In the matter of WCUBE SOLUTIONS PRIVATE LIMITED

National Company Law Tribunal8 May 2026

CitationIB/519/ND/2025

Ratio decidendi

The rule this decision rests on

Where the adjudicating authority is satisfied under Section 7(5) of the Insolvency and Bankruptcy Code, 2016 that a default has occurred, that is, non-payment of a debt, or any part or instalment of it, when it has become due and payable, the application must be admitted unless it is incomplete; the Tribunal has no discretion to refuse admission in order to facilitate a settlement between the parties, and it cannot compel parties to settle. Where the corporate debtor contends that the debt is not due, the Tribunal may reject the application only if it finds the debt has not become due and payable; a debt that is due and payable and remains unpaid is a default which requires admission, and no further ground exists to reject the application. A conversion option in a loan agreement, exercisable only at the discretion of the financial creditor and not exercised, does not extinguish or suspend the debtor's liability to repay, and so does not preclude admission of the application under Section 7.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

IN THE NATIONAL COMPANY LAW TRIBUNAL: NEW DELHI COURT – IV Item No. 404 IA/1140/ND/2026 in IB/519/ND/2025 IN THE MATTER OF: Swatee Agarawal …Applicant Versus Wcube Solutions Pvt. Ltd …Respondent Under Section 7 of the Insolvency and Bankruptcy Code, 2016. Order delivered on 08.05.2026 CORAM: SHRI ASHOK KUMAR BHARDWAJ, HON’BLE MEMBER (JUDICIAL) SHRI ATUL CHATURVEDI, HON’BLE MEMBER (TECHNICAL) HYBRID HEARING (PHYSICAL & VC) PRESENT: For the Applicant : Ms. Shruti Kanodia, Mr. Rishabh Dua, Ms. Sejal Gupta, Advs. For the Respondent : Mr. Shikhar Khare, Ms. Bhanupriya Singh, Advs. ORAL ORDER IA/1140/ND/2026: For the reasons stated therein the IA is allowed and the form-D is taken on record, subject to all just exceptions. IB/519/ND/2025: 1. The present petition has been preferred under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating the CIRP against Corporate Debtor. The amount of debt and default has been mentioned in Part-IV of the application which reads thus:

IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026

2. Having drawn our attention to term loan agreement dated 07.05.2024 the Ld. Counsel for the petitioner espoused that the entire amount of debt repayable within one year of disbursement i.e. 08.05.2024. The clause 2 of the agreement reads thus: “TERM LOAN AMOUNT; DISBURSEMENT TERMS 2.1 Terms of Disbursement and draw downs. 2.1.1 Subject to the terms and conditions set forth in this Agreement and in the other Loan Documents, Lender shall extend the Term Loan Amount(s) to the Borrower on the respective Closing Date(s) up to an aggregate of the principal amount specified in Schedule 1 hereunder. The Term Loan Amount(s) shall be utilized by the Borrower only for the specific Purpose as stated in Schedule 1 hereunder, and for no other reason or purpose whatsoever. 2.1.2 Subject to the terms and conditions set out under this Agreement, the Term Loan Amounts shall be disbursed to the Borrower as per Schedule 1. 2.2 Repayment. 2.2.1 The Borrower shall repay the Term Loan on the Due Date(s), in accordance with the terms set out in Schedule 1 hereof. If the Due Date(s) in respect of any amounts payable falls on a day which is not a Business Day, the immediately next Business Day shall be considered as the Due Date(s) for such payment. 2.2.2 Subject to the provisions of this Agreement, the Borrower may prepay the outstanding principal amounts in full or in part, before the Due Date(s).”

3. It is not in dispute that the Principal amount of Rs. 1,50,00,000/- (Indian Rupees One Crore Fifty Lakhs only) has not been repaid by the Corporate Debtor to the Financial Creditor. By way of IA/1140/ND/2026 the creditor has also placed on record the Form-D dated 09.10.2025 issued by NeSL to establish the default. The Form/report reads thus:-

IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026

4. To further establish the disbursement of amount of loan, Ld. Counsel for the Creditor made reference to the bankers book i.e. HDFC Bank. The IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026

Bank statement Placed on record reads thus:

5. The aforementioned documents viz. the statement of the item book and the NeSL report, are sufficient to establish that there is debt disbursed by the Applicant to the Corporate Debtor as also there is default in repayment of the same. Along with this petition, the Applicant has also enclosed the FORM2 in terms of which the IP accorded his consent to act as IRP. The Form-2 reads thus:

IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026

6. As can be seen from the aforementioned consent form, IP Mr. Kunwarpreet Singh declared that no disciplinary proceedings are pending against him with the board or ICSI institute. The requirement of Section 7(5)(a) of IBC, 2016 is found satisfied. Mr. Shikhar Khare, Ld. Counsel for the Corporate Debtor submitted that the Corporate Debtor is financially healthy company and today he has brought a cheque of Rs. 10 Lacs to offer to the Financial Creditor to show his bondafide that he is keen to enter settlement qua the amount of debt defaulted to be paid by the Corporate Debtor. However, Ld. Counsel for the petitioner categorically submitted

IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 that he has instructions from his client that she is not interested in any settlement. It is noted that even previously also, Ld. Counsel for the Corporate Debtor had placed on record an e-mail to buttress that the Corporate Debtor is keen to enter into settlement. In the wake, the settlement discussion reads thus:

7. However, as noted hereinabove, the Financial Creditor is not interested in any settlement. As per the rule by Hon’ble Supreme Court in M. Suresh Kumar Reddy Vs. Canara Bank & Ors. [Civil Appeal No. 7121 of 2022]. It is not for this Tribunal to facilitate the settlement between the parties. Relevant excerpts of the judgment reads thus:

IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 “9. The view taken in Innoventive Industries has been followed by this Court in the case of E.S. Krishnamurthy and others. Paragraph nos. 32 to 34 of the said decision read thus: 32. In Innoventive industries [Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, paras 28 and 30 : (2018) 1 SCC (Civ) 356], a two-Judge Bench of this Court has explained the ambit of Section 7 IBC, and held that the adjudicating authority only has to determine whether a “default” has occurred i.e. whether the “debt” (which may still be disputed) was due and remained unpaid. If the adjudicating authority is of the opinion that a “default” has occurred, it has to admit the application unless it is incomplete. Speaking through Rohinton F. Nariman, J., the Court has observed : (SCC pp. 438-39, paras 28 & 30) “28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor — it need not be a debt owed to the applicant financial creditor.

Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 registered office of the corporate debtor. The speed within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important.

This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the “debt”, which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. * * * 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred.

It is of no matter that the debt is disputed so long as the debt is “due” i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 adjudicating authority may reject an application and not otherwise.’

33. In the present case, the adjudicating authority noted that it had listed the petition for admission on diverse dates and had adjourned it, inter alia, to allow the parties to explore the possibility of a settlement. Evidently, no settlement was arrived at by all the original petitioners who had instituted the proceedings. The adjudicating authority noticed that joint consent terms dated 12-2-2020 had been filed before it. But it is common ground that these consent terms did not cover all the original petitioners who were before the adjudicating authority. The adjudicating authority was apprised of the fact that the claims of 140 investors had been fully settled by the respondent. The respondent also noted that of the claims of the original petitioners who have moved the adjudicating authority, only 13 have been settled while, according to it “40 are in the process of settlement and 39 are pending settlements”. Eventually, the adjudicating authority did not entertain the petition on the ground that the procedure under IBC is summary, and it cannot manage or decide upon each and every claim of the individual homebuyers. The adjudicating authority also held that since the process of settlement was progressing “in all seriousness”, instead of examining all the individual claims, it would dispose of the petition by directing the respondent to settle all the remaining claims “seriously” within a definite time-frame. The petition was accordingly disposed of by directing the respondent to settle the remaining claims no later than within three months, and that if any of the remaining original petitioners were aggrieved by the settlement process, they would be at liberty to approach the adjudicating authority again in accordance with law. The adjudicating authority's

IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 decision was also upheld by the appellate authority, who supported its conclusions.

34. The adjudicating authority has clearly acted outside the terms of its jurisdiction under Section 7(5) IBC. The adjudicating authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the adjudicating authority must then either admit or reject an application, respectively. These are the only two courses of action which are open to the adjudicating authority in accordance with Section 7(5). The adjudicating authority cannot compel a party to the proceedings before it to settle a dispute. (emphasis added)

10. Thus, once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section 7. “Default” is defined under sub-section (12) of Section 3 IBC which reads thus: “3. Definitions: - In this Code, unless the context otherwise requires— .. .. .. .. .. .. .. .. (12) “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not [paid] by the debtor or the corporate debtor, as the case may be;”

Thus, even the non-payment of a part of debt when it becomes due and payable will amount to default on the part of a corporate debtor. In such a case, an order of admission under Section 7 IBC must follow. If NCLT finds that there is a debt, but it has not become due and payable, the IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 application under Section 7 can be rejected. Otherwise, there is no ground available to reject the application.

11. Reliance is placed on the decision of this Court in Vidarbha Industries and in particular, what is held therein in paras 86 to 89 which reads thus:- “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.

87. Ordinarily, the adjudicating authority (NCLT) would have to exercise its discretion to admit an application under Section 7 IBC and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the corporate debtor in payment of the debt, unless there are good reasons not to admit the petition.

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 IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 award/decretal amount is incapable of realisation. The example is only illustrative.

89. In this case, the adjudicating authority (NCLT) has simply brushed aside the case of the appellant that an amount of Rs 1730 crores was realisable by the appellant in terms of the order passed by APTEL in favour of the appellant, with the cursory observation that disputes if any between the appellant and the recipient of electricity or between the appellant and the Electricity Regulatory Commission were inconsequential.” (emphasis added) 12. A review petition was filed by Axis Bank Ltd. seeking a review of the decision of Vidarbha Industries on the ground that the attention of the Court was not invited to the case of E.S. Krishnamurthy. While disposing of review petition by order dated 22nd September 2022, this Court held thus: “The elucidation in paragraph 90 and other paragraphs were made in the context of the case at hand. It is well settled that judgments and observations in judgments are not to be read as provisions of statute. Judicial utterances and/or pronouncements are in the setting of the facts of a particular case.

To interpret words and provisions of a statute, it may become necessary for the Judges to embark upon lengthy discussions. The words of Judges interpreting statutes are not to be interpreted as statutes.”

13. Thus, it was clarified by the order in review that the decision in Vidarbha Industries was in the setting of facts of the case before this IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026

Court. Hence, the decision in Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view taken in the cases of Innoventive Industries and E.S. Krishnamurthy. The view taken in Innoventive Industries still holds good.” 8. Similar view was taken by the Hon’ble Supreme Court in E.S. Krishnamurthy v. Bharath Hi-Tecch Builders (P) Ltd., (2022) 3 SCC 161. 9. In terms of the view taken by Hon’ble Supreme Court in the aforementioned judgment, we are unable to intervene in the matter to facilitate settlement between the parties. Mr. Khare, Ld. Counsel for the Corporate Debtor also espoused with aplomb that the loan agreement provides for conversion of loan amount into equity share and the auction by the Financial Creditor. 10. From a perusal of clause 6 of the agreement, it is clear that it was the discretion/option which could be exercised by the Financial Creditor/Applicant to seek conversion of the amount of debt into equity shares. Indubitably as on date no conversion has taken place the fact is established from the approach of the Corporate Debtor to offer settlement to the petitioner and to further propose to handover a cheque of Rs. 10,00,000/- to him. The clause 6 reads thus:- “6. AMENDMENTS AND WAIVERS 6.1 Any provision of this Agreement may be waived by Lender if, and only if such waiver is in writing and duly signed by Lender. No waiver by Lender of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. Any provision of this Agreement may be amended by the Parties if, and only if such amendment is in writing and duly signed by both the Parties.”

11. As far as the reply dated 13.08.2025 given by the creditor to the legal notice served upon the Corporate Debtor is concerned, the reply IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 nowhere indicates or establishes that the amount of debt could be converted into equity in any manner. Indubitably as on date and also on the date of filing of this application under sec 7 of the code, the liability of the Corporate Debtor to repay the amount of debt subsists. 12. In totality of the facts and circumstances, particularly for the reasons that the requirement of Section 7(3) read with Section 7(5)(1) are met, we pass an order in terms of provision Section 7(6) of IBC, 2016 i.e. for commencement of CIRP. Mr. Singh who has given consent for the purpose is appointed as IRP. The Application stands allowed. 13. After we dictated the above order, Ld. Counsel for the corporate debtor submitted that the Corporate Debtor has a buyer who will purchase the property of the Corporate Debtor within 30 days and will take over all the liability of the Corporate Debtor regarding the amount of debt payable to the Applicant before us and after dictating the aforementioned order, Ld.

Counsel for the Applicant gave four citations on a slip of paper, without making any arguments with relation to the same. He simply asked us to note the citations in the order. As we dictated the order in the open court and the counsel for the respondent did not make any submissions with reference to the order, we note the citations given by respondent i. Chemical Suppliers India Pvt. Ltd. Vs. Kanodia Technoplast Ltd. Company Appeal (AT) (Insolvency) No. 1244 of 2025 ii. Reliance Commercial Finance Ltd. (Previously known as Reliance Capital Ltd.) Vs. Darode Jog Builder Pvt. Ltd. Comp. App. (AT) (Ins) No. 1005 of 2022 iii. State Bank of India v. Krishidhan Seeds Pvt. Ltd. (TP 82/2019) (CP(IB) 500/2018) iv. B. Nirmal Kumar v. LIC HFL Trustee Co. (P) Ltd., 2025 SCC OnLine NCLAT 1842 14. We have already referred to the judgments of Hon’ble Supreme Court wherein their lordships have laid down the law that it is IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026 impermissible to this Tribunal to facilitate the settlement. The counsel for the creditor pressed the petition on merits and denied settlement.

15. As proposed by the Petitioner, Mr. Kunwarpreet Singh having Registration No. IBBI/IPA-002/IP01150/2021-2022/ 13788 is appointed as IRP, subject to the condition that no disciplinary proceeding is pending against him and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. 16. It is further ordered that Mr. Kunwarpreet Singh shall take charge of the CIRP of the Corporate Debtor with immediate effect and would take steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016 read with extend provisions of IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016. The moratorium under sec 14 of IBC, 2016 is declared. 17. The Petitioner is directed to deposit Rs. 2,00,000/- only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor. 18. A copy of this Order shall immediately be communicated by the Registry/Court Officer of this Tribunal to the Petitioner /Financial Creditor, the Respondent/Corporate Debtor and the IRP mentioned above.

19. In addition, a copy of this Order shall also be forwarded by the Registry/Court Officer of this Tribunal to the IBBI for their records. 20. Accordingly, the petition IB/519/ND/2025 filed under Sec 7 of the IBC, 2016 is allowed. -SD- -SD- ATUL CHATURVEDI ASHOK KUMAR BHARDWAJ MEMBER (TECHNICAL) MEMBER (JUDICIAL)

Mamta/Alok

IA/1140/ND/2026 in IB/519/ND/2025 Date of Order 08.05.2026

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