Deepak Modi vs Shalfeyo Industries Private Limited & ...

(Arising out of order dated 18.12.2024 passed by the National Company Law Tribunal, Jaipur Bench, Rajasthan in I.A. (IBC) No. 549/JPR/2024 in CP (IB) No. 79/9/JPR/2020)

In the matter of: Deepak Modi S/o Ram Sharan Modi Residing at C-1301, AIS Residency, Haldi Ghati Marg, Jaipur-302033. ...Appellant Vs. 1. Shalfeyo Industries Private Limited having its Registered Office at: 250/47, RHB Pratap Enclave Haldhighati Marg, Pratap Nagar, Sanganer Jaipur-302017 (Rajasthan) Acting through its Resolution Professional Mr. Umang Jain having office address at: 380, Gayatri Nagar-A, Maharani Farm, Durgapura, Jaipur-302018 (Rajasthan)

2. Axis Bank Limited, Axis House, Tower 2, 2nd Floor, Jaypee Greens Wish Town, Sector 128, Noida - 201304. 3. Prime Impex, A partnership firm, having its Office Address at: 7/59 Vidhyadhar Nagar, Jaipur-302039 (Rajasthan) Also at:- H-103, Badharna Marble Mandi, VKI Extension Jaipur-302013 (Rajasthan) ...Respondents Present: For Appellant: Mr. Sandeep Bajaj, Advocate.

For Respondents: Mr. Anupam Singh and Mr. Roshini Nathwani, Advocates.

J U D G M EN T

(7th September, 2026)

INDEVAR PANDEY, MEMBER (T)

The present Appeal CA AT (Ins.) No. 222 of 205, has been preferred by Mr.

Deepak Modi, Suspended Director of Shalfeyo Industries Private Limited

("Corporate Debtor"), against the impugned order dated 18.12.2024 passed by

the National Company Law Tribunal, Jaipur Bench ('Adjudicating Authority') in

IA (IBC) No. 549/JPR/2024 in CP (IB) No. 79/9/JPR/2020, whereby the

application filed by the Appellant under Section 12A of the Insolvency and

Bankruptcy Code, 2016 ("hereinafter referred to as 'Code') read with Regulation

30A of the CIRP Regulations seeking withdrawal of the CIRP of the Corporate

Debtor was dismissed. The CIRP was initiated at the instance of Prime Impex

(Operational Creditor)/Respondent No.3 on 16.08.2022, and Mr. Umang Jain

appointed as the Resolution Professional. Axis Bank Limited, the financial

creditor is the Respondent No.2 in these proceedings.

FACTS OF THE CASE

2. The brief facts of the case relevant for the instant appeal are given below:

Page 2 of 23

Company Appeal (AT) (Ins.) No. 222 of 2025 i.) Prime Impex, the Operational Creditor, initiated the insolvency

proceedings under Section 9 of the Code against Shalfeyo Industries

Private Limited. The Corporate Insolvency Resolution Process ('CIRP')

proceedings were admitted by the Adjudicating Authority on 16.08.2022,

pursuant to which Mr. Umang Jain was appointed as the Interim

Resolution Professional who was subsequently confirmed as Resolution

Professional (RP).

ii.) Pursuant to the public announcement, Axis Bank Limited submitted

its claim as the sole Financial Creditor, and the (Committee of Creditors)

was accordingly constituted with Axis Bank as its sole member. In the 1st

CoC meeting held on 15.09.2022, Axis Bank stated that the Corporate

Debtor had no meaningful assets and that continuation of the CIRP would

serve no useful purpose, and accordingly requested that steps be taken for

closure of the CIRP.

iii.) Consequent to the initiation of CIRP proceedings, the Appellant's

personal property, which had been furnished as collateral to Axis Bank,

was sold and the Appellant deposited the balance outstanding of the Axis

Bank thereby meeting the entire claim of Financial Creditor.

iv.) As the claim of the Financial Creditor/ Axis Bank was fully satisfied

the Bank withdrew its claim, following which the RP reconstituted the CoC,

replacing Axis Bank with Prime Impex, the Operational Creditor/

Respondent No. 3. The said reconstitution was challenged by the

Appellant, and the Adjudicating Authority subsequently directed Page 3 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 restoration of the CoC to its original composition, namely with Axis Bank

as the Financial Creditor.

v.) During the CIRP, the CoC also decided for liquidation of the Corporate

Debtor. The resolution for liquidation was passed on 05.11.2022, when

the CoC comprised of the Operational Creditor as the sole CoC member,

despite two Expressions of Interest having been received.

vi.) Subsequently, the Financial Creditor continued to remain the relevant

creditor for the purpose of the CoC, and during the 6th CoC meeting held

on 18.09.2023, Axis Bank noted that the entire insolvency proceedings

had originated from a claim of approximately Rs. 12 Lakhs and had

continued for about one and a half years. Axis Bank accordingly took an

initiative to facilitate settlement between Deepak Modi and Prime Impex.

The Appellant initially offered payment of Rs. 8 Lakhs along with return of

materials valued at Rs. 4 Lakhs and subsequently offered to settle the

entire claim of approximately Rs. 12 Lakhs, but the offer was not accepted

as the Operational Creditor sought additional compensation and litigation

costs.

vii.) In respect of the Operational Creditor, the Appellant agreed to pay

the entire claimed amount of Rs. 11.90 Lakhs and placed a demand

draft bearing No. 722222 dated 03.12.2024 towards the said amount. The

Appellant also provided the draft of Form FA to the Operational Creditor

and undertook to pay such fees and expenses of the Resolution

Page 4 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 Professional as might ultimately be determined by the Adjudicating

Authority.

viii.) As the sole Financial Creditor had been fully paid, and that the only

other creditor, Prime Impex, had also been offered full payment of its claim,

the Appellant sought withdrawal of the CIRP under Section 12A of the IBC

read with Regulation 30A of the CIRP Regulations. The withdrawal

application in the form FA was filed as IA (IBC) No. 549/JPR/2024 in CP

(IB) No. 79/9/JPR/2020 by the Appellant on 20.11.2024 in his capacity

as the suspended director of the Corporate Debtor.

ix.) The Adjudicating Authority, while considering IA (IBC) No.

549/JPR/2024, recorded that the application had been filed by Deepak

Modi, a suspended director, seeking withdrawal under Section 12A; that

the debt of the sole Financial Creditor was stated to have been settled; that

the entire claim of the sole Operational Creditor amounting to Rs. 11.90

Lakhs had been offered through demand draft; and that the Appellant had

undertaken to pay the RP's fees and expenses as determined by the

Adjudicating Authority.

x.) The Adjudicating Authority duly noted that the Appellant has fully paid

the claims of Financial Creditors it has also offered 100% claims of the

OCs claims through Demand Draft and the application of IRP for

determination of CIRP Cost is pending with the Adjudicating Authority.

However, relying on the judgment of Hon'ble Supreme Court in the matter

of Glass Trust Company LLC v/s Byju Raveendran and Others 2024 SCC Page 5 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 OnLine SC 3032. The Ld. Adjudicating Authority dismissed the prayer filed

under Section 12A of the Code as the application has been filed by the

applicant who is the suspended Director of the Corporate Debtor and not

through the Resolution Professional as mandated under the Code. Ld.

Adjudicating Authority further held that the proposal required to be filed

with the approval of 90% of voting shares of the CoC, which was not done

in this case. It therefore dismissed the application on the grounds that it

does not fulfil the mandate of the Code as laid down in Section 12A. The

present appeal arises from the same impugned order dated 18.12.2024.

Submissions of the Appellant

3. The Ld. Counsel for the Appellant submits that the present matter has, by

subsequent developments, reached a position of complete stalemate,

notwithstanding the Appellant's repeated efforts to bring the CIRP to an end. It

is submitted that the Appellant had continued to service the loan account even

during the CIRP and, in the 5th and 6th meetings of the CoC, Respondent No. 2

itself acknowledged that the account remained regular and that there was no

creditor other than the sole Financial Creditor and the Operational Creditor.

Respondent No. 2 had also indicated that the CIRP was being unnecessarily

prolonged and had facilitated efforts towards settlement. In this process, the

Appellant offered to pay Rs. 8 lakhs and return material worth Rs. 4 lakhs lying

at site and subsequently even offered the entire amount of Rs. 12 lakhs, but the

Operational Creditor declined the offer and sought further compensation and

litigation costs.

Page 6 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025

4. The Ld. Counsel submits that, during the pendency of the said

proceedings, the judgment of the Hon'ble Supreme Court in Glass Trust

Company LLC v. Byju Raveendran and Others (2024 SCC OnLine SC 3032)

necessitated compliance with the procedure prescribed therein. The Appellant

accordingly made further bona fide efforts to resolve all outstanding issues. He

agreed to pay the entire claimed amount of Rs. 11.90 lakhs to the Operational

Creditor through a demand draft and furnished the requisite Form FA,

requesting that the same be forwarded to the RP and placed before the CoC.

However, the Operational Creditor declined to forward the Form FA, citing legal

advice. Thereafter, the Appellant and the Operational Creditor also attempted to

resolve the matter with the RP, but the RP declined the settlement and insisted

that his fees and CIRP expenses be determined by the Adjudicating Authority.

The Appellant has no objection to such determination.

5. It is therefore submitted that, as on date, the substantive claims have

either been fully discharged or are capable of being satisfied, and the only

surviving issue concerns the CIRP/RP expenses and the procedural steps

necessary for closure. The Appellant has consistently expressed his willingness

to make payment of any amount found legitimately payable. Even in relation to

the RP's fees, the Appellant has stated that any additional amount which the

Adjudicating Authority considers just and proper may be paid so as to bring the

proceedings to a close. The Appellant accordingly submits that continued

continuation of the CIRP serves no useful purpose when the Financial Creditor's

dues stand settled, the Operational Creditor's claimed amount has been offered

Page 7 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 in full, and the remaining issue can be resolved by determination of the RP's

legitimate fees and expenses.

6. The Ld. Counsel for Appellant submits that the subsequent developments

demonstrate that the matter has reached a stalemate. The Appellant is willing to

discharge the amounts found payable, while the necessary steps for placing the

withdrawal proposal before the CoC and bringing the CIRP to an end have not

materialised. The Appellant therefore prays that, keeping in view the peculiar

subsequent developments and the fact that continuation of the CIRP would serve

no meaningful insolvency-resolution purpose, appropriate orders may be passed

to bring the CIRP to its logical closure, subject to determination and payment of

such legitimate CIRP costs, RP fees and expenses as may be found payable by

the Adjudicating Authority.

Submissions of the Respondent No.1/RP

7. Ld. Counsel submits that the Appellant has presented a distorted account

of the proceedings and has attributed the delay in the CIRP to the Respondent,

he submits that the record demonstrates that the CIRP has been prolonged on

account of repeated disputes, applications and lack of effective cooperation. The

Respondent had, from the commencement of the CIRP, attempted to discharge

its functions as Resolution Professional, including taking steps for securing the

assets and conducting the meetings of the Committee of Creditors. Directions

were also passed by the Adjudicating Authority for handing over possession of

the assets of the Corporate Debtor. However, the disputes concerning Page 8 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 possession, constitution and reconstitution of the CoC, CIRP expenses and other

pending applications continued to prevent any effective progress in the CIRP.

8. He submits that the subsequent course of the proceedings is particularly

relevant. Axis Bank, which ultimately came to constitute the sole CoC member

with 100% voting share, had earlier withdrawn its claim, pursuant to which the

CoC was reconstituted with operational creditor as sole member of CoC who

proposed liquidation of the Corporate Debtor. On an application filed by the

Appellant, Ld. Adjudicating Authority passed an order dated 11.08.2023 vide

which the CoC was again restored to its original composition with Axis Bank as

the sole member. Thereafter, Axis Bank gave consent for proceeding with the

liquidation application already pending before the Adjudicating Authority.

However, even after repeated proceedings before the Adjudicating Authority, the

matter did not progress towards resolution or revival of the Corporate Debtor

and instead remained caught between the proposed liquidation, pending

applications and the disputes raised by the parties.

9. Ld. Counsel submits that the subsequent developments make it clear that

the CIRP has effectively reached a stalemate. The 10th CoC meeting records that

the application filed by the Appellant under Section 12A seeking withdrawal of

the CIRP had been dismissed by the Adjudicating Authority on 18.12.2024, while

Axis Bank stated that the entire payment had already been received in its loan

account and sought clarity regarding the return of the security documents. The

discussions further recorded the competing positions concerning the payment

made by the Appellant in his capacity as personal guarantor and the course to Page 9 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 be followed for bringing the CIRP to an end. Significantly, during the said

proceedings, the RP/Chairman of CoC recorded that there was no possibility of

settlement, while the parties themselves discussed either closure of the CIRP or

proceeding towards liquidation.

10. Ld. Counsel submits that, in view of these subsequent developments, the

numerous allegations and disputes raised by the Appellant need not be

examined independently for determining the present appeal. The record shows

that despite the CIRP having continued for a considerable period, no effective

resolution has emerged; the liquidation application remains pending, the Section

12A application has been dismissed; the sole CoC member has expressed its

position regarding closure/liquidation; and the parties have themselves failed to

arrive at any workable settlement. The Respondent therefore submits that the

proceedings have reached a point of complete stalemate, and continuation of the

CIRP without any realistic prospect of resolution would serve no useful purpose.

The appeal may accordingly be considered in light of these subsequent

developments and disposed of in accordance with the circumstances now

prevailing.

Submissions of the Respondent No.2/ Axis Bank

11. Ld. Counsel for Financial Creditor submits that the present appeal arises

from the order dated 18.12.2024 passed by the Learned Adjudicating Authority

in CP No. (IB)-79/9/JPR/2020, whereby withdrawal of the CIRP was declined.

The CIRP has since continued and reached a stalemate.

Page 10 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025

12. He submits that Axis Bank Ltd. was the sole financial creditor of the

Corporate Debtor, but its entire financial exposure was discharged by the

Appellant from his own funds by 24.09.2024, resulting in a NIL balance and

release of the mortgage and security documents. Axis Bank, therefore, has no

subsisting financial claim or continuing interest in the Corporate Debtor.

13. It is further submitted that after initiation of the CIRP on 16.08.2022, Axis

Bank withdrew its claim under Regulation 12A by emails dated 01.10.2022 and

06.10.2022, and its withdrawal was recorded in the CoC meetings held on

17.10.2022 and 05.11.2022. Consequently, Axis Bank ceased to be a member of

the CoC from 07.10.2022 and had no role in the subsequent conduct of the CIRP

or the decision to liquidate the Corporate Debtor.

14. Ld. Counsel submits that the CIRP costs claimed by Respondent No. 1,

stated to be approximately Rs. 35 lakhs against the original operational debt of

approximately Rs. 12 lakhs, require independent scrutiny and determination

strictly in accordance with Regulation 34B of the IBBI Regulations. In any event,

Axis Bank cannot be fastened with costs incurred after its withdrawal from the

CoC and cessation of its role in the CIRP.

15. Ld. Counsel submits that, in view of the statement recorded on 05.08.2026

by this Appellate Tribunal, Axis Bank has no objection to disposal of the appeal

in terms of the proposed settlement, whereby the Appellant has offered Rs.

18,00,000/- to Respondent No. 3 along with CIRP costs as determined by the

Learned Adjudicating Authority, and supports early closure of the CIRP. Page 11 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 Submissions of Respondent No.3/ Prime Impex

16. Ld. Counsel for Operational Creditor submits that the application for

closure of CIRP filed by the Appellant Under Section 12A of the Code was not

compliant with Regulation 30A, as the Form FA relied upon was unsigned and

merely a draft, and requisite bank guarantee towards CIRP costs was not

furnished with application. The Learned Adjudicating Authority, therefore,

rightly dismissed the application, in view of the law laid down by the Hon'ble

Supreme Court in "Glass Trust Company LLC Vs. Byju Raveendran & Ors.,

reported in 2024 SCC OnLine SC 3032".

17. Ld. Counsel submits that, as recorded in the order passed by this

Appellate Tribunal on 05.08.2026, the Appellant has expressed willingness to

pay Rs. 18 lakhs to Respondent No. 3 along with the CIRP costs determined by

the Learned Adjudicating Authority. Respondent No. 3 is willing to accept the

said amount and, upon payment of the CIRP costs so determined, execute Form

FA under Section 12A of the IBC read with Regulation 30A for bringing the CIRP

to an end.

18. Ld. Counsel submits that the amendment to the IBC effective from

26.05.2026 does not cure the defects in the application already filed, particularly

as the CIRP had proceeded to the stage of invitation of expressions of interest.

19. Ld. Counsel submits that, insofar as the order dated 26.09.2022 is

concerned, the appeal in which the said interim order was passed was dismissed

on 31.03.2023, whereas the liquidation application was filed thereafter on Page 12 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 01.05.2023. There was, therefore, no deliberate violation of the said order.

Without prejudice, Respondent No. 3 has already tendered an unconditional

apology in case this Hon'ble Appellate Tribunal takes a different view.

20. In view of the aforesaid, Respondent No. 3 prays that the appeal be

dismissed. In the alternative, appropriate orders may be passed to give effect to

the aforesaid settlement, subject to payment of Rs. 18 lakhs and the CIRP costs

determined by the Learned Adjudicating Authority.

Analysis and Findings

21. We have gone through the documents on record and heard the parties

through their Ld. Counsels.

22. The CIRP of the Corporate Debtor was initiated on 16.08.2022 on the

application of Prime Impex, the Operational Creditor, whose claim was

approximately Rs. 11.90 lakhs. Axis Bank was the sole Financial Creditor and

had filed a claim of approximately Rs. 1.04 Crore. In the course of the CIRP, no

resolution could be achieved as Corporate Debtor has no tangible assets and the

CoC resolved to proceed towards liquidation. The Resolution Professional

thereafter filed IA No. 243/JPR/2023 under Section 33(2) of the Code seeking

liquidation of the Corporate Debtor. The Resolution Professional also filed IA No.

160/2023 for determination of the CIRP costs, which is pending with Ld.

Adjudicating Authority.

Page 13 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025

23. Several efforts were made at various stages of proceedings to reach a

settlement. The record shows that settlement was discussed on several occasions

during the CIRP itself. In the CoC proceedings, the Financial Creditor had noted

that the CIRP had been initiated for a claim of only about Rs. 12 lakhs and had

continued for a considerable period. The Financial Creditor had also taken an

initiative for conciliation and settlement between the parties. The Appellant had

made different settlement offers, including an offer to settle the entire claim of

the Operational Creditor, though those efforts did not result in a final settlement

at that stage.

24. The application filed by the Appellant under Section 12A was ultimately

dismissed by the Adjudicating Authority by order dated 18.12.2024, principally

on the ground that the statutory procedure contemplated under Section 12A of

the Code read with Regulation 30A of the CIRP Regulations, 2016 had not been

complied with. In particular, the Adjudicating Authority noted the requirement

relating to Form FA, approval of the CoC and the CIRP-cost related

security/Bank Guarantee. We are conscious that these statutory requirements

cannot ordinarily be ignored and that the present proceedings cannot be closed

by a simple order allowing withdrawal under Section 12A.

25. However, during the pendency of the present Appeal, there have been

material developments. On 05.05.2026, this Tribunal recorded that settlement

discussions were taking place between the Appellant and the Operational

Creditor, but that the parties had reached a deadlock particularly with regard to

the CIRP costs, which were already the subject matter of proceedings before the Page 14 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 Adjudicating Authority. On 19.05.2026, it was informed that the settlement talks

had failed. Thereafter, on 01.07.2026, the Appellant offered Rs. 17 lakhs to the

Operational Creditor in full and final settlement, including interest and other

amounts, and undertook to pay the CIRP costs as determined by the

Adjudicating Authority. Importantly, on being specifically asked by this Tribunal,

the Operational Creditor did not dispute the amount of Rs. 17 lakhs and the

remaining issue was stated to be with regard to Form FA and the Bank

Guarantee. We accordingly directed the Appellant to place his undertaking on

affidavit.

26. Pursuant to the aforesaid direction, the Appellant filed the Affidavit in

Compliance dated 29.07.2026. This affidavit is important because it converts the

statement made before the Tribunal into a formal undertaking. The Appellant

placed on record that the claim of the sole Financial Creditor, Axis Bank, of

approximately Rs. 1.04 Crore, had been settled by payment of Rs. 1.28 Crore. In

relation to the Operational Creditor, the Appellant undertook to pay Rs. 17 lakhs

against the claim of approximately Rs. 11.90/11.95 lakhs towards full and final

settlement. Most importantly, the Appellant also undertook to pay the CIRP costs

as may ultimately be determined by the Adjudicating Authority in accordance

with law. The affidavit was thus not a mere expression of willingness to negotiate;

it contained a specific undertaking regarding payment of the creditors' claims as

well as the CIRP costs. The Affidavit dated 29.07.2026 is extracted below:

Page 15 of 23

Company Appeal (AT) (Ins.) No. 222 of 2025 Page 16 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 Page 17 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 Page 18 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025

27. Thereafter in the hearing on 05.08.2026, the position was further clarified

before this Tribunal. Learned counsel for the Appellant, on instructions, stated

that the Appellant was ready to pay Rs. 18 lakhs to Prime Impex as full and final

settlement to which the Ld. Counsel for Operational Creditor agreed. Thus, even

the amount offered to the Operational Creditor was subsequently enhanced from

Rs. 17 lakhs to Rs. 18 lakhs. The dispute regarding CIRP costs, which had earlier

prevented the settlement from being completed, is not being left unresolved by

the Appellant; rather, the Appellant has expressly agreed to abide by whatever

amount is determined by the Adjudicating Authority in IA No. 160/2023.

28. When the entire factual position is considered together, certain

peculiarities of this CIRP Proceeding become clear, which are given below:

i. The CIRP was initiated essentially on a relatively small operational

debt of about Rs. 11.90 lakhs.

ii. The sole Financial Creditor, Axis Bank, has already been paid in full.

iii. The sole Operational Creditor is being offered Rs. 18 lakhs against

its original claim of Rs. 11.90 Lakhs as full and final settlement.

There is no other creditor in the instant proceedings.

iv. There is no resolution plan presently available, which can take the

Corporate Debtor towards resolution.

v. The Appellant has agreed to pay the CIRP Costs, which is pending

adjudication in IA No. 160/2023 before the Ld. Adjudicating

Authority.

Page 19 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 This clearly shows that no useful purpose is being served by keeping this CIRP

alive, except for wastage of precious time of this Appellate Tribunal and wasteful

increase in CIRP Cost.

29. When we consider the submission of the RP, his concern regarding CIRP

costs cannot be said to be without basis. CIRP costs are legitimate statutory

expenses and cannot simply be waived or assumed. Similarly, the objection

regarding compliance with Section 12A and Regulation 30A was legally relevant

when the original withdrawal application was considered. However, that does not

answer the present question. The Appellant is now expressly undertaking to pay

the CIRP costs as determined by the Adjudicating Authority, and the

determination of those costs is already pending before the NCLT. Therefore, the

legitimate interest of the RP in recovery of properly determined CIRP costs is

protected without requiring the CIRP itself to continue indefinitely.

30. During the hearing, it was brought to our notice that application for

withdrawal of Corporate Insolvency Resolution Process has to be made by the

Applicant initiating the CIRP Process in Form -FA, which in this case is Prime

Impex/ Respondent No.3. The Applicant also has to attach bank guarantee

equivalent to CIRP Cost till the date of filing of application, as provided in

Regulation 30A(2) of CIRP Regulations, 2016. The Operational Creditor refused

to provide bank guarantees as the CIRP Cost claimed by the RP was much higher

than its claim. Therefore, in-spite of paying the Financial Creditor in full;

submitting a bank draft of entire claim of Operational Creditor upto that time;

the Appellant could not get the Operational Creditor and Resolution Professional Page 20 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 to agree to sign and file the application under Section 12A. In such a situation,

Appellant himself submitted the Form-FA with an undertaking that he would

pay the dues of the RP as decided by the Ld. Adjudicating Authority, for which

an application has already been filed by the RP with the Ld. Adjudicating

Authority. However, the Ld. Adjudicating Authority did not accept the

submission of Appellant and rejected the application on the grounds of non-

compliance with the procedure laid down in Section 12A of the Code r/w

Regulation 30A of CIRP Regulations, 2016.

31. As we have noted earlier the Appellant in its affidavit dated 29.07.2026

has stated that he has made full payment to the Financial Creditor/ Axis Bank

and the bank is on record stating that they have no further claims. Further, he

is willing to make a payment of Rs. 17 lakhs to the Operational Creditor as full

and final settlement. Subsequently, during the hearing on 05.08.2026 the Ld.

Counsel for Applicant under instructions of his client stated that he is ready to

pay Rs. 18 lakhs to the Operational Creditor/ Respondent No.3 which was agreed

to by Ld. Counsel for Respondent No. 3 as full and final settlement of his claim.

Ld. Counsel for Appellant further stated that he is also willing to pay the CIRP

Cost which would be determined by the Adjudicating Authority.

32. In these proceedings, we note that the claims of all the creditors have now

been settled. The CIRP Cost is to be determined by the Adjudicating Authority

and the Appellant has agreed to pay the amount, which would be determined by

the Adjudicating Authority. However, the CIRP Process has effectively reached a

procedural stalemate, as the Form FA cannot be filed in the present situation Page 21 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025 due to peculiar situation prevailing, wherein the CIRP Cost is not crystallised

and there is a dispute regarding the same between the Appellant and RP, which

is pending with Adjudicating Authority. The amount for Bank Guarantee to be

attached with Form FA cannot be determined in such a situation. Futher,

Operational Creditor is also not willing to provide the bank guarantee. In such a

situation, the procedure as laid down by Section 12A of the Code and Regulation

30A is not feasible option in this proceeding. Keeping the CIRP alive is not serving

any purpose nor it would be in accordance with the objectives of the Code which

seeks to resolve the insolvency and keep it as a going concern. We are of the view

that, the company is a viable entity and keeping the CIRP alive merely because

the earlier statutory withdrawal mechanism could not be completed, would be

huge wastage of precious resources in terms of time of Tribunals which could be

productively used to dispose other important proceedings.

33. In view of the aforesaid discussion, we are of the view that in the peculiar

circumstances of the present case, continuation of the CIRP would serve no

meaningful purpose and would only result in further wastage of precious

resources. We therefore dispose of this appeal with the following directions: -

(i) The CIRP Proceedings against the Corporate Debtor/ Shalfeyo

Industries Pvt. Ltd. are closed subject to the condition that as per

the undertaking, the Appellant would pay Rs.18 lakhs to

Respondent No.3/ Prime Impex within two weeks of this order as

full and final settlement;

Page 22 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025

(ii) Ld. Adjudicating Authority to determine the CIRP costs in IA No.

160/2023 within four weeks from the receipt of this order, after

considering the claim of the Resolution Professional and the

submission of the Appellant; and

(iii) The Appellant would pay the CIRP costs as determined by the Ld.

Adjudicating Authority within two weeks from the order.

34. Pending IA's if any are closed. No order as to costs.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Arun Baroka] Member (Technical)

[Indevar Pandey] Member (Technical) Place: New Delhi

Harleen/ Pragya (LRA)

Page 23 of 23 Company Appeal (AT) (Ins.) No. 222 of 2025