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Termination of CIRP Cannot Be Challenged When Order Also Grants Relief:
In a succinct ruling, the dismissed a creditor’s challenge to the termination of a corporate insolvency resolution process, observing that it failed to understand how an order could be assailed when it had also granted relief through that very termination. The bench of Justice B.V. Nagarathna and Justice R. Mahadevan delivered the order on , in the case of
Relief Through Termination
The dispute arose from insolvency proceedings initiated by Sanjay Kumar Bhuwalka against Sulojay Realty Private Limited over an unpaid debt of approximately ₹7.47 crore. The , admitted the company into the in . However, the company’s suspended director, Achal Kumar Jindal, appealed to the , which stayed the process on the condition that the director deposit the entire claimed amount with interest. The director complied, depositing the sum, and later sought termination of the CIRP, offering the deposited amount to satisfy the creditor’s claim.
Creditor’s Refusal and NCLAT’s Action
The creditor refused the offer, insisting that the deposit was made under and could not be treated as a . The NCLAT, noting that the creditor was the sole member of the and no other claims had been received, found the refusal unjustified. It viewed the continued pursuit of insolvency as an attempt to abuse the framework and terminated the CIRP. The creditor then appealed to the .
’s Reasoning
Dismissing the appeal, the held that the NCLAT’s order could not be questioned. “ in the instant case,” the Court observed. The bench clarified that the termination itself provided relief to the creditor by securing the deposited amount, which could now be withdrawn.
Key Observations
- “Termination of legal proceedings cannot be a ground for assailing the same particularly when the relief has also granted by such termination of legal proceedings.”
- The Court permitted the creditor to apply before the NCLAT for withdrawal of the deposited amount, directing that such application be considered in accordance with law.
Court’s Decision
The dismissed the civil appeal and disposed of pending applications. The creditor is now entitled to withdraw the deposited amount from the NCLAT based on his entitlement, subject to the tribunal’s order. The ruling reinforces the principle that termination of insolvency proceedings that grants relief cannot be independently challenged, discouraging that prolong the process.
