TaxTMI 
TaxTMI 
2026 (7) TMI 103
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....uthority (NCLT, Kolkata Bench) in C.P. (IB) No. 69/KB/2024, dated 13.12.2024, by which the CD was admitted to CIRP under Sec.7 IBC in a proceeding initiated by the first respondent. Right at the outset it may be stated, as the proceeding progressed before us, the focus of appeal shifted from a contest on the merit of the Order of the Adjudicating Authority to the advisability of continuing CIRP on grounds of malice within the meaning of Sec.65 IBC. 2. The material facts are: a) Sulojay Realty Pvt. Ltd., is the Corporate Debtor and the appellant is one of its suspended Directors. The CD was incorporated on 20.03.2021, and at the relevant point of time, Sanjay Kumar Bhuwalka, the first respondent herein, was also one of its directors and indeed was its majority shareholder. b) Between April, 2021 and May, 2022, the first respondent had advanced various sums to the Corporate Debtor through banking channels, aggregating Rs.. 7,47,32,000/-. And, in June, 2021, the CD had made a partial repayment of Rs. 1,85,01,399/- towards the said liability. As to the balance payable, CD had acknowledged the same in its annual report for the FY 2021-22 and also for the FY 2022-23,....
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.... amount has been deposited. Arguments 4. Before embarking to narrate the arguments advanced by the rival parties, few facts are required to be placed on record: a) that the CoC is comprised of a sole member, the petitioning creditor, the first respondent herein. And, the Interim Resolution Professional has made a statement that when he invited claims, he has received none. This implies, that the corporate debtor has just one creditor, and he constitutes the one member CoC; b) In the course of the argument, the learned counsel for the appellant has made a submission that the amount deposited by the appellant before this tribunal pursuant to the Order dated 18.12.2024 may be withdrawn by the first respondent towards satisfaction of the claim. c) The first respondent, however, rejected this offer on the ground that the amount was deposited not with any intent to pay the debt, but with an intent to show bonafide for obtaining an interim order of stay, and not voluntarily but only as directed by the tribunal. 5. Turning to the arguments, keeping aside his contention on the merit of the appeal, the learned counsel for the appellant submitted that irres....
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....or malicious. d) Sec.65 of the Code cannot be invoked in the absence of specific pleadings and material establishing fraudulent or malicious initiation of insolvency proceedings and, in any event, such plea cannot be permitted to be raised for the first time in appeal. e) that the liabilities of the Corporate Debtor are far in excess of its assets and continuation of CIRP is therefore necessary for carrying the insolvency process to its logical conclusion in accordance with the provisions of the Code. 7. In reply, the learned counsel for the appellant argued: a) even if it is presumed that there existed any ground for initiating a CIRP against the corporate debtor, today, with the amount so alleged to have been defaulted having been deposited by the appellant with a plea to the sole creditor to withdraw it towards satisfaction of his debt, the justification for initiating CIRP is lost and to let it to continue will now fall outside Sec.12A of the Code, but will fall within Rule 11 of the NCLAT Rules as it constitutes an abuse of judicial process of the tribunal. b) the refusal of the first Respondent, being the sole creditor of the Corporate D....
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....islative philosophy behind the insolvency resolution process, where it was declared that the principal aim of the Code is to revive and resurrect a financially crippled corporate debtor, and that the liquidation of the corporate debtor should be the last resort, and should not be attempted till the insolvency resolution process is exhausted. b) In M. Suresh Kumar Reddy Vs Canara Bank & Others [(2023)8 SCC 387] it is held that before initiating CIRP, the Adjudicating Authority is only required to examine the criteria prescribed in Sec.7 or 9 IBC, and not to examine the solvency of the corporate debtor, since the Code has not required it as a pre-requisite. c) In GLAS Trust Co. LLC v. Byju Raveendran [(2025) 3 SCC 625] it is held that for settlement and withdrawal of CIRP the inherent powers of the tribunal shall not be summoned since the Code has made a specific provision in Sec.12A to be read with Regulation 30 of the CIRP Regulation for the said purpose. 10. To repeat, here in this case, there is just one creditor, who constitutes the sole member of the CoC. And, the debt said to be in default is now offered to be repaid by the suspended director of the CD, wh....
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....ling need to limit the operation of this underlying presumption behind initiating a CIRP right at the point where a genuine offer of settlement is made, more so where there is a one member CoC, constituted of only the petitioning-creditor. Otherwise, the Code will end up producing Shylocks out of creditors of the corporate debtor. A default in paying the debt may generally be understood as a situation where the debtor did not possess the money to repay the debt (which the Code treats as an act of insolvency), but is it an irredeemable sin if the debt-amount is offered later, but before third party interests are created in the assets of the corporate debtor? d) Now, under Sec.12A, a decision on settlement and withdrawal has to be approved by a 90% vote of the CoC, but if the offer of settlement is understood as conveying an intention of the suspended board to revive the corporate debtor, can the CoC decide against it and reject the offer of settlement arbitrarily and without assigning justifiable reasons? 11. And, here in this case, the CoC has a solitary member, who incidentally is the only creditor of the corporate debtor. The money due to him has already been deposite....