Jagmal Suspended Board Of Director M/S ... vs M/S Mangal Sales Corporation

(Arising out of Order dated 09.04.2026 passed by the Adjudicating Authority (National Company Law Tribunal, Principal Bench, New Delhi) in C.P. (IB) No. 429 of 2024.)

IN THE MATTER OF: Jagmal Suspended Board of Director Prolific Papers Pvt. Ltd. ...Appellant Versus Mangal Sales Corporation Through Its Proprietor & Anr. ...Respondents Present: For Appellant : Mr. Akhil Shankhwar and Mr. Vardan Mittal, Advocate.

For Respondents : Mr. Raunak Sathpathy, Advocate. Mr. Pradeep Gaur, Advocate for IRP.

JUDGMENT

Per Justice N. Seshasayee, Member (Judicial)

1. This appeal has been filed by the suspended director of the Corporate

Debtor (CD), challenging the order admitting the CD into CIRP under Sec. 9

of the IBC in CP (IB) No. 429 of 2024, filed by the first respondent herein.

2. The facts fall within a very narrow compass and are as follows:

a) The first respondent/Operational Creditor (OC) has laid a petition

under Sec. 9 alleging that appellant has defaulted in payment of

an operational debt of Rs. 1,69,48,652.14/-.

b) The CD entered appearance and the matter was heard by the

Adjudicating Authority. On 15.12.2025, the Adjudicating Authority

reserved the petition under Sec. 9 for orders.

c) While matters stood thus, on 23.03.2026 the appellant and the

first respondent settled their disputes and entered into a

Settlement Deed. Based on the same, the appellant and the first

respondent agreed that the former would pay the latter a sum that

they had mutually agreed towards full settlement of the latter's

claim. This amount was to be paid in three tranches. This

document of settlement also provided for the withdrawal of CP (IB)

No. 429 of 2024 which the first respondent had instituted

immediately the appellant making payments as stipulated in the

said document.

d) On 23.03.2026, the last instalment required to be paid was duly

paid. On 26.03.2026, an application was taken out by the

respondent No. 1, the Operational Creditor (OC) for withdrawal of

the CP (IB) No. 429 of 2024. However, some defects were notified

by the Registry and on 09.04.2026, this application was refiled by

the first respondent.

Comp. App. (AT) (Ins.) No. 687 of 2026 2 of 4

3. On 09.04.2026, the Adjudicating Authority pronounced the Order

admitting the CD into CIRP. It is in these circumstances the present appeal

has been preferred challenging the aforesaid order. Learned counsel for the

appellant submitted that it was the sheer misfortune of the CD that it was

drawn into CIRP even though the entire claim of the first respondent had

been paid in terms of the settlement deed even before the CD was admitted

to CIRP. Indeed, even an application was promptly filed on 26.03.2026, but

because some defects were notified, the same could not be brought on

record before the final order was passed. Indeed, according to both the

parties herein, before the pronouncement of order on 09.04.2026, this

aspect was brought to the notice of the learned Adjudicating Authority but

the same was not considered.

4. Appearing for the first respondent Shri. Raunak Satpathy, the learned

counsel for the operational creditor, endorsed every statement of the counsel

for the appellant. He submitted that the entire amount had been received

even before the order under Sec. 9 was pronounced and, hence, on

26.03.2026, the first respondent had even taken out an application.

5. We have carefully perused the records, including documents of

settlement dated 23.03.2026. The e-filing portal of NCLT shows that the

application for withdrawal of Sec. 9 petition was filed on 26.03.2026 by the

very Operational Creditor who had earlier filed the petition under Sec. 9 of

the IBC. Given the circumstances, it would have been appropriate if the

learned Adjudicating Authority had deferred pronouncement of the final

Comp. App. (AT) (Ins.) No. 687 of 2026 3 of 4 order and expedited the scrutiny process of the application which the

appellant had filed for withdrawal of CP (IB) No. 429 of 2024.

6. Inasmuch as the entire amount has been paid even before the

pronouncement of final order, necessarily the CP (IB) No. 429 of 2024

should have been allowed to be withdrawn. Since CIRP came to be admitted

overlooking the aspect of complete settlement of the dues of the respondent

No. 1, it is appropriate that the order of the Adjudicating Authority be set

aside and the CIRP is permitted to be withdrawn.

7. Accordingly, this appeal is allowed and the impugned Order dated

09.04.2026 passed by the Adjudicating Authority is set aside, and the CIRP

wrongly initiated against the corporate debtor is directed to be withdrawn.

No costs.

8. All Pending IAs also stand disposed of.

[Justice N Seshasayee] Member (Judicial)

[Indevar Pandey] Member (Technical) rashmi

Comp. App. (AT) (Ins.) No. 687 of 2026 4 of 4