NCLT
Investment On Profit-Sharing Basis Does Not Qualify As Financial Debt : NCLT Delhi Reaffirms
The National Company Law Tribunal at New Delhi has recently reaffirmed that an investment made on a profit-sharing basis does not constitute a financial debt under Section 5(8) of the Insolvency and Bankruptcy Code and therefore cannot be used to initiate insolvency proceedings under Section 7. The ruling came in a case where Modern Solar Private Limited sought to treat Rs 20 lakh advanced to Claro Energy Private Limited in 2013 as a loan carrying interest.A coram of Judicial Member Mahendra...
No Wilful Disobedience: NCLT Kochi Dismisses Bhagyodayam Company's Contempt Plea Against Ex-MD
The National Company Law Tribunal at Kochi has recently reiterated that simply failing to hand over company records to the tribunal appointed administrator, even after a specific direction from the tribunal, is not enough to initiate contempt unless there is clear proof that the person intended to defy the order. A coram of Judicial Member Vinay Goel and Technical Member Madhu Sinha dismissed a contempt plea filed by Kerala based-Bhagyodayam Company against its former Managing Director Paul...
SARFAESI Notice Counts As Valid Invocation Of Personal Guarantee: NCLT Mumbai
The National Company Law Tribunal at Mumbai has recently held that a notice issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002, which empowers a secured creditor to demand repayment of dues within sixty days prior to enforcing its security, can operate as a valid invocation of a personal guarantee when it contains a direct repayment demand addressed to the guarantor.A coram of Judicial Member K R Saji...
Securities Premium Account Cannot Offset Accumulated Losses: NCLT Bengaluru
The National Company Law Tribunal at Bengaluru has recently clarified that while a company may reduce its paid-up share capital to write off accumulated losses under Section 66 of the Companies Act, the securities premium account cannot be used for such write-off, as this is expressly prohibited under Section 52 of the Act. A coram of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada partly allowed the petition filed by Firepro Systems Pvt Ltd, approving the...
Loss of ITC Due To Corporate Debtor's Default In GST Filing Is Not Operational Debt: NCLT Mumbai
The National Company Law Tribunal at Mumbai has recently held that operational creditors cannot claim GST-related dues arising from a corporate debtor's failure to file returns once the GST department has already lodged its own claim in liquidation. A coram of Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati rejected the appeal filed by Instakart Services Pvt. Ltd in the liquidation of TopsGroup services and Solutions concluding that the claim “cannot be...
Tribunal's Power To Probe Company's Fraud Cannot Be Misused For Debt Recovery: NCLT Ahmedabad
The National Company Law Tribunal at Ahmedabad has recently held that Section 213 of the Companies Act, which empowers the tribunal to order an investigation into a company's affairs, cannot be invoked for recovery of unpaid dues. A Bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, while dismissing a creditor's plea seeking an investigation into United Petrofer Ltd, observed, “The adjudication of dishonoured cheques and monetary recovery necessarily lie within the...
Operational Creditor Cannot Become Financial Creditor Through Settlement: NCLT Mumbai
The National Company Law Tribunal (NCLT) at Mumbai has recently reaffirmed that an operational creditor cannot be converted into a financial creditor by way of a settlement with the corporate debtor. At the outset, the tribunal noted that Capacite Infraprojects Ltd was engaged only as a contractor for construction of 16 SRA buildings, and that the flats were never part of a real estate transaction between the parties. The units came into the picture much later, when the real estate developer,...
NCLT Delhi Seeks Tribunal President's View On Whether Banks Lending to Homebuyers Are Financial Creditors Of The Developer
The National Company Law Tribunal (NCLT), Delhi, has referred to its President the question of whether banks that advanced housing loans to homebuyers under a tripartite agreement be treated as Financial Creditors of the real estate developer undergoing insolvency, after its two members issued conflicting rulings in the CIRP of AVJ Developers (India) Pvt Ltd. AVJ has been in insolvency since October 2019.The matter was heard by Judicial Member Bachu Venkat Balaram Das and Technical Member...
Written OTS Offer Revives Time-Barred Debt, NCLT Delhi Admits Insolvency Plea Against JS Designer
The National Company Law Tribunal at New Delhi has recently admitted Central Bank of India's insolvency plea against JS Designer Ltd, holding that the company's written one-time settlement proposals in 2024 constituted a fresh and enforceable promise to pay a time barred debt. A coram of Judicial Member Jyotsna Sharma and Technical Member Anu Jagmohan Singh noted that JS Designer had remained in continuous default since 2017, but its subsequent OTS offers revived the limitation period for...
NCLT Hyderabad Orders Liquidation Of Pavana Keerthi Hotels After SRA Fails To Furnish Bank Guarantee
The National Company Law Tribunal at Hyderabad has recently ordered the liquidation of Pavana Keerthi Hotels India Pvt. Ltd after observing that the successful resolution applicant failed to execute the resolution plan including the submission of a mandatory Performance Bank Guarantee (PBG). A coram of Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri in an order passed on 20 November 2025, observed: “We find that all legal requirements for ordering liquidation have...
CoC Can Invite Fresh Bids, Regulations Only Limit Modification Of Existing Bids: NCLT Kochi
The National Company Law Tribunal (NCLT), Kochi Bench, has recently clarified that the Insolvency and Bankruptcy Board of India Regulations, 2016, restrict only the modification of an already issued Expression of Interest and do not prevent the Committee of Creditors from issuing a fresh call for EOIs. A coram of Judicial Member Vinay Goel and Technical Member Madhu Sinha dismissed an application filed by Resolution Applicant Sumit Khanna challenging the CoC's decision to invite fresh EOIs for...
NCLAT Dismisses Plea Challenging Investigation Into Alleged Siphoning By Exclusive Capital, Promoters
The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently dismissed an appeal filed by Exclusive Capital Ltd. and its promoters, upholding the National Company Law Tribunal (NCLT) Delhi's decision directing a full investigation into the company's affairs. The probe concerns allegations that the management siphoned funds through related-party transactions and diversion of assets, including unsecured loans worth more than Rs 21 crore and luxury vehicles valued at over Rs 16 crore,...