NCLAT New Delhi Sets Aside Monte Carlo Insolvency Order After Settlement & Prior Dispute Admission

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 3 August held that an insolvency process cannot continue once the operational creditor's claim has been fully settled and the creditor has no objection to setting aside the admission order.

A Bench comprising Judicial Member Justice Mohd Faiz Alam Khan with Technical Members Indevar Pandey and Arun Baroke set aside the order passed by the Ahmedabad Bench of the National Company Law Tribunal (NCLT) admitting the Section 9 petition (provision allowing an operational creditor to initiate insolvency proceedings for unpaid operational debt) filed by Vanshita Transport against Monte Carlo Limited. It observed:

“The claim of the operational creditor, on whose application moved under Section 9, the CIRP was initiated, has also been satisfied in full and claim of the OC/Respondent No. 1 has been fully discharged and the OC instead of contesting has stated that he is not having any objection if the impugned order is set aside.”

Mrunal Kanubhai Patel, suspended director and promoter of Monte Carlo Limited, filed the appeal against the NCLT Ahmedabad order admitting Vanshita Transport's insolvency petition for an alleged operational debt. He argued that Monte Carlo Limited remained a financially sound and profitable company with a net worth of Rs. 1,962 crores and audited profits exceeding Rs. 200 crores in recent years. Also that the NCLT initiated CIRP against the company for a claim of Rs. 1.47 crores despite its financial position and positive credit rating.

Further, he alleged that Vanshita Transport obtained the transportation contract through collusion and that an employee accepted a bribe of Rs. 10 lakhs from the operational creditor. He argued that the parties had disputes regarding the measurement of transportation distance on the Bhagalpur route and that these disputes arose before Vanshita Transport issued the Section 8 demand notice (notice demanding payment before initiating insolvency proceedings). He also submitted that the NCLT failed to properly consider these disputes while admitting the petition.

During the hearing, Patel submitted that although he had a strong case on merits, he was willing to deposit the claimed amount to demonstrate his bona fides. He prepared a demand draft of Rs. 1.50 crore for this purpose.

On 10 July 2026, the NCLAT directed the Interim Resolution Professional (IRP) not to proceed further under the NCLT's order and recorded that Patel had deposited the demand draft of Rs. 1.50 crore. The parties subsequently executed a settlement agreement dated 25 July 2026, under which Vanshita Transport accepted the full claim amount, consented to setting aside the insolvency order and filed an affidavit supporting closure of the proceedings.

The IRP informed the NCLAT that, apart from Vanshita Transport's claim, only the Employees Provident Fund Organisation (EPFO) filed a claim of Rs. 2.98 lakhs, which Monte Carlo Limited also settled in full. Bank of Baroda certified that Monte Carlo Limited maintained a standard and regular account without any overdue amounts.

The Bench noted that Vanshita Transport withdrew its objections, acknowledged the existence of prior disputes and consented to closure of the CIRP.

Accordingly, the NCLAT set aside the NCLT's order dated 6 July 2026, relying on the settlement between the parties and the existence of prior disputes. It closed the CIRP against Monte Carlo Limited and directed the return of the Rs. 1.50 crore demand draft deposited by Patel.

For Appellants: Senior Advocate Arun Kathpalia, with Advocates Ruby Singh Ahuja, Parth Contractor, Ravneet Kaur Malik and Varsha Himatsingka

For Respondents: Advocates Honey Satpal, Akash Agarwalla, Aman and Tanya Gupta