Failure to provide liberty in withdrawing insolvency application bars subsequent applications; pending appeals must be resolved appropriately.

JUDGMENT

Dated this the 24^th day of February, 2026 Above writ petition is filed challenging Ext.P16 order dated

16.04.2025 and Ext.P18 order dated 17.07.2025 issued by the National Company Law Tribunal, Kochi. Petitioner has also sought for stay of operation of Ext.P16 order.

2. Petitioner is one of the suspended Directors of the 4^th respondent company. The 3^rd respondent KSIDC sanctioned a loan of Rs.7,94,90,000/- to the petitioner’s company. Due to the flood that occurred across the State of Kerala, there was some default in payment of the loan amount. Thereupon, insolvency application under Section 7 of the Insolvency and Bankruptcy Code was filed by the 3^rd respondent before the NCLT, Kochi. While further proceedings were initiated before the NCLT by the 3^rd respondent based on the judgments of this Court, the OTS proposal was accepted by the 3^rd respondent and thereupon the 3^rd respondent application to withdraw Section 7 insolvency application filed before the NCLT, Kochi. In Ext.P10, the 3^rd respondent has speci permission to withdraw the company petition with liberty to approach the Tribunal in order to revive and restore the application if in case any default is made by the Corporate debtor, or to file a fresh Section 7 application for initiating CIRP against the corporate debtor. But the NCLT, Kochi by Ext.P11 order only permitted the 3^rd respondent to withdraw the company petition specifically rejecting the prayer seeking to grant liberty as prayed for by the 3^rd respondent. Thereafter the petitioner’s company defaulted in the payment of the OTS amount. Thereupon the 3^rd respondent again application under Section 7 for initiating insolvency proceedings. Petitioner submits that though Ext.P13 application is barred by the principles of Order XXIII Rule 1 CPC, NCLT Kochi admitted the company petition as per Ext.P16 order dated 16.04.2025. While so, petitioner filed Ext.P17 application to recall Ext.P16 order, whereby the Section 7 application was admitted. By Ext.P18 order dated 17.07.2025, the said request to recall Ext.P16 order was dismissed by the NCLT. Challenging Ext.P18 order petitioner filed Ext.P19 appeal before the NCLAT Chennai Bench. Petitioner would submit that Ext.P19 appeal was filed during August, 2025, and the matter is pending adjudication and in the meanwhile the resolution professional has already invited application from interested parties for a resolution plan. Petitioner contends that since the earlier Section 7 application was withdrawn without any liberty being granted, the filing of Ext.P13 application is barred by res judicata.

3. I have heard and considered the contentions raised by the learned Senior Counsel.

4. What is under challenge in this writ petition is Ext.P16 order as well as Ext.P18 order issued by the NCLT, Kochi. Petitioner has also sought for stay of the operation of Ext.P16. Admittedly, an appeal was preferred challenging Ext.P18 order, whereby the request of the petitioner to recall Ext.P16 order was dismissed by the NCLT, Kochi with cost of Rs.10,000/-. A perusal of Ext.P19 appeal memorandum would reveal that two interlocutory applications were also filed along with the same. In one of the application, the relief sought for is stay of Ext.P18 order dated 17.07.2025, where a cost of Rs.10,000/- is imposed. Whereas the other interlocutory application filed along with the appeal memorandum is to stay all further proceedings on the strength of the order dated 16.04.2025, i.e. Ext.P16 order admitting Section 7 petition produced along with the writ petition. So in Ext.P19 appeal before the NCLAT, Ext.P18 order dated 17.07.2025 is under challenge and in the stay petition the operation of Ext.P18 was sought to be stayed to the extent it imposed a fine of Rs.10,00