TaxTMI 
TaxTMI 
2026 (9) TMI 746
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....m Shukla, Mr. Shyam Kapadia, Mr. Kaustubh Singh, Ms. Urvi Gupta, Mr. Samant Sathiya and Ms. Heena Kochar, Advocates JUDGMENT Per: Justice N. Seshasayee, Member (Judicial) The present appeal arises out of the order dated 19.08.2025 passed by the National Company Law Tribunal, Mumbai Bench in Company Petition (IB) No. 576 (MB) of 2025, whereby the Adjudicating Authority disposed of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 and directed release of the deposited amount to the Respondent without adjudicating the existence of financial debt, default and maintainability of the petition. Facts 2. The material facts are: a) the Appellant, M/s. North Life Spaces LLP, entered into a Facility....
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....icating Authority however, directed release of the demand drafts to the respondent, recorded payment of the principal and interest and withdrawal of the tax penalty and default interest claims, and closed the Company Petition. Liberty was granted to the respondent to pursue such other claims as may be legally maintainable. The interlocutory application was also disposed of. f) the appellant now challenges the impugned order principally on the ground that its objections to the maintainability, debt and default were not adjudicated before the demand drafts were released and the Company Petition was closed. The appeal was filed on 02.10.2025. g) thereafter, the respondent issued a Demand Notice dated 19.09.2025 claiming Rs. 2....
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....ithdrawal of the tax penalty and default interest claims, and closed the Company Petition without adjudicating the Appellant's objections. d) the subsequent Demand Notice dated 19.09.2025 raised a claim of Rs. 2,77,72,206/- towards interest, default interest and legal expenses, substantially different in its components from the claim forming the basis of the Section 7 petition. The respondent cannot, under the liberty granted by the impugned order, revive or enlarge the insolvency claim through a subsequent computation. The alleged debt and each component thereof must have a contractual and legal foundation. The impugned order, having closed the Sec. 7 proceedings without determining the existence of debt, default and maintaina....
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....and indeed has expressly reserved its right to pursue the same in accordance with law. e) Indeed, the Demand Notice dated 19.09.2025 does not alter the validity of the impugned order. The liberty granted therein merely preserves the respondent's right to pursue such other claims as may be legally maintainable. f) the impugned order was passed within the jurisdiction of the Adjudicating Authority on the basis of the Appellant's own deposit and does not warrant interference. Discussion & Decision 5. The core issue is whether the deposit made by the Appellant after the Company Petition had been reserved for orders could, by itself, justify closure of the Sec. 7 proceedings without adjudicating the objections rai....
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.... by the Appellant are never adjudicated. The fact that an amount was deposited could be taken into account, but it does not substitute the determination required in a Sec. 7 proceeding, particularly where the existence of debt, default and maintainability had been specifically questioned. Here, the fact that the deposit was made after the matter had been reserved assumes significance. 9. The Adjudicating Authority necessarily has to consider the controversy already argued before it. The subsequent deposit did not, without more, extinguish the objections already on record. So far as the contention of the respondent on the plea of approbation and reprobation goes, it does not take the respondent any further. The appellant did make the depo....