The initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC is impermissible if the outstanding debt on the date of the admission order falls below the statutory threshold of one crore rupees.

The instant appeal has been filed by the appellant challenging the order dated 20th July 2026 (impugned order) passed by Learned National Company Law Tribunal, Kolkata Bench (Adjudicating Authority) passed in CP (IB) No. 138 of 2025 whereby the application filed by Respondent No. 1,2 and 3 under section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) has been admitted against the Corporate Debtor (CD).

2. Brief facts necessary for the disposal of this appeal are that an application under Section 7 of the Code was filed by the Respondent No. 1, 2 and 3 against the corporate debtor for initiation of CIRP against CD Raja Udyog Private Limited with the contention that during the Covid-19 pandemic situation the Corporate Debtor was in need of immediate financial assistance and the Corporate Debtor approached the Respondents through one of its directors namely Mr. Om Prakash Gupta and relying upon the representation, assurance and promise that the amount would be repaid soon and would be returned back, the Respondent financial creditors advanced financial assistance to the corporate debtor.

3. It is further reflected that the Respondent No. 1 landed Rs. 1 Crore to the corporate debtor while the Respondent No. 2 and 3 together Advanced Rs. 1 Crore 25 Lakhs.

4. It is further reflected that the corporate debtor initially paid interest including TDS to the financial creditors until 30th April 2022 however after 30th April 2022 the corporate debtor stopped making any payments towards the discharge of its liability and consequently Respondents issued demand notices dated 29th January 2025 and 21st March 2025 demanding the entire outstanding amount within 10 days. However, the corporate debtor issued cheques towards/for part payment but these cheques were also dishonoured upon presentation and thus the CD committed a default of Rupees 3,15,78,482/-. In Part IV of the application, it is claimed that as on 28th April 2025 a sum of Rupees 3,18,88,305.66/- is due and payable by the corporate debtor.

5. Ld. Adjudicating Authority found that there is debt and default and also the debt at the time of default was above threshold and admitted the application by passing the impugned order and Mr. Abhijit Jain was appointed as the Interim Resolution Professional (IRP). Aggrieved by this impugned order instant Appeal has been preferred by the appellant, who is the director of the suspended management of the CD.

6. It is also evident that when this appeal was presented before us on 28th July 2026, it was informed to us that parties are in the process of entering into the settlement and it is further submitted by the Ld. Counsel for the Appellant that Rs 2.25 Crores has already been given to the Respondent No. 1, 2 and 3 and they have prepared the demand draft of Rs. 93,88,310/- in favour of Respondent No. 1, 2, 3 and the settlement terms would be reduced in writing within few days and would be submitted before this Appellate Tribunal.

7. It is also evident that in pursuance of order dated 28th July 2026, the parties filed a joint affidavit dated 31st July 2026 along with the copy of the Memorandum of Settlement wherein it is stated in clear terms that the parties have settled the dispute amicably and a consolidated sum of Rs. 3,18,88,305/- shall be treated as the full and final settlement amount against all claimed amount in satisfaction and discharge of all liabilities, whether admitted or disputed, existing as on date.

8. It is also reflected that in the memorandum of settlement, it has been specifically stated that prior to the pronouncement of the impugned judgment the corporate debtor had repaid the entire principal amount alleged to have been advanced by the Respondents/ financial creditors and in this regard the details have been produced in tabular form which shows that Rs. 1 crore were paid to Respondent No. 1- Dinesh Chand, Rs. 75 lakhs to Respondent No. 2- Girish Chandra and Rs. 50 lakhs to Respondent No. 3-