Vijaybhai Dhanjibhai Detroja vs Vidres India Ceramics Private Limited

Comp. App. (AT) (Ins) No. 1698 of 2026 (Arising out of the Order dated 31.08.2026 passed by the National Company Law Tribunal, Ahmedabad Bench, in Company Petition (IB) No. 2 (AHM)2026)

IN THE MATTER OF: Vijaybhai Dhanjibhai Detroja Shareholder & Director of Sanford Vitrified Pvt. Ltd. (Company under CIRP process) Having his address at: 401, Platinum Heights, Ravapar, Green Park, Morbi-363641 ...Appellant

Versus 1. Vidres India Ceramics Private Limited 3rd floor, Sarthik Square, B/S Pizza Hut, Sarkhej Gandhinagar Highway, Ahmedabad-380054, Gujarat ...Respondent No. 1

2. Chetan Patel Interim Resolution Professional Regn No. IBBI/ IPA-002/ IP-N00819/ 2019- 2020/12561 Of M/s Sanford Vitrified Pvt Ltd. Having his office at: A106, Titanium square, Thaltej Cross Road, SG highway, Ahmedabad-380054 Email: chetanpatelcs@gmail.com ...Respondent No. 2

Present For Appellant: Mr. Keith Varghese, Advocate Comp. App. (AT) (Ins) No. 1698 of 2026

For Respondents: Mr. Pranav Thakkar, Advocate Mr. Chetan Patel, Advocate for IRP/R-2

JUDGEMENT

(18.09.2026)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present Appeal has been preferred under Section 61 of the Insolvency

and Bankruptcy Code, 2016 ("Code") by the Appellant, i.e. Mr. Vijaybhai

Dhanjibhai Detrojawho, is a shareholder and suspended Director of M/s Sanford

Vitrified Pvt. Ltd. ("Corporate Debtor"), assailing the order dated 31.08.2026

passed by the, National Company Law Tribunal, Ahmedabad Bench

("Adjudicating Authority") in C.P. (IB) No. 2/(AHM)/2026, whereby the

application filed by Respondent No. 1 under Section 9 of the Code came to be

admitted and Corporate Insolvency Resolution Process ("CIRP") was initiated

against the Corporate Debtor.

Vidres India Ceramics Private Limited, who is the Operational Creditor. Is

Respondent No. 1, herein

Mr. Chetan Patel, who is the Interim Resolution Professional, is the pendentent No. 2, herein.

2. The Respondent No. 1 had instituted the aforesaid proceedings under

Section 9 of the Code in respect of an operational debt. During the pleadings of

the present Appeal before us, the parties entered into a Settlement Agreement

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dated 12.09.2026. An application under Rule 11 of the National Company Law

Appellate Tribunal Rules, 2016 has consequently been preferred seeking to bring

the said Settlement Agreement on record and, on the basis thereof, to set aside

the Impugned Order dated 31.08.2026 and release the Corporate Debtor from the

CIRP.

3. We have heard the learned Counsel appearing for the Appellant and learned

Counsel appearing for Respondent No. 1 and have perused the records, including

the Settlement Agreement dated 12.09.2026 and the documents placed on record

in support thereof.

4. Before considering the effect of the settlement, it is necessary to notice the

relevant facts. The Respondent No. 1 had claimed an operational debt of

₹2,26,40,900/- in respect of unpaid bills raised during the period from 18.09.2024

to 12.03.2025. During the pendency of the proceedings before the Adjudicating

Authority, a sum of ₹1,13,36,501/- had already been paid, leaving, according to

the Settlement Agreement, a balance of ₹1,13,04,399/-.

5. The Adjudicating Authority, however, by order dated 31.08.2026, admitted

the Section 9 application and initiated CIRP against the Corporate Debtor,

appointing Mr. Chetan Patel as the Interim Resolution Professional ("IRP").

Aggrieved by the said order, the Appellant preferred the present Appeal on

03.09.2026.

6. The Settlement Agreement dated 12.09.2026 records that, during the

pendency of the Appeal, the parties mutually agreed to settle the dispute and the

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outstanding claims forming the subject matter of the Section 9 proceedings. The

Agreement further records that the Appellant entered into the settlement in his

individual capacity, after obtaining the consent of the Directors, and not on behalf

of the Corporate Debtor, which is presently undergoing CIRP.

7. Under the Settlement Agreement, the parties have acknowledged

₹1,13,04,399/- as the amount remaining payable and agreed that the said amount

shall constitute full and final settlement of the operational debt, claims, dues and

demands of Respondent No. 1 pertaining to the subject matter of the proceedings.

8. The aforesaid settlement amount is stated to have been tendered by way of

two Demand Drafts, namely, DD No. 504509 dated 05.09.2026 for ₹75,00,000/-

and DD No. 504510 dated 07.09.2026 for ₹38,04,399/-. The Settlement

Agreement also records that an earlier Demand Draft of ₹25,00,000/- dated

25.08.2026 stood cancelled/returned and was superseded by the aforesaid two

Demand Drafts.

9. The Respondent No. 1, under the Settlement Agreement, has undertaken to

give its unconditional consent before this Appellate Tribunal to the setting aside

of the admission order dated 31.08.2026. It has further undertaken to accept the

settlement amount, not to pursue the claims forming the subject matter of the

present proceedings, and not to raise any objection or seek adjournment before

this Appellate Tribunal. The Agreement further records an undertaking to

withdraw the pending complaints under Section 138 of the Negotiable

Instruments Act, 1881.

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Comp. App. (AT) (Ins) No. 1698 of 2026

10. The Settlement Agreement further records that, upon the settlement, no

outstanding dues, claims or demands, including principal, interest, penalty or

legal costs, shall remain against the Corporate Debtor or its

Directors/shareholders in respect of the transactions forming the subject matter

of C.P. (IB) No. 2/(AHM)/2026, the pending criminal complaints and the present

Appeal. It is also relevant to note that the Settlement Agreement contains a

specific stipulation that, in the event either of the Demand Drafts is defective or

is not handed over in terms of the Agreement, the settlement shall stand rendered

void and Respondent No. 1 shall be at liberty to pursue the CIRP proceedings and

oppose the Appeal.

11. Insofar as the expenses occasioned by commencement of the CIRP are

concerned, the Settlement Agreement records that Respondent No. 1 had

deposited ₹1,00,000/- with the IRP towards CIRP costs and fees and that the

Appellant had paid ₹2,00,000/- to Respondent No. 1 towards CIRP costs and fees.

12. The principal question which, therefore, arises for consideration is

whether, in view of the settlement having been arrived at after admission of the

Section 9 application and commencement of CIRP, this Appellate Tribunal can,

in exercise of its jurisdiction under Rule 11 of the NCLAT Rules, 2016, itself set

aside the admission order and bring the CIRP to an end.

13. It is not in dispute that the settlement in the present case has taken place

after the order of admission dated 31.08.2026. Thus, the present case is not one

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where the parties had settled their disputes before the admission of the Section 9

application.

14. In this context, the amended provisions of Section 12A of the Code assume

significance. Section 12A of the code, as amended by the Insolvency and

Bankruptcy Code (Amendment) Act, 2026, provides the statutory mechanism for

withdrawal of an application admitted under Sections 7, 9 or 10 of the Code. The

amended provision requires an application by the Resolution Professional with

the approval of ninety per cent voting share of the Committee of Creditors, subject

to the restrictions contained in sub-section (2).

15. The provisions of Section 12A of the Code, relating to withdrawal of

applications admitted under Sections 7, 9 and 10, were amended by the IBC

(Amendment) Act, 2026 (Act No. 6 of 2026), on 06.04.2026. The said

amendment came into force with effect from 26.05.2026. Accordingly, the

provisions of Section 12A applicable to the present case, post-amendment, are set

out below:

"12A. (1) Subject to sub-section (2), the Adjudicating Authority may allow the withdrawal of an application admitted under section 7, 9 or 10, on an application made by the resolution professional, with the approval of ninety per cent. voting share of the committee of creditors in such manner as may be specified.

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(2) Notwithstanding anything contained in any law for the time being in force, an application admitted under section 7, 9 or 10 shall not be withdrawn--

(a) before the constitution of the committee of creditors under subsection (1) of section 21; and

(b) after the first invitation for submission of a resolution plan has been issued by the resolution professional. (3) The Adjudicating Authority shall pass an order under sub-

section (1) within a period of thirty days from the date of receipt of the application:

Provided that if the Adjudicating Authority has not passed an order within such period, it shall record the reasons for such delay in writing.".

16. The aforesaid issue has recently been considered by the coordinate bench

of this Appellate Tribunal in Aayush Prashant Agarwal, Suspended Director of

EPIC Yarns Private Limited v. Uma Export Limited & Anr., I.A. No. 5601 of

2026 in Company Appeal (AT) (Insolvency) No. 1366 of 2026, decided on

24.08.2026. In the said case, the settlement between the parties was arrived at

after initiation of CIRP but before constitution of the CoC. Taking note of the

amendment to Section 12A of the Code, this Appellate Tribunal observed that the

procedure for withdrawal of an application for CIRP had been made more

stringent and that sub-section (2) of Section 12A, commencing with a non-

obstante clause, stipulates that an application admitted under Sections 7, 9 or 10

shall not be withdrawn before constitution of the CoC or after issuance of the first

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invitation for submission of a resolution plan. The paragraph of Aayush Prashant

Agarwal (Supra) reads as under:

"4.6 We note that in the above cited case the settlement had taken place prior to initiation of CIRP whereas in the present case the settlement had taken place after the initiation of CIRP. The CIRP in the present case was initiated on 23.07.2026 whereas the settlement deed is dated 06.08.2026. Further the above cited case is prior to amendment of Section 12A of IBC, 2016. The procedure for withdrawal of application for CIRP has now been made more stringent. The sub Section 2 of Section 12A begins with a non obstante clause and states that application admitted under Section 7, 9 and 10 shall not be withdrawn prior to the constitution of CoC or after the first invitation for submission of resolution plan has been issued by the Resolution Professional."

17. The Appellate Tribunal thereafter, having considered the amended

Section 12A and the fact that the settlement was subsequent to commencement

of CIRP, did not itself terminate the CIRP. Instead, the Tribunal directed as

follows:

"Considering the conspectus of facts and legal position as applicable to this case, IRP is at liberty to make an appropriate application before the Ld. NCLT, in terms of the provisions of Section 12A of the IBC, 2016. The Ld. NCLT is requested to dispose of application under Section 12A so received, within 15 days of the receipt of the said application as per law."

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21. The aforesaid decision is relevant to the present matter not merely because

there is a settlement between the parties, but because the settlement in both cases

came into existence after the admission of the Section 9 proceedings. The

statutory position governing withdrawal after admission, therefore, cannot be

disregarded merely because the settlement is consensual between the parties

before this Appellate Tribunal.

22. We are also conscious of the fact that in the present case, the Committee

of Creditors has not yet been constituted. However, the mere absence of

constitution of the CoC does not, by itself, dispense with the statutory mechanism

applicable to a post-admission settlement. The question is not merely whether a

settlement has been reached, but also the manner in which the CIRP, once

commenced pursuant to an order of admission, is ended.

23. At the same time, the Settlement Agreement itself demonstrates that the

parties are conscious that the closure of the CIRP is required to be effectuated in

accordance with the applicable provisions of the Code and the orders of the

competent forum. The settlement, therefore, cannot be treated as operating, by

itself, to efface the order of admission dated 31.08.2026.

24. The fact that Respondent No. 1, being the Operational Creditor, has given

its unconditional consent to the settlement and to the setting aside of the

admission order is undoubtedly a relevant subsequent circumstance. Likewise,

the fact that the settlement amount has been agreed to be accepted in full and final

satisfaction of the operational debt and that the CoC has not yet been constituted

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are circumstances which may be considered by the Adjudicating Authority while

examining the appropriate application under Section 12A.

25. However, these circumstances do not warrant this Appellate Tribunal

bypassing the statutory mechanism which has been specifically provided for

withdrawal of an admitted insolvency application. The appropriate course,

consistent with the statutory scheme and the approach adopted by this Appellate

Tribunal in Aayush Prashant Agarwal (Supra), would therefore be to permit the

IRP to place the settlement before the Adjudicating Authority and seek

appropriate orders in accordance with Section 12A of the Code.

26. We make it clear that we are not examining the merits of the grounds raised

in the Appeal against the order dated 31.08.2026, as the subsequent settlement

has intervened during the pendency of the Appeal. The rights and contentions of

the parties on the original grounds of challenge are, accordingly, not being

adjudicated upon by us.

27. In view of the settlement, the learned Counsel for Respondent No. 1 having

expressly consented to the settlement and the parties having agreed upon the

amount of ₹1,13,04,399/- towards full and final settlement, the settlement dated

12.09.2026 is taken on record for the limited purpose of enabling the parties and

the IRP to place the same before the Adjudicating Authority in appropriate

proceedings.

28. The IRP, Mr. Chetan Patel, is at liberty to make an appropriate application

before the Adjudicating Authority under Section 12A of the code, placing on

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record the Settlement Agreement dated 12.09.2026 and the consent of the

Operational Creditor, along with the relevant documents concerning the

settlement and CIRP costs.

29. The Adjudicating Authority shall consider such application in accordance

with law, including the amended provisions of Section 12A of the code, and shall

take into consideration the fact that the settlement has been arrived at after

admission of the Section 9 application, the present status of the CIRP, the fact

that the Committee of Creditors has not yet been constituted, and the consent of

the Operational Creditor.

30. Since the Settlement Agreement is subject to the statutory process and

appropriate orders of the Adjudicating Authority, the prayer of the Appellant to

directly set aside the admission order dated 31.08.2026 in exercise of Rule 11 of

the NCLAT Rules, 2016 cannot be acceded to at this stage.

31. It is therefore pertinent to note that since the Settlement Agreement dated

12.09.2026 is taken on record, the IRP is at liberty to file an appropriate

application before the Adjudicating Authority under Section 12A of the code,

placing the Settlement Agreement and the consent of Respondent No. 1 on record.

Further, the Adjudicating Authority is requested to consider and dispose of such

application expeditiously preferably within 15 days of the receipt of the said

application in accordance with the law.

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Comp. App. (AT) (Ins) No. 1698 of 2026

32. The present Appeal and the application filed under Rule 11 are disposed of

in the above terms. All pending applications, if any, stand disposed of

accordingly. No Cost. IA, if any, are closed.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Naresh Salecha] Member (Technical) Sim Chinmayee Sinha

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