Supreme Best Value Kolhapur (Shiroli) ... vs Canara Bank

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 1750 of 2025 (Arising out of Order dated 25.08.2025 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench Court VI in C.P.(IB)/414(MB)2025)

IN THE MATTER OF:

Vikram Sharma, Suspended Director, Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Pvt. Ltd. ...Appellant

Versus

Canara Bank ...Respondent

Present:

For Appellant : Mr. Shyam Kapadia, Advocate. For Respondents : Mr. Yash Dhruva, Ms. Ruchita Sain, Advocates.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by Suspended Director of the CD has been filed

challenging order dated 25.08.2025 passed by National Company Law

Tribunal, Mumbai Bench Court VI in C.P.(IB)/414(MB)2025 admitting

Section 7 application. The Adjudicating Authority declared moratorium

and appointed IRP. Challenging the order initiating Corporate Insolvency

Resolution Process ("CIRP") against the Corporate Debtor ("CD") -

Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Pvt. Ltd., this

Appeal has been filed.

2. Brief facts of the case necessary to be noticed for deciding the

Appeal are:

Company Appeal (AT) (Ins.) No.1750 of 2025 1

(i) Public Works Department ("PWD"), Govt. of Maharashtra

entered into a Concession Agreement with Supreme

Infrastructure India Ltd. for implementing a road project of

four-laning of the existing road from Shiroli (Kolhapur) to

Ankali on State Highway No.33 and from Ankali to Sangali on

State Highway No.75, on a design, build, finance, operate and

transfer basis.

(ii) Special Purpose Vehicle ("SPV") namely - Supreme Best Value

Kolhapur (Shiroli) Sangali Tollways Pvt. Ltd. was incorporated

on 31.12.2011 to execute the project. The project work was

to be completed within 24 months.

(iii) The CD availed finance from Consortium of Lenders

amounting to Rs.247.50 crores in the year 2012. The

Financial Creditor on 01.04.2013 on the request of the CD,

sanctioned a term loan of Rs.75 crores and certain additional

finance was also granted by Financial Creditor to the CD and

total disbursement to the CD was made by Financial Creditor

was of Rs.85.80 crores.

(iv) The PWD failed to issue Provisional Completion Certificate.

In May 2016, the CD was informed of a potential takeover of

the project by National Highways Authority of India ("NHAI").

(v) The CD invoked the arbitration against the PWD. The

Arbitral Tribunal gave an award on 21.06.2022 holding the

CD entitled to restitution and compensation on account of

Company Appeal (AT) (Ins.) No.1750 of 2025 2 untimely takeover of the project by NHAI and a sum of

Rs.318,94,70,738/- was awarded with interest @ 12.5% per

annum from 20.09.2016 until payment. The award was

challenged by the PWD under Section 34 of the Arbitration

and Conciliation Act, 1996 before the High Court of Bombay,

which proceedings are pending. The CD also instituted a

Commercial Execution Application (L) No.38161 of 2022,

which is also pending as on date.

(vi) The CD committed default in repayment of amount to the

Financial Creditor, hence, the account of the CD was declared

as NPA on 30.07.2017. The CD issued various revival letters

and lastly a letter on 11.08.2018, acknowledging the

availment of facilities from the Financial Creditor. A recall

noticed dated 26.02.2020 was issued by the Financial

Creditor to the CD.

(vii) Due to non-payment of dues, the application under Section 7

was filed by Financial Creditor on 29.11.2024 claiming

default of an amount of Rs.346,83,19,536.66/- as on

31.10.2024.

(viii) Notice was issued by the Adjudicating Authority to the CD,

who appeared and filed its reply, objecting to Section 7

application. It was pleaded by the CD that inspite of

continuous efforts of the CD to complete the project, various

impediments beyond the control of the CD adversely impacted

Company Appeal (AT) (Ins.) No.1750 of 2025 3 the project. The CD invoked the arbitration and an award

was passed for amount of Rs. 318,94,70,738/-, which award

has been challenged by the PWD under Section 34. The CD

has already initiated proceedings for execution. In Joint

Lenders Meeting held on 09.05.2018, it was resolved that any

amount received by Borrower whether through arbitration

proceedings or settlement scheme by the Government of

Maharashtra, will be deposited in the Escrow/ TRA Account

and Lenders shall have first charge. It is submitted that

there is no willful default committed by the CD and inability

to pay solely arises from the unilateral takeover of the project

by the PWD to issue Provisional Completion Certificate. The

Financial Creditor is not entitled to initiate proceedings. The

Company Petition is barred by time, default having been

committed on 30.04.2017 and the Company Petition having

been filed on 29.11.2024.

(ix) The Adjudicating Authority after hearing the parties held that

Company petition was well within limitation as after

subsequent to date of default on 30.04.2017, the CD issued

revival letters on 11.08.2018 and thereafter there is

acknowledgement in the balance sheets of the CD for

Financial Years 31st March, 2019, 31st March, 2021 and 31st

March, 2022. Hence, the application under Section 7, thus,

was well within time. The Adjudicating Authority also

Company Appeal (AT) (Ins.) No.1750 of 2025 4 considered the submissions of the CD based on arbitration

award and reliance on judgment of the Hon'ble Supreme

Court in Vidarbha Industries Power Ltd. vs. Axis Bank

Ltd. - (2022) 8 SCC 352. The Adjudicating Authority held

that there being debt and default, the judgment of the Hon'ble

Supreme Court in Vidarbha Industries Power Ltd. shall not

come to aid of the CD. The submission of the Financial

Creditor that the CD is neither financially sound nor

commercially viable was accepted and Section 7 application

was consequently admitted.

3. We have heard Shri Shyam Kapadia, learned Counsel appearing for

the Appellant; and Shri Yash Dhruva and Ms. Ruchita Sain, learned

Counsel appearing for the Respondent.

4. Learned Counsel for the Appellant challenging the order passed by

the Adjudicating Authority submitted that Adjudicating Authority

committed error in not placing reliance on judgment of the Hon'ble

Supreme Court in Vidarbha Industries Power Ltd. It is submitted that

judgment of the Vidarbha Industries Power Ltd. is still good law. The

review petition having been dismissed the view taken by the Adjudicating

Authority that the judgment of the Hon'ble Supreme Court in Vidarbha

Industries Power Ltd. is no longer the law, is not correct. It is submitted

that the amount, which was claimed by Financial Creditor in Section 7

application of Rs.346,83,19,536.66/- was less than the amount claimed

in the execution petition, which was Rs.561,23,88,602/- as on

Company Appeal (AT) (Ins.) No.1750 of 2025 5 07.12.2022. It is submitted that amount claimed by Financial Creditor

being less than the amount claimed in the execution proceedings, which

arose out of the award delivered on 21.06.2022 for Rs.318,94,70,738/-

together with interest @ 12.5% per annum from 20.09.2016, the

Adjudicating Authority having not appreciated the legal position correctly

has erred in observing that it has no option except to admit Section 7

application.

5. Learned Counsel appearing for the Respondent refuting the

submissions of the Appellant submits that the judgment of the Hon'ble

Supreme Court in Vidarbha Industries Power Ltd. in no manner

supports the claim of the Appellant. It is submitted that total amount

due on CD as computed is Rs.1113 crores towards Lenders of

Consortium. The amount which is claimed in the execution proceedings

by the CD is, thus, much less than the amount of debt, which is to be

discharged. It is submitted that the CD has no assets of its own and it

being not financially sound or commercially viable, the Adjudicating

Authority has rightly admitted Section 7 application. It is submitted that

the CD owes huge amount of debt to the Consortium of Lenders, which is

much more than the award in favour of the CD. The resolution of the CD

is necessary as per the provisions of the IBC.

6. We have considered the submissions of learned Counsel for the

parties and have perused the record.

Company Appeal (AT) (Ins.) No.1750 of 2025 6

7. Following facts and figures reflecting from the records are

undisputable between the parties:

(i) The CD was incorporated as SPV on 31.12.2011 to execute

the project of four-laning of the existing road on State

Highway No.33 and State Highway No.75. The work was to

be completed within 24 months from 20.10.2012 from the

date of issuance of work order.

(ii) The CD could not complete the work and PWD did not issue

Provisional Completion Certificate. The CD was informed in

May 2016 that project is now taken over by NHAI.

(iii) The consortium lending, which was taken by the CD with

L&T Infrastructure Finance Company Ltd. as lead Banker

was Rs.247.50 crores in the year 2012. The Financial

Creditor (Canara Bank) has disbursed an amount of Rs.85.80

crores to the CD in the year 2013-2016.

(iv) Arbitral award was issued in favour of the Appellant dated

21.06.2022 for amount of Rs.318,94,70,738/- with 12.5%

interest.

(v) Section 7 application was filed by Financial Creditor claiming

an amount of Rs. 346,83,19,536.66/-. The amount admitted

in CIRP of the CD of Consortium Lenders is Rs.1113 crores.

Company Appeal (AT) (Ins.) No.1750 of 2025 7

8. The present is a case where there is no challenge to the finding of

the Adjudicating Authority regarding outstanding default of more than

Rs.1 crore and the default committed by the CD in repayment of the term

loan.

9. The only submission which has been pressed by the learned

Counsel for the Appellant is submission based on the judgment of the

Hon'ble Supreme Court in Vidarbha Industries Power Ltd. The

submission of the Appellant is that since the amount claimed in the

execution proceedings by the CD is much more than total debt claimed by

Canara Bank in its Section 7 application, the judgment of Vidarbha

Industries Power Ltd. was fully applicable and CIRP against the CD was

liable to be stayed and Adjudicating Authority committed error in

directing for admission of Section 7 application. It is submitted that

Adjudicating Authority has failed to consider the judgment of Vidarbha

Industries Power Ltd., which is still good in law. The review petition

filed against the said judgment has also been dismissed.

10. For appreciating the submission of learned Counsel for the

Appellant, we may notice the judgment of the Hon'ble Supreme Court in

Vidarbha Industries Power Ltd. in some detail. In the case of Vidarbha

Industries Power Ltd. Financial Creditor - Axis Bank Ltd. has filed an

application under Section 7 against the CD - Vidarbha Industries Power

Ltd. for initiating CIRP against it. The CD had filed an application being

MA No.570 of 2020 in CP(IB) No.264 of 2020 seeking stay of the

proceeding, so long as Civil Appeal No.372 of 2017 filed by Maharashtra

Company Appeal (AT) (Ins.) No.1750 of 2025 8 Electricity Regulatory Commission ("MERC") is pending. The case of the

CD in the above was that the CD has filed an Appeal before the Appellate

Tribunal for Electricity ("APTEL") challenging disallowance of the actual

fuel cost for Financial Years 2014-15 and 2015-16. The APTEL allowed

the appeal and directed MERC to allow the Appellant the actual cost of

coal purchased for Unit-1, capped to the fuel cost of Unit-2. The CD had

claimed a sum of Rs.1730 crores due to the Appellant in terms of the said

order of the APTEL. Against the order of APTEL, Civil Appeal No.372 of

2017 was filed in the Hon'ble Supreme Court, which was pending. In the

above background, the application was filed by the CD to stay Section 7

proceeding, which was rejected by Adjudicating Authority, against which

an Appeal was filed, which too was dismissed by this Tribunal.

Challenging the order of this Tribunal, an Appeal was filed in the Hon'ble

Supreme Court. In the above background of facts, the Hon'ble Supreme

Court has considered the scope and ambit of Section 7 of the IBC. The

Hon'ble Supreme Court in Vidarbha Industries Power Ltd. has observed

that the CD, who is in the red should be resolved, however, the viability

and overall financial health of the CD are not extraneous matters. In

Paragraph-59 of the judgment, following was observed:

"59. There can be no doubt that a corporate debtor who is in the red should be resolved expeditiously, following the timelines in the IBC. No extraneous matter should come in the way. However, the viability and overall financial health of the corporate debtor are not extraneous matters."

11. The Hon'ble Supreme Court in the above case in Paragraphs 61 and

62 laid down following:

Company Appeal (AT) (Ins.) No.1750 of 2025 9

"61. In our view, the Appellate Authority (Nclat) erred in holding that the adjudicating authority (NCLT) was only required to see whether there had been a debt and the corporate debtor had defaulted in making repayment of the debt, and that these two aspects, if satisfied, would trigger the CIRP. The existence of a financial debt and default in payment thereof only gave the financial creditor the right to apply for initiation of CIRP. The adjudicating authority (NCLT) was required to apply its mind to relevant factors including the feasibility of initiation of CIRP, against an electricity generating company operated under statutory control, the impact of MERC's appeal, pending in this Court, order of Aptel referred to above and the overall financial health and viability of the corporate debtor under its existing management.

62. As pointed out by Mr Gupta, legislature has, in its wisdom, chosen to use the expression "may" in Section 7(5)(a) IBC. When an adjudicating authority (NCLT) is satisfied that a default has occurred and the application of a financial creditor is complete and there are no disciplinary proceedings against proposed resolution professional, it may by order admit the application. Legislative intent is construed in accordance with the language used in the statute."

12. Further, elaborating the scope of Section 7 in Paragraph 76 and 77

of the judgment, following was laid down:

"76. The fact that the legislature used "may" in Section 7(5)(a) IBC but a different word, that is, "shall" in the otherwise almost identical provision of Section 9(5)(a) shows that "may" and "shall"

in the two provisions are intended to convey a different meaning. It is apparent that the legislature intended Section 9(5)(a) IBC to be mandatory and Section 7(5)(a) IBC to be discretionary. An application of an operational creditor for initiation of CIRP under Section 9(2) IBC is mandatorily required to be admitted if the application is complete in all respects and in compliance of the requisites of the IBC and the rules and regulations thereunder, there is no payment of the unpaid operational debt, if notices for payment or the invoice have been delivered to the corporate debtor by the operational creditor and no notice of dispute has been received by the operational creditor. The IBC does not countenance dishonesty or deliberate failure to repay the dues of an operational creditor.

77. On the other hand, in the case of an application by a financial creditor who might even initiate proceedings in a representative capacity on behalf of all financial creditors, the adjudicating authority might examine the expedience of initiation of CIRP, taking into account all relevant facts and circumstances, including the overall financial health and viability of the corporate debtor. The adjudicating authority may in its discretion not admit the application of a financial creditor.

Company Appeal (AT) (Ins.) No.1750 of 2025 10

13. What was laid down by the Hon'ble Supreme Court in the above

case is that the Adjudicating Authority while considering the proceeding

for initiation of CIRP, must take into account - (1) all relevant facts and

circumstances; (2) including the overall financial health; and (3) viability

of the CD. The Adjudicating Authority may in its discretion not admit the

application of a Financial Creditor, after considering the aforesaid facts.

The Hon'ble Supreme Court further laid down following in Paragraphs 86,

87 and 88:

"86. Even though Section 7(5)(a) IBC may confer discretionary power on the adjudicating authority, such discretionary power cannot be exercised arbitrarily or capriciously. If the facts and circumstances warrant exercise of discretion in a particular manner, discretion would have to be exercised in that manner.

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

88. The adjudicating authority (NCLT) has to consider the grounds made out by the corporate debtor against admission, on its own merits. For example, when admission is opposed on the ground of existence of an award or a decree in favour of the corporate debtor, and the awarded/decretal amount exceeds the amount of the debt, the adjudicating authority would have to exercise its discretion under Section 7(5)(a) IBC to keep the admission of the application of the financial creditor in abeyance, unless there is good reason not to do so. The adjudicating authority may, for example, admit the application of the financial creditor, notwithstanding any award or decree, if the award/decretal amount is incapable of realisation. The example is only illustrative."

Company Appeal (AT) (Ins.) No.1750 of 2025 11

14. In the facts of the above case, the Hon'ble Supreme Court held that

since dues of the Financial Creditor are much less than the dues to which

CD was entitled, i.e. Rs.1730 crores, hence, that was a relevant factor,

which was required to be considered by the Adjudicating Authority, while

proceeding to admit. It is relevant to notice that the Hon'ble Supreme

Court after exposition of law under Section 7 has set-aside the order

passed by NCLT and NCLAT and remitted the matter to NCLT for

reconsideration of the application of the Appellant for stay of further

proceedings on merits in accordance with law.

15. The judgment of the Hon'ble Supreme Court in Vidarbha

Industries Power Ltd. laid down that discretion is vested in the

Adjudicating Authority not to admit Section 7 application, if there are

relevant circumstances. We notice that although the Adjudicating

Authority in the impugned order after having been satisfied that there is

debt and default and relying on the judgment of the Hon'ble Supreme

Court in M/s Innoventive Industires Ltd. vs. ICICI bank & Anr. -

(2018) 1 SCC 407 and judgment of the Hon'ble Supreme Court in M.

Suresh Kumar Reddy vs. Canara Bank and Ors. - (2023) 8 SCC 387

held that when debt and default is proved the Adjudicating Authority has

to admit Section 7 application. The submission raised by Financial

Creditor that CD is neither financially sound nor commercially viable has

also been noticed by the Adjudicating Authority in Paragraph 33 of the

impugned order.

Company Appeal (AT) (Ins.) No.1750 of 2025 12

16. As noted above, the learned Counsel for the Appellant has based his

submission on the judgment of the Hon'ble Supreme Court in Vidarbha

Industries Power Ltd. and has submitted that the said judgment gives

clear discretion to the Adjudicating Authority to reject Section 7

application in the facts of the present case. We, thus, proceed to examine

the submission of the Appellant on merits, placing reliance on the

judgment in Vidarbha Industries Power Ltd.

17. There are two reasons due to which we are unable to accept the

submission of learned Counsel for the Appellant that in the facts of the

present case, Section 7 application could not have been entertained. They

are:

(I) The debt which is owed by the CD is not debt only to the

Canara Bank, but the CD owed debt to Consortium of

Lenders and as submitted by learned Counsel for the

Respondent that the debt of the Consortium Lenders, which

is admitted in the proceedings is of Rs.1113 crores, which

includes the debt of Financial Creditor - Canara Bank. As

per the case of the Appellant in the execution proceedings,

which has been filed for execution of the award, the amount

claimed in the execution proceeding is Rs.561.23 crores. The

amount, thus, claimed in the execution proceedings by the

CD, which is pending before the Bombay High Court, are

much less than total amount, which is owed by the CD to the

Consortium of Lenders. The Hon'ble Supreme Court in

Company Appeal (AT) (Ins.) No.1750 of 2025 13 Vidarbha Industries Power Ltd. in Paragraph-88 has held

that when the awarded/decretal amount exceeds the amount

of debt, the Adjudicating Authority has to exercise its

discretion under Section 7(5)(a) of the IBC to keep the

admission of the application of the Financial Creditor in

abeyance, unless there is good reason not to do so. The

present is a case where dues owed by the CD are much more,

which is almost double than the amount, which is claimed in

the execution proceedings by the CD. Thus, in view of the

judgment of the Hon'ble Supreme Court Vidarbha Industries

Power Ltd. Paragraph-88, as extracted above, the judgment

of the Hon'ble Supreme Court in Vidarbha Industries Power

Ltd. does not come to any aid to the Appellant, nor the

present is a case where Adjudicating Authority could have

exercised its discretion in not admitting Section 7 application

or keeping the proceeding in abeyance.

(II) The Hon'ble Supreme Court in the Vidarbha Industries

Power Ltd. has held that Adjudicating Authority for

exercising its discretion has to consider all relevant facts and

circumstances including overall financial health and viability

of the CD. The CD was a SPV formed to execute the project.

It has no independent business apart from execution of the

project, nor the SPV has any other source of income. The

PWD having not issued Provisional Completion Certificate

Company Appeal (AT) (Ins.) No.1750 of 2025 14 and the project having taken over by the NHAI in 2016, the

CD is neither carrying any business nor has any finances.

The Adjudicating Authority in Paragraph-33 has also noticed

the submission of the Financial Creditor that the CD is

neither financially sound nor commercially viable. Thus, the

fact that the CD is not carrying any business and it was only

a SPV to carry out the project is a relevant consideration and

the overall financial health of the CD indicates that it has

neither any business nor any finance. These factors were

relevant factors to be considered to exercise its discretion as

per the law laid down by the Hon'ble Supreme Court in

Vidarbha Industries Power Ltd. Thus, in view of the fact

that the CD was only a SPV and it has no other business or

finance, present was not a case where the Adjudicating

Authority could have exercised its discretion of keeping the

proceeding in abeyance.

18. We, thus, are satisfied that even as per judgment of the Hon'ble

Supreme Court in Vidarbha Industries Power Ltd. present is not a case

where the Adjudicating Authority could have exercised its discretion to

keep the Section 7 proceedings in abeyance or to reject Section 7

application. We, thus, do not find any substance in submission of

learned Counsel for the Appellant that in view of the law laid down by the

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

Adjudicating Authority ought to have rejected Section 7 application or

Company Appeal (AT) (Ins.) No.1750 of 2025 15 kept the proceedings in abeyance. As noted above, the present is a case

where debt and default by the CD is not even disputed. For the reasons

as indicated above, the judgment of the Hon'ble Supreme Court in

Vidarbha Industries Power Ltd. does not come to any aid to the

Appellant in the facts of the present case.

19. In view of foregoing discussions, we do not find any good ground to

interfere with the order of the Adjudicating Authority admitting Section 7

application. In result, the Appeal is dismissed. Parties shall bear their

own costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

10th April, 2026

Ashwani

Company Appeal (AT) (Ins.) No.1750 of 2025 16