CIRP Petition By Non-Existent Entity Not Maintainable Post Amalgamation: NCLAT Chennai

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) on 2 April, held that a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by a non-existent entity is not maintainable, particularly where the entity had been dissolved pursuant to an approved scheme of amalgamation prior to initiation of proceedings.

Section 9 allows operational creditors, such as suppliers, employees, or service providers , to initiate the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor.

A Bench comprising Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain dismissed the appeal by Samunnati Agri Value Chain Solutions Pvt. Ltd., and upheld the order of the NCLT, Amaravati Bench. The Tribunal observed:

“As on the date of institution of the proceedings under Section 9 of the IBC, the application was filed by M/s. Samunnati Agro Solutions Private Limited, which was a non-existing company, having merged into the parent company on 23.12.2022. The proceedings of CP (IB) / 54 / 9 / AMR / 2024 are therefore not maintainable at the behest of the Appellant.”

The appellant had filed the Section 9 application claiming to be an operational creditor. However, the Tribunal noted that pursuant to a scheme of arrangement approved under Sections 230-232 of the Companies Act, 2013 by the NCLT Chennai Bench, the said entity had already been amalgamated and dissolved without winding up. Consequently, the original entity ceased to exist, and only the existing entities could initiate legal proceedings.

The NCLAT further clarified that the Section 9 petition was filed after the dissolution of the company, making the initiation of IBC proceedings by an entity with no juristic existence legally untenable.

Rejecting the appellant's contention that a subsequent order dated 4 March 2025, which clarified the effective date of the scheme, revived its legal standing, the Tribunal held that the order had no bearing on the maintainability of the Section 9 application, as it dealt solely with the effective date of the scheme and not the legal existence of the company.

The Tribunal also noted that the company with legal existence was Samunnati Agri Value Chain Solutions Private Limited, while the Section 9 application was filed in the name of Samunnati Agro Solutions Private Limited.

Accordingly, the NCLAT upheld the decision of the NCLT and affirmed that proceedings initiated by a non-existent entity are not maintainable.

For Appellant: Mr. Raja Shekar Rao Salvaji, Advocate