Mekaster Finlease Limited vs Prayag Polytech Private ...

(Arising out of order dated 25.07.2025 passed by the National Company Law Tribunal, Jaipur Bench, Rajasthan in Company Petition (IB) No. 29/7/JPR/2022)

In the matter of:

Mekaster Finlease Limited Jain Bhawan, 16/121-122, Faiz Road, Karol Bagh, Near Lal Masjid, New Delhi - 110005 ...Appellant

Vs.

Prayag Polytech Private Limited C-587, Phase-1, Industrial Area Bhiwadi, Alwar Rajasthan - 301019 ...Respondent

Present: For Appellant: Mr. Kanishk Rana, Advocate.

For Respondents: Ms. Abhishek Devgan and Mr. Vishal Hirawat, Advocates for RP.

J U D G M EN T

(18th September, 2026)

INDEVAR PANDEY, MEMBER (T)

The present Appeal has been preferred under Section 61 of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'Code') by

Mekaster Finlease Limited (Financial Creditor), assailing the Judgment

dated 25.07.2025 passed by the National Company Law Tribunal, Jaipur Bench (Adjudicating Authority) in CP (IB) No. 29/7/JPR/2022, whereby

the Adjudicating Authority dismissed the Appellant's application filed under

Section 7 of the Code seeking initiation of the Corporate Insolvency Resolution

Process (CIRP), proceedings against Prayag Polytech Private Limited

(Corporate Debtor/Respondent).

2. The Appellant has sought the following reliefs in this appeal: -

a. Set aside the Impugned Order dated 25.07.2025 passed by the

Hon'ble National Company Law Tribunal, Jaipur Bench in

Company Petition (IB) No.- 29/7/JPR/2022;

b. Direct the Ld. Adjudicating Authority to initiate CIRP against the

Respondent herein; and

c. Pass any other/ further order(s) as this Hon'ble Appellate

Tribunal may deem fit and proper in the interest of justice.

Brief Facts of the Case

3. The brief facts of the case relevant for deciding this appeal are as given

below :-

i) The Appellant/Financial Creditor is a Non-Banking Financial

Institution registered with the Reserve Bank of India and is engaged

in the business of providing loans and financial facilities and the

Respondent/Corporate Debtor is a private company.

ii) In May 2018, the Respondent approached the Appellant for financial

assistance. Pursuant thereto, the Appellant advanced a sum of

Rs.1,00,00,000/- to the Respondent on 24.05.2018, carrying interest

Page 2 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 at the rate of 12% per annum with monthly rests. A Promissory Note

was executed in respect of the said financial assistance.

iii) Subsequently, the Respondent approached the Appellant for further

financial assistance. Accordingly, on 01.08.2018, the Appellant

advanced a further sum of Rs.55,00,000/- to the Respondent, carrying

interest at the rate of 12% per annum with monthly rests. A further

Promissory Note was executed in respect of the said amount.

iv) The aforesaid financial assistance aggregating to Rs.1,55,00,000/-

was stated to be repayable on demand. The Appellant thereafter issued

demand/recall notices dated 10.12.2018, 22.04.2019 and

27.04.2019. The record further refers to a written confirmation of the

outstanding amount as on 01.04.2019.

v) As the amounts claimed by the Appellant remained outstanding, the

Appellant instituted a petition under Section 7 of the Insolvency and

Bankruptcy Code, 2016, on 11.04.2022, seeking initiation of

Corporate Insolvency Resolution Process against the Respondent. The

petition was registered as Company Petition (IB) No. 29/7/JPR/2022,

wherein the Appellant claimed an amount of Rs.2,14,73,221/- as the

amount in default.

vi) The Adjudicating Authority, by order dated 25.07.2025, rejected the

Section 7 application filed by the Appellant. Aggrieved by the aforesaid

order, the Appellant has preferred the present appeal before this

Appellate Tribunal, seeking, inter alia, setting aside of the impugned

Page 3 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 order and initiation of Corporate Insolvency Resolution Process

against the Respondent.

vii) During pendency of the present appeal, the Section 7 application filed

by Union Bank of India against the Respondent/CD, being CP(IB) No.

68/7/JPR/2024, was allowed on 10.02.2026 and CIRP commenced

against the Corporate Debtor/Respondent. Mr. Rishabh Chand Lodha

was appointed as IRP and was subsequently confirmed as the RP.

Submissions of Appellant

4. Learned Counsel for the Appellant submitted that the present Appeal

continues to survive notwithstanding the subsequent commencement of CIRP

against the Respondent. It was submitted that during the pendency of the

Appeal, the Respondent was admitted into CIRP in CP(IB) No.

68/7/JPR/2024 on 10.02.2026, against which the Appeal came to be

dismissed by this Tribunal on 23.04.2026. Pursuant thereto, the Appellant

lodged its claim of Rs.2,97,43,803/- in Form-C before the Resolution

Professional on 05.05.2026. However, the aforesaid claim was not admitted

on the ground that the Adjudicating Authority, by the Impugned Order dated

25.07.2025, had held that the transaction in question did not constitute a

financial debt.

5. He submits that the aforesaid finding is the very subject matter of the

present Appeal and directly affects the Appellant's status and entitlement in

the CIRP of the Respondent. According to the Appellant, unless the finding

recorded in the Impugned Order is set aside, the rejection of its claim by the

Page 4 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 Resolution Professional cannot be effectively adjudicated upon in independent

proceedings, as the same would require reconsideration of the very issue

already determined by the Adjudicating Authority. It was, therefore,

contended that the subsequent commencement of CIRP does not render the

Appeal infructuous, since this Tribunal can still grant effective relief by

examining the nature of the transaction and determining whether the

Appellant is a financial creditor.

6. On the merits of the transaction, Learned Counsel submitted that the

Appellant, being a non-banking financial institution registered with the

Reserve Bank of India, had advanced a sum of Rs.1 crore on 24.05.2018 and

a further sum of Rs.55 lakh on 01.08.2018 to the Respondent. The amounts

were advanced against interest at the rate of 12% per annum with monthly

rests and were repayable on demand. The terms of the transactions were

evidenced by two duly executed promissory notes. It was argued that the

actual disbursal of the aforesaid amounts stood established from the

Appellant's bank statements, while the Respondent's liability was further

evidenced by its confirmation of accounts.

7. It is submitted by the Appellant that the transaction squarely falls

within the ambit of "financial debt" under Section 5(8) of the Code, since

the amounts were admittedly disbursed to the Respondent against

consideration for the time value of money. According to the Appellant, the

statutory definition does not prescribe execution of any particular or

composite loan agreement as a condition precedent for establishing a financial

debt. The promissory notes, bank records and confirmation of accounts, when

Page 5 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 read together, sufficiently establish both the disbursal and the agreed

interest-bearing nature of the transaction.

8. The Appellant submits that the Respondent never disputed receipt of

Rs.1.55 crore or the execution of the promissory notes. The defence raised by

the Respondent was that the funds received from the Appellant were utilised

for repayment of its earlier liabilities towards Lovely Securities Private Limited

and Avail Financial Services Limited. It is contended that such subsequent

utilisation of the borrowed funds could not alter the legal character of the

original transaction between the Appellant and the Respondent. According to

the Appellant, repayment of pre-existing liabilities out of subsequently

borrowed funds cannot, by itself, constitute "round tripping", particularly

when the underlying loans from the said lenders were independently existing

and were subject to interest obligations.

9. The Appellant also assailed the reliance placed by the Adjudicating

Authority upon an alleged email suggesting that the funds advanced by the

Appellant were merely routed to the aforesaid lenders. It was submitted that

the said email was specifically denied by the Appellant and, on its face, did

not contain the usual header and footer particulars of a genuine email. In

contrast, according to the Appellant, the record contains proper copies of the

relevant email correspondence. It was further pointed out that the loans

obtained by the Respondent from Lovely Securities Private Limited and Avail

Financial Services Limited pre-dated the advances made by the Appellant,

having been obtained in 2013 and 2014 respectively, and that the

corresponding interest payments and liabilities were reflected in the Form

Page 6 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 26AS records and confirmations of accounts. It was, therefore, contended that

the material relied upon by the Adjudicating Authority did not justify the

conclusion that the Appellant's transaction was a sham or a mere

arrangement for routing funds.

10. On the question of default, Learned Counsel submitted that both

advances were repayable on demand and that the Respondent had failed to

pay even the agreed monthly interest. The Appellant was consequently

constrained to issue demand/recall notices requiring repayment of the

outstanding amounts. Despite the same, neither the principal nor the accrued

interest was paid. It was thus contended that the ingredients of "default"

under Section 3(12) of the Code stood satisfied, the debt having become due

and payable and remaining unpaid.

11. Learned Counsel accordingly submitted that the record establishes the

existence of a genuine interest-bearing borrowing, actual disbursal of ₹1.55

crore, acknowledgment of liability by the Respondent and subsequent default

in repayment. It was, therefore, urged that the finding of the Adjudicating

Authority that the transaction did not constitute a financial debt is

unsustainable and that the Impugned Order dated 25.07.2025 be set aside.

Consequently, the Appellant prayed that its claim lodged in Form-C be

directed to be considered by the Resolution Professional in accordance with

law.

Submissions of Respondent/Resolution Professional

12. Ld. Counsel for the Resolution Professional/ Respondent submitted

that, subsequent to the Impugned Order dated 25.07.2025, the Corporate

Page 7 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 Debtor was admitted into CIRP on 10.02.2026 pursuant to the Section 7

application preferred by Union Bank of India. It was contended that the

principal relief sought by the Appellant, namely, commencement of CIRP

against the Corporate Debtor, has consequently been overtaken by

subsequent events. The Code does not contemplate commencement of two

parallel CIRPs against the same Corporate Debtor, and even if the present

Appeal were to be allowed, no second CIRP could be initiated. The Appeal,

therefore, according to the Respondent/RP, has become incapable of granting

the substantive relief originally sought and deserves to be disposed of as

infructuous.

13. He submits that the commencement of CIRP on 10.02.2026 brought

into operation the statutory framework governing the Corporate Debtor,

including the moratorium under Section 14 of the Code. Relying upon the

judgment of the Hon'ble Supreme Court in P. Mohanraj & Ors. v. Shah

Brothers Ispat Pvt. Ltd., (2021) ibclaw.in 24 SC bearing "Civil Appeal

No. 10355 of 2018, it was submitted that the moratorium is intended to

prevent individual proceedings against the Corporate Debtor and to ensure

that its affairs are dealt with collectively within the insolvency resolution

process. The RP submits that permitting the Appellant to continue the present

proceedings for securing an order of admission, after CIRP has already

commenced, would be inconsistent with the scheme of the Code and would

amount to permitting an individual creditor to pursue a parallel course

outside the ongoing CIRP.

Page 8 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025

14. RP further submitted that, upon commencement of CIRP, the Appellant

itself invoked the statutory mechanism for lodging its claim by submitting

Form-C before the Resolution Professional for a sum of Rs.2,97,43,803/-. The

Resolution Professional, in discharge of his statutory functions, sought the

necessary supporting material and clarification regarding the status of the

present Appeal. According to the Respondent/RP, despite being afforded

sufficient opportunity, the Appellant failed to furnish the requisite material.

Upon examination of the available record, including the findings contained in

the Impugned Order dated 25.07.2025, the claim was not admitted by the

Resolution Professional on 03.08.2026.

15. Ld. Counsel submits that the consequence of the aforesaid events is

that the Appellant's present grievance, if any, concerns the non-admission or

verification of its claim in the ongoing CIRP and not the commencement of

CIRP against the Corporate Debtor. The Respondent/RP contended that the

Code provides a separate statutory mechanism for determination and

adjudication of claims during CIRP and that any challenge arising from such

determination must be pursued in accordance with the remedies available

under the Code. The present Appeal, which originated from the rejection of

the Appellant's Section 7 application, cannot be converted into a proceeding

for independent adjudication of its claim in the already commenced CIRP.

16. Ld. Counsel further submits that the underlying liability now sought to

be recognised by the Appellant in the CIRP is substantially the same

transaction which formed the basis of its earlier Section 7 proceedings. The

Appellant, having already invoked the claim-verification mechanism by filing

Page 9 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 Form-C, cannot simultaneously seek determination of the same entitlement

through the present Appeal. While filing of the claim may not, by itself,

amount to abandonment of the Appeal, it demonstrates that the Appellant

has already subjected its alleged debt to the statutory process applicable to

the ongoing CIRP.

17. RP contended that the findings recorded by the Adjudicating Authority

regarding the existence of financial debt and the nature of the transactions

cannot now be used as a means of securing an indirect admission of the

Appellant's claim through the present Appeal. Any dispute concerning the

Appellant's status as a financial creditor, the amount claimed, or the

evidentiary material relied upon must be considered within the statutory

framework governing the ongoing CIRP. The Respondent/RP, therefore,

prayed that the present Appeal be dismissed/disposed of as having become

infructuous, without undertaking a fresh adjudication of the merits of the

Impugned Order dated 25.07.2025.

Analysis and Findings

18. We have considered the submissions advanced by the Learned Counsel

for the parties and perused the material on record.

19. The principal question for consideration is whether the present Appeal,

arising from rejection of the Appellant's Section 7 application, survives in view

of the subsequent commencement of CIRP against the same Corporate

Debtor?

Page 10 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025

20. We have seen that the Appellant has sought two specific reliefs in this

appeal viz. (i) Setting aside the impugned order; and (ii) Direct the Ld.

Adjudicating Authority to initiate CIRP against the Respondent.

21. The Appellant had initially sought initiation of CIRP against the

Corporate Debtor by filing an application under Section 7 of the Code, which

was dismissed by the Adjudicating Authority on 25.07.2025. Consequent to

the same the Appellant has filed these proceedings before this Appellate

Tribunal. During pendency of the present Appeal, on a Section 7 application

filed by the Canara Bank, Ld. Adjudicating Authority (NCLT Jaipur Bench)

admitted the Respondent (Prayag Polytech Private Limited) in CIRP

Proceedings vide CP No. (IB)- 68/7/JPR/2024 on 10.02.2026. Mr. Rishabh

Chand Lodha was appointed as Interim Resolution Professional (IRP) and

subsequently confirmed as Resolution Professional.

22. Aggrieved by the aforesaid initiation of CIRP at behest of Canara Bank,

Milan Aggarwal the suspended Director of M/s Prayag Polytech Private

Limited filed an appeal CA (AT) (Ins) No. 298 of 2026 before this Appellate

Tribunal. This appeal was dismissed by this Appellate Tribunal vide its order

dated 23.04.2026. Consequently, CIRP Proceedings against Prayag Polytech

Private Limited, who is the Corporate Debtor/Respondent herein, are going

on in the CP No. (IB)- 68/7/JPR/2024. The Appellant has already filed his

claim in the aforesaid CIRP proceedings for an amount of Rs.2,97,43,803/- in

Form-C on 05.05.2026.

23. In the ongoing CIRP proceedings, RP sought original claim documents

and other documents from the Appellant on several dates, but the Appellant

Page 11 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 did not submit the same. Based on the available documents, RP rejected the

Appellant's claim on 03.08.2026. The Appellant has sought continuation of

the Appeal on the ground that the Adjudicating Authority's finding in the

impugned order regarding the alleged absence of financial debt operates

against its claim filed before the Resolution Professional.

24. We note that the reliefs sought by the Appellant in this appeal have

already been granted in view of the order passed in CIRP Proceedings initiated

by Canara Bank. The Appellant has sought setting aside of impugned order

vide which the Section 7 application filed by the Appellant was rejected and

initiation of CIRP against the Corporate Debtor. The CIRP proceedings have

already been initiated against the Corporate Debtor and the Appellant is

already participating in the said proceedings by filing his claim.

25. The very relief sought by the Appellant, namely, commencement of

CIRP, has already been effectuated through a subsequent proceeding. The

Section 14(1)(a) of the Code specifically bars institution of any proceeding

against the Corporate Debtor after the commencement of moratorium. Thus,

the initiation of a second and parallel CIRP against the same Corporate Debtor

is not possible under the existing provisions of the code.

26. The Appellant seeks the decision of this Tribunal in this appeal on

merits, taking the plea that the Adjudicating Authority has already decided

the status of his claim, which was not considered as a financial debt, due to

which, his Section 7 application was rejected.

27. We are unable to agree with the contention of the Appellant. It is a

settled legal position that parallel CIRP Proceedings cannot be initiated

Page 12 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 against the same corporate debtor. The present Appeal cannot, therefore, be

converted into an independent proceeding for adjudication of the Appellant's

claim merely because the underlying transaction is common to both

proceedings.

28. The collective nature of the CIRP also militates against continuation of

separate proceedings by an individual creditor for determination of an

entitlement which is already required to be dealt with within the insolvency

process. The statutory consequences flowing from commencement of CIRP,

including the moratorium under Section 14, reinforce the requirement that

claims against the Corporate Debtor be dealt with within the framework of the

ongoing CIRP. The principle underlying such collective process has also been

recognised by the Hon'ble Supreme Court in P. Mohanraj & Ors. v. Shah

Brothers Ispat Pvt. Ltd., (2021) ibclaw.in 24 SC bearing "Civil Appeal

No. 10355 of 2018.

29. The CIRP Process is agnostic as to which entity has initiated the

proceedings. Once a Corporate Debtor is admitted to CIRP, all creditors in

same class are treated equally within the framework. The entity initiating

CIRP does not get any extra benefit in distribution of claims under the

Resolution Plan. The Appellant therefore, is not adversely affected by the

initiation of CIRP Proceedings at the behest of Canara Bank.

30. The subsequent commencement of CIRP has consequently altered the

circumstances in which the present Appeal was instituted. The Appellant's

grievance regarding non-admission of its claim is a subsequent grievance

arising within the ongoing CIRP and has to be pursued through the remedy

Page 13 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025 available under the Code. The Appellant has appropriate legal remedies

available under the Code to challenge the rejection of its claim by the RP.

31. We are therefore of the view that no effective relief can now be provided

in the present Appeal. The original prayer for initiation of CIRP has become

incapable of grant. The Appellant's subsequent claim before the Resolution

Professional in another CIRP proceeding cannot be adjudicated in an appeal

arising from the earlier rejection of its Section 7 application. The Appellant

may pursue such remedy as may be available under the Code in respect of its

claim, in accordance with law. The present Appeal has been rendered

infructuous by the subsequent commencement of CIRP against the Corporate

Debtor.

32. In view of the aforesaid discussion, the Appeal is dismissed as

infructuous. Pending IAs, if any, are closed. No order as to costs.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Arun Baroka] Member (Technical)

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

Harleen

Page 14 of 14 Company Appeal (AT) (Ins.) No. 1582 of 2025