Kkspun India Limited vs State Bank Of India

(Arising out of order dated 11.07.2025 passed by the National Company Law Tribunal, New Delhi Bench-IV in CP (IB) No. 36/ND/2024)

In the matter of:

KAVISH GUPTA, SUSPENDED DIRECTOR OF KKSPUN INDIA LIMITED R/o 86, Anand Lok, August Kranti Marg, New Delhi - 110049 ...Appellant

Vs.

1. YES BANK LTD. Having its Registered Office at: Yes Bank House Off Western Express Highway Santacruz East, Mumbai - 400055

2. INTERIM RESOLUTION PROFESSIONAL OF KKSPUN INDIA LIMITED Mr. Harvinder Singh IBBI/IPA 001/IPP00463/2017-2018/10806 11 CSC DDA Market A Block Saraswati Vihar, New Delhi, National Capital Territory of Delhi, 110034

3. STATE BANK OF INDIA Having its concerned Brach Office at: State Bank of India, SAMB-II, 11th Floor, Jawahar Vyapar Bhavan, 1, Tolstoy Marg, New Delhi - 110001 Through its Authorised officer

4. IndusInd Bank Ltd. Registered office: 2401 Gen., Thimmayya Road, Pune- 411001 ...Respondents Present:

For Appellant: Mr. Kartik Malhotra and Mr. Anindit Mandal, Advocates.

For Respondents: Mr. Hasmat Nabi, Ms. Farah Naaz and Mr. Toshib Ahmed, Advocates for Yes Bank. Ms. Rashi Gupta, Adv. for IRP. Mr. Siddharth Sangal, Ms. Richa Mishra, Ms. Kashish Tewatia, Ms. Mrinalini Tandon, Advocates for SBI.

WITH Company Appeal (AT) (Ins.) No. 812 of 2025

(Arising out of order dated 14.05.2025 passed by the National Company Law Tribunal, New Delhi Bench-IV in CP (IB) No. 326/ND/2024)

In the matter of:

KKSPUN INDIA LIMITED (CIN:U29199DL2006PLC144590) A company incorporated under Companies Act, 1956 Regd. Office: DSIIDC Shed No. 103, Scheme - I, Okhla Industrial Area, Phase-II, New Delhi - 110 020

ALSO AT: Having its Corporate Office at: 10th Floor, Tower A, Vatika Mindscapes, 12/3, Sarai Khwaja, Mathura Rd, Sector 27, Faridabad, Haryana 121003 ...Appellant

Vs.

STATE BANK OF INDIA Having its concerned Brach Office at: State Bank of India, SAMB-II, 11th Floor, Jawahar Vyapar Bhavan, 1, Tolstoy Marg, New Delhi - 110001 Through its Authorised officer ...Respondent

Page 2 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Present:

For Appellant: Mr. Kartik Malhotra and Mr. Anindit Mandal, Advocates.

For Respondents: Mr. Siddharth Sangal, Ms. Richa Mishra, Ms. Kashish Tewatia, Ms. Mrinalini Tandon, Advocates for SBI.

WITH Company Appeal (AT) (Ins.) No. 813 of 2025

(Arising out of order dated 28.04.2025 passed by the National Company Law Tribunal, New Delhi Bench-IV in CP (IB) No. 326/ND/2024)

In the matter of:

KKSPUN INDIA LIMITED (CIN:U29199DL2006PLC144590) A company incorporated under Companies Act, 1956 Regd. Office: DSIIDC Shed No. 103, Scheme - I, Okhla Industrial Area, Phase-II, New Delhi - 110 020

ALSO AT: Having its Corporate Office at: 10th Floor, Tower A, Vatika Mindscapes, 12/3, Sarai Khwaja, Mathura Rd, Sector 27, Faridabad, Haryana 121003 ...Appellant

Vs.

STATE BANK OF INDIA Having its concerned Brach Office at: State Bank of India, SAMB-II, 11th Floor, Jawahar Vyapar Bhavan, 1, Tolstoy Marg, New Delhi - 110001 Through its Authorised officer ...Respondent

Present:

For Appellant: Mr. Kartik Malhotra and Mr. Anindit Mandal, Advocates.

Page 3 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 For Respondents: Mr. Siddharth Sangal, Ms. Richa Mishra, Ms. Kashish Tewatia, Ms. Mrinalini Tandon, Advocates for SBI.

WITH Company Appeal (AT) (Ins.) No. 815 of 2025

(Arising out of order dated 28.04.2025 passed by the National Company Law Tribunal, New Delhi Bench-IV in CP (IB) No. 36/ND/2024)

In the matter of:

KKSPUN INDIA LIMITED (CIN:U29199DL2006PLC144590) A company incorporated under Companies Act, 1956 Regd. Office: DSIIDC Shed No. 103, Scheme - I, Okhla Industrial Area, Phase-II, New Delhi - 110 020

ALSO AT: Having its Corporate Office at: 10th Floor, Tower A, Vatika Mindscapes, 12/3, Sarai Khwaja, Mathura Rd, Sector 27, Faridabad, Haryana 121003 ...Appellant

Vs.

YES BANK LIMITED Having its Registered Office at: Yes Bank House Off Western Express Highway Santacruz East, Mumbai - 400055

And a Branch Office at: Yes Bank Limited, Max Towers 4th Floor, Sector - 16B Noida - 201301 Through its Authorised officer ...Respondent

Present:

For Appellant: Mr. Kartik Malhotra and Mr. Anindit Mandal, Advocates.

Page 4 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 For Respondents: Mr. Hasmat Nabi, Ms. Farah Naaz and Mr. Toshib Ahmed, Advocates for Yes Bank.

WITH Company Appeal (AT) (Ins.) No. 816 of 2025

(Arising out of order dated 14.05.2025 passed by the National Company Law Tribunal, New Delhi Bench-IV in CP (IB) No. 36/ND/2024)

In the matter of:

KKSPUN INDIA LIMITED (CIN:U29199DL2006PLC144590) A company incorporated under Companies Act, 1956 Regd. Office: DSIIDC Shed No. 103, Scheme - I, Okhla Industrial Area, Phase-II, New Delhi - 110 020

ALSO AT: Having its Corporate Office at: 10th Floor, Tower A, Vatika Mindscapes, 12/3, Sarai Khwaja, Mathura Rd, Sector 27, Faridabad, Haryana 121003 ...Appellant

Vs.

YES BANK LIMITED Having its Registered Office at: Yes Bank House Off Western Express Highway Santacruz East, Mumbai - 400055

And a Branch Office at: Yes Bank Limited, Max Towers 4th Floor, Sector - 16B Noida - 201301 Through its Authorised officer ...Respondent

Present:

For Appellant: Mr. Kartik Malhotra and Mr. Anindit Mandal, Advocates.

Page 5 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 For Respondents: Mr. Hasmat Nabi, Ms. Farah Naaz and Mr. Toshib Ahmed, Advocates for Yes Bank.

J U D G M EN T (17th July, 2026)

INDEVAR PANDEY, MEMBER (T)

This appeal CA (AT) (Ins.) No. 1015 of 2025 has been preferred under

Section 61 of the Code by Mr. Kavish Gupta, Suspended Director of

KKSPUN India Limited, and it arises from the judgment and order dated

11.07.2025 passed by the National Company Law Tribunal, New Delhi Bench-

IV (Adjudicating Authority), in CP (IB) No. 36/ND/2024. The Adjudicating

Authority vide the impugned order admitted the application filed under

Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred

to as 'Code') by Yes Bank Limited/ Respondent No.1 and Financial

Creditor, against KKSPUN India Limited/Corporate Debtor and initiated

the Corporate Insolvency Resolution Process (CIRP). Mr. Harvinder Singh, was

appointed as the Interim Resolution Professional (IRP) of KKSPUN India

Limited/Corporate Debtor, by the Adjudicating Authority and he is the

Respondent No.2 here. The State Bank of India (SBI), which is the lead

bank of consortium of lenders, who have extended credit facilities to CD has

been arrayed as Respondent No.3 and IndusInd Bank another member of

the same consortium is the Respondent No.4. This appeal would henceforth

be referred to as First Appeal/Main Appeal.

Page 6 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 2. The Appellant contends that the impugned order was passed without

affording an effective opportunity of hearing; without considering the pending

applications seeking deferment of the proceedings; and despite the fact that a

comprehensive settlement and compromise scheme under Sections 230-232

of the Companies Act, 2013 had reached an advanced stage of approval before

the consortium of lenders. According to the Appellant, the admission of the

Section 7 application rendered the ongoing settlement process infructuous

and caused irreparable prejudice to an otherwise commercially viable MSME

company.

Company Appeal (AT) (Ins.) No. 812 of 2025

3. The CA (AT) (Ins.) No. 812 of 2025 (hereinafter referred to as 'Second

Appeal') has been preferred by KKSPUN India Limited (Corporate

Debtor/Appellant) against State Bank of India (Respondent/Financial

Creditor) challenging the order dated 14.05.2025 passed by the Ld.

Adjudicating Authority in CP (IB) No. 326/ND/2024. The appeal arises from

the dismissal of the New Restoration Application bearing RA No.

36/ND/2025, which was filed by the Corporate Debtor seeking restoration of

its earlier Recall Application bearing IA No. 1916/ND/2025. The said

Recall Application was preferred for recalling the orders dated 19.03.2025

and 02.04.2025, whereby the Corporate Debtor contended that vide order

dated 19.03.2025 the Ld. Adjudicating Authority closed its right to advance

arguments in the Section 7 proceedings filed by State Bank of India and

further vide the order dated 02.04.2025 the Ld. AA reserved the orders in Sec

7 petition, without granting it an effective opportunity of hearing. The

Page 7 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Corporate Debtor has challenged the said order on the ground that the

Adjudicating Authority ought to have restored the Recall Application and

considered its submissions on merits.

Company Appeal (AT) (Ins.) No. 813 of 2025

4. The CA (AT) (Ins.) No. 813 of 2025 (hereinafter referred to as 'Third

Appeal') has been preferred by KKSPUN India Limited (Corporate

Debtor/Appellant) against State Bank of India (Respondent/Financial

Creditor) challenging the order dated 28.04.2025 passed by the Ld.

Adjudicating Authority in CP (IB) No. 326/ND/2024. The appeal arises from

the dismissal of the Corporate Debtor's Recall Application bearing IA No.

1916/ND/2025, which was filed seeking recall of the orders dated

19.03.2025 and 02.04.2025 passed in the Section 7 proceedings initiated

by State Bank of India. The IA No. 1916/ND/2025 was dismissed by the Ld.

Adjudicating Authority for 'want of prosecution' by the Appellant. The

grievance raised by the Corporate Debtor is that while the settlement process

between the Corporate Debtor and consortium lenders was progressing and

the application seeking abeyance of the Section 7 proceedings was pending,

the Adjudicating Authority closed the Corporate Debtor's right to argue on

19.03.2025 and thereafter reserved the Company Petition for final orders on

02.04.2025. The present appeal, therefore, primarily concerns the issue of

denial of opportunity of hearing and the refusal to recall the procedural orders

passed during the pendency of the insolvency proceedings.

Company Appeal (AT) (Ins.) No. 815 of 2025

Page 8 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 5. The CA (AT) (Ins.) No. 815 of 2025 (hereinafter referred to as 'Fourth

Appeal') has been preferred by KKSPUN India Limited (Corporate

Debtor/Appellant) against Yes Bank Limited (Respondent/Financial

Creditor) challenging the order dated 28.04.2025 passed by the Ld.

Adjudicating Authority in CP (IB) No. 36/ND/2024. The present appeal

arises from the dismissal of the Corporate Debtor's Recall Application

bearing IA No. 1913/ND/2025, which sought recall of the orders dated

19.03.2025 and 02.04.2025 passed during the pendency of the Section 7

application filed by Yes Bank Limited, for 'want of prosecution'. The Corporate

Debtor submitted that the order dated 19.03.2025 resulted in closure of its

right to advance oral arguments and the subsequent order dated 02.04.2025

resulted in the Section 7 Petition being reserved for final orders, despite the

pendency of its application seeking deferment of proceedings due to the

ongoing settlement discussions and the Scheme of Compromise and

Arrangement under Sections 230-232 of the Companies Act, 2013. The appeal

has accordingly been preferred seeking restoration of the opportunity to

address arguments and contest the Section 7 proceedings on merits before

any final adjudication.

Company Appeal (AT) (Ins.) No. 816 of 2025

6. The CA (AT) (Ins.) No. 816 of 2025 (hereinafter referred to as 'Fifth

Appeal') has been preferred by KKSPUN India Limited/Corporate Debtor

against Yes Bank Limited (Respondent/Financial Creditor) challenging the

order dated 14.05.2025 passed by the Ld. Adjudicating Authority in CP (IB)

No. 36/ND/2024. The appeal arises from the dismissal of the New

Page 9 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Restoration Application bearing RA No. 37/ND/2025, filed by the

Corporate Debtor for restoration of its earlier Recall Application bearing IA

No. 1913/ND/2025. The Recall Application sought recall of the orders dated

19.03.2025 and 02.04.2025, whereby the Corporate Debtor's right to argue

the Section 7 Petition filed by Yes Bank Limited was closed and the matter

was reserved for final orders. According to the Corporate Debtor, dismissal of

the Restoration Application prevented consideration of its grievance regarding

lack of effective hearing. The present appeal therefore seeks restoration of the

Recall Application and an opportunity to place its submissions before

adjudication of the insolvency proceedings.

7. The First appeal is the Main Appeal among the five connected appeals

arising out of the same insolvency proceeding i.e. CP (IB) No. 36/ND/2024,

vide which the CD was admitted in CIRP. The other 4 appeals are challenges

to procedural orders passed by Ld. Adjudicating Authority during the CIRP

proceedings of the same Corporate Debtor. Since all the appeals arise from

the same set of facts and interconnected proceedings, before the Ld.

Adjudicating Authority, they are being considered together. The First appeal

challenges the final order dated 11.07.2025 passed in CP (IB) No.

36/ND/2024, whereby the Adjudicating Authority admitted the application

under Section 7 of the Code and initiated the Corporate Insolvency Resolution

Process against the Corporate Debtor.

Facts of the Case

8. The brief facts of the case relevant to the disposal of these appeals are

as follows: -

Page 10 of 48

Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 i. The Corporate Debtor, KKSPUN India Limited, is engaged in the

business of manufacturing precast concrete products and supplying the

same to large Engineering, Procurement and Construction (EPC)

companies, particularly Larsen & Toubro. The company is registered as

a Micro, Small and Medium Enterprise (MSME) and claims to be a

commercially solvent, profit-making concern employing more than 235

persons. Being an EPC contractor, its principal commercial assets

consist of ongoing work orders, skilled manpower and engineering

expertise rather than tangible immovable assets.

ii. The Yes Bank Limited/ Respondent No.1 Bank sanctioned

various credit facilities to the Corporate Debtor over a period of time since

2016. The Corporate Debtor failed to maintained financial discipline and

defaulted in payment to the Financial Creditor. Subsequently, the loan

account of the Appellant/ Corporate Debtor was classified as NPA w.e.f.

05.08.2022. Yes Bank also recorded the default of the Appellant with the

NeSL portal on 05.08.2022. The Respondent No.1, thereafter on

07.03.2023 issued loan recall notice to Corporate Debtor for the entire

outstanding amount of all facilities, amounting to Rs.32.13 crores, which

was due as on 01.03.2023, together with interest and other charges etc.

and requested the payment within seven days of receipt of the loan recall

notice.

iii. As the Corporate Debtor did not make outstanding payment, the

Respondent No.1/Yes Bank filed application under Section 7 of the Code

for total outstanding dues of Rs.32.57 cr. on 14.12.2023. The same was

Page 11 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 registered on 24.01.2024 as CP (IB) No.36/ND/2024. The Corporate

Debtor filed its detailed reply on 09.05.2024.

iv. Parallelly, The CD had also availed credit facilities from

Respondent No.3/SBI, which were granted way back in 2011 amounting

to Rs.69.50 cr. These facilities were subsequently enhanced/ renewed/

modified over a period of time. The last such renewal took place on

18.02.2022 for Rs.169.88 cr. The CD also committed default in

repayment of SBI Loan Account also and it was declared as NPA w.e.f.

10.08.2022. SBI also filed its own Section 7 petition, which was listed as

CP (IB) No. 326/2024 for a default of Rs.190.49 cr. Later on, several

banks, which had provided credit facilities to the CD, formed a

consortium of which SBI was the lead member. The CD filed its Reply

dated 28.08.2024 to the Section 7 IBC Petition of the SBI.

v. The Ld. NCLT on 18.12.2024 heard the Ld. Counsel for the SBI

and asked the Respondent to come forth for arguments, as the present

application had been pending for long. However, as the Debt and default

was crystal clear, the CD sought an opportunity to get the matter settled.

Therefore, the Ld. NCLT, on 06.01.2025, 20.02.2025 and on 30.01.2025

granted several opportunities to the CD to settle the matter with the

Applicant and also to argue the matter on merits, but in vain.

vi. A Joint Lenders Meeting (JLM) was conducted on 10.02.2025 to

discuss the revised Settlement Proposal dated 30.01.2025 of Rs. 83.00

Crores of the CD, however, the CD did not make payment of any upfront

Page 12 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 amount, thus, the said Settlement Proposal could not proceed at all even

for consideration of the lenders, hence, was deemed as failed.

vii. The above fact of non-consideration of the Settlement Proposal of

the CD was informed to the Ld. NCLT during hearing on 19.03.2025,

whereafter, the Ld. NCLT re-heard the arguments on behalf of the

Applicant-Bank, and on failure to argue the matter, the respondent's

right to argue was closed, while the Ld. NCLT granted liberty to both the

parties to file a brief note and listed the matter for compliance to

02.04.2025. The brief notes were duly filed by all concerned, and on

02.04.2025 the Ld. NCLT reserved the matter for orders.

viii. The CD filed an LA. No. 1916/2025 seeking recall of Orders dated

19.03.2025 and 02.04.2025, however, the CD did not appear before the

Ld. NCLT to prosecute the said LA. No. 1916/2025 on 28.04.2025, thus,

on the 2nd call, the said I.A. was dismissed for 'want of prosecution'. The

Restoration Application No. 36/2025 of the CD seeking to restore LA. No.

1916/2025 was also dismissed by the Ld. NCLT by its Order dated

14.05.2025 holding that the appellant failed to point out any valid

reasons for restoration.

ix. The CD filed CA (AT) (INS.) Nos. 812/2025 and 813/2025

challenging the Orders dated 14.05.2025 and 28.04.2025 which was

listed for hearing on 27.05.2025, however, no interim relief was granted

in favour of the CD. Having failed to obtain any interim Order from the

NCLAT on 27.05.2025, the CD again moved the Ld. NCLT by filing LA.

No. 3136/2025 seeking abeyance of pronouncement of Order in the Page 13 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Section 7 IBC Petition, This IA. No. 3136/2025 was dismissed by the Ld.

NCLT by its Order dated 04.07.2025.

x. During the pendency of the Section 7 proceedings, the Corporate

Debtor, on 07.12.2024, initiated an independent process under Sections

230-232 of the Companies Act, 2013 by filing CA (CAA)

No.114/ND/2024, proposing a comprehensive Scheme of Compromise

and Arrangement before the consortium of lenders with the objective of

settling the outstanding debts outside insolvency proceedings. The

proposed scheme envisaged a negotiated restructuring with all

consortium banks, including Yes Bank.

xi. The Corporate Debtor thereafter filed IA No.5985/ND/2024 on

16.12.2024 under Rule 11 of the NCLT Rules, requesting the

Adjudicating Authority to keep the Section 7 proceedings in abeyance,

until consideration of the compromise scheme under Sections 230-232.

The said application was ultimately dismissed as infructuous

simultaneously with the admission of the Section 7 petition on

11.07.2025.

xii. While these negotiations continued, the first motion application

filed under Sections 230-232 came to be reserved for orders on

11.02.2025, and thereafter, on 20.02.2025, the Corporate Debtor placed

before the Adjudicating Authority the minutes of the Joint Lenders

Meeting reflecting that the settlement proposal was proposed to be put

to voting on 10.03.2025. In view thereof, the Section 7 proceedings were

Page 14 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 adjourned to 19.03.2025 for reporting the status of settlement or for

hearing arguments.

xiii. Shortly thereafter, on 20.03.2025, the Adjudicating Authority

allowed the first motion application in CA (CAA) No.114/ND/2024,

thereby approving the initial stage of the proposed Scheme of

Compromise and Arrangement under Sections 230-232 of the

Companies Act.

xiv. When the matter again came up on 02.04.2025, the Corporate

Debtor had engaged a Senior Counsel to argue the Section 7 petition.

However, the Adjudicating Authority reserved orders without hearing

arguments either on the pending Rule 11 application, on the merits of

the Section 7 petition, or on the progress of the compromise scheme and

the Joint Lenders Meetings. Aggrieved thereby, the Corporate Debtor filed

IA No.1913/ND/2025 on 16.04.2025 seeking recall of the orders dated

19.03.2025 and 02.04.2025, alleging that those orders had been

obtained due to serious misrepresentations made by Yes Bank before the

Adjudicating Authority. The recall application, however, came to be

dismissed on 28.04.2025 for non-appearance of counsel.

xv. Finally, while the clarification applications came up before this

Appellate Tribunal on 11.07.2025, the Adjudicating Authority

pronounced the impugned order on the very same day admitting the

Section 7 petition and initiating CIRP against the Corporate Debtor. Ld.

Adjudicating Authority took a view that the loan account(s) of the CD

having turned NPA on 10.08.2022 and the debts and default being clear

Page 15 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 in view of the NESL Certificates as also the CD having admitted the debts

and defaults in the Letter dated 24.11.2021; Balance Sheet as at 2022 &

2023; and the Settlement Proposals dated 08.01.2024, 06.07.2024,

24.09.2024 and 30.01.2025; it was a fit case for admission in CIRP.

xvi. Both the CP (IB) No. 36/2024 of the Yes Bank Ltd. and the CP

(IB) No. 326/2024 of the SBI were listed for pronouncement of Orders on

11.07.2025. However, since the Section 7 IBC Petition of the Yes Bank

Ltd. was filed prior in time, the Ld. NCLT passed the Admission Order in

CP (IB) No. 36/2024 of Yes Bank Ltd., while the CP (IB) No. 326/2024 of

the Respondent No.3/SBI was disposed of in view of Admission Order

and Appointment of the RP in Yes Bank's CP (IB) No. 36/2024. This

appeal arises from the aforesaid impugned order dated 11.07.2025.

Submissions of Appellant

9. Ld. Counsel submitted that the Corporate Debtor is a long-standing

infrastructure company engaged in the manufacture of spun concrete pipes

and execution of infrastructure projects across the country. Respondent No.1,

Yes Bank, claims an exposure of approximately Rs.60.94 Crores, whereas

Respondent No.3, State Bank of India, claims dues exceeding Rs.190 Crores.

However, the alleged financial distress was not attributable to any deliberate

default on the part of the Corporate Debtor. Rather, the Respondent Banks

themselves had precipitated the liquidity crisis by unilaterally curtailing

sanctioned credit facilities, despite the Corporate Debtor continuing to

execute several public infrastructure projects. It was further submitted that

Page 16 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 this conduct of the Banks forms the subject matter of a Counterclaim of

approximately Rs.817 Crores pending before the Debts Recovery Tribunal-III,

New Delhi.

10. He submitted that even on the date of admission of the Section 7

application, the Corporate Debtor remained a genuine going concern. It

continued to execute Government projects, maintain operational activities

and function under the supervision of an Agency for Specialised Monitoring

appointed by State Bank of India itself. According to the Appellant, these

circumstances clearly demonstrated that the Corporate Debtor was

commercially viable and capable of revival, making the admission of CIRP

wholly unwarranted.

11. He further submitted that the impugned Admission Order is founded

entirely upon two earlier orders dated 19.03.2025 and 02.04.2025, by which

the Corporate Debtor's right to address arguments was closed and the matter

was reserved for orders. It was contended that these foundational orders were

procured by the Respondent Banks through material suppression of facts and

misrepresentation regarding the ongoing settlement process and, therefore,

the very foundation of the admission order stands vitiated.

12. He submitted that the Corporate Debtor had promptly filed Recall and

Restoration Applications specifically pointing out the suppression and

misrepresentation practised by the Respondent Banks. However, those

applications were dismissed, without examining the allegations on merits or

calling upon the Banks to rebut the assertions made therein. The said

Page 17 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 dismissal orders have already been challenged before this Hon'ble Tribunal in

Company Appeals (AT) (Ins.) Nos. 812, 813, 815 and 816 of 2025, which are

pending consideration along with the present Appeal.

13. Relying upon the settled principle of sublato fundamento cadit opus,

Learned Counsel submitted that once the foundational orders themselves are

under challenge for having been procured by suppression and material

misrepresentation, every consequential proceeding flowing therefrom,

including the Admission Order and the CIRP initiated pursuant thereto,

necessarily falls. It was therefore submitted that the impugned Admission

Order cannot be sustained in law as it rests upon proceedings that stand

fundamentally vitiated by denial of fairness and suppression of material facts.

14. Learned Counsel submitted that the Corporate Debtor was effectively

denied a meaningful opportunity of being heard before the Section 7 petition

came to be admitted. It was submitted that after the arguments on behalf of

Yes Bank concluded on 14.10.2024, the Corporate Debtor was deprived of its

right to advance arguments owing to a sequence of procedural events, despite

the existence of ongoing settlement negotiations between the parties.

According to the Appellant, the cumulative effect of these events resulted in a

grave violation of the principles of natural justice.

15. It was submitted that on 13.11.2024, an adjournment was granted as

the arguing counsel for the Corporate Debtor was engaged before the Delhi

High Court. Thereafter, on 13.12.2024, when IA No.5985/ND/2024 seeking

adjournment of the Section 7 proceedings in view of the ongoing settlement

Page 18 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 process was listed for the first time, the Corporate Debtor requested that the

said interlocutory application be heard before the main petition. However,

instead of adjudicating the application on merits, the Learned Adjudicating

Authority proceeded to close the Corporate Debtor's right to advance

arguments on the ground that it was not coming forward to argue. It was

contended that the application raising the existence of an active settlement

process remained undecided for several months and was ultimately dismissed

as infructuous only after the Section 7 petition itself stood admitted.

16. He further submitted that even thereafter, on 09.01.2025 and

30.01.2025, the matter continued to be adjourned without adjudicating the

said application. Subsequently, on 20.02.2025, the Corporate Debtor placed

before the Learned Adjudicating Authority the Minutes of the Joint Lender

Meeting dated 10.02.2025 demonstrating that One Time Settlement (OTS)

negotiations were actively continuing. The Respondent Banks themselves

informed the Tribunal that the settlement proposal would be considered on

10.03.2025, thereby acknowledging the subsistence of settlement

discussions.

17. It was further submitted that immediately before the hearing dated

19.03.2025, State Bank of India had addressed a communication dated

18.03.2025 to the Corporate Debtor actively engaging with the OTS proposal.

Nevertheless, on 19.03.2025, after a change in the composition of the Bench,

fresh arguments were heard on behalf of Yes Bank, whereas the Corporate

Debtor's right to argue was once again closed, when only its junior counsel

was present. According to the Appellant, the Respondent Banks failed to

Page 19 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 disclose before the Learned Adjudicating Authority that settlement

negotiations remained alive, that an OTS communication had been issued

only a day earlier, and that proceedings under Section 230 of the Companies

Act were listed on the very next day. These material facts, according to the

Appellant, were deliberately withheld despite being directly relevant to the

exercise of jurisdiction by the Adjudicating Authority.

18. Learned Counsel submitted that when the matter was next listed on

02.04.2025, the Corporate Debtor appeared through a Senior Counsel who

was fully prepared to address arguments on merits and had also filed written

submissions in compliance with the earlier directions. However, without

affording any oral hearing whatsoever, the Learned Adjudicating Authority

simply reserved the matter for orders on the basis that the earlier order had

already extinguished the Corporate Debtor's right to argue. It was therefore

contended that the impugned admission order was rendered without granting

the Corporate Debtor an effective opportunity of hearing, thereby violating the

principles of natural justice and rendering the proceedings fundamentally

unfair.

19. Ld Counsel submitted that the conduct of the Respondent Banks

squarely attracted the doctrine of approbation and reprobation. It was

contended that while the Banks represented before the Learned Adjudicating

Authority that there existed no meaningful settlement process warranting

deferment of the Section 7 proceedings, they were simultaneously

participating in active OTS negotiations with the Corporate Debtor through

Page 20 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Joint Lender Meetings, correspondence and consideration of settlement

proposals under the Section 230 Scheme.

20. He further submitted that this suppression also forms the very basis of

the Recall Applications filed before the Learned Adjudicating Authority. Since

the foundational orders dated 19.03.2025 and 02.04.2025 were passed

without disclosure of these material developments, the Respondent Banks

cannot now seek to sustain the consequential Admission Order which itself

stands vitiated by such suppression and misrepresentation.

21. Learned Counsel submitted that this Hon'ble Tribunal, by its order

dated 29.05.2025, had expressly permitted the settlement process and the

Section 7 proceedings to continue simultaneously. He contended that the

order dated 29.05.2025 ought to be understood as protecting the ongoing

settlement process and ensuring that it received a genuine opportunity to

succeed. If, despite such protection, the Section 7 petition is admitted before

the settlement process could conclude, the very purpose of permitting parallel

proceedings would stand frustrated. According to the Appellant, this could

never have been the intention behind the order passed by this Hon'ble

Tribunal.

22. Learned Counsel further submitted that when the impugned Admission

Order was passed on 11.07.2025, proceedings under Section 230 of the

Companies Act continued to remain pending before the Learned Adjudicating

Authority itself and several orders had already been passed therein on

02.04.2025, 28.04.2025 and 14.05.2025. He contended that admitting the

Page 21 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Corporate Debtor into CIRP despite an active Court-supervised settlement

process was contrary both to the spirit of the Insolvency and Bankruptcy Code

and to the earlier directions issued by this Hon'ble Tribunal.

23. Ld. Counsel further submitted that the Corporate Debtor has a

substantial Counterclaim of approximately Rs.817 Crores pending before the

Debts Recovery Tribunal-III, New Delhi, wherein it has specifically alleged that

the Respondent Banks' unilateral curtailment of sanctioned credit facilities

caused the liquidity crisis faced by the Corporate Debtor. It was pointed out

that this Counterclaim had already been instituted on 13.10.2023, much

prior to the filing of the present Section 7 application by Yes Bank, and even

the Learned Adjudicating Authority had taken note of this chronology in its

order dated 23.05.2025.

24. The Appellant contends that the Committee of Creditors consists

exclusively of the very Banks against whom the Counterclaim has been

instituted. Consequently, the failure of the Interim Resolution Professional to

actively pursue the Counterclaim has directly benefited those creditors who

stand to gain if the claim is abandoned. It was submitted that a Counterclaim

of Rs.817 Crores constitutes a valuable asset of the Corporate Debtor and the

Interim Resolution Professional is under a statutory obligation to preserve and

protect such asset instead of permitting it to perish through inaction.

25. Ld. Counsel also submitted that apart from the Counterclaim, the

Corporate Debtor possesses genuine arbitral claims of nearly Rs. 1200 Crores

against various Government authorities, of which approximately Rs.450

Page 22 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Crores have already been recognised as receivables in its books of account.

According to the Appellant, these significant recoverable assets were

completely ignored by the Learned Adjudicating Authority while passing the

impugned Admission Order.

26. He submitted that instead of facilitating resolution, the initiation of

CIRP has caused serious and irreversible prejudice to the Corporate Debtor.

Bank Guarantees amounting to approximately Rs.1.5 Crores have already

been invoked and encashed, while additional guarantees worth nearly Rs.3.5

Crores face imminent invocation. Salaries of employees and CIRP expenses

have also not been released, except for a limited period, despite enjoying

statutory priority under the Insolvency and Bankruptcy Code. According to

the Appellant, the CIRP has therefore resulted in destruction of the Corporate

Debtor's business rather than its preservation.

27. Learned Counsel finally submitted that the Insolvency and Bankruptcy

Code is intended to serve as a mechanism for resolution of genuine insolvency

and not as an instrument for debt recovery. In the present case, the

Respondent Banks initiated insolvency proceedings, despite the pendency of

substantial Counterclaims against them and while actively pursuing

settlement negotiations. Once the Corporate Debtor entered CIRP, the same

creditors against whom the Counterclaim was pending assumed complete

control over the Committee of Creditors, thereby creating an inherent conflict

of interest. It was therefore submitted that the impugned Admission Order

facilitates precisely the kind of recovery-oriented process which the Code was

never intended to encourage and accordingly deserves to be set aside. Page 23 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Submission of Respondent No.1/YES BANK

28. Learned Counsel submitted that the present appeal filed by the

Suspended Director of the Corporate Debtor is devoid of merit and has been

preferred only to delay the CIRP proceedigs initiated pursuant to the order

dated 11.07.2025 passed by the Learned Adjudicating Authority. It was

submitted that the impugned order has been passed after due consideration

of the existence of financial debt and default and after granting sufficient

opportunity to the Corporate Debtor to contest the proceedings.

29. He submitted that the Corporate Debtor had availed various credit

facilities from YES Bank. After availing the facilities to the maximum extent,

the Corporate Debtor failed to maintain financial discipline and committed

continuous defaults in repayment of its outstanding obligations despite

repeated demands made by the Financial Creditor. Consequently, the loan

account of the Corporate Debtor was classified as Non-Performing Asset (NPA)

with effect from 05.08.2022 in accordance with the applicable RBI guidelines.

30. It was further submitted that, owing to the persistent default, YES Bank

issued a Loan Recall Notice dated 07.03.2023 calling upon the Corporate

Debtor to clear the outstanding liability under the Cash Credit Facility, Bank

Guarantee Facility and GECL Facility. The Corporate Debtor was called upon

to deposit 100% cash margin against the outstanding uninvoked Bank

Guarantees amounting to approximately Rs.21.85 Crores and to repay the

outstanding amount of approximately Rs.32.13 Crores under the remaining

Page 24 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 facilities along with applicable interest and charges. However, despite service

of the said notice, the Corporate Debtor failed to discharge its liabilities.

31. Ld. Counsel submitted that, upon failure of the Corporate Debtor to

clear the dues, YES Bank also invoked the guarantees furnished by the

guarantors and called upon them to make payment of the outstanding

amounts. However, neither the Corporate Debtor nor the guarantors came

forward to liquidate the admitted dues, thereby confirming the continuing

default committed towards the Financial Creditor.

32. Ld. Counsel further submitted that YES Bank was constrained to

initiate recovery proceedings by filing O.A. No.571/2023 before the Debt

Recovery Tribunal-I, Delhi for recovery of its outstanding dues. The said

proceedings were independent recovery measures and do not affect the

maintainability of proceedings under Section 7 of the Code, since the scope of

enquiry under Section 7 is confined only to the existence of financial debt and

occurrence of default.

33. He submitted that the default committed by the Corporate Debtor was

also duly recorded with National E-Governance Services Limited (NeSL) on

05.08.2022 in respect of the loan accounts maintained by the Corporate

Debtor. At the time of filing the Section 7 Application, the total outstanding

liability payable by the Corporate Debtor was Rs.32,57,29,534.01 as on

01.06.2023, comprising dues under Cash Credit/BG Invoked Loan facilities

and GECL Facility. Thus, the existence of financial debt as well as default

stood clearly established through documentary evidence and authenticated

records.

Page 25 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

34. Ld. Counsel submitted that the Corporate Debtor, in its reply before the

Ld. Adjudicating Authority, never disputed the factum of availing the credit

facilities from YES Bank. Once the financial facilities, disbursement and

default were established, the statutory requirements under Section 7 of the

Code stood satisfied. The objections subsequently raised by the Corporate

Debtor were only an attempt to divert attention from the admitted default and

delay the commencement of CIRP.

35. He submitted that sufficient opportunities were granted to the

Corporate Debtor before the Learned Adjudicating Authority. Arguments on

behalf of YES Bank were heard, and repeated opportunities were granted to

the Corporate Debtor to advance its submissions. However, despite several

adjournments, the Corporate Debtor failed to proceed with arguments,

resulting in closure of its right to argue. Even thereafter, written submissions

were permitted to be filed. Therefore, the allegation that the impugned order

was passed without granting adequate opportunity of hearing is factually

incorrect and contrary to the record.

36. Ld. Counsel submitted that the Corporate Debtor also attempted to

delay the Section 7 proceedings by filing applications seeking abeyance of the

final hearing on the ground of pendency of proceedings under Sections 230- 232 of the Companies Act, 2013. However, such pendency cannot defeat the

statutory right of a Financial Creditor under the Code, once debt and default

are established, proceedings under Section 7 cannot be indefinitely stalled

merely on the basis of a proposed scheme.

Page 26 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

37. He further submitted that the Appellant has sought to rely upon the

pendency of the counterclaim filed before the Debt Recovery Tribunal to

contend that the Section 7 proceedings ought not to have been admitted. The

said contention is wholly misconceived. The counterclaim filed by the

Corporate Debtor does not extinguish the admitted financial debt owed to YES

Bank, nor does it alter the fact that the Corporate Debtor had defaulted in

repayment of the credit facilities availed by it. The proceedings before the DRT

are independent recovery proceedings, whereas the limited enquiry before the

Adjudicating Authority under Section 7 of the Code is only with respect to the

existence of debt and default. Once the same stood established through loan

documents, NeSL record of default and admitted availment of facilities, the

pendency of any counterclaim could not have prevented admission of the

Section 7 Application.

38. It was submitted that the Corporate Debtor's reliance on its alleged

counterclaim of approximately Rs.817 Crores before the DRT was merely an

attempt to create an artificial dispute and delay the insolvency proceedings.

He submitted that unlike proceedings under Section 9 of the Code, where pre-

existing disputes are relevant, no such considerations arise under Section 7

proceedings filed by a Financial Creditor. The Corporate Debtor cannot avoid

CIRP merely by raising monetary claims against the Financial Creditor after

committing default.

39. Ld. Counsel further submitted that the reliance placed by the Corporate

Debtor upon pending proceedings under Sections 230-232 of the Companies

Act, 2013 was also untenable. The existence of a proposed scheme of Page 27 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 arrangement cannot override the statutory scheme of the Code. The Code

provides an independent mechanism for resolution of a Corporate Debtor

upon establishment of debt and default, and therefore the pendency of any

proposed scheme cannot be used as a ground to indefinitely keep Section 7

proceedings in abeyance.

40. He submitted that the Corporate Debtor was attempting to rely upon

the judgment of the Hon'ble Supreme Court in Vidarbha Industries Power Ltd.

v. Axis Bank Ltd. to contend that admission of a Section 7 application is

discretionary. However, the said judgment was rendered in its peculiar facts

and has no application to the present case. In the present matter, there is

clear evidence of disbursement of financial facilities, continuous default since

05.08.2022, admission of facilities by the Corporate Debtor, NeSL record of

default and outstanding dues exceeding Rs.32 Crores. Therefore, there existed

no exceptional circumstance requiring the Adjudicating Authority to defer

admission of the petition.

41. Ld. Counsel submitted that the settled position of law, as laid down in

"Innoventive Industries Ltd. v. ICICI Bank Ltd., E.S. Krishnamurthy v. Bharath

Hi Tech Builders Pvt. Ltd." and subsequently reaffirmed in M. Suresh Kumar

Reddy v. Canara Bank, is that once the Adjudicating Authority is satisfied

regarding the existence of financial debt and occurrence of default, the

application under Section 7 of the Code is required to be admitted. In the

present case, all statutory requirements were duly fulfilled by YES Bank and

no legal ground existed for rejection or deferment of the proceedings.

Page 28 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

42. Summing up, Ld. Counsel submitted that the Corporate Debtor had

been granted sufficient opportunity before the Ld. Adjudicating Authority. The

record demonstrates that the Corporate Debtor participated in the

proceedings, filed its reply and was also permitted to file written submissions.

The inability or failure of the Corporate Debtor to advance arguments despite

repeated opportunities cannot subsequently be projected as violation of

natural justice. Therefore, the impugned order dated 11.07.2025 admitting

the Section 7 Application was passed after due consideration of the record

and warrants no interference by this Hon'ble Tribunal.

Submissions of Respondent No. 3/SBI

43. Ld. Counsel for SBI submitted that the law is now well settled that the

pendency of proceedings under Section 230 of the Companies Act does not

create any legal embargo upon initiation or continuation of proceedings under

Section 7 of the Insolvency and Bankruptcy Code. In support of this

proposition, reliance was placed upon the judgment of this Hon'ble Tribunal

in Grand Developers Pvt. Ltd. v. Nitin Batra & Ors., Company Appeal

(AT) (Insolvency) No. 899 of 2024, wherein this Appellate Tribunal

categorically held that proceedings relating to a Scheme under Section 230 of

Companies Act are entirely independent of insolvency proceedings under the

Code. The mere filing of such a Scheme cannot be used as a device to stall,

obstruct or indefinitely delay the consideration of an otherwise maintainable

application under Section 7. He submitted that this judgment squarely

applies to the facts of the present case. The repeated attempts made by the

Page 29 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Corporate Debtor to rely upon the proposed Scheme were nothing but an

endeavour to postpone the inevitable consequences of its admitted financial

default. Such attempts cannot override the statutory mandate of the

Insolvency and Bankruptcy Code or defeat the rights of the financial creditors

to seek resolution of the Corporate Debtor through the mechanism provided

under the Code.

44. Ld. Counsel further submitted that the conduct of the Corporate Debtor

throughout the proceedings unequivocally establishes its acknowledgment of

the outstanding financial liability. It was pointed out that the Corporate

Debtor repeatedly approached the consortium lenders with One-Time

Settlement proposals, including those dated 08.01.2024, 06.07.2024 and

24.09.2024, offering to settle the admitted dues for substantially reduced

amounts. Every one of these proposals was rejected by the lenders as being

commercially unacceptable. Nevertheless, the significance of these proposals

lies not in their rejection, but in the fact that they constitute repeated and

unequivocal admissions by the Corporate Debtor of the existence of the

outstanding financial debt. A party genuinely disputing either the debt or the

default would never seek repeated settlements with its lenders. The repeated

settlement proposals therefore completely belie the Appellant's attempt to

question the existence of debt and default before this Hon'ble Tribunal and

furnish yet another independent acknowledgment of liability.

45. Ld. Counsel thereafter addressed the Appellant's reliance upon the

alleged counterclaim pending before the Debt Recovery Tribunal. It was

submitted that the existence of a counterclaim, cross-demand or even an Page 30 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 independent money suit has absolutely no bearing upon the jurisdiction

exercised by the Adjudicating Authority under Section 7 of the Insolvency and

Bankruptcy Code. The limited enquiry under Section 7 is confined to

determining whether a financial debt exists and whether a default has

occurred. Once these jurisdictional facts are established from the material

placed on record, the pendency of collateral proceedings elsewhere cannot

defeat or postpone admission of the insolvency proceedings. In the present

case, the alleged counterclaim raised by the Corporate Debtor does not erase

the admitted financial liability owed to SBI, nor does it displace the

overwhelming documentary evidence establishing default. Therefore, the

Appellant's reliance upon such proceedings is wholly misconceived.

46. In support of the above proposition, Ld. Counsel placed reliance upon

the judgment of this Hon'ble Tribunal in Vijay Kumar Singhania v. Bank

of Baroda & Ors., Company Appeal (AT) (Insolvency) No. 1058 of 2023,

wherein it was categorically held that the mere filing of a counterclaim or

money suit by the Corporate Debtor cannot negate the existence of debt and

default, when the Financial Creditor has established the same through the

loan documents, statements of account and other relevant evidence. He

submitted that the principle laid down therein squarely governs the present

controversy. Here also, SBI has produced the sanction letters, executed loan

documents, authenticated statements of account, NeSL record of default,

acknowledgments of liability contained in the Corporate Debtor's own balance

sheets and correspondence, and several settlement proposals made by the

Corporate Debtor itself. In the face of such overwhelming evidence, the alleged

Page 31 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 counterclaim cannot be permitted to cloud or postpone the commencement of

insolvency proceedings. It was further submitted that the aforesaid judgment

has also been affirmed by the Hon'ble Supreme Court in Civil Appeal (Diary)

No. 5768 of 2024 by order dated 14.08.2024, thereby lending finality to the

legal position that pendency of a counterclaim is no defence to a Section 7

application once debt and default stand established.

47. Ld. Counsel thereafter submitted that the Appellant has also sought to

contend that the Corporate Insolvency Resolution Process ought to be kept in

abeyance on considerations such as the necessity of making payments to

suppliers, preserving business operations and maintaining the Corporate

Debtor as a going concern. It was submitted that such submissions are

contrary to the express provisions of the Code and have been expressly

rejected by this Hon'ble Tribunal. Once an application under Section 7 has

been admitted and the statutory consequences under the Code come into

operation, including the declaration of moratorium under Section 14, neither

the suspended management nor any other stakeholder can seek suspension

or dilution of the statutory process merely on equitable considerations.

Commercial inconvenience or business exigencies cannot override the

mandatory statutory framework enacted by Parliament.

48. In this regard, Ld. Counsel relied upon the judgment of this Appellate

Tribunal in Sunil Gutte v. Avil Menezes & Ors., Company Appeal (AT)

(Insolvency) No. 515 of 2025, wherein this Tribunal categorically held that

once moratorium has been declared, the suspended management is bound by

the statutory mandate of the Code and cannot seek to suspend, keep in Page 32 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 abeyance or render inoperative the declaration of moratorium merely by

contending that payments to suppliers or other operational creditors are

necessary for running the Corporate Debtor as a going concern. The judgment

makes it abundantly clear that equitable considerations cannot prevail over

the express provisions of Section 14 of the Code. Learned Counsel submitted

that the Appellant's prayer seeking suspension or postponement of the CIRP

is therefore directly contrary to the law declared by this Hon'ble Tribunal and

deserves outright rejection.

49. Ld. Counsel then dealt with the Appellant's reliance upon the judgment

of the Hon'ble Supreme Court in Vidarbha Industries Power Limited v. Axis

Bank Limited, (2022) 8 SCC 352, wherein the Appellant has attempted to

contend that, since certain arbitration proceedings are pending and the

Corporate Debtor may ultimately receive certain amounts therefrom, the

initiation of the Corporate Insolvency Resolution Process ought to be deferred.

It was submitted that such reliance is wholly misplaced. The factual matrix

of Vidarbha Industries was entirely exceptional and cannot be mechanically

applied to every case arising under Section 7 of the Code. The present case is

fundamentally different. Here, there is overwhelming documentary evidence

establishing debt and default, repeated acknowledgments of liability by the

Corporate Debtor itself, unsuccessful settlement proposals and a continuing

inability to discharge the admitted dues. The mere possibility that the

Corporate Debtor may, at some future point of time, succeed in unrelated

arbitral proceedings cannot extinguish the present default or postpone the

operation of the Insolvency and Bankruptcy Code.

Page 33 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

50. Ld. Counsel further submitted that even the legal position emerging

from Vidarbha Industries stands subsequently clarified by the Hon'ble

Supreme Court itself. It was pointed out that while disposing of the Review

Petition filed by Axis Bank Limited on 22.09.2022, the Hon'ble Supreme Court

expressly clarified that the decision rendered in Vidarbha Industries was

confined to the peculiar facts of that case and should not be understood as

laying down any principle contrary to the earlier binding decisions of the

Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank and E.S.

Krishnamurthy v. Bharath Hi Tech Builders Pvt. Ltd. Both these judgments

continue to hold the field and unequivocally declare that once the

Adjudicating Authority is satisfied regarding the existence of a financial debt

and the occurrence of default, admission of the application under Section 7

necessarily follows. The discretion contemplated under Section 7 cannot be

exercised in a manner that defeats the very object of the Insolvency and

Bankruptcy Code.

51. Ld. Counsel also relied upon the subsequent judgment of the Hon'ble

Supreme Court in M. Suresh Kumar Reddy v. Canara Bank & Ors., Civil

Appeal No. 7121 of 2022, decided on 11.05.2023, wherein the Hon'ble

Supreme Court clarified the limited scope of the decision in Vidarbha

Industries and reaffirmed the ratio laid down in Innoventive Industries and

E.S. Krishnamurthy. It was reiterated therein that once the jurisdictional

facts of debt and default are established, the Adjudicating Authority is

ordinarily bound to admit the application under Section 7. He submitted that

the present case is fully governed by these binding precedents, since the

Page 34 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 existence of financial debt and continuing default is established not merely

through the records of the Financial Creditor but also through repeated

acknowledgments made by the Corporate Debtor itself. Consequently, the

reliance placed by the Appellant upon Vidarbha Industries is entirely

misconceived and liable to be rejected.

52. Lastly, Ld. Counsel submitted that this Appellate Tribunal has, by order

dated 26.09.2025, already directed the Resolution Professional to take charge

of the affairs of the Corporate Debtor. The insolvency process has thus

progressed in accordance with the statutory framework prescribed under the

Code. At this stage, it would neither be in the interest of the Corporate Debtor

nor in the interest of the financial creditors, operational creditors or any other

stakeholder to interrupt the CIRP. Rather, the larger objective of the Code

would be best served by permitting the CIRP to proceed to its logical

conclusion so that a viable and value-maximising resolution of the Corporate

Debtor may be achieved in the interests of all concerned.

Analysis and Findings

53. We have gone through the documents on record and have heard the

parties at length.

54. The Appellant's challenge in the present appeal is mainly on two

grounds. Firstly, it has been argued that the Corporate Debtor was denied an

effective opportunity of hearing and that the Adjudicating Authority ought to

have deferred the proceedings in the interest of revival of the Corporate

Debtor. The applications filed by Appellant at various stages were not decided

or summarily rejected by the Adjudicating Authority and the Section 7 petition Page 35 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 was admitted. Further the Appellant's lawyer was not allowed to argue his

case before the Adjudicating Authority. These events are clear violation of

Principles of Natural Justice and based on this ground alone the impugned

order needs to be set aside. Secondly, he challenges the admission of the

Section 7 Application by contending that the Adjudicating Authority ought

not to have initiated the Corporate Insolvency Resolution Process, when the

Corporate Debtor was pursuing a Scheme of Compromise under Section 230

of the Companies Act, 2013 and negotiations for a One-Time Settlement

("OTS") were actively underway with the Consortium of Lenders.

55. On the other hand, the Respondents contend that the financial debt

and default stand admitted and duly established; that the requirements of

Section 7 of the Code stood fully satisfied; and that neither the pendency of a

proposed settlement nor the existence of a Scheme under Section 230 could

prevent the Adjudicating Authority from exercising its jurisdiction under the

Code. The Respondents further submit that the Corporate Debtor had been

afforded sufficient opportunity during the proceedings and that the Impugned

Order does not suffer from any legal or factual infirmity.

56. We have carefully considered the record in this regard in light of the

proceedings before the Adjudicating Authority. The record indicates that the

Corporate Debtor was granted several opportunities to place its case and

advance submissions. The Section 7 Application was first listed before the

Adjudicating Authority on 05.04.2024, when notice was issued to the

Corporate Debtor. Thereafter, vide order dated 19.04.2024, the Corporate

Debtor was granted time to file its reply. On 10.05.2024, when further time Page 36 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 was sought on account of delay in filing, the Adjudicating Authority directed

the Corporate Debtor to upload its reply on the DMS portal, thereby providing

an opportunity to bring its defence on record.

57. The proceedings further demonstrate that the matter remained pending

for a considerable period thereafter. The arguments on behalf of the Financial

Creditor were heard on 14.10.2024. Subsequently, on 13.11.2024, the

Corporate Debtor again sought an adjournment on the ground that its

counsel was engaged before the Hon'ble Delhi High Court. The Adjudicating

Authority, while granting the said opportunity, specifically recorded that the

Corporate Debtor should address arguments on the next date, failing which

the matter would proceed on the basis of the material already available on

record.

58. Despite the aforesaid opportunity, on 13.12.2024, the Corporate Debtor

again sought deferment of the proceedings on the ground that

IA/5985/ND/2024 had been filed on 11.12.2024 and was listed on the same

day. The Adjudicating Authority noticed that sufficient opportunities had

already been granted and that the Financial Creditor had already concluded

its arguments. Accordingly, the Adjudicating Authority declined further

adjournment and closed the opportunity of the Corporate Debtor to advance

arguments.

59. It is also significant that even thereafter, the Corporate Debtor was

afforded another opportunity. On 19.03.2025, considering the change in the

composition of the Bench, the Adjudicating Authority again called upon the

Page 37 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Corporate Debtor to advance its submissions. However, the counsel appearing

for the Corporate Debtor expressed inability to argue the matter. It was only

thereafter that the right to advance oral arguments was closed. The

Adjudicating Authority took the written submissions filed by the appellant on

record.

60. The above sequence of proceedings shows that the Corporate Debtor

was not denied an opportunity to present its case. The record reflects that the

Corporate Debtor participated in the proceedings, filed its pleadings, placed

its defence before the Adjudicating Authority and was repeatedly granted

opportunities to advance submissions. The closure of the right to argue was

not an immediate consequence but followed only after several opportunities

had already been provided.

61. Further, even after reserving the matter, the Adjudicating Authority

continued to seek necessary clarifications. On 23.05.2025, directions were

issued to both parties to file status reports indicating the stage of proceedings

in OA No.571/2023 and the Counter Claim. Further directions were also

issued regarding submission of a valid Authorisation for Assignment (AFA),

declaration regarding non-initiation of disciplinary proceedings and details of

assignments undertaken by the proposed Resolution Professional. This

further indicates that the Adjudicating Authority proceeded after examining

the relevant material and ensuring procedural compliance.

62. The principles of natural justice require a fair and reasonable

opportunity of hearing. They cannot be interpreted to mean that proceedings

must continue indefinitely despite repeated opportunities being granted. A Page 38 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 party which has participated in the proceedings and has been provided

sufficient opportunity to place its case cannot subsequently contend that

there has been denial of natural justice merely because further adjournment

was not granted.

63. It is also pertinent to note that the Corporate Debtor had sufficient

opportunity to place its case before the Adjudicating Authority. The pleadings,

documents, replies, applications and written submissions filed by the parties

were already available on record. The Corporate Debtor had also placed its

objections regarding the Section 7 Application, proposed Scheme under

Section 230 of the Companies Act, settlement discussions and pending DRT

proceedings before the Adjudicating Authority. Therefore, it cannot be said

that the Corporate Debtor was deprived of an opportunity to present its case.

64. In view of the above factual position, we find that the proceedings before

the Adjudicating Authority do not suffer from violation of principles of natural

justice. The Corporate Debtor had adequate opportunity to present its

defence, and the Adjudicating Authority committed no error in proceeding to

decide the Section 7 Application on the basis of the pleadings, documents and

material available on record. We are also cognizant of the fact that the

proceedings under the Code are summary proceedings and need to be

finalized in a time bound manner. The appellant was given several

opportunities for making its submissions before the Adjudicating authority

which it failed to utilize. In spite of that, Adjudicating Authority did not decide

the matter ex-parte but passed the order after considering the reply filed by

the appellant as well as its written submissions.

Page 39 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

65. The Appellant has also sought to contend that the orders dated

19.03.2025 and 02.04.2025 were illegal and therefore the admission order

based upon those proceedings must automatically fail. This contention is

equally without merit. As noted earlier, we did not find any irregularity in the

procedure adopted by the Adjudicating Authority. The matter was decided on

merit based on the documents submitted by the appellant and respondents

including their written submissions. Once the main petition has been decided

on merits by the Adjudicating Authority, those procedural orders become part

of the decision in the main appeal. Mere pendency of such proceedings cannot

automatically invalidate the admission order passed by the Adjudicating

Authority.

66. We are also unable to accept the submission that the Adjudicating

Authority ought to have exercised its inherent powers to postpone the decision

on the Section 7 Application. Inherent powers are intended to advance the

cause of justice and cannot be exercised in a manner that defeats the

statutory scheme of the Code. Once debt and default stood established, the

Adjudicating Authority was justified in proceeding to decide the application in

accordance with law. Accepting the Appellant's submission would virtually

permit insolvency proceedings to remain pending for an indefinite period on

the basis of negotiations which may or may not ultimately succeed.

67. In addition to that, it is necessary to examine the scope of jurisdiction

of the Adjudicating Authority while dealing with an application under Section

7 of the Code. The jurisdiction under Section 7 is limited. The Adjudicating

Authority is required to examine whether a financial debt exists, whether a Page 40 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 default has occurred and whether the application is otherwise complete in

terms of the Code. Once these requirements are satisfied, the Adjudicating

Authority is ordinarily required to admit the application. The insolvency

process under the Code is triggered by the occurrence of default and not by

the commercial strength or future prospects of the Corporate Debtor.

68. In the present case, the existence of financial facilities extended by the

lenders to the Corporate Debtor is not in dispute. The material placed on

record shows that substantial credit facilities had been sanctioned by the

consortium of banks from time to time. The loan accounts were classified as

Non-Performing Assets and recall notices were issued. The Banks have

specifically pointed out that the Corporate Debtor committed default in

repayment of the financial facilities and that the outstanding dues exceeded

Rs.190 Crores. These facts form part of the record and have not been

effectively disputed by the Appellant. Instead, the challenge is primarily

directed against the timing of the admission of the Section 7 petition rather

than the existence of debt or default itself.

69. It is an admitted position that several OTS proposals were submitted by

the appellant on 08.01.2024, 06.07.2024 and 24.09.2024, which were all

rejected by the lenders. This itself is an admission and acknowledgment of

'debt' and 'default' on its part.

70. The principal argument advanced by the Appellant is that the

Adjudicating Authority ought to have deferred the Section 7 proceedings

because the Corporate Debtor had initiated a Scheme of Compromise under

Section 230 of the Companies Act, 2013 and the Consortium of Lenders was Page 41 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 considering the same. According to the Appellant, the proposed Scheme had

reached an advanced stage and the Consortium had resolved to vote upon the

proposal during the period from 14.07.2025 to 14.08.2025. It has also been

argued that the Corporate Debtor had agreed to deposit a portion of the

settlement amount to demonstrate its bona fides.

71. The Respondent banks, on the contrary, have submitted that in the

Joint Lenders Meeting conducted on 10.02.2025, a revised settlement

proposal of the CD for Rs.83 crores was considered. However, the CD did not

make payment of any upfront amount due to which settlement proposal could

not reach the consideration stage by the lending banks. Consequent to the

non-consideration of the settlement proposal of the CD, the lending banks

informed the Adjudicating Authority during the hearing on 19.03.2025 that

the settlement proposal could not be considered by the banks. Thereafter, the

Adjudicating Authority re-heard the arguments on behalf of Applicant banks.

The respondent failed to argue the matter on the said date and its right to

argue was closed. At the same time, Ld. Adjudicating Authority granted liberty

to both the parties to file written submissions. Matter was listed for

compliance on 02.04.2025 and as the notes of submission were filed by the

parties, the Ld. Adjudicating Authority reserved the matter for orders.

72. The submission of appellant that the orders under section 7 should not

have been passed during the pendency of a Scheme under Section 230 of the

Companies Act, in our view, does not prevent the Adjudicating Authority from

exercising its jurisdiction under Section 7 of the IBC. Until such Scheme

under section 230 is approved in accordance with law and becomes binding

Page 42 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 upon all stakeholders, it remains only a proposal. The Court cannot refuse to

admit a Section 7 application merely because settlement negotiations are

taking place or because there exists a possibility that the parties may arrive

at a future settlement. Judicial decisions must be based on existing legal

rights and obligations and not on uncertain future events. We have already

noted that the settlement proposal had failed and banks had duly informed

the Ld. Adjudicating Authority about such failure. It's only after the failure of

settlement that the Ld. Adjudicating Authority decided the matter on merits.

73. The Appellant has repeatedly emphasised that the Corporate Debtor is

a commercially viable company executing public infrastructure projects, that

it possesses substantial receivables, and that admission into CIRP would

adversely affect its business operations and future contracts. The facts on the

contrary show that CD failed repeatedly to make payments to its Financial

Creditors. In case of OTS proposals, it failed to deposit even earnest money.

Which commercially viable and solvent company would not be able to pay

even working capital loan? We find no merit in this submission of CD. While

these submissions may indicate that the Corporate Debtor intended to revive

its business, they do not alter the legal position under the Code. The object of

the IBC is itself the resolution of financially distressed companies. Admission

into CIRP does not amount to liquidation, on the contrary, the Code provides

a structured mechanism for resolution, while preserving the Corporate Debtor

as a going concern. Therefore, the possibility of commercial hardship cannot

by itself constitute a legal ground to refuse admission under Section 7.

Page 43 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

74. The Appellant has also relied upon the observations made by this

Appellate Tribunal in the earlier proceedings that settlement negotiations may

continue in parallel with the pending insolvency proceedings. In our view, the

said observation has been correctly understood by the Adjudicating Authority.

The observation merely recognised that parties were free to continue

negotiations, even while the statutory proceedings remained pending. It did

not direct the Adjudicating Authority to indefinitely postpone the adjudication

of the Section 7 petition until the settlement discussions concluded. It,s only

after all efforts at settlement failed and the Banks reported the same to the

Ld. Adjudicating Authority the AA moved ahead with Sec 7 proceedings. Had

such an interpretation been accepted, every Corporate Debtor could

indefinitely delay insolvency proceedings merely by initiating negotiations

with its lenders. Such an interpretation would be contrary to the scheme and

timelines prescribed under the Code.

75. The Appellant has further argued that the Section 7 petition was filed

only as a recovery mechanism and therefore ought not to have been

entertained. This contention also deserves to be rejected. It is well settled that

a Financial Creditor is entitled to invoke the provisions of Section 7 once the

statutory requirements are fulfilled. Merely because the Financial Creditor

seeks recovery of its legitimate dues cannot lead to the conclusion that the

insolvency process has been misused. In the absence of any material

demonstrating abuse of process or lack of jurisdiction, such a contention

cannot invalidate the proceedings initiated under the Code.

Page 44 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

76. It is further relevant to notice that the Corporate Debtor had relied upon

the pendency of proceedings before the Debt Recovery Tribunal, including OA

No.571/2023 and the Counter Claim filed by it, to seek deferment of the

Section 7 proceedings. The Adjudicating Authority, before passing the

Impugned Order, had also sought clarification from the parties regarding the

status of the said proceedings. From the status placed on record, it was

noticed that the matter before the DRT was still pending and the Corporate

Debtor had not filed its written submissions therein. Therefore, the Counter

Claim was yet to be adjudicated and no determination had been made in

favour of the Corporate Debtor which could have any bearing on the

proceedings under Section 7 of the Code.

77. It is also pertinent to note that the Counter Claim relied upon by the

Corporate Debtor arose at a later stage during the pendency of proceedings.

The same remained pending adjudication before the DRT and no final

determination had been made in favour of the Corporate Debtor. Therefore,

the mere filing of the Counter Claim could not be treated as a ground to defer

adjudication of the Section 7 Application.

78. In these circumstances, the Adjudicating Authority proceeded to

consider the Section 7 Application on the basis of the financial debt and

default placed before it and did not find it appropriate to await the outcome

of the pending DRT proceedings. We find no error in the approach adopted by

the Adjudicating Authority.

Page 45 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

79. The Appellant has relied upon Vidarbha Industries Power Limited v.

Axis Bank Limited, (2022) 8 SCC 352. However, the said judgment was

rendered in exceptional facts where the Corporate Debtor had a crystallised

and enforceable claim in its favour. In the present case, the proposed Scheme

under Section 230, the settlement discussions and the pending Counter

Claim before the DRT had not attained finality and did not displace the

established financial debt and default. The decision in Vidarbha Industries is

applicable only in specific circumstances and not universally. Therefore, it

does not assist the Appellant.

80. The Respondents have also relied upon the judgment of this Appellate

Tribunal in Grand Developers Pvt. Ltd. v. Nitin Batra & Ors., Company

Appeal (AT) (Insolvency) No. 899 of 2024, wherein it was held that

proceedings under Section 230 of the Companies Act, 2013 are independent

of proceedings under the Insolvency and Bankruptcy Code. The said principle

squarely applies to the present case. The mere pendency of the proposed

Scheme under Section 230 did not create any legal bar to the admission of

the Section 7 Application.

81. They have also relied upon Vijay Kumar Singhania v. Bank of Baroda

& Ors., Company Appeal (AT) (Insolvency) No. 1058 of 2023, wherein this

Appellate Tribunal held that the mere filing of a counterclaim or money suit

does not negate the existence of financial debt and default. In the present case

also, the pendency of OA No. 571/2023 and the Counter Claim before the

DRT did not affect the Financial Creditor's right to maintain the application

under Section 7.

Page 46 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025

82. Reliance has further been placed on Sunil Gutte v. Avil Menezes &

Ors., Company Appeal (AT) (Insolvency) No. 515 of 2025, wherein this

Appellate Tribunal held that equitable considerations cannot override the

statutory mandate of the Code. The Appellant's reliance on the Corporate

Debtor's ongoing projects, payments to suppliers and commercial viability

cannot, therefore, constitute valid grounds to postpone the insolvency

proceedings once the requirements of Section 7 stand satisfied.

83. It is equally important to note that the Appellate jurisdiction under

Section 61 of the Code is limited. We do not sit in appeal over every finding

merely because another view may also be possible. Interference is warranted

only when the impugned order suffers from patent illegality, material

irregularity, perversity or jurisdictional error. After carefully examining the

Impugned Order as well as the material placed on record, we find that the

Adjudicating Authority correctly examined the requirements of Section 7,

considered the relevant material and admitted the application only after

recording its satisfaction regarding the existence of financial debt and default.

No material has been shown before this Court to establish that the findings

recorded by the Adjudicating Authority are contrary to law or unsupported by

the record.

84. In view of our findings recorded hereinabove, we find no legal or factual

infirmity in the Impugned Order dated 11.07.2025 passed by the Adjudicating

Authority admitting the application under Section 7 of the Insolvency and

Bankruptcy Code, 2016. The admission of the Corporate Debtor into

Page 47 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025 Corporate Insolvency Resolution Process has been found to be in accordance

with law.

85. Consequently, Company Appeal (AT) (Ins.) No. 1015 of 2025 is

dismissed. Company Appeal (AT) (Ins.) Nos. 815 of 2025 and 816 of 2025

are also dismissed as they arise out of procedural orders passed during the

same proceedings. The Company Appeal (AT) (Ins.) Nos. 812 of 2025 and

813 of 2025, which arise out of CP (IB) No. 326 of 2025, which has been

disposed of by the Adjudicating Authority in view of the admission of CP (IB)

No. 36 of 2024 and accordingly are dismissed being infructuous. All pending

Interlocutory Applications, if any, also stand disposed of. There shall be no

order as to costs.

Justice N. Seshasayee Member (Judicial)

Arun Baroka Member (Technical)

Indevar Pandey Member (Technical)

Place: New Delhi

Harleen/ Pragya (LRA)

Page 48 of 48 Company Appeal (AT) (Ins.) Nos. 1015, 812, 813, 815 & 816 of 2025