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2026 Supreme(Online)(NCLAT) 540
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Arun Baroka, Member (Technical)
Gokul Aggarwal – Appellant
Versus
Bank of India – Respondent
Company Appeal (AT) (Insolvency) No. 1047 of 2024 | IA No. 41 of 2024 in CP(IB) No. 3962/MB-I/2018
For the Appellants/Petitioners: Gaurav Mitra, J. Rajesh
For the Respondents: Sumant Batra, Sarthak Bhandari, Riya Kaur Arora, Nikhil Thakur, Akhil Rana, Ashish V., Brijesh Kumar Tamber, Prateek Kushwaha, Krishnendu Datta, Akshay Puri, Harsh Gurbani
Section 12A withdrawal under IBC is not permissible during liquidation proceedings; the only available settlement mechanism is a scheme under Section 230 of the Companies Act, 2013.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 12A, 33(2), 52, 61 - Liquidation proceedings - Withdrawal under Section 12A is legally impermissible during liquidation - Only available mechanism for settlement post-liquidation is a scheme under Section 230 of the Companies Act, 2013 as contemplated by Regulation 2B of the Liquidation Regulations - Simultaneous CIRP proceedings against both principal debtor and corporate guarantor are maintainable under the existing provisions of law. (Paras 18, 20)
(B) NCLT Rules, 2016 - Rule 48 - Consequence of non-appearance of applicant - Tribunal may, in its discretion, either dismiss the application for default or hear and decide it on merit - Where the case was disposed of on merits, the decision shall not be re-opened. (Para 16)
Facts of the case:
The appeal was filed by a promoter and member of the suspended board of directors of the holding company and principal borrower (RNA Corp Pvt. Ltd.). The corporate debtor (Chamber Constructions Pvt. Ltd.) was a subsidiary that had provided a corporate guarantee for loans advanced to the principal borrower. CIRP was initiated against both the corporate debtor and the principal borrower by different financial creditors. The Committee of Creditors unanimously resolved to liquidate the corporate debtor as no resolution plans were received. The adjudicating authority allowed the liquidation application and dismissed the appellant's application seeking stay. The appellant challenged these orders, arguing that the issue of simultaneous CIRP proceedings was pending before the Supreme Court.
Findings of Court:
The Appellate Tribunal found no infirmity in the adjudicating authority's orders. It held that the Supreme Court had subsequently delivered judgment holding that simultaneous CIRP proceedings against both principal debtor and corporate guarantor are maintainable. The Tribunal also held that Section 12A withdrawal is not permissible during liquidation proceedings, as settled in earlier case law. The liquidation order was upheld, and the liquidator was allowed to proceed.
Issues: The main issues were (i) whether simultaneous CIRP proceedings can be initiated against both the principal borrower and the corporate guarantor, (ii) whether an application under Section 12A is permissible during liquidation proceedings, and (iii) whether the adjudicating authority erred in dismissing the appellant's application for stay.
Ratio Decidendi: The court ruled that simultaneous CIRP proceedings against principal debtor and corporate guarantor are maintainable; Section 12A withdrawal is not available during liquidation; and the adjudicating authority correctly dismissed the stay application as the Supreme Court order did not bar the proceedings.
Result: Appeal dismissed. The corporate debtor shall continue to be liquidated. All related IAs dismissed. No order as to costs.
| Table of Content |
|---|
| 1. background facts and procedural history of the cirp against the corporate debtor and principal borrower. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. procedural and interim orders regarding settlement attempts and stay on liquidation. (Para 9 , 10 , 11 , 12 , 13 , 14) |
| 3. court's observations on non-appearance, sc status quo order, and subsequent sc decision allowing parallel cirps. (Para 15 , 16 , 17 , 18 , 19) |
| 4. section 12a not applicable in liquidation; coc's unanimous liquidation decision justified. (Para 20 , 21 , 22) |
| 5. appeal dismissed; liquidation to proceed; no costs ordered. (Para 23) |
J U D G M E N T
(Hybrid Mode)
[Per: Arun Baroka, Member (Technical)]
1.The captioned Appeal is filed by the Appellant under Section 61 of the Insolvency and Bankruptcy Code, 2016 impugning the order dated 21.02.2024 passed by the Hon'ble National Company Law Tribunal, Mumbai ("Hon'ble Adjudicating Authority") allowing IA No.2471 of 2021 filed by Respondent No.4- the Resolution Professional of the Corporate Debtor and IA No. 924 of 2021 preferred by Respondent No.1- Bank of India, and further dismissing an IA bearing No.41/2024 preferred by the Appellant seeking that the aforesaid Applications preferred by the Respondent Nos. I and 4 be stayed.
Brief facts of the case
2. Company Petition (IB) No. 3962/2018 was filed by Bank of Baroda- Respondent No. 2 against the Corporate Debtor-Chamber Constructions Private Limited under Section 7 of the Code. The CIRP order against the Corporate Debtor was admitted on 16.07.2019.
3. It is brought to our notice that RNA Corp is the holding Company- principal borrower and is also the corporate guarantor of the Corporate Debtor-Chamber Constructions Private Limited.
4. The claim of R1-Bank of India filed [Rs. 81,58,50,645.75/-] in the CIRP of the Corporate Debtor for corporate guarantee furnished by the Corporate Debtor for the loan advanced to one RNA Corp Pvt. Ltd. (RNA Corp) was admitted by R-4-RP. The R-4-RP preferred an application being IA No. 2471 of 2020 on 19.09.2020 before the Hon'ble NCLT seeking initiation of Liquidation of the Corporate Debtor. Bank of India – Respondent No.1 filed a Company Petition (IB) No. 909/2019 under Section 7 of the Code against the principal borrower namely RNA Corp for the same claim as was against the Corporate Debtor. The principal borrower – RNA Corp, the corporate guarantor was also admitted into CIRP vide dated 26.11.2019 under Section 7 of the Code.
5. Also to be noted that Respondent Nos. 2 and 3 are the other financial creditors of the Corporate Debtor such that Respondent Nos. 1, 2, and 3 constitute 68.79%, 25.02%, and 6.19% of the committee of creditors.
6. The Applicant Mr. Gokul Aggarwal is one of the promoters and member of the Suspended Board of Director of principal borrower – RNA Corp and filed an appeal before this Hon’ble Tribunal vide CA (AT)(Ins.) No. 1504/2019 against the order of admission against the principal borrower – RNA Corp. This Tribunal had dismissed the appeal on 07.02.2020. The applicant preferred a Review Application No. 15/2020 before this Tribunal, and that was also dismissed on 07.12.2020.
7. The Appellant had also filed a Civil Appeal No. 827-828/2021 before the Hon’ble Supreme Court challenging the two orders dated 07.02.2020 and 07.12.2020 passed by this Tribunal on the grounds that Respondent No.1 had already filed the claim for the same debt in the CIRP of the Corporate Debtor and therefore the CIRP of RNA Corp for that very same debt was not maintainable. The Hon’ble Supreme Court had taken cognizance of the said contention and accordingly passed the order dated 12.04.2021 declaring the status quo thereby staying the CIRP of RNA Corp. The relevant extracts of the order of Hon’ble Supreme Court is as follows:
“Issue notice.
Counter affidavit, if any, be filed in the meanwhile.
In the meanwhile, status quo, as it exists today, shall be
maintained by the parties.
Tag along with C.A. No.878/2019.
List on 01.07.2021.”
Thus, the Appella
