Section 7 admission discretionary; not to be stayed despite favorable award if total debt exceeds award amount and corporate debtor (non-viable SPV) lacks financial health.

J U D G M E N T

ASHOK BHUSHAN, J.

This Appeal by Suspended Director of the CD has been filed challenging order dated 25.08.2025 passed by National Company Law Tribunal, Mumbai Bench Court VI in C.P.(IB)/414(MB)2025 admitting Section 7 application. The Adjudicating Authority declared moratorium and appointed IRP. Challenging the order initiating Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor (“CD”) - Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Pvt. Ltd., this Appeal has been filed.

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

(i) Public Works Department (“PWD”), Govt. of Maharashtra entered into a Concession Agreement with Supreme Infrastructure India Ltd. for implementing a road project of four-laning of the existing road from Shiroli (Kolhapur) to Ankali on State Highway No.33 and from Ankali to Sangali on State Highway No.75, on a design, build, finance, operate and transfer basis.

(ii) Special Purpose Vehicle (“SPV”) namely – Supreme Best Value Kolhapur (Shiroli) Sangali Tollways Pvt. Ltd. was incorporated on 31.12.2011 to execute the project. The project work was to be completed within 24 months.

(iii) The CD availed finance from Consortium of Lenders amounting to Rs.247.50 crores in the year 2012. The Financial Creditor on 01.04.2013 on the request of the CD, sanctioned a term loan of Rs.75 crores and certain additional finance was also granted by Financial Creditor to the CD and total disbursement to the CD was made by Financial Creditor was of Rs.85.80 crores.

(iv) The PWD failed to issue Provisional Completion Certificate. In May 2016, the CD was informed of a potential takeover of the project by National Highways Authority of India (“NHAI”)

(v) The CD invoked the arbitration against the PWD. The Arbitral Tribunal gave an award on 21.06.2022 holding the CD entitled to restitution and compensation on account of untimely takeover of the project by NHAI and a sum of Rs.318,94,70,738/- was awarded with interest @ 12.5% per annum from 20.09.2016 until payment. The award was challenged by the PWD under Section 34 of the Arbitration and Conciliation Act, 1996 before the High Court of Bombay, which proceedings are pending. The CD also instituted a Commercial Execution Application (L) No.38161 of 2022, which is also pending as on date.

(vi) The CD committed default in repayment of amount to the Financial Creditor, hence, the account of the CD was declared as NPA on 30.07.2017. The CD issued various revival letters and lastly a letter on 11.08.2018, acknowledging the availment of facilities from the Financial Creditor. A recall noticed dated 26.02.2020 was issued by the Financial Creditor to the CD.

(vii) Due to non-payment of dues, the application under Section 7 was filed by Financial Creditor on 29.11.2024 claiming default of an amount of Rs.346,83,19,536.66/- as on 31.10.2024.

(viii) Notice was issued by the Adjudicating Authority to the CD, who appeared and filed its reply, objecting to Section 7 application. It was pleaded by the CD that inspite of continuous efforts of the CD to complete the project, various impediments beyond the control of the CD adversely impacted the project. The CD invoked the arbitration and an award was passed for amount of Rs. 318,94,70,738/-, which award has been challenged by the PWD under Section 34. The CD has already initiated proceedings for execution. In Joint Lenders Meeting held on 09.05.2018, it was resolved that any amount received by Borrower whether through arbitration proceedings or set