The NCLAT set aside the CIRP initiated by Respondent No. 2...

The NCLAT set aside the CIRP initiated by Respondent No. 2 against Respondent No. 1, holding it to be collusive and for purposes other than insolvency resolution. Respondent No. 3 was a director and shareholder in all three companies, controlling over 20% voting shares, thereby qualifying as a related party u/s 5(24)(m)(i) and (iii) of the IBC. The amount disbursed by Respondent No. 2 to Respondent No. 1, being related parties, does not qualify as financial debt per the Supreme Court's ruling in Phoenix ARC case. The NCLAT relied on Hytone Merchants case, which allowed setting aside CIRP if collusion is proved despite fulfilling Section 7 requirements. Respondent No. 3's presence across companies and lack of denial regarding allegations indicated collusion between Respondents No. 1 and 2.