1. Whether the alleged debt qualifies as an 'operational debt' under Section 5(21) of the Insolvency and Bankruptcy Code, 2016 (the Code), thus enabling initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Code.

2. Whether there exists a pre-existing dispute between the Operational Creditor and the Corporate Debtor prior to the issuance of the demand notice under Section 8 of the Code, which would bar admission of the Section 9 application.

3. Whether the application filed under Section 9 of the Code is maintainable in light of the facts and circumstances, including the nature of the debt and the existence of disputes.

Issue-wise Detailed Analysis

1. Qualification of the Debt as Operational Debt under Section 5(21) of the Code

Relevant Legal Framework and Precedents: Section 5(21) of the Code defines 'operational debt' as a claim in respect of the provision of goods or services including employment or a debt payable under any law to government authorities. Section 9 of the Code allows an operational creditor to initiate CIRP only when there is a default in payment of such operational debt.

The Tribunal referred to a precedent from the National Company Law Tribunal, Indore Bench, which held that amounts arising out of settlement agreements do not qualify as operational debt. This view was upheld by the National Company Law Appellate Tribunal (NCLAT), which emphasized that the Code is not a recovery mechanism but a resolution process for insolvency, and amounts due under settlement agreements are better suited for recovery proceedings.

Court's Interpretation and Reasoning: The Tribunal observed that the debt claimed by the Applicant arose from a settlement agreement (the Second Memorandum of Understanding dated 01.06.2024) between the parties to resolve prior disputes. The debt amounting to INR 4,29,98,630/- inclusive of principal and interest was thus not a straightforward operational debt arising from supply of goods or services, but an amount agreed upon to settle disputes.

Accordingly, the Tribunal concluded that such a debt cannot be categorized as operational debt within the meaning of Section 5(21) of the Code. The Tribunal relied on the aforementioned precedents to reinforce this interpretation, emphasizing that the Code is not intended for recovery of disputed amounts settled through agreements but for insolvency resolution.

Application of Law to Facts: Since the debt arose from a settlement agreement and not from an undisputed operational transaction, the Tribunal held that the claim does not satisfy the statutory definition of operational debt necessary for initiating CIRP under Section 9.

Treatment of Competing Arguments: Although the Applicant contended that the debt was due and payable, the Tribunal gave primacy to the nature of the debt and the legal framework, dismissing the claim as operational debt. The Applicant's reliance on the dishonor of post-dated cheques and issuance of legal notices under the Negotiable Instruments Act was not sufficient to override the statutory interpretation.

Conclusion: The debt in question does not qualify as operational debt under the Code, and thus the Section 9 application is not maintainable on this ground.

2. Existence of Pre-existing Dispute Between the Parties

Relevant Legal Framework and Precedents: Section 9(5)(ii)(d) of the Code mandates rejection of an application if a dispute exists between the parties prior to the demand notice. The NCLAT has consistently held that the existence of a bona fide dispute is a valid ground for rejection of a Section 9 application. Landmark judgments cited include M/s. Sumilon Polyester Pvt. Ltd. vs M/s. Parikh Packaging Pvt. Ltd. and Mr. Umesh Saraf vs Tech India Engineers Pvt. Ltd., which emphasize that the Code is not a recovery statute and that pre-existing disputes bar insolvency proceedings.

Court's Interpretation and Reasoning: The Tribunal noted that the parties had entered into multiple correspondences and legal notices concerning disputes over work allocation and profit-sharing. The existence of the Second Memorandum of Understanding itself was a consequence of these disputes. The Tribunal observed that such disputes were clearly in existence prior to the issuance of the demand notice under Section 8 of the Code.

Key Evidence and Findings: The record revealed multiple communications, legal notices, and complaints exchanged between the parties. The Applicant admitted to the existence of disputes and the need for a second settlement agreement to resolve them.

Application of Law to Facts: Given the admitted pre-existing disputes, the Tribunal held that the application under Section 9 was not maintainable. The Code envisages CIRP only in cases of undisputed default, and the presence of a dispute negates the prerequisite condition for admission.

Treatment of Competing Arguments: The Applicant argued that the disputes were resolved by the second MoU and that the debt was due and payable. However, the Tribunal found that the existence of disputes prior to the demand notice was established and that the second MoU was itself a product of those disputes. Thus, the application could not be admitted.

Conclusion: The Tribunal concluded that the application must be rejected due to the existence of pre-existing disputes, which are fatal to the maintainability of a Section 9 application.

3. Maintainability of the Application Under Section 9 of the Code

Relevant Legal Framework and Precedents: Section 9 of the Code lays down procedural and substantive requirements for an operational creditor to initiate CIRP, including delivery of demand notice, absence of payment, and absence of dispute. The Supreme Court in Swiss Ribbon Pvt. Ltd. vs. Union of India clarified that the Code is not a recovery mechanism but a resolution process for insolvency.

Court's Interpretation and Reasoning: The Tribunal reviewed compliance with procedural requirements and found that although the demand notice was issued, the existence of dispute and the nature of the debt disqualified the application. The Tribunal emphasized that the Code's objective is to revive corporate debtors and not to serve as a tool for recovery of disputed debts.

Application of Law to Facts: The application was incomplete in the sense that it failed to meet the substantive conditions for admission under Section 9, particularly the absence of dispute and the nature of the debt.

Treatment of Competing Arguments: The Applicant's reliance on dishonored cheques and demand notices was insufficient to override the statutory bar created by the existence of disputes and the non-qualification of the debt as operational debt.

Conclusion: The application was held to be non-maintainable and was accordingly rejected.

Significant Holdings

"The debt that has been termed as 'default' under Section 9 of the Code hereof, cannot be considered as 'operational debt' due to the basis of the said debt not falling under the aforementioned pre-requisite conditions as mentioned above."

"Any amount outstanding arising out of a settlement agreement cannot be termed as operational debt within the meaning of Section 5(21) of the IBC, 2016."

"The Code is not a recovery proceeding and the Application which has been filed in the present case is only the application for recovery of balance amount of the interest and application was not filed for resolution of any insolvency of the Corporate Debtor."

"If there was a 'Dispute in existence' even before the issuance of Demand Notice under Section 8(1) of the I&B Code, the Application for initiation of Insolvency Process by an Operational Creditor can be rejected by the Adjudicating Authority."

"The Code is beneficial legislation intended to put the Corporate Debtor on its feet and it is not a mere money recovery legislation for the Creditors."

The Tribunal's final determinations were:

1. The debt claimed does not qualify as operational debt under the Code and hence the Section 9 application is not maintainable on this ground.

2. There existed a pre-existing dispute between the parties prior to the demand notice, which bars admission of the Section 9 application.

3. The application filed under Section 9 of the Code is rejected for non-compliance with the statutory requirements and due to the existence of disputes and the nature of the debt.

1. Whether the Petitioner is entitled to an investigation under Section 213 of the Companies Act, 2013 into the affairs of the Respondent No. 1 Company based on alleged fraudulent, oppressive, or unlawful conduct.

2. Whether the Respondents have committed acts of oppression and mismanagement under Sections 241 and 242 of the Companies Act, 2013, including unauthorized changes in directorship, improper buy-back of shares, and misuse of company funds.

3. Whether the Petitioner is entitled to payment of outstanding Director's remuneration and other monetary claims alleged to be due from the Respondent No. 1 Company.

4. Whether the Respondent Nos. 2 to 6 should be removed as directors and an administrator appointed under Section 242(2)(h) of the Companies Act.

5. Whether the Respondent No. 2 is obligated to transfer back the balance equity shares to the Petitioner, restoring his original shareholding.

6. Whether the Company Secretary and Statutory Auditor acted negligently or in conspiracy with the Respondents, thereby justifying an investigation.

7. Whether the advances and loans granted by the Respondent No. 1 Company to its Associate Company, Dishti Vishal Private Limited, were improper or oppressive.

8. Whether the Petitioner's rights as a shareholder, including access to company premises, documents, and benefits, have been violated.

9. Whether the use of company funds for personal benefits by Respondents constitutes oppression or mismanagement.

10. Whether the alleged creation of benami property using company funds amounts to mismanagement or fraudulent conduct.

Issue-wise Detailed Analysis

1. Investigation under Section 213 of the Companies Act, 2013

Legal Framework and Precedents: Section 213 empowers the Tribunal to order an investigation if the company's affairs are conducted fraudulently, oppressively, or for unlawful purposes. The Supreme Court in the cited case elucidated that oppression involves conduct that is harsh, burdensome, mala fide, or against probity and good conduct.

Court's Interpretation and Reasoning: The Tribunal examined the Petitioner's allegations of fraudulent accounting, misappropriation of funds, and irregularities in shareholding and director appointments. The Respondents provided documentary evidence, including bank certificates and audited accounts, to rebut claims of fraud or mismanagement.

Key Evidence and Findings: The Respondent No. 8 (Auditor) produced bank certificates evidencing partial payment of the Petitioner's remuneration. Audited financials of Dishti Vishal Private Limited and Respondent No. 1 Company were scrutinized, showing proper accounting of advances and investments. The Tribunal found no substantive material to support claims of fraudulent financial reporting or procedural violations warranting investigation.

Application of Law to Facts: The Tribunal held that mere allegations without corroborative evidence do not satisfy the threshold for ordering an investigation under Section 213. The Petitioner's claims appeared to be family disputes and shareholder disagreements rather than company affairs conducted oppressively or fraudulently.

Treatment of Competing Arguments: The Respondents' explanations regarding the buy-back, remuneration payments, and loans were accepted as compliant with statutory provisions and company policies. The Petitioner's assertions were often contradicted by documentary evidence or found to be matters of civil dispute rather than corporate mismanagement.

Conclusions: No grounds for investigation under Section 213 were established.

2. Allegations of Oppression and Mismanagement under Sections 241 and 242

Legal Framework and Precedents: Sections 241 and 242 provide relief against oppression and mismanagement. The Supreme Court's criteria for oppression include harsh, burdensome, mala fide conduct, even if legally permissible.

Court's Interpretation and Reasoning: The Tribunal analyzed allegations such as unauthorized director appointments, non-payment of remuneration, failure to transfer shares, misuse of company funds, and denial of shareholder benefits.

Key Evidence and Findings: The Tribunal noted that the Petitioner was a director during the relevant meetings approving director appointments and financial statements, thus estopping him from raising those issues later. The buy-back was conducted at face value with Board approval, consistent with Articles of Association and statutory provisions. The Petitioner's share transfer was a voluntary gift, and the company's affairs are distinct from shareholder agreements. The alleged misuse of funds for personal benefits was explained as legitimate employee perks. The Petitioner was no longer a director or employee, thus not entitled to such benefits.

Application of Law to Facts: The Tribunal held that shareholder disputes over share transfers and benefits do not constitute oppression of company affairs. The buy-back and director appointments were lawful and ratified. Non-payment of dividends is a commercial decision and not oppressive.

Treatment of Competing Arguments: The Petitioner's claims were often based on verbal agreements or family arrangements, which cannot be enforced as company affairs. The Respondents' compliance with statutory procedures and company policies was accepted.

Conclusions: No acts of oppression or mismanagement were proven.

3. Payment of Director's Remuneration and Other Monetary Claims

Legal Framework: Directors are entitled to remuneration as per company policy and statutory approvals. Non-payment may constitute oppression if deliberate and unjustified.

Court's Reasoning and Findings: The Auditor's bank certificate showed substantial payment to the Petitioner. The balance amount was reflected as payable in the company's books. The Tribunal found no evidence of deliberate withholding or fraudulent accounting. The Petitioner's claim for interest was not substantiated.

Conclusions: No entitlement to additional payments beyond those evidenced was established.

4. Removal of Directors and Appointment of Administrator under Section 242(2)(h)

Legal Framework: Section 242(2)(h) permits removal of directors and appointment of an administrator if company affairs are conducted oppressively or prejudicially.

Findings: Since no oppression or mismanagement was established, removal of directors or appointment of an administrator was unwarranted.

5. Restoration of Shareholding by Transfer of Shares

Legal Framework: Share transfers between shareholders are private arrangements and do not affect company affairs unless fraudulent or oppressive conduct is involved.

Court's Reasoning: The Petitioner's transfer of shares was voluntary and unconditional as per records. The Tribunal held that enforcement of verbal arrangements between shareholders is beyond the Tribunal's jurisdiction under Sections 241/242, which address company affairs, not private contracts.

Conclusion: No direction to restore shareholding was issued.

6. Allegations against Company Secretary and Auditor

Legal Framework: Auditors and Company Secretaries are bound by professional codes and must act independently.

Findings: No material was found to demonstrate negligence, conspiracy, or breach of duties by these professionals. The Tribunal observed that family disputes were improperly extended to implicate these independent officers.

7. Advances and Loans to Associate Company

Legal Framework: Loans to associate companies must comply with Section 186 of the Companies Act, 2013. Interest-free loans may attract penalties but do not necessarily constitute oppression.

Findings: The loan was approved by the Board and shareholders where required. No permanent alienation of funds occurred, and the advances were reflected in audited accounts. The Petitioner's claim of oppression on this ground was rejected.

8. Shareholder Rights and Access to Company Premises and Benefits

Findings: The Petitioner was denied access to premises after ceasing to be a director and employee. The Tribunal found no violation of shareholder rights requiring intervention. The dispute over occupation of residential premises was sub judice before civil courts.

9. Misuse of Company Funds for Personal Benefits

Findings: The Respondents explained that vehicles and credit cards were provided as employee benefits. The Petitioner, no longer employed, was not entitled to such benefits. No evidence of siphoning or misappropriation was found.

10. Allegations of Benami Property Creation

Findings: The advances to the Associate Company and its investments were transparent and recorded. The allegation of land purchased in the name of a laborer was unsubstantiated by financial records and dismissed.

Significant Holdings

"The Tribunal held that the Petitioner has failed to make out a case of oppression as alleged in the Petition."

"An understanding between two shareholders of the Respondent No. 1 Company does not have any relationship with the conduct of company's affairs as the company and its shareholders are two distinct entities and any breach in the promise, even if there was one, by one shareholder to another shareholder in relation to shares of the Company cannot concern the company."

"The mere non-payment of the money lying to the credit of the Petitioners in the books of the Respondent No. 1 Company cannot be held to be an act of oppression and the Petitioner has remedies available under the civil law in relation to recovery of those amounts."

"The buy-back was carried out at face value, while the intrinsic value of its shares was much higher than the face value. Accordingly, such buy-back cannot be said to be an act of oppression prejudicial to the interest of its members or of the Respondent No. 1 Company."

"No substantive material on record to demonstrate any mis-statement in the financial statements or non-observance of disclosure or procedural requirements by the Auditor or Company Secretary."

"Non-payment of dividend to shareholders does not constitute an act of oppression."

Final determinations included dismissal of the Petition under Sections 241, 242, and 213 of the Companies Act, 2013. The application for vacation of company property by the Respondents was partly allowed with directions to refund rental proceeds collected unlawfully by the Petitioner. The Tribunal refrained from ordering vacation of premises as the matter was sub judice before the civil courts.

The Tribunal considered several core legal issues in the petition filed under Sections 397 and 398 of the Companies Act, 1956, by the Petitioner against Winterpark Developers Private Limited:

1. Whether the appointments of Respondents 2 and 3 as directors were illegal and constituted acts of oppression and mismanagement.

2. Whether there was misappropriation of funds invested by the Petitioner and other investors in the company.

3. Whether the issuance of additional shares and the conduct of company affairs were irregular and prejudicial to the interests of the Petitioner.

4. Whether the Petitioner was entitled to relief under Sections 397 and 398 of the Companies Act, 1956, based on the alleged acts of oppression and mismanagement.

ISSUE-WISE DETAILED ANALYSIS

1. Illegal Appointment of Directors

The Tribunal examined the legality of the appointments of Respondents 2 and 3 as directors. The Petitioner alleged that these appointments were made without proper authority and were void ab initio. The Tribunal found that the Petitioner had signed documents acknowledging the directorship of Respondents 2 and 3, which contradicted his claims of unawareness. Additionally, the Tribunal noted that the Petitioner was involved in the company's affairs and had participated in meetings where these appointments were discussed.

2. Misappropriation of Funds

The Petitioner claimed that funds invested in the company were misappropriated by the Respondents. The Tribunal reviewed evidence, including handwritten documents and minutes of meetings, which indicated that the Petitioner was aware of and involved in the transactions related to the company's land acquisitions. The Tribunal found that the Petitioner had received monetary benefits from these transactions and had not provided sufficient evidence of misappropriation.

3. Issuance of Additional Shares and Conduct of Company Affairs

The Petitioner alleged irregularities in the issuance of additional shares and the conduct of company affairs. The Tribunal found that the Petitioner was aware of the shareholding structure and had participated in decisions regarding the company's operations. The Tribunal noted that the Petitioner had not provided evidence of prejudice resulting from the issuance of additional shares.

4. Entitlement to Relief under Sections 397 and 398

The Tribunal considered whether the Petitioner was entitled to relief under Sections 397 and 398 of the Companies Act, 1956. The Tribunal emphasized the equitable nature of its jurisdiction and the requirement for the Petitioner to come with clean hands. The Tribunal found that the Petitioner had suppressed material facts and made false statements, which disqualified him from seeking equitable relief.

SIGNIFICANT HOLDINGS

The Tribunal made several significant holdings in its judgment:

1. The Tribunal held that the Petitioner was aware of and involved in the company's affairs, including the appointments of Respondents 2 and 3 as directors. The Petitioner had acknowledged these appointments in signed documents, undermining his claims of illegal appointments.

2. The Tribunal found that the Petitioner had received monetary benefits from the transactions related to the company's land acquisitions and had not provided evidence of misappropriation. The Petitioner was involved in the decision-making process and had participated in meetings where these transactions were discussed.

3. The Tribunal held that the Petitioner was aware of the shareholding structure and had participated in decisions regarding the company's operations. The Petitioner had not demonstrated prejudice resulting from the issuance of additional shares.

4. The Tribunal emphasized the equitable nature of its jurisdiction and the requirement for the Petitioner to come with clean hands. The Tribunal found that the Petitioner had suppressed material facts and made false statements, which disqualified him from seeking equitable relief. The Tribunal dismissed the petition on the grounds of suppression and misstatement.

The Tribunal concluded that the Petitioner had not come with clean hands and had failed to provide sufficient evidence to support his claims of oppression and mismanagement. Consequently, the petition was dismissed.

The Tribunal identified the following primary issues for determination:

(a) Whether the application under Section 94 of the Insolvency and Bankruptcy Code (IBC) is maintainableRs.

(b) Whether the absence of an ongoing Corporate Insolvency Resolution Process (CIRP) or liquidation against the Corporate Debtor renders the present petition by the Personal Guarantor non-maintainableRs.

(c) Whether the Personal Guarantor has committed a default, justifying admission of the insolvency petitionRs.

(d) Whether the conditions under Section 100 of the IBC for initiation of the Insolvency Resolution Process (IRP) against the Personal Guarantor are metRs.

ISSUE-WISE DETAILED ANALYSIS

Issue (a): Maintainability of the Application under Section 94 of the IBC

The legal framework involves Section 94 of the IBC, which allows a personal guarantor to initiate insolvency proceedings. The Tribunal considered whether the application met procedural and substantive requirements under the IBC.

The Court concluded that the application was maintainable as it complied with all necessary procedural requirements, including the submission of essential documents and the IRP's report recommending admission under Section 99 of the IBC.

Issue (b): Impact of Absence of Ongoing CIRP or Liquidation against the Corporate Debtor

The Tribunal examined whether pending CIRP or liquidation proceedings against the Corporate Debtor are a prerequisite for filing an insolvency petition by the Personal Guarantor.

The Court referenced the National Company Law Appellate Tribunal (NCLAT) decision in Anita Goyal v. Vistra ITCL (India) Ltd., which clarified that personal insolvency proceedings against a guarantor are maintainable independently of any CIRP or liquidation against the Corporate Debtor.

The Tribunal concluded that the absence of ongoing CIRP or liquidation proceedings does not render the present petition non-maintainable.

Issue (c): Default by the Personal Guarantor

The Tribunal reviewed whether the Personal Guarantor defaulted on their obligations, justifying the initiation of insolvency proceedings.

Key evidence included the invocation of the personal guarantee by the Financial Creditor and the subsequent default by the Corporate Debtor. The Tribunal noted that the Personal Guarantor's liability is coextensive with that of the Corporate Debtor under Sections 126 to 128 of the Indian Contract Act, 1872.

The Tribunal found that the Personal Guarantor's liability crystallized upon the invocation of the guarantee, and the default was established by the IRP's report.

Issue (d): Conditions under Section 100 of the IBC

The Tribunal assessed whether the conditions for initiating the IRP against the Personal Guarantor were satisfied.

The IRP's report confirmed the existence of an undisputed debt and default by the Personal Guarantor. The Tribunal found no valid objections to the IRP's findings and determined that the conditions under Section 100 of the IBC were met.

SIGNIFICANT HOLDINGS

The Tribunal held that the application under Section 94 of the IBC was maintainable and that the absence of ongoing CIRP or liquidation against the Corporate Debtor did not affect the petition's validity. The Tribunal emphasized the independent right of the Personal Guarantor to seek insolvency resolution.

The Tribunal ordered the initiation of the Insolvency Resolution Process against the Personal Guarantor, declaring a moratorium on all debts as per Section 101 of the IBC. The Tribunal appointed a new Resolution Professional and outlined the procedural steps for publishing a public notice, inviting claims, and preparing a repayment plan.

The Tribunal's decision reinforced the principle that personal guarantors can independently initiate insolvency proceedings and that their liability is coextensive with the Corporate Debtor upon default.

The Tribunal considered the following core legal questions:

(a) Whether the Applicant, as an unsuccessful Resolution Applicant, has locus to challenge the approval of the Resolution Plan of Respondent No. 3 by the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code, 2016 ("Code").

(b) Whether the principles of natural justice were violated in the process of approval of the Resolution Plan, particularly regarding the Applicant's claim that ongoing discussions indicated that resolution plans would not be put to vote.

(c) Whether the revised financial proposal submitted by the Applicant after the approval of Respondent No. 3's Resolution Plan should be considered by the CoC in the interest of value maximization of the Corporate Debtor.

(d) Whether Respondent No. 3 is an eligible Resolution Applicant under Section 29A of the Code, specifically concerning:

(i) The classification of Indrajit Power Private Limited (IPPL) as a Non-Performing Asset (NPA) and its relationship with Respondent No. 3;

(ii) The applicability of Explanation II to Section 29A(c) granting immunity;

(iii) The interpretation of "connected person" under Section 29A(j) and whether IPPL qualifies as such;

(iv) The implications of shareholding, control, and management relationships between Respondent No. 3, its subsidiaries, and IPPL;

(e) Whether the Committee of Creditors' commercial wisdom, including the methodology of bid evaluation and negotiation process, is subject to judicial review.

(f) Whether any delay or failure in implementation of other resolution plans connected to Respondent No. 3 impacts its eligibility under Regulation 38(1B) of the CIRP Regulations, 2016.

2. ISSUE-WISE DETAILED ANALYSIS

(a) Locus of the Applicant to challenge the Resolution Plan approval

Relevant legal framework includes the non-justiciability principle of CoC's commercial wisdom as established in the Supreme Court judgment in K. Sashidhar v. Indian Overseas Bank. The Court emphasized that the decision of the CoC to approve or reject a resolution plan is not ordinarily subject to judicial interference.

The Tribunal acknowledged the Applicant's lack of locus as an unsuccessful bidder but allowed the Applicant to raise the eligibility issue of the successful Resolution Applicant under Section 29A, which is a matter the Tribunal is duty-bound to examine under Section 31 of the Code.

The Applicant's challenge to the process and value maximization was rejected on grounds that the Applicant had ample opportunity to participate and improve its bid within stipulated timelines and did not request extension beyond the permitted period.

The Tribunal found no violation of natural justice or discrimination against the Applicant during the negotiation and bidding process. The Applicant's attempt to submit a superior financial offer post-closure of bidding was held impermissible.

(b) Alleged violation of natural justice and process fairness

The Applicant contended that ongoing discussions gave rise to a belief that resolution plans would not be put to vote and that its revised financial proposal was not considered.

The Tribunal reviewed the negotiation rounds, noting that the Applicant was granted extensions due to personal reasons and was given fair opportunity to improve bids. The Applicant failed to meet the minimum bid requirements in the final rounds and was disqualified accordingly.

The Tribunal held that the CIRP is a time-bound process and cannot be extended indefinitely under the guise of value maximization. The commercial wisdom of the CoC in conducting negotiations and bid evaluation is non-justiciable.

(c) Consideration of revised financial proposal by the Applicant post-approval

The Applicant submitted a revised financial proposal after the CoC had approved Respondent No. 3's plan and sought its consideration to maximize value for stakeholders.

The Tribunal rejected this plea on the basis that the Applicant did not seek extension or permission to submit revised bids within the prescribed timelines, and the CoC is not obligated to consider bids submitted after closure of the process. The Applicant's claim was held to be an attempt to delay the CIRP.

(d) Eligibility of Respondent No. 3 under Section 29A of the Code

The Tribunal undertook a detailed examination of the eligibility criteria under Section 29A, focusing on subsections (c) and (j) and the related Explanation II.

(i) NPA classification and timing

Section 29A(c) disqualifies a person if an account under their control has been classified as NPA for over one year prior to the insolvency commencement date. IPPL was classified as NPA on 12.01.2022, and the CIRP for the Corporate Debtor commenced on 12.08.2022, less than one year later.

The Tribunal relied on precedent where similar facts led to the conclusion that the one-year disqualification period had not elapsed, thus Respondent No. 3 was eligible on the date of resolution plan submission.

Explanation II grants immunity to a resolution applicant who acquired the account through an approved resolution plan within the last three years, which further supports Respondent No. 3's eligibility.

(ii) Connected person and associate company analysis

The Applicant argued that IPPL is a connected person of Respondent No. 3 due to shareholding by its subsidiaries (EML and EVSL) and common beneficial ownership.

The Tribunal examined the definitions under Section 29A(j), Explanation I, and the Companies Act, 2013, including the concepts of "associate company," "control," and "related party."

It was noted that:

• IPPL is not a holding, subsidiary, associate company, or related party of Respondent No. 3 as per statutory definitions.
• Respondent No. 3 is a foreign company not incorporated under the Companies Act, but the Tribunal rejected the argument that this excludes it from being considered a company for associate company purposes.
• EML and EVSL hold shares in IPPL but do not exercise control or management over IPPL as required to establish association or related party status.
• There is no evidence that any director or promoter of Respondent No. 3 is a director or exercises control over IPPL.
• Control under Section 2(27) of the Companies Act requires de facto or de jure control over management or policy decisions, which was not demonstrated.

Accordingly, IPPL does not qualify as a connected person under Section 29A(j), and Respondent No. 3 is not disqualified on this ground.

(iii) Alleged delay in implementation of other resolution plans

The Applicant alleged that NCRAL delayed implementation of a resolution plan for Crest Steel and Power Private Limited, which could impact Respondent No. 3's eligibility under Regulation 38(1B) of the CIRP Regulations.

The Tribunal found no evidence of failure in implementation; delay alone does not trigger disqualification. Thus, Regulation 38(1B) was not applicable.

(e) Commercial wisdom of the Committee of Creditors

The Tribunal reaffirmed the settled legal position that the CoC's commercial wisdom, including evaluation methodology and negotiation process, is not subject to judicial interference unless there is a violation of law or procedure.

The Applicant's challenge to the CoC's evaluation matrix and decision was dismissed as the Applicant had actively participated without objection during the process and raised issues only post facto.

3. SIGNIFICANT HOLDINGS

On the locus of unsuccessful Resolution Applicants:

"Though, the Applicant, being an unsuccessful Resolution Applicant, does not have locus to intervene the approved Resolution Plan, the Counsel for the Applicant raised the issue of the eligibility of the Successful Resolution Applicant in terms of section 29A of the IB Code, apart from other issues. Since this Tribunal is duty bound to examine that the Resolution Plan placed before it for approval in terms of Section 31 of the IB Code is in compliance with the provisions of Code, this Tribunal considered it appropriate to grant opportunity to the Applicant to advance its arguments."

On time-bound nature of CIRP and bid submission:

"The CIRP is a time bound process and it has to be concluded at certain point of time. In the garb of value maximisation, the process could not be carried for an infinite time. It is not in dispute that the financial bids placed by each of Resolution Applicant were evaluated in terms of approved evaluation matrix and the financial bid of the Applicant was not superior to the bid of Respondent No. 3. The Applicant cannot be allowed to counter the bid of Respondent No. 3 after the closure of timelines in the garb of value maximisation."

On eligibility under Section 29A(c):

"Applying the ratio of decision in case of Avantha Holdings Ltd., the period of one year from the date of classification of account of IPPL as NPA i.e. 12.01.2022 has not elapsed on the commencement of CIRP in case of Corporate Debtor i.e. 12.08.2022, accordingly, it cannot be said that Respondent No. 3... was not qualified in terms of Section 29A(c). Further, Explanation II to Section 29A(c) only makes the provisions contained in clause (c) inapplicable if the conditions specified therein are satisfied."

On definition of connected person and associate company:

"The word 'Control' is defined in Section 2(27) of Companies Act, 2013 as... 'control' shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert... The expression 'control', in Section 29A(c), denotes only positive control... mere power to block special resolutions of a company cannot amount to control."

"IPPL is not a connected person of Respondent No. 3, accordingly, disqualification in terms of Section 29A(j) is not applicable in the present case."

On non-interference with CoC's commercial wisdom:

"The commercial wisdom of the CoC is not to be interfered with by the Tribunal... the methodology of calculation of NPV or conduct of the Negotiation process which lies within the ambit of the financial wisdom of the CoC is not commented upon by this Tribunal in the present application."

Final determination:

The Tribunal dismissed the application challenging the approval of the Resolution Plan of Respondent No. 3, holding that:

• The Applicant had no locus to challenge the plan approval except on eligibility grounds;
• The Applicant was given fair opportunity and failed to submit a superior bid within timelines;
• The revised financial proposal submitted post-approval could not be considered;
• Respondent No. 3 is eligible under Section 29A of the Code, as the NPA classification period had not elapsed and IPPL is not a connected person;
• The CoC's commercial wisdom and negotiation process are non-justiciable;
• No violation of natural justice or procedural irregularity was established.

The core legal questions considered by the Tribunal were:

1. Whether the Liquidator is entitled to fees for the sale of the Panagarh Unit, which was conducted solely by the Respondent Banks, under Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016.

2. Whether the Respondent Banks have complied with Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016, concerning the payment of liquidation costs.

ISSUE-WISE DETAILED ANALYSIS

1. Entitlement of Liquidator's Fees

Relevant legal framework and precedents: The Tribunal considered Regulation 4(2)(b) of the IBBI (Liquidation Process) Regulations, 2016, which outlines the entitlement of a liquidator to fees as a percentage of the amount realized and distributed. The Tribunal also referenced the case of Shikshak Sahakari Bank Ltd. v. Mr. Jagdish Kumar Parulkar, where the NCLAT held that the liquidator is entitled to fees even if they did not directly realize or distribute the secured asset.

Court's interpretation and reasoning: The Tribunal interpreted Regulation 4(2)(b) to mean that a liquidator is entitled to fees only when they have realized or distributed any amount. Since the sale of the Panagarh Unit was conducted by the Respondent Banks without the liquidator's involvement, the Tribunal found that the liquidator was not entitled to fees for this sale.

Key evidence and findings: The Tribunal found that the Respondent Banks conducted the entire sale process of the Panagarh Unit and realized the proceeds without the liquidator's involvement.

Application of law to facts: Applying Regulation 4(2)(b), the Tribunal concluded that the liquidator was not entitled to fees for the sale of the Panagarh Unit as they did not participate in the realization or distribution of the sale proceeds.

Treatment of competing arguments: The Tribunal considered the liquidator's argument, referencing the NCLAT's decision in Shikshak Sahakari Bank Ltd., but distinguished it on the facts, noting that in the present case, the liquidator had no role in the sale process.

Conclusions: The Tribunal concluded that the liquidator was not entitled to fees for the sale of the Panagarh Unit under Regulation 4(2)(b).

2. Compliance with Regulation 21A

Relevant legal framework and precedents: Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016, requires secured creditors to pay their share of liquidation costs if they choose to realize their security interest.

Court's interpretation and reasoning: The Tribunal interpreted Regulation 21A as mandating secured creditors to contribute towards liquidation costs, even if they proceed to realize their security interest.

Key evidence and findings: The Tribunal found that the Respondent Banks had contributed towards liquidation costs, excluding the liquidator's fees for the Panagarh Unit sale.

Application of law to facts: The Tribunal applied Regulation 21A to determine that the Respondent Banks had complied with their obligations to contribute towards liquidation costs, except for the contested liquidator's fees.

Treatment of competing arguments: The Tribunal acknowledged the Respondent Banks' argument that they had fulfilled their obligation under Regulation 21A by contributing to the liquidation costs and that the liquidator's fees for the Panagarh Unit sale were not applicable.

Conclusions: The Tribunal concluded that the Respondent Banks had complied with Regulation 21A, except for the liquidator's fees related to the Panagarh Unit sale.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "A bare perusal thereof explicates that a liquidator is entitled to fees towards realisation and distribution only when he has 'realised' or 'distributed' any amount and not otherwise."

Core principles established: The Tribunal established that a liquidator is not entitled to fees for the sale of assets conducted solely by secured creditors without the liquidator's involvement in realization or distribution.

Final determinations on each issue: The Tribunal determined that the liquidator was not entitled to fees for the sale of the Panagarh Unit and that the Respondent Banks had complied with their obligations under Regulation 21A, except for the liquidator's fees related to the Panagarh Unit sale.

The Tribunal considered the following core legal questions:

- Whether the appellant is the rightful shareholder of 100 equity shares in the respondent company, including shares issued during corporate actions and dividends declared since 2015.

- Whether the respondent company is obligated to rectify its register of members to reflect the appellant as a shareholder holding 100 shares.

- Whether the appeal filed by the appellant is maintainable, particularly considering the procedural compliance regarding verification and affidavit requirements under the National Company Law Tribunal Rules, 2016.

- Whether the appeal is barred by limitation and laches, given the alleged share transfer occurred in 2016 and the appeal was filed in 2021.

- The validity and authenticity of the share transfer deed dated 02.05.2009, which was purportedly acted upon in 2016.

- Whether the appellant's claims of usurpation of shares and non-transfer constitute sufficient cause for relief under the Companies Act, 2013.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Rightful Ownership and Rectification of Register of Members

Legal Framework and Precedents: The appeal was filed under Sections 58 and 59 of the Companies Act, 2013, which govern the rectification of the register of members. The appellant sought a declaration of rightful ownership and a direction to the company to rectify its register accordingly.

Court's Interpretation and Reasoning: The Tribunal noted the appellant's assertion that prior to 2015, the appellant's family held 2,590 shares, which were allegedly usurped by another family's members by 2016. The appellant contended that the respondent company failed to reflect the appellant's shareholding in its register and did not respond to a legal notice issued in 2020.

Key Evidence and Findings: The appellant relied on publicly available Annual Returns filed with the Registrar of Companies for 2015 and 2016, a share transfer deed dated 02.05.2009, and other documents arising from family disputes. The respondent company submitted that the share transfer was effected in 2016 based on the 2009 deed and approved by a Board resolution dated 20.02.2016.

Application of Law to Facts: The Tribunal observed that the appellant's shares were recorded as transferred in the Annual Return for 2016, indicating knowledge of the transfer. No timely objection was raised by the appellant following the transfer. The appellant's claim of rightful ownership was thus undermined by the recorded transfer and lack of prompt action.

Treatment of Competing Arguments: The appellant challenged the validity of the 2009 share transfer deed, citing discrepancies in signatures and the delayed use of the deed in 2016. The respondent company argued the transfer was valid and duly approved. The Tribunal found the respondent's evidence regarding the Board resolution and Annual Returns persuasive, weakening the appellant's claim.

Conclusion: The Tribunal concluded that the appellant's claim to rectify the register was not maintainable due to the recorded transfer and lack of timely objection.

Issue 2: Procedural Compliance Regarding Verification and Affidavit Requirements

Legal Framework and Precedents: The Tribunal considered Rule 23 and Rule 26 of the National Company Law Tribunal Rules, 2016, which require that appeals be accompanied by duly certified and verified documents, supported by affidavits. The respondent company challenged the appeal on grounds of defective verification and non-compliance with these procedural rules.

Court's Interpretation and Reasoning: The Tribunal reviewed the affidavits and documents submitted by the appellant and noted the respondent's objections that the affidavits did not verify the documents properly and that the copies were uncertified secondary evidence.

Key Evidence and Findings: The respondent cited Supreme Court precedents emphasizing the importance of proper verification of affidavits to ensure authenticity and responsibility for allegations. The appellant countered that the documents were publicly available and did not require verification, and that the respondent itself failed to verify its documents adequately.

Application of Law to Facts: While recognizing the procedural deficiencies, the Tribunal held that these were not determinative of the substantive rights of the parties. The Tribunal did not dismiss the appeal solely on procedural grounds.

Treatment of Competing Arguments: The appellant's argument that the respondent's objections were technical and intended to avoid substantive issues was noted. The Tribunal balanced the procedural requirements against the need to address the core dispute.

Conclusion: Procedural irregularities were acknowledged but did not bar the Tribunal from adjudicating the appeal on merits.

Issue 3: Limitation and Laches

Legal Framework and Precedents: Section 59 of the Companies Act, 2013, does not specify a limitation period. However, Section 433 of the Act incorporates the Limitation Act, 1963, for proceedings before the Tribunal. Article 137 of the Limitation Act prescribes a three-year limitation for appeals to civil courts, which has been held applicable to appeals under the Companies Act. The Tribunal relied on precedent from the Hon'ble Supreme Court and the National Company Law Appellate Tribunal affirming this principle.

Court's Interpretation and Reasoning: The Tribunal observed that the share transfer was recorded in 2016, and the appellant filed the appeal in January 2021, well beyond the three-year limitation period. The appellant was deemed to have knowledge of the transfer from the Annual Returns filed in 2016.

Key Evidence and Findings: The Annual Returns for 2016, the share transfer deed, and the Board resolution approving the transfer were critical evidence. The appellant's delay in initiating proceedings and failure to respond promptly to the share transfer were noted as laches.

Application of Law to Facts: Applying Article 137, the Tribunal held the appeal was time-barred. The appellant's argument that the respondent should also be estopped from relying on the 2009 deed due to limitation was rejected as the respondent's actions were recorded and publicly available, unlike the appellant's delayed challenge.

Treatment of Competing Arguments: The appellant contended ignorance of the transfer until 2020, but the Tribunal emphasized that the information was publicly accessible. The respondent's reliance on limitation was upheld.

Conclusion: The appeal was dismissed as barred by limitation and laches.

Issue 4: Allegations of Fraud and Usurpation of Shares

Legal Framework and Precedents: Allegations of fraud require clear and convincing evidence. The appellant alleged wrongful usurpation of shares by the family of another shareholder.

Court's Interpretation and Reasoning: The Tribunal found the appellant's assertions of fraud unsubstantiated by corroborative evidence. The publicly available Annual Returns and the absence of timely objections weakened the claim.

Key Evidence and Findings: No direct evidence of fraudulent conduct was presented beyond the appellant's assertions. The respondent's documentation of share transfers and approvals was accepted as prima facie valid.

Application of Law to Facts: Without sufficient evidence, the Tribunal could not infer fraud or illegal usurpation.

Treatment of Competing Arguments: The appellant's reliance on family dispute documents was insufficient to establish fraud.

Conclusion: The fraud allegations were dismissed due to lack of evidence.

3. SIGNIFICANT HOLDINGS

- "No period of limitation is provided in Section 59 of the Companies Act, 2013. But Section 433 of the Companies Act says that the provisions of the Limitation Act, 1963 shall, as far as may be, apply to proceedings of appeals before the Tribunal or the Appellate Tribunal, as the case may be... Article 137 of the Limitation Act, 1963 will apply to any Appeal or application under any act to a Civil Court."

- The Tribunal emphasized that "the present Appeal is time barred" as it was filed beyond the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963.

- The Tribunal held that "challenge to the share transfer through this Appeal filed by the Appellant is barred by the limitation" and that "the shares were transferred in the name of the Respondent on the basis of the share transfer deed dated 02.05.2009 on 20.02.2016."

- Procedural deficiencies in verification and affidavit compliance, while noted, "are not determinative of substantive rights" and did not warrant dismissal of the appeal on those grounds alone.

- The Tribunal concluded that "the appellant's failure to initiate timely action, despite public availability of the shareholding details, precludes them from seeking relief."

- Final determination: The appeal was dismissed as time-barred under the Limitation Act, with no order as to costs.

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following core legal questions:

• Whether the resolution plan submitted by the Successful Resolution Applicant (SRA) complies with the requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 (the Code) and the corresponding regulations.
• Whether the Committee of Creditors (CoC) exercised its commercial wisdom appropriately in approving a resolution plan with a value lower than the liquidation value of the Corporate Debtor.
• Whether the resolution plan addresses the treatment of various categories of creditors, including secured and unsecured financial creditors, operational creditors, and other creditors, in accordance with the Code.
• Whether the resolution plan provides for the management and implementation of the Corporate Debtor post-approval.
• Whether the resolution plan is in compliance with Section 29A of the Code regarding the eligibility of the resolution applicant.
• Whether the resolution plan includes necessary reliefs and concessions to ensure the Corporate Debtor operates as a going concern.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Compliance with Section 30(2) of the Code

• Legal Framework: Section 30(2) outlines the requirements a resolution plan must satisfy, including payment of insolvency resolution process costs, repayment of debts, and management of the Corporate Debtor's affairs.
• Court's Interpretation: The Tribunal examined the resolution plan and confirmed that it fulfills all the requirements specified under Section 30(2).
• Key Evidence and Findings: The resolution plan provides for the payment of CIRP costs, debts of operational creditors, and management of the Corporate Debtor's affairs post-approval.
• Application of Law to Facts: The Tribunal found that the resolution plan meets all statutory requirements, thus complying with Section 30(2).
• Conclusion: The resolution plan satisfies the conditions set forth in Section 30(2) of the Code.

Issue 2: CoC's Commercial Wisdom

• Legal Framework: The Supreme Court in Maharashtra Seamless Limited v. Padmanabhan Venkatesh held that CoC can approve a plan with a value lower than the liquidation value if it is feasible and viable.
• Court's Interpretation: The Tribunal acknowledged the CoC's authority to approve such a plan based on its commercial judgment.
• Key Evidence and Findings: The CoC approved the plan with 93.76% votes, considering its feasibility despite the lower value.
• Application of Law to Facts: The Tribunal upheld the CoC's decision, emphasizing the CoC's commercial wisdom.
• Conclusion: The CoC's approval of the resolution plan is valid and binding.

Issue 3: Treatment of Creditors

• Legal Framework: Section 30(2)(b) mandates repayment of operational creditors and consideration for financial creditors.
• Court's Interpretation: The plan's provisions for creditors were scrutinized and found to be compliant with the Code.
• Key Evidence and Findings: The plan details payments to various creditors, with specific provisions for dissenting creditors.
• Application of Law to Facts: The Tribunal confirmed that the plan treats creditors as per legal requirements.
• Conclusion: The resolution plan's creditor treatment aligns with statutory obligations.

Issue 4: Management and Implementation Post-Approval

• Legal Framework: Section 30(2)(c) requires a plan for managing the Corporate Debtor's affairs post-approval.
• Court's Interpretation: The Tribunal noted the plan's provisions for a new management structure and implementation committee.
• Key Evidence and Findings: The plan includes a detailed management and supervision strategy.
• Application of Law to Facts: The Tribunal found the management provisions to be adequate and compliant.
• Conclusion: The plan provides a clear framework for post-approval management.

Issue 5: Eligibility under Section 29A

• Legal Framework: Section 29A outlines the eligibility criteria for resolution applicants.
• Court's Interpretation: The Tribunal reviewed affidavits and reports confirming the applicant's eligibility.
• Key Evidence and Findings: The resolution applicant submitted necessary affidavits confirming compliance with Section 29A.
• Application of Law to Facts: The Tribunal confirmed the applicant's eligibility based on the evidence provided.
• Conclusion: The resolution applicant meets the eligibility criteria under Section 29A.

Issue 6: Reliefs and Concessions

• Legal Framework: The Code allows for reliefs and concessions to facilitate the Corporate Debtor's operations.
• Court's Interpretation: The Tribunal considered the requested reliefs but emphasized compliance with statutory obligations.
• Key Evidence and Findings: The plan seeks certain reliefs to ensure the Corporate Debtor operates as a going concern.
• Application of Law to Facts: The Tribunal granted some reliefs while directing the applicant to seek others from competent authorities.
• Conclusion: The resolution plan includes necessary reliefs, subject to statutory compliance.

3. SIGNIFICANT HOLDINGS

• "The committee of creditors may approve a resolution plan by a vote of not less than sixty-six percent of voting share of the financial creditors, after considering its feasibility and viability..."
• The Tribunal upheld the CoC's decision to approve a resolution plan with a lower value than the liquidation value, citing the CoC's commercial wisdom.
• The resolution plan's compliance with Section 30(2) of the Code was confirmed, ensuring the plan's legality and viability.
• All claims not part of the resolution plan are extinguished upon approval, as per the Supreme Court's precedent in Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited.
• The Tribunal emphasized the limited scope of judicial review, restricting its role to ensuring compliance with statutory requirements.

The judgment concludes by approving the resolution plan submitted by the Successful Resolution Applicant, making it binding on all stakeholders involved, and outlining the next steps for implementation and supervision.

The Tribunal addressed the following core legal questions:

1. Whether the Applicant's claim should be extinguished under the approved resolution plan.

2. Whether the Applicant's claim and the counterclaim by Katerra should be adjudicated together in arbitration proceedings.

3. Whether the resolution professional (RP) has the authority to extinguish claims that are disputed and not admitted.

4. Whether the approval of the resolution plan extinguishes any claims not included in it, in line with the "Clean Slate" principle.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Extinguishment of Applicant's Claim under the Resolution Plan

The Applicant argued that its claim should not be extinguished by the resolution plan, as it was disputed and not admitted due to a counterclaim by Katerra. The Applicant contended that extinguishing the claim would be unjust and detrimental, depriving them of asserting their claim in arbitration proceedings. The Tribunal noted that the resolution plan's approval binds all claims, and any claim not included in the plan is extinguished, as established in Ghanshyam Mishra & Sons Private Limited v. Edelweiss Asset Reconstruction Company Ltd. The Tribunal upheld the "Clean Slate" principle, emphasizing that the resolution applicant should not face undecided claims post-approval.

Issue 2: Adjudication of Claims in Arbitration Proceedings

The Applicant asserted that the claims and counterclaims between ECPWPL and Katerra should be resolved in arbitration, citing the interlinked nature of the claims arising from the same contractual circumstances. The Tribunal acknowledged that the claims were subject to arbitration, as previously held in Shaapoorji Pallonji & Co (P) Ltd v. Kobra West Power Co. Ltd. The Tribunal allowed the continuation of arbitration proceedings but clarified that any determination in arbitration would not affect the approved resolution plan, as established in Adani Power Ltd. v. Shapoorji Pallonji and Co Pvt. Ltd.

Issue 3: Authority of the Resolution Professional

The Applicant contended that the RP lacked the authority to extinguish disputed claims, which should be adjudicated by a competent forum, such as an arbitral tribunal. The Tribunal recognized the RP's role in collating claims but emphasized that the RP's actions must align with the approved resolution plan. The Tribunal reiterated that the RP cannot substitute its views for those of the arbitral tribunal, as supported by NTPC v. Rajiv Chakraborty.

Issue 4: "Clean Slate" Principle and Resolution Plan Approval

The Tribunal emphasized the "Clean Slate" principle, which ensures that once a resolution plan is approved, all claims not part of the plan are extinguished. This principle supports the revival of the corporate debtor as a going concern without unexpected liabilities. The Tribunal referenced the Swiss Ribbons Pvt. Ltd. and Anr. v. Union of India and Ors decision, highlighting the importance of timely resolution and the finality of the resolution plan.

SIGNIFICANT HOLDINGS

The Tribunal concluded that the Applicant's claim cannot be preserved outside the resolution plan, reinforcing the "Clean Slate" principle. The Tribunal held that:

"Once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan."

The Tribunal dismissed the Applicant's request to prevent the extinguishment of its claim, affirming the resolution plan's binding nature and the finality it provides to the corporate insolvency resolution process.

The Tribunal considered the following core legal questions:

• Whether the application filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiating Insolvency Resolution Process against the Personal Guarantor is maintainable.
• The nature and scope of the adjudicatory authority's role under Sections 95 to 100 of the IBC in relation to insolvency proceedings against personal guarantors.
• The procedural requirements for initiating insolvency resolution against a personal guarantor, including the necessity and sufficiency of the demand notice under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019.
• The role and appointment of the Resolution Professional under Sections 97 and 99 of the IBC and the extent of judicial scrutiny at the initial stages of insolvency resolution process.
• Whether the application complies with the statutory requirements regarding debt particulars, default, and evidence of non-payment.

Issue-Wise Detailed Analysis

1. Maintainability of Application under Section 95(1) of IBC against Personal Guarantor

The legal framework governing this issue is Section 95(1) of the IBC, which permits a creditor to apply for initiating insolvency resolution against a personal guarantor of a corporate debtor. The application must be accompanied by details of the debt, evidence of default, and proof of service of demand notice.

The Tribunal noted the Petitioner's submission that the corporate debtor had availed credit facilities from the Petitioner and the Respondent had provided a personal guarantee. The total debt was quantified at Rs. 32.62 Crores as of 22.07.2024, with a default amount of Rs. 15.69 Crores as on 11.02.2009. The actual date of default was 30.04.2009. A Debt Recovery Certificate (DRC) was issued on 27.07.2021 by the Debt Recovery Tribunal (DRT), Chennai, confirming the debt and default. The Petitioner also filed relevant account statements, the DRT order, and the DRC as evidence.

The Tribunal observed that the Petitioner had issued a demand notice to the personal guarantor on 20.07.2023 under Rule 7(1) of the Insolvency and Bankruptcy Rules, 2019, fulfilling the procedural requirement of serving a demand notice before initiating insolvency proceedings.

Applying the law to facts, the Tribunal found that the Petitioner complied with the statutory requirements under Section 95(1) and accompanying rules, establishing a prima facie case for initiating insolvency resolution against the personal guarantor.

2. Nature of Adjudicatory Authority's Role under Sections 95 to 100 of IBC

The Tribunal relied heavily on the Supreme Court's authoritative interpretation in a landmark judgment concerning the jurisdiction and functions of the adjudicating authority under Sections 94 to 100 of the IBC. The Court summarized that no judicial adjudication occurs at the stages under Sections 95 to 99; rather, these provisions envisage a facilitative and recommendatory process.

Key points from the Supreme Court ruling include:

• The Resolution Professional (RP) appointed under Section 97 serves to collate facts and examine the application, submitting a recommendatory report on acceptance or rejection.
• The adjudicating authority does not conduct a judicial determination of 'jurisdictional facts' at the stage of appointing the RP.
• The debtor is not deprived of natural justice rights, as the RP's examination process allows participation and the adjudicating authority must observe natural justice principles when deciding under Section 100.
• The interim moratorium under Section 96 protects the debtor from further legal proceedings during the resolution process.
• The provisions do not violate constitutional guarantees under Articles 14 and 21.

The Tribunal applied these principles, emphasizing that the current stage involves appointment of the RP to examine the application and submit a report. No final adjudication on the merits of the insolvency application is undertaken at this stage.

3. Appointment and Role of Resolution Professional

The Petitioner proposed a Resolution Professional whose registration was verified on the IBBI database. However, as the proposed RP's Authorisation to Act (AFA) was expiring shortly, the Tribunal appointed an alternative RP with a valid AFA.

The RP was directed to examine the application as per Section 97(6) of the IBC and submit a recommendatory report within 10 days under Section 99(1). The RP's role is to investigate the facts relevant to the insolvency application and recommend acceptance or rejection to the adjudicating authority.

The Tribunal underscored the procedural mandate that the applicant must serve a copy of the application and order on the RP to enable proper examination.

4. Compliance with Procedural Requirements and Evidence of Default

The Tribunal carefully reviewed the Petitioner's submission of debt particulars, default amount, date of default, and supporting documents including the DRT order and Debt Recovery Certificate. The demand notice issued under Rule 7(1) was also scrutinized and found to be in order.

The Tribunal found that the evidence submitted was sufficient to establish the existence of debt and default, fulfilling the statutory preconditions for initiating insolvency resolution against the personal guarantor.

5. Treatment of Competing Arguments

The judgment does not indicate any substantive objections or competing arguments raised by the Respondent at this stage. The Tribunal noted that the Respondent would have an opportunity to file a reply and participate in the process once the RP submits the report. This approach aligns with the principle that no judicial adjudication occurs at the initial stage and natural justice is preserved.

Significant Holdings

The Tribunal's key determinations and legal principles include:

"No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC."

"The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process."

"The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application."

"No violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional."

"The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application."

Further, the Tribunal concluded that the Petitioner had complied with the procedural and substantive requirements under the IBC and Rules, and accordingly appointed a Resolution Professional to examine the application and submit a report within the statutory timeframe.

The Tribunal scheduled the matter for further hearing upon receipt of the RP's report, thereby preserving the procedural safeguards and ensuring that the Respondent's rights would be protected in subsequent stages.

1. Whether the application filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiating the Insolvency Resolution Process against the Personal Guarantor of a Corporate Debtor is maintainable and complies with the statutory requirements.

2. The scope of judicial adjudication and the role of the Adjudicating Authority and Resolution Professional at the stages envisaged under Sections 95 to 100 of the IBC.

3. Whether the procedural safeguards under the IBC, including the opportunity for the Personal Guarantor to participate and respond, have been complied with and whether there is any violation of natural justice.

4. The appointment and role of the Interim Resolution Professional in examining the application and submitting a report recommending acceptance or rejection of the application.

Issue-wise Detailed Analysis

Issue 1: Maintainability of the Application under Section 95(1) of the IBC

The application was filed by the Applicant bank under Section 95(1) of the IBC for initiating the Insolvency Resolution Process against the Personal Guarantor of a Corporate Debtor who had defaulted on loan repayments. The Applicant provided particulars of the debt, default amount, and date of default, supported by documentary evidence including the Deed of Guarantee, Statement of Accounts, Recovery Certificate, and the Demand Notice issued under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019.

The Tribunal noted that Section 95(1) permits a creditor to apply for initiation of insolvency proceedings against a Personal Guarantor, provided the debt and default particulars are furnished, and a Demand Notice has been duly served. The Applicant complied with these statutory requirements, including serving the Demand Notice dated 20.07.2023 on the Personal Guarantor. The Tribunal found the application to be in proper form and maintainable.

Issue 2: Scope of Judicial Adjudication and Role of the Adjudicating Authority and Resolution Professional under Sections 95 to 100 of the IBC

The Tribunal extensively relied on the Supreme Court's authoritative interpretation in the matter of Dilip B Jiwrajka v. Union of India, which clarified the procedural framework and jurisdictional scope under Sections 95 to 100 of the IBC. The Court summarized that no judicial adjudication occurs at the stages envisaged under these sections. Instead, the Resolution Professional plays a facilitative and investigatory role by collating facts and examining the application for insolvency resolution.

The Tribunal emphasized the following key points from the Supreme Court ruling:

• The Resolution Professional's report is recommendatory and does not bind the Adjudicating Authority.
• No adjudicatory function or determination of 'jurisdictional facts' is required at the stage of appointing the Resolution Professional.
• The Adjudicating Authority must observe principles of natural justice only when deciding to accept or reject the application under Section 100.
• The debtor (Personal Guarantor) is not deprived of the opportunity to participate during the Resolution Professional's examination.
• The interim moratorium protects the debtor from further legal proceedings during the process.

Accordingly, the Tribunal held that the present stage involves no judicial determination but only the appointment of a Resolution Professional to examine the application and recommend acceptance or rejection.

Issue 3: Compliance with Procedural Safeguards and Natural Justice

The Tribunal observed that the Personal Guarantor had been served with the Demand Notice as mandated under Rule 7(1) of the relevant Rules. The Supreme Court's ruling was cited to affirm that there is no violation of natural justice at this stage as the debtor is entitled to participate in the process and file a reply once the Resolution Professional submits the report under Section 99.

The Tribunal assured that the Personal Guarantor would be given an opportunity to respond after the Resolution Professional's report, thereby safeguarding procedural fairness.

Issue 4: Appointment and Role of the Interim Resolution Professional (IRP)

The Applicant proposed the name of a Resolution Professional, whose credentials and disciplinary status were verified with the Insolvency and Bankruptcy Board of India (IBBI) portal. The Tribunal appointed the proposed Resolution Professional as the Interim Resolution Professional for the Personal Guarantor.

The IRP was directed to examine the application in accordance with Section 97(6) of the IBC and submit a report recommending acceptance or rejection within 10 days as per Section 99(1). The Applicant was also directed to serve a copy of the application and order on the IRP.

The Tribunal scheduled the matter for further hearing upon receipt of the IRP's report.

Significant Holdings

"No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC."

"The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process."

"No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application."

"There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional."

"The adjudicating authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application."

The Tribunal's final determinations were:

• The application under Section 95(1) of the IBC filed by the Applicant for initiation of Insolvency Resolution Process against the Personal Guarantor is maintainable and in compliance with statutory requirements.
• The Resolution Professional is appointed as Interim Resolution Professional to examine the application and submit a recommendatory report within the prescribed time frame.
• The Personal Guarantor will be afforded an opportunity to respond after the IRP's report is filed, ensuring adherence to natural justice.
• The matter is adjourned for further hearing on receipt of the IRP's report.

The Tribunal considered the following core legal questions:

(a) Whether the application filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiating Insolvency Resolution Process (IRP) against the Personal Guarantor of a Corporate Debtor is maintainable.

(b) Whether the procedural requirements under Section 95 of the IBC, including issuance of demand notice and submission of requisite documents, have been complied with by the Applicant.

(c) The scope of judicial adjudication at the stage of examination of the application under Sections 95 to 99 of the IBC, including the role and powers of the Resolution Professional (RP) and the Adjudicating Authority.

(d) Whether principles of natural justice are complied with during the process of examination of the application under Sections 95 to 100 of the IBC.

(e) The appointment and role of the Interim Resolution Professional in the insolvency resolution process of the Personal Guarantor.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a): Maintainability of Application under Section 95(1) of IBC

The legal framework under Section 95(1) of the IBC permits a creditor to apply for initiation of Insolvency Resolution Process against a Personal Guarantor of a Corporate Debtor upon default in repayment of debt. The Applicant, Indian Bank, filed the application against the Personal Guarantor of M/s Indalloys & Extrusion Pvt Ltd., alleging default in repayment of loan facilities extended to the Corporate Debtor.

The Applicant submitted particulars of debt amounting to Rs. 32.62 crores and default amounting to Rs. 15.69 crores, with default dated 30.04.2009. The application was supported by documentary evidence including the Deed of Guarantee, Recovery Certificate issued by Debt Recovery Tribunal (DRT), and Final Order passed by DRT. The Demand Notice under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 was also issued to the Personal Guarantor.

The Tribunal found that the Applicant had complied with the statutory prerequisites under Section 95(1), including furnishing details of debt, default, and issuance of demand notice, thus rendering the application maintainable.

Issue (b): Compliance with Procedural Requirements under Section 95

Section 95 mandates that the creditor must serve a demand notice to the Personal Guarantor and attach relevant documents evidencing the debt and default. The Applicant produced the Demand Notice dated 20.07.2023 and copies of Recovery Certificate and Deed of Guarantee. The Tribunal verified these documents and found that the Applicant fulfilled the procedural requirements necessary for initiation of the Insolvency Resolution Process.

Issue (c): Scope of Judicial Adjudication and Role of Resolution Professional under Sections 95 to 99

The Tribunal extensively relied on the Supreme Court's authoritative pronouncement in the matter of Dilip B Jiwrajka v. Union of India, which clarified the nature of proceedings under Sections 95 to 99 of the IBC. The Court observed that:

• No judicial adjudication is involved at the stages envisaged in Sections 95 to 99;
• The Resolution Professional's role is facilitative and recommendatory, collating facts relevant to the application;
• The Adjudicating Authority does not conduct a hearing to determine jurisdictional facts at this stage;
• The Resolution Professional may exercise powers under Section 99(4) to seek information and examine the application;
• The Adjudicating Authority must observe principles of natural justice only at the stage of deciding acceptance or rejection under Section 100;
• The interim moratorium under Section 96 protects the debtor from further legal proceedings;
• The provisions do not violate Articles 14 and 21 of the Constitution.

Applying this framework, the Tribunal held that the current stage involves no judicial determination but a procedural examination by the Resolution Professional. The Personal Guarantor is not deprived of opportunity to participate as he can file a reply after the RP submits the report under Section 99.

Issue (d): Compliance with Principles of Natural Justice

The Tribunal underscored that the procedural scheme under Sections 95 to 100 ensures that the Personal Guarantor is not denied natural justice. The RP's examination is not a judicial adjudication but a fact-finding and recommendatory process. The Personal Guarantor will be afforded an opportunity to respond after the RP's report, and the Adjudicating Authority will apply natural justice principles before accepting or rejecting the application under Section 100.

Issue (e): Appointment and Role of Interim Resolution Professional

The Applicant proposed the name of the Resolution Professional, Mr. Madhu Desikan, whose credentials and disciplinary status were verified by the Tribunal. The Tribunal appointed him as Interim Resolution Professional (IRP) to examine the application as per Section 97(6) of the IBC and to submit a report recommending acceptance or rejection within 10 days as mandated by Section 99(1).

The IRP was directed to collate all relevant facts, ensure procedural compliance, and facilitate the process without conducting judicial adjudication. The Applicant was further directed to serve copies of the application and order on the IRP to enable proper examination.

3. SIGNIFICANT HOLDINGS

The Tribunal's key legal determinations include the following:

"No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC."

"The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process."

"No violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional."

"The adjudicating authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application."

The Tribunal conclusively held that the application filed by the Applicant under Section 95(1) of the IBC was maintainable, procedural requirements were satisfied, and the appointment of the Interim Resolution Professional was warranted to facilitate examination and submission of a recommendatory report. The Personal Guarantor will be given an opportunity to respond after the RP's report, ensuring compliance with natural justice before any final adjudication.

ISSUES:

Whether the Resolution Plan submitted under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 ("the Code") and Regulation 39(4) of the CIRP Regulations complies with the statutory requirements for approval by the Adjudicating Authority.Whether the Resolution Plan adequately addresses the claims and dues of various classes of creditors, including Workmen, Operational Creditors, Financial Creditors, and Other Creditors, in compliance with the Code and relevant judgments.Whether the Resolution Applicant meets the eligibility criteria under Section 29A and other applicable provisions of the Code.Whether the Resolution Plan provides for effective management, control, and implementation mechanisms as required under the Code and CIRP Regulations.Whether the Resolution Plan's conditional clauses, especially regarding environmental clearances and permissions, are valid and enforceable.Whether the Resolution Plan complies with the requirement of extinguishment of existing shares and allotment of new shares without requiring further consents under the Companies Act, 2013.Whether the Resolution Plan complies with the principle that claims not included in the approved plan stand extinguished as per the Supreme Court's judgment in Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited.

RULINGS / HOLDINGS:

The Resolution Plan submitted under Section 30(6) of the Code and Regulation 39(4) of the CIRP Regulations is approved as it meets the requirements specified in Section 30(2) and is compliant with the law.The Resolution Plan provides for payment to Workmen, Operational Creditors, Financial Creditors, and Other Creditors in a manner that is "not less than what they would have got under as per Section 53 of IBC," including full payment of Provident Fund and Gratuity dues, thus complying with the Jet Airways judgment and relevant statutory provisions.The Resolution Applicant is eligible under Section 29A and has submitted the required affidavit of eligibility; hence, it is qualified to submit and implement the Resolution Plan.The Resolution Plan contains adequate provisions for management and control of the Corporate Debtor, including reconstitution of the Board and supervision by an Interim Committee, ensuring effective implementation and compliance with the Code.The conditional clause requiring clarification/permission from competent authorities regarding the Eco-Sensitive Zone is valid; failure to obtain such permission within 180 days results in termination of the Resolution Plan without liability on the Resolution Applicant, with refund of deposits and costs as specified.The Resolution Plan's provision for extinguishment of existing shares and allotment of new shares to the Resolution Applicant without requiring shareholder consent under the Companies Act, 2013, is valid and binding.In accordance with the Supreme Court's judgment in Ghanshyam Mishra and Sons Private Limited, all claims not included in the approved Resolution Plan stand extinguished, and no further proceedings can be initiated in respect thereof.

RATIONALE:

The Court applied the statutory framework under the Insolvency & Bankruptcy Code, 2016, particularly Sections 7, 16, 25, 29A, 30, 31, 32A, 53, and relevant Regulations under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016.The Court relied on precedent, including the Supreme Court's ruling in K Sashidhar v. Indian Overseas Bank & Others, which mandates that the Adjudicating Authority's role is limited to verifying compliance with Section 30(2) and giving primacy to the commercial wisdom of the Committee of Creditors.The Court considered the Jet Airways judgment to ensure that Workmen's dues, including Provident Fund and Gratuity, are paid in full or at least not less than the minimum entitlement under Section 53 of the Code.The Court examined the detailed compliance certificate (Form H) and found the Resolution Plan compliant with all mandatory requirements, including payment priorities, management control, and eligibility criteria.The Court noted the Resolution Professional's adherence to orders admitting additional claims of Workmen and the Resolution Applicant's commitment not to pay amounts beyond the admitted claims where the proposed payment already exceeds statutory entitlements.The Court addressed the conditional clause concerning environmental clearances as a valid condition precedent to the Resolution Plan's effectiveness, with clear consequences for non-fulfillment, demonstrating a balanced approach to regulatory compliance and commercial certainty.The Court distinguished the Scheme of Arrangement and Amalgamation submitted along with the Resolution Plan, holding that it should be filed and considered separately under the appropriate law, maintaining procedural propriety.The Court emphasized that approval of the Resolution Plan does not absolve the Corporate Debtor or Resolution Applicant from compliance with applicable laws but clarifies non-liability for pre-CIRP offences under Section 32A of the Code.

The Tribunal considered the following core legal issues:

• Whether the demat account of the Corporate Debtor, frozen due to non-compliance with SEBI regulations, should be defrozen to enable the liquidator to take custody of the shares and distribute the proceeds according to the waterfall mechanism under Section 53(1) of the Insolvency & Bankruptcy Code, 2016 (IBC).
• Whether the jurisdiction of the National Company Law Tribunal (NCLT) extends to adjudicating matters related to the freezing of demat accounts under SEBI regulations, in light of Section 60(5) of the IBC.
• Whether the provisions of Section 238 of the IBC, which provide the Code with an overriding effect, apply to the SEBI regulations and circulars that led to the freezing of the demat account.

ISSUE-WISE DETAILED ANALYSIS

1. Freezing of Demat Account

Relevant Legal Framework and Precedents: The demat account was frozen under SEBI LODR Regulations and SEBI circulars, which mandate freezing promoter accounts for non-compliance by listed entities. The Applicant argued that Section 238 of the IBC provides the Code with an overriding effect over conflicting laws.

Court's Interpretation and Reasoning: The Tribunal noted that the demat account was frozen prior to the initiation of the Corporate Insolvency Resolution Process (CIRP) and liquidation proceedings. However, the Tribunal emphasized the liquidator's duty under IBC to liquidate assets expeditiously and maximize recovery.

Key Evidence and Findings: The demat account was frozen due to non-compliance by entities in which the Corporate Debtor was a promoter. The Tribunal found that continuing the freeze would impede the liquidation process.

Application of Law to Facts: The Tribunal applied Section 60(5) of the IBC, which allows it to adjudicate matters related to insolvency proceedings, and Section 238, which provides the Code with an overriding effect.

Treatment of Competing Arguments: The Respondents argued that the freeze was a continuation of pre-existing proceedings and should not be lifted. The Tribunal, however, found that the freeze obstructed the liquidation process, which is a time-bound procedure under IBC.

Conclusions: The Tribunal concluded that the demat account should be defrozen to allow the liquidator to perform her duties under the IBC.

2. Jurisdiction of NCLT

Relevant Legal Framework and Precedents: Section 60(5) of the IBC grants the NCLT jurisdiction over matters related to insolvency proceedings. The Supreme Court in Gujarat Urja Vikas Nigam Limited v. Amit Gupta emphasized that NCLT's jurisdiction should not usurp that of other tribunals unless the matter relates to insolvency.

Court's Interpretation and Reasoning: The Tribunal found a clear nexus between the issue of the frozen demat account and the insolvency proceedings, as the freeze impeded the liquidation process.

Key Evidence and Findings: The Tribunal noted that the demat account's freeze was a significant obstacle to the liquidation process, which is inherently linked to insolvency proceedings.

Application of Law to Facts: The Tribunal applied Section 60(5) to assert jurisdiction, highlighting the connection between the frozen account and the insolvency process.

Treatment of Competing Arguments: The Respondents argued that the matter should be adjudicated under SEBI regulations. The Tribunal disagreed, citing the direct impact on the liquidation process.

Conclusions: The Tribunal held that it had jurisdiction to order the defreezing of the demat account.

3. Overriding Effect of IBC

Relevant Legal Framework and Precedents: Section 238 of the IBC provides the Code with an overriding effect over conflicting laws. The Tribunal referenced previous judgments affirming this principle.

Court's Interpretation and Reasoning: The Tribunal determined that the IBC's provisions, particularly those related to liquidation, should prevail over SEBI regulations in this context.

Key Evidence and Findings: The Tribunal found that maintaining the freeze would conflict with the IBC's objectives of maximizing asset value and expeditious liquidation.

Application of Law to Facts: The Tribunal applied Section 238 to prioritize the IBC's provisions over SEBI's regulations, given the direct impact on the liquidation process.

Treatment of Competing Arguments: The Respondents contended that SEBI regulations operated independently. The Tribunal found that the IBC's objectives necessitated an overriding effect in this case.

Conclusions: The Tribunal concluded that the IBC's provisions should override the SEBI regulations, allowing the demat account to be defrozen.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The CIRP or liquidation process is a time-bound process. The continued freezing of demat accounts would cause delay in the liquidation process, especially in the facts when the two defaulting listed entities are also under liquidation and compliances expected of them for defreezing of the Demat account of the Corporate Debtor is an impossibility."

Core Principles Established: The Tribunal established that the IBC's provisions, particularly regarding liquidation, have an overriding effect over conflicting SEBI regulations when they impede the liquidation process.

Final Determinations on Each Issue: The Tribunal ordered the defreezing of the demat account to allow the liquidator to fulfill her duties under the IBC, asserting its jurisdiction under Section 60(5) and the overriding effect of Section 238.