Appeal withdrawn to pursue Section 7 recovery claims for settlements, incentives, commissions and discounts with liberty for fresh application

The NCLAT (PB) at New Delhi disposed of the appeal as withdrawn at the request of the appellant's counsel. The appellant sought withdrawal to enable filing of an appropriate application before the NCLT regarding recovery of amounts towards settlement of accounts, incentives, commissions, and discounts arising from a Section 7 application. The NCLAT granted liberty to the appellant to file such application, noting it may be filed so as to be taken up on the already fixed NCLT date, without expressing any view on merits.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the Tribunal could proceed with the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 in the absence of an express stay of NCLT proceedings in the High Court's order dated 30.04.2025.

1.2 What is the effect of the subsequent order dated 23.06.2025 passed by the High Court on the maintainability and continuation of the present appeal challenging the Tribunal's orders dated 09.05.2025 and 20.05.2025.

1.3 Whether, in the circumstances, the appeal should be decided on merits or permitted to be withdrawn with liberty to approach the Tribunal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Tribunal proceeding with Section 7 IBC application in light of the High Court's order dated 30.04.2025

Interpretation and reasoning

2.1 The Tribunal, by order dated 17.03.2025, had adjourned the Section 7 application sine die till final disposal of A.S. No. 527 of 2023. Subsequently, on 30.04.2025, the High Court stayed "further proceedings in I.A. No. 636 of 2011 in O.S. No. 325 of 1996, dated 10.07.2023" for eight weeks, without expressly staying NCLT proceedings.

2.2 On 09.05.2025, the Tribunal noted that: (i) its earlier sine die adjournment was based on the pending civil proceedings; (ii) the High Court had not granted any stay of NCLT proceedings; and (iii) the stay was confined to proceedings in I.A. No. 636 of 2011 in O.S. No. 325 of 1996. On this basis, the Tribunal held it was "constrained to proceed with the matter" and would be "failing in our duty" if it did not proceed further in the absence of any stay of the corporate insolvency petition.

2.3 The subsequent order dated 20.05.2025 merely recorded joint submissions of counsel that pleadings were complete and posted the matter before the regular Bench for arguments.

2.4 Before the Appellate Tribunal, the appellant relied on the High Court's later order dated 23.06.2025 (produced during hearing) to contend that the earlier order dated 30.04.2025 stood modified and that the modified order also covered the NCLT proceedings, implying that the Tribunal ought not to have proceeded with the Section 7 application.

2.5 The respondent argued that: (i) the appeal was filed on the basis of the order dated 30.04.2025; (ii) the subsequent order dated 23.06.2025, passed during the pendency of the appeal, could not be used to assail earlier Tribunal orders; and (iii) if any grievance survived after 23.06.2025, the proper course was to move the NCLT, not seek relief in this appeal.

Conclusions

2.6 The Appellate Tribunal did not adjudicate on the correctness of the Tribunal's understanding of the order dated 30.04.2025 or on whether the High Court's order dated 23.06.2025 in fact operated as a bar to continuation of NCLT proceedings.

2.7 Without expressing any opinion on the merits or on the effect of either the 30.04.2025 or 23.06.2025 High Court orders, the Appellate Tribunal proceeded to deal with the matter on the basis of the appellant's request to withdraw the appeal.

Issue 2 - Effect of the High Court's order dated 23.06.2025 on the pending appeal

Interpretation and reasoning

2.8 During hearing, the appellant produced the High Court's order dated 23.06.2025 in A.S. No. 527 of 2023 and C.R.P. No. 2461 of 2023, contending that it modified the earlier order dated 30.04.2025 and extended protection to the appellant including vis-à-vis NCLT proceedings.

2.9 The respondent contended that: (i) the appeal had been instituted on 23.05.2025 specifically on the footing of the High Court's order dated 30.04.2025; (ii) the later order dated 23.06.2025, being subsequent to the filing of the appeal, could not be relied upon within the framework of this appeal to challenge the impugned Tribunal orders; and (iii) the appeal had thereby become infructuous, and any benefit of the later High Court order should instead be sought directly before the NCLT.

2.10 Faced with this objection, the appellant sought permission to withdraw the appeal, with liberty to move an appropriate application before the Tribunal in terms of the High Court's order dated 23.06.2025.

Conclusions

2.11 The Appellate Tribunal accepted that, in view of the subsequent High Court order dated 23.06.2025 produced during the pendency of the appeal and the respondent's contention of infructuousness, the appropriate course was not to adjudicate the appeal on merits.

2.12 The appeal was therefore permitted to be withdrawn, with explicit liberty to the appellant to file an appropriate application before the Tribunal in terms of the High Court's order dated 23.06.2025.

Issue 3 - Appropriate relief and directions upon withdrawal of the appeal

Interpretation and reasoning

2.13 The appellant requested: (i) withdrawal of the appeal; (ii) liberty to move the Tribunal within 15 days; and (iii) a direction for expeditious disposal of such application.

2.14 It was brought to the notice of the Appellate Tribunal that the Section 7 application before the Tribunal was already listed on 08.07.2025. Counsel indicated that the appellant would file its application in time for it to be taken up on that date.

Conclusions

2.15 The appeal was disposed of as withdrawn, without any observation on the merits of the impugned orders dated 09.05.2025 and 20.05.2025, or on the merits of the Section 7 application.

2.16 Liberty was granted to the appellant to file an appropriate application before the Tribunal in terms of the High Court's order dated 23.06.2025.

2.17 The Tribunal was directed to make all endeavour to decide any such application as early as possible, if filed by the appellant.

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