TaxTMI 
TaxTMI 
2026 (5) TMI 650
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....mber has agreed with the findings and order of Judicial Member delivered on 10.01.2025. The Appellant aggrieved by the order dated 17.09.2025 has come up in this Appeal. 2. Brief background facts necessary to be noted for deciding the Appeal are: (i) The Financial Creditor - Kotak Mahindra Bank Ltd. ("Kotak") sanctioned various credit facilities to the CD between September 2017 to 17th March, 2021. Loan recall notices were issued by the Bank to the CD on 13.11.2021, 19.01.2022 and 27.01.2022. (ii) A Company Petition (IB) No.76 of 2022 was filed by the Kotak against the CD claiming financial debt and default to the extent of Rs. 18,11,06,790.12 as on 19.01.2022. The CD filed a reply in Section 7 application objecting to clubbing 21 Loan Agreements in one proceeding. It was pleaded that the CD is functioning as a Contractor for infrastructure project of the Government and Government entities and CD is running Company with 728 employees and 15 current projects. It was further pleaded that the CD is holding Arbitral Awards aggregating to Rs. 30 crores against National Highway Authority of India ("NHAI") dated 26.06.2018 for Rs. 20,27,39,408 and two Awards against R....
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....e said judgment in paragraph- 86 & 88 has made following observations:- "86. Even though Section 7(5)(a) IBC may confer discretionary power on the adjudicating authority, such discretionary power cannot be exercised arbitrarily or capriciously. If the facts and circumstances warrant exercise of discretion in a particular manner, discretion would have to be exercised in that manner. 88. The adjudicating authority (NCLT) has to consider the grounds made out by the corporate debtor against admission, on its own merits. For example, when admission is opposed on the ground of existence of an award or a decree in favour of the corporate debtor, and the awarded/ decretal amount exceeds the amount of the debt, the adjudicating authority would have to exercise its discretion under Section 7(5)(a) IBC to keep the admission of the application of the financial creditor in abeyance, unless there is good reason not to do so. The adjudicating authority may, for example, admit the application of the financial creditor, notwithstanding any award or decree, if the award/decretal amount is incapable of realisation. The example is only illustrative." 12. The case of the Vida....
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....d. Learned Counsel for the Appellant referring to various additional affidavits submits that Section 34 petition filed by NHAI has been dismissed on 30.12.2025. Learned Counsel for the Appellant has also placed reliance on order of Hon'ble Supreme Court passed in Civil Appeal Nos.3640-42 of 2025 - Periyammal (Dead) through Legal Representatives and Ors. vs. V. Rajamani and Anr., where Hon'ble Supreme Court has issued direction to all the High Courts to obtain status of pending Execution Petitions and ensure that Execution Petitions are decided and disposed of within a period of six months. It is submitted that the Appellant has also filed Special Civil Application in Gujarat High Court seeking direction for disposal of execution proceedings. 6.1 Learned Counsel for the Appellant submits that the view of the third Member that CD is not entitled for the benefit of judgment of the Hon'ble Supreme Court in Vidarbha Industries, is incorrect. Facts of the Vidarbha Industries and decision laid down therein is fully attracted in the facts of the present case. The Adjudicating Authority itself being satisfied that judgment of the Hon'ble Supreme Court in Vidarbha Industries is applicable....
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.... judgment of the Hon'ble Supreme Court in Periyammal (supra) does not absolve the CD to clear his debt and default having been established, which is not even questioned by the Appellant, the Appellant is not entitled for any indulgence in this proceeding. 8. We heard learned Counsel for the partis and perused the record. 9. We in our order dated 25.09.2025 has noted the amount receivable by the Appellant under the various arbitral Award in Paragraph 6. It is useful to notice Paragraph 6 of the order, which is as follows: "6. The additional-affidavit has been filed by the appellant, in the additional affidavit appellant has referred to the decrees obtained in four cases and the amounts which is yet to be recovered except item no.4 in the affidavit where an amount of Rs. 2.50 crores has been received on 01.09.2025 as a full and final settlement and the said execution has been disposed of. In paragraph-2 of the additional affidavit following has been stated:- "2. The amounts receivable by Appellant/ CD under the various arbitral awards in indicated at Paragraph no.7 (xxxvii) of appeal. In addition to the same, table below provides present stated of procee....
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....ted cited supra, we find it proper to keep this proceeding for admission under Section 7 of IBC in abeyance for six months from today. We make it clear that if the corporate debtor fails to settle the due debts within the time given, we will be constrained to pass further orders. We further direct the corporate debtor not to sell the assets mortgaged with the applicant or other financial creditors without approval of this Adjudicating Authority." 11. After the lapse of period of six months, Section 7 application came for consideration before the Adjudicating Authority and split verdict was passed on 10.01.2025 in Section 7 application. Learned judicial Member in Paragraph 16 held that Section 7 application needs to be admitted. Paragraph 16 of the order is as follows: "16. All the requirements of Section 7 application are fulfilled. Though earlier, applicant has suggested name of IRP, in the written submissions, they have mentioned that the Tribunal may appoint any local IRP from the panel of Insolvency Professional." 12. Learned Technical Member rejected Section 7 application by following order: "The present petition CP(IB) 76 is rejected with liberty to fi....
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....to the Financial Creditor. The order of Adjudicating Authority on Section 7 application is yet to be passed and opinion of third Member was directed to be placed before NCLT Ahmedabad with record of Company Petition (IB) No.76 of 2022, as noted above. 16. Learned Counsel for the Appellant in its submission emphasized on various subsequent events, including direction passed by Hon'ble Supreme Court in the case of Periyammal (supra) directing all High Courts to ensure that execution proceedings are decided within six months and the progress made in the execution proceedings including the dismissal of Section 34 application filed by NHAI against the arbitral Award of the CD. The Appellant has also pleaded that Section 7 application filed by the SBI and Punjab and Sind Bank has also been rejected on 20.01.2026 and 29.03.2026 by NCLT. The Appellant has also relied on the order of High Court of Gujarat dated 02.04.2026, where High Court has directed to conclude execution of award within six weeks. 17. From the facts, which have been brought on record and submissions made by the Appellant, present is a case where due to difference of opinion, an order of split verdict between Judici....