptcy Code, 2016 – Sections 7 and 14 – Corporate Insolvency Resolution Process – Initiation and continuation of – Purpose is rescue and revival of corporate debtor as a going concern – It is not a proceeding for benefit of individual creditors seeking to recover their dues – Moratorium under Section 14 operates in interest of corporate debtor itself – Resolution process is not intended to be adversarial toward corporate debtor but rather to be protective of its interests – IBC is not a forum for individual creditors to realise their dues through back door of insolvency – The moment Section 7 petition is admitted, process moves entirely beyond control of petitioning creditor and operates for collective benefit of all stakeholders – Insolvency mechanism cannot be pressed into service as a substitute for ordinary execution or recovery proceedings. (Paras 19 and 20)
(B) Insolvency and Bankruptcy Code, 2016 – Section 7 – Civil Procedure Code, 1908 – Order XXXVII Rule 1 – Corporate Insolvency Resolution Process – Direction by NCLAT to admit petition – Respondent, holding a final decree and having full machinery of civil execution at his disposal, chose instead to invoke insolvency jurisdiction – Such conduct is an improper use of IBC using insolvency as a substitute for debt enforcement and as a means of coercing corporate debtor into payment – While IBC incidentally results in satisfaction of creditors’ claims, that consequence is a byproduct of resolution process and not its primary object – Creditor who approaches NCLT not with any genuine concern for resolution of corporate debtor but purely to secure payment of his individual dues is acting contrary to purpose and spirit of Code – Natural and ordinary remedy available to respondent was to execute decree under provisions of CPC – Decree is a money decree and machinery for its execution is well established and effective – NCLT and NCLAT are not the appropriate Fora for execution and computation and insolvency jurisdiction under IBC was not designed to resolve disputes about quantum of a decretal amount – Initiation and maintenance of CIRP proceedings against appellant cannot be sustained – Impugned order of NCLAT set aside and order of NCLT which dismissed Section 7 application filed by respondent, restored. (Paras 21, 23, 25, 28, 33, 34 and 36)
Facts of the case:
Appellant has preferred this appeal under Section 62 of Insolvency and Bankruptcy Code, 2016, assailing order dated 01.11.2022 of National Company Law Appellate Tribunal, Principal Bench, New Delhi in Company Appeal (AT) (Insolvency) No. 904 of 2022. By that order, NCLAT set aside order of National Company Law Tribunal, New Delhi Bench-IV dated 20.06.2022 and directed admission of a petition filed under Section 7 of IBC by respondent.
Findings of Court:
The respondent is at liberty to pursue the execution of the decree dated 11.01.2018 in accordance with the law. All pending interlocutory applications are disposed of.
Result : Appeal allowed with costs quantified at Rs. 5,00,000/-.
What is the appropriateness of initiating and continuing Corporate Insolvency Resolution Process under IBC when a final decree debt exists and execution proceedings are available?
What is the proper forum for execution and computation of a decreed amount, and when does IBC become an abuse or substitute for debt recovery?
What is the impact of misusing IBC for recovery on the admissibility of Section 7 petitions when the debtor is solvent and has pending execution/computation matters?
JUDGMENT :
1. The appellant has preferred this appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (“the IBC”), assailing the order dated 01.11.2022 of the National Company Law Appellate Tribunal, Principal Bench, New Delhi (“the NCLAT”) in Company Appeal (AT) (Insolvency) No. 904 of 2022. By that order, the NCLAT set aside the order of the National Company Law Tribunal, New Delhi Bench-IV (“the NCLT”) dated 20.06.2022 and directed the admission of a petition filed under Section 7 of the IBC by the respondent.
2. The respondent is a money lender. On 24.02.2010, he advanced a loan of Rs. 2,50,00,000/- to the appellant for a period of two months, carrying interest at 12.75% per annum payable on a half-yearly basis. The loan agreement also provided that in the event of default, the appellant would remain liable to pay interest at the stipulated rate. On 31.03.2010, a further loan of Rs. 2,00,00,000/- was taken by the appellant for a period of fifteen days, at 3% per month, again payable half-yearly. The appellant furnished cheques as security against both loans.
3. When presented, the cheques were dishonoured, leading to the respondent filing a complaint under Section 138 of the Negotiable Instruments Act, 1881, before the Metropolitan Magistrate, Tis Hazari, Delhi. During the pendency of those proceedings, the parties entered into a compromise on 31.08.2013, by which the appellant agreed to pay Rs. 3,22,02,660/- within twelve months. It is a fact that by 31.07.2014, the appellant had, in aggregate, made payments of Rs. 3,53,51,520/- to the respondent.
4. When the appellant did not honour the compromise in full, the respondent filed a summary suit before the Delhi High Court on 01.02.2016, praying for a decree of Rs. 4,38,00,617/- with pendente lite and future interest at 24% per annum. Under a second compromise deed dated 23.12.2016, which was executed between the parties during the pendency of the suit, the appellant agreed to pay Rs. 2,38,61,907/- as full and final settlement.
5. The suit was decreed by the learned Single Judge of the Delhi High Court on 11.01.2018 for Rs. 4,38,00,617/- with interest at 24% per annum from 01.02.2016. The decree also directed that Rs. 25,00,000/- paid by the appellant on 06.01.2018 be deducted, and that costs of Rs. 5,00,000/-be awarded. The appellant challenged this decree by way of RFA(OS) No. 48 of 2018 before the Division Bench, which was dismissed on 27.07.2018 with costs of Rs. 25,000/-. The appellant’s Special Leave Petition1[Diary No. 22264 of 2021] was also dismissed by this Court on 22.10.2021. The decree accordingly attained finality.
6. Rather than proceeding to execute the decree, the respondent filed a petition under Section 7 of the IBC before the NCLT on 13.12.2021, being CP No. (IB)-766(ND)/2021, alleging that the decretal amount constituted a financial debt and that the appellant was in default thereof.
7. The NCLT dismissed the petition on 20.06.2022, primarily on the following four broad reasons. Firstly, the NCLT held that a decree holder is a separate class of creditor under Section 3(10) of the IBC and does not automatically become a “Financial Creditor” under Section 5(7). Secondly, the NCLT found that the debt in question did not qualify as a “financial debt” under Section 5(8) of the IBC. The original loan advances were for extremely short periods and the respondent had not produced adequate evidence, such as financial statements, to establish that the amounts were disbursed against consideration for the time value of money. Thirdly, the NCLT observed that the appellant was a solvent and functioning enterprise, with revenue of approximately Rs. 35 crores and profits of Rs. 8 crores, employing 95 full-time staff. Fourthly, and most significantly for our purposes, the NCLT recorded that the IBC is not a recovery mechanism and that the respondent was misusing the insolvency process against a solvent company. It noted that the respondent’s claim was based on the C
