The Tribunal ruled that funds for CIRP costs should come from the assets of the Corporate Debtor, not the Respondents.

NATIONAL COMPANY LAW TRIBUNAL

COURT ROOM NO. 1

MUMBAI BENCH

Item No. 40

IA 5256/2024, IA 5122/2024 in C.P. (IB)/89(MB)2022

CORAM:

SH. PRABHAT KUMAR SH. SUSHIL MAHADEORAO KOCHEY HON’BLE MEMBER (TECHNICAL) HON’BLE MEMBER (JUDICIAL)

ORDER SHEET OF THE HEARING ON 29.10.2025

NAME OF THE PARTIES: NAGRAJ ALLOYS PRIVATE LIMITED

Under Section 10 & 25(2)(j), 43,45,47,50,60(5),66 of the Insolvency and

Bankruptcy Code, 2016 and Regulation 35A

________________________________________________________________

ORDER

IA 5122/2024

1. Adv. Yahya Batatawala for the Applicant in IA 5122/2024, IA 5256/2024

is present, Adv. Jatin Kumar, Adv. Aashray Chauddhary, Adv. Shaunak

Hiwarkhedkar for all the Respondents are present.

2. This is an Application filed by Mr. Hasti Mal Kachhara RP of Nagraj

Alloys Private Limited under Section 60(5) of the Insolvency and

Bankruptcy Code, 2016 (“Code”) seeking following reliefs:-

a. To direct the Respondents to deposit the balance CIRP cost of Rs.

23,49,057/- in view of the undertaking cum declaration given in

Affidavit dated 13.10.2023;

b. To pass such other Order or Orders as this Hon'ble Tribunal shall

deem fit and expedient.

3. The Corporate Applicant filed the Company Petition under Section 10 of

the IBC, 2016, which was admitted by this Tribunal commencing Corporate Insolvency Resolution Process (“CIRP”) in case of Corporate

Debtor vide Order dated 02/01 /2024 and appointing Mr. Prasad Kamalakar Dharap, an Insolvency Professional, as IRP.

4. The IRP published a Public Announcement in Form A in The Indian Express (English) and Loksatta (Marathi) on 04/01/2024 to invite claims from creditors. Following the claims report, the IRP constituted a Committee of Creditors (CoC) consisting solely of Omkara Asset Reconstruction Private Limited as the Financial Creditor. The IRP convened the 1st CoC meeting on 31/01/2024, where the CoC replaced the IRP with the present Applicant as the RP by a 100% majority.

5. The Applicant has preferred the present Application against the Respondents seeking direction qua the Respondents to make payment/

contribution towards the CIRP cost.

6. It is case of the Applicant that the Suspended Board of Directors/

Respondents had submitted a Declaration in the form of Affidavit dated 13.10.2023 wherein it was confirmed that they will make available the CIRP cost, and this Tribunal has recorded in its Order dated 12.12.2023that the Respondents have filed the requisite Declaration in the form of Affidavit. The Applicant is stated to have incurred a total CIRP cost of Rs. 26,49,057 /-, out of which, the Respondent has paid Rs. 3,00,000/-, and Respondent has not paid amount thereafter. A sum of Rs. 12,90,298/- is stated to have been funded by Mis Omkara Assets Reconstruction Private Limited being sole CoC member towards payments of the security service provider and other professionals appointed in the CIR Process. It is also stated that the Applicant had addressed letters dated 16.07.2024 and 12.08.2024 thereby calling upon the Respondents to deposit the amount of CIRP cost with the bank account of the Corporate Debtor. However, till date there is no response from the Respondents nor have they deposited the balance CIRP cost with the Applicant.

7. Learned counsel for Respondents submits that the Respondent no. 3 ceased to be director when this declaration was made in compliance of the order dated 03.09.2024 and asserted that no provision is contained either in the Code or the CIRP Regulations contemplating of funding of CIRP process by the suspended board members.

8. The Respondent No. 1 & 2, in terms of the declaration dated 13.10.2023 filed before this Tribunal during consideration of Corporate Debtor’s application u/s 10 of the Code for commencement of CIRP, had undertaken to “Make available requisite funds to meet the CIRP cost as per the Insolvency and Bankruptcy Code, 2016 read with Regulation 33 and 34 of Insolvency and Bankruptcy (Resolution Process for Corporate Persons) Regulations, 2016”. Further, this Tribunal in i