Sole Financial Creditor Can't 'Jump In and Out' Of CIRP; No Claim Withdrawal After CoC Entry: NCLT Mumbai
Kirit Singhania
7 April 2026 9:18 AM IST
Holding that a sole secured financial creditor cannot ''jump in and jump out" of the corporate insolvency resolution process (CIRP), the National Company Law Tribunal (NCLT) at Mumbai emphasised that such conduct would undermine the scheme and objectives of the Insolvency and Bankruptcy Code (IBC).
A bench of Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan was hearing an application filed by SREI Equipment Finance Ltd. seeking withdrawal of its claim and exit from the committee of creditors (CoC) of Interbuild Infrastructure Pvt. Ltd. Holding that a single creditor does not have the inherent right to withdraw his claim, the tribunal observed:
“The financial creditors cannot be allowed to jump in and jump out of the insolvency resolution process and abandon the CD on mere recovery considerations. The Applicant is duty bound to take the CIRP of the CD to a logical conclusion rather than shirking away from their lawful duties under the Code. They have no 'commercial wisdom' or 'inherent right' to withdraw their claim as the sole secured financial creditor in the CoC of the CD and reject the CIRP costs and fees payable to the IRP and other professionals.”
The CIRP had been initiated on July 11, 2023 at the instance of operational creditor Gujarat Enterprise. Subsequently, SREI submitted its claim of Rs. 62.59 lakh on August 23, 2023 and was recognised as the sole secured financial creditor, holding 100% voting share in the CoC. However, citing low recovery prospects and rising CIRP costs, it sought to withdraw its claim in December 2023.
Rejecting the plea, the tribunal held that once a claim is admitted and the CoC is constituted, there is no provision under the IBC permitting such withdrawal. It observed that insolvency proceedings are not recovery mechanisms but collective processes in rem, where creditors must act responsibly.
The tribunal stressed that the applicant, being the sole CoC member, was duty-bound to take the CIRP to its logical conclusion and could not abandon the process based on commercial considerations.
The application was dismissed, with directions to convene CoC meetings and decide on the appointment of a resolution professional.
For Applicant: Advocate Pawan Kulkarni i/b AVP Partners
For Corporate Debtor: Advocate Devul Dighe