2026 Supreme(Online)(NCLAT) 332

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
ASHOK BHUSHAN, J
Mehsana Urban Co – Operative Bank Ltd. – Appellant
Versus
Swastik Ceracon Ltd. – Respondent
Company Appeal (AT) (Insolvency) No. 1956 of 2025 | I.A. No.370/AHM/2025 | C.P. (IB) No. 175/9/AHM/2018

IBC overrides Multi-State Co-operative Societies Act; NCLT has jurisdiction over multi-state co-operative banks participating in CIRP for enforcing asset protections like moratorium on dividend adjustments from corporate debtor's shares (28 words).

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 5(1), 3(23), 14, 18, 32A, 60(5)(c), 238 - Multi-State Co-operative Societies Act, 2002 - Sections 55, 56, 84, 121 - Corporate Insolvency Resolution Process - Jurisdiction of Adjudicating Authority (NCLT) - Multi-state co-operative bank filed claim as financial creditor during CIRP, claim admitted, received substantial amount under approved resolution plan - Subsequent application by successful resolution applicant seeking refund of dividends/dividend value (Rs.56 lakhs) unilaterally adjusted by bank from shares held by corporate debtor during and post-CIRP - Shares qualify as assets under Section 18 r/w Section 3(37), protected by moratorium under Section 14 - Adjustments violate moratorium and extinguishment under Section 32A - Section 121 excluding Companies Act applicability to multi-state co-operatives does not oust IBC or NCLT jurisdiction u/s 60(5)(c) for questions arising from insolvency proceedings - Multi-state co-operative societies included in 'person' u/s 3(23)(g) - Section 238 overrides conflicting provisions - NCLT has jurisdiction post-plan approval for enforcement related to CIRP assets - Interest on refund modified from adjustment dates to date of application filing. (Paras 10, 12, 13, 22)

(B) IBC - Section 60(5)(c) - Scope - Jurisdiction extends to questions of law/facts arising out of or in relation to insolvency resolution - Distinguished from public law determinations or pre-existing statutory disputes not linked to CIRP - Where creditor participates in CIRP by filing claim, cannot later deny NCLT jurisdiction - No requirement for disputes to be referred under other statutes like cooperative laws. (Paras 13-15, 21)

Facts of the case:
Corporate debtor underwent CIRP from 15.01.2019, resolution plan approved on 20.06.2022 - Multi-state co-operative bank, financial creditor, filed claim of over Rs.10 crores, admitted, allocated CoC voting share - Corporate debtor held equity shares in bank, reflected in information memorandum - Bank adjusted dividends (aggregating Rs.56 lakhs) on these shares during CIRP (2019, 2021) and post-plan (2022, 2023) towards its dues - Successful resolution applicant filed application post-plan implementation seeking refund with interest, alleging unauthorized adjustments violating moratorium - Adjudicating Authority allowed application, directed refund with 10% interest from adjustment dates.

Findings of Court:
NCLT has jurisdiction; adjustments illegal; directed refund of Rs.56,00,000/- with 10% p.a. interest from 04.03.2025 (application filing date) till payment, within 45 days from judgment date.

Issues: (i) NCLT jurisdiction u/s 60(5) post-plan approval and over multi-state co-operative bank; (ii) Validity of adjustments during/post-CIRP vis-à-vis moratorium u/s 14 and Section 32A; (iii) Whether shares/fixed deposits constitute protected assets; (iv) Appropriate reliefs.

Ratio Decidendi: IBC applies to multi-state co-operatives as 'persons'; Section 238 overrides exclusions u/s 121 of cooperative law; NCLT competent u/s 60(5)(c) for CIRP-linked enforcement; shares are assets, dividends non-adjustable during moratorium; interest runs from application date where no prior challenge raised.

Result: Appeal partly allowed; refund direction modified on interest start date, rest upheld.

Table of Content
1. factual background of cirp and unauthorized adjustments. (Para 1 , 2 , 6)
2. parties' jurisdictional and set-off contentions. (Para 3 , 4)
3. ibc overrides multi-state cooperative societies act; nclt jurisdiction applies. (Para 7 , 8 , 9 , 10 , 11 , 12)
4. nclt jurisdiction under section 60(5)(c) for insolvency-related disputes. (Para 13 , 14 , 15 , 16)
5. precedents do not oust ibc jurisdiction; section 84 inapplicable. (Para 17 , 18 , 19 , 20 , 21)
6. interest on refund from application date; appeal partly allowed. (Para 22 , 23 , 24)

J U D G M E N T

ASHOK BHUSHAN, J.

This appeal has been filed challenging the order dated 30.10.2025 passed by the adjudicating authority (National Company Law Tribunal, Division Bench, Court I, Ahmedabad), in I.A.370/AHM/2025 in C.P. (IB) No. 175/9/AHM/2018. Adjudicating authority by the impugned order has allowed the I.A. 370/AHM/2025 filed by the Swastik Ceracon Limited, the respondent herein and directed the appellant to refund the amount of ₹56,00,000/- with 10% interest from respective adjustments dates.

2. Brief facts of the case necessary to be noticed for deciding the appeal are:

i. The corporate debtor, Swastik Ceracon Limited was subjected to Corporate Insolvency Resolution Process (CIRP) by order dated 15.01.2019 passed by the adjudicating authority. In pursuance of publication issued by Interim Resolution Professional (IRP), appellant has filed its claim in Form-C for an amount of ₹10,43,45,631/-.

ii. The corporate debtor had equity shares of Mehsana Urban Cooperative Bank Limited, which was reflected in the Information Memorandum of the corporate debtor as prepared by Resolution Professional (RP). Resolution plan of the corporate debtor was approved by the adjudicating authority vide order dated 20.06.2022. Under the resolution plan against the admitted claim of the appellant, appellant was proposed an amount of more than ₹5,00,00,000/-.

iii. Successful Resolution Applicant (SRA) having taken control of the corporate debtor after approval of the resolution plan filed an I.A.370/AHM/2025 praying for reliefs which have been quoted in paragraph 1 of the impugned order which are to the following effect:

“(A). This Hon'ble Tribunal be pleased to direct the Respondent herein to refund and I or pay the Applicant herein an amount of Rs. 56,00,000/- or part thereof alongwith the interest calculated at the interest of 10 % per annum calculated from the date of remittance of amounts from the account of the Corporate Debtor till the date of actual payment or any such other amount that this Tribunal may deem appropriate;

(B) This Hon'ble Tribunal may be pleased to direct the Respondent herein to Close the account(s) held in the accounts of the Applicant and direct the Respondent to refund I pay an amount to the tune of Rs. 20,37, 767.85ps. or part thereof along with appropriate interest thereon;

(C) This Hon'ble Tribunal may be pleased to pass any other and/or further orders.”

iv. The case of the SRA in the application was that the appellant during the CIRP period, as well as subsequent to the approval of resolution plan has adjusted the dividends and the value of the shares unauthorisingly, the shares were assets of the corporate debtor and during CIRP and after the approval of the plan, appellant was not entitled to adjust the amounts towards its dues. Moreso, when appellant has filed its claim.

v. Adjudicating authority heard the parties and issued notice to the appellant, and after hearing the parties by the impugned order has allowed the application. 4 issues were framed by the adjudicating authority in paragraph 20, which are as follows:

“20. Upon meticulous analysis of the pleadings, documents, and submissions, the following issues crystallize for adjudication: (i) Whether this Tribunal possesses jurisdiction under Section 60(5) of the Code to entertain and decide the Application, particularly post-approval of the Resolution Plan on 20.06.2022?

(ii) Whether the adjustments/set-offs effec

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