Interim Stay Of CIRP Admission Does Not Extinguish Moratorium Unless Specifically Vacated: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has recently held that an interim stay of an order admitting a company into the Corporate Insolvency Resolution Process (CIRP) does not extinguish the accompanying moratorium.

It also ruled that such a stay cannot permit a second insolvency proceeding against the same corporate debtor. The tribunal accordingly set aside two orders admitting insolvency proceedings against Manpasand Beverages Ltd.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra ruled, “We are of the view that the grant of interim stay by this Tribunal did not result in the extinction, termination, quashing or obliteration of the CIRP proceedings or the attendant moratorium. Even if the CIRP admission order is stayed, the moratorium under Section 14 continues unless specifically vacated.”

The tribunal was hearing two appeals arising from separate orders passed by the Ahmedabad bench of the National Company Law Tribunal (NCLT). One order admitted an insolvency petition filed by Rajaram Foods Products India Ltd. (formerly Capricorn Foods).

The other admitted a subsequent petition filed by Tetra Pak India Pvt. Ltd. against the same corporate debtor.

The appellate tribunal set aside both orders. It held that the first petition was barred by genuine pre-existing disputes. It further held that the second order was without jurisdiction because a parallel CIRP could not be initiated while the earlier insolvency process remained in force.

The tribunal further observed, “The Adjudicating Authority had failed to consider and apply the settled legal position that the insolvency framework mandates a single, consolidated CIRP for a Corporate Debtor for parallel admissions would defeat the objectives of certainty and orderly resolution of the Corporate Debtor.”

The first appeal arose from an order dated November 19, 2025. By that order, the NCLT admitted Rajaram Foods' application against Manpasand Beverages. The operational creditor claimed unpaid dues of ₹4.44 crore, apart from interest. The claim related to supplies of mango and guava pulp made between March 2018 and March 2019.

Manpasand disputed the claim. It relied on contemporaneous emails, debit notes and minutes of meetings to show long-standing disagreements over defective supplies, expired goods, short supply and non-supply. It also referred to GST investigation records pointing to alleged paper transactions.

Those records also showed that the operational creditor had reversed input tax credit of ₹1.54 crore. The company further relied on the creditor's write-off of the receivables in its books. It argued that this formed another aspect of the pre-existing dispute. Rajaram Foods maintained that the goods had in fact been supplied.

Examining the record, the tribunal referred to the Supreme Court's decision in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. It reiterated that a petition by an operational creditor must fail if there is a plausible pre-existing dispute requiring further investigation.

The tribunal found that the emails exchanged between the parties, the meeting minutes and the investigation records established genuine disputes over the quality, quantity and supply of goods.

It noted that these disputes existed well before the statutory demand notice was issued. The tribunal also observed that the GST findings and the creditor's write-off of the receivables added to the existence of disputes. Such disputed claims, it held, could not be resolved through summary insolvency proceedings.

Holding that the NCLT ought not to have admitted the insolvency petition, the tribunal set aside the November 19, 2025 order. It consequently brought that CIRP to an end.

The second appeal challenged the NCLT's order dated January 12, 2026. By that order, the tribunal admitted another insolvency petition filed by Tetra Pak India against Manpasand Beverages.

The suspended director argued that the company was already undergoing CIRP when the second petition was admitted. According to the appellant, the Insolvency and Bankruptcy Code does not permit parallel insolvency proceedings against the same corporate debtor.

Although the earlier admission order had been stayed by the NCLAT, the appellant contended that the stay did not revive the legal position that existed before commencement of the CIRP.

Tetra Pak argued that the stay granted by the appellate tribunal had put the earlier CIRP in abeyance. It therefore contended that the NCLT was free to admit a fresh insolvency petition.

The tribunal rejected that contention. Referring to the Supreme Court's decision in Glas Trust Company LLC v. Byju Raveendran and its own earlier ruling in Axis Bank Ltd. v. Asset Reconstruction Company (India) Ltd., it held that an interim stay does not extinguish or quash the CIRP.

It also does not remove the protection available to the corporate debtor under the moratorium. The tribunal further held that insolvency proceedings acquire the character of proceedings in rem once a CIRP is admitted. Allowing parallel CIRPs would undermine the insolvency framework.

The tribunal observed, “we are therefore of the considered view that the second impugned order clearly suffers from a jurisdictional infirmity as the Adjudicating Authority could not have exercised its jurisdiction under Section 9 of the IBC in respect of a Corporate Debtor which was already under CIRP though under an interim stay and therefore the same cannot be sustained.”

Holding that the NCLT lacked jurisdiction to admit a second insolvency petition while the earlier CIRP and moratorium continued to operate, the tribunal declared the January 12, 2026 admission order non est in law and set it aside.

It granted Tetra Pak India liberty to file a fresh application under Section 9 of the Insolvency and Bankruptcy Code in accordance with law if circumstances so arise.