Taxmann's Analysis | Top 20 Rulings of the Year 2025 on Insolvency and Bankruptcy Code (IBC)

Top 20 Rulings of the Year 2025

On

Insolvency and Bankruptcy Code (IBC)

Top 20 Rulings of the Year 2025

On

Insolvency and Bankruptcy Code (IBC)

Contents 1.

Homebuyer with Buy-Back Agreement Deemed a Speculative Investor, Not a Financial Creditor Under IBC: SC

5

2.

Dues for Workers’ Welfare Can’t Be Part of Liquidation Estate; Must Be Fully Used for Workers’ Payment: HC

6

3.

Preference Shareholder Cannot Maintain an Insolvency Petition u/s 7 as CRPS Funds Are Share Capital Not Debt: SC

7

4.

Rights Issue During CD’s CIRP Valid; Plea to Restrain EGM and Alteration of CD’s Shareholding Dismissed: SC

8

5.

Regulatory Penalties Under Consumer Protection Laws Do Not Constitute “Debt” Under IBC; Moratorium u/s 96 Doesn’t Apply: SC

9

6.

CIRP Plea u/s 7 Rightly Rejected as Share Application Money Isn’t Financial Debt Without Proof of Private Placement: NCLAT

10

7.

NCLT Lacks Power to Direct Noida Authority to Revalidate Layout Map as It Falls Beyond Its Jurisdiction Under IBC: HC

11

8.

IBC Moratorium Can’t Be a Shield Against Sec. 138 NI Act; Debtors Can’t Escape Prosecution During CIRP: SC

12

9.

Writ Against SARFAESI Action Dismissed as Sec. 94 Plea Isn’t Maintainable Where Borrower Was a Proprietorship Firm: HC

13

10.

Sec. 9 Plea Wrongly Dismissed as Service of Notice on KMP at Co.’s Registered Address Was Deemed Valid u/s 8: SC 14

11.

A Resolution Plan Involving a Combination Needs CCI Approval Before CoC Consideration, as Required u/s 31(4) of IBC: SC

15

12.

Sale of Pledged Shares by the Lender of the Corporate Debtor’s Subsidiary for Debt Repayment Is Not an Undervalued Transaction

16

13.

IBC Provisions Override Income-Tax; Reassessment Notice Issued to Corporate Debtor Quashed: HC

17

14.

Revenue’s Appeals on Assessee’s Tax Liability Couldn’t Proceed During Moratorium Under Section 14 of IBC During CIRP

18

15.

Homebuyers Whose Claim Was Duly Verified and Admitted by RP Were Entitled to Possession of Flats Under IBC: SC

19

16.

Section 7 Applications Remain Valid Despite a Defective Affidavit, as the Defect Is Neither Fatal Nor Incurable: SC

20

17.

NCLAT Has No Power to Condone Delay Beyond 45 Days u/s 61(2) & Appeals Filed Later Are Barred Regardless of Reason for Delay: SC

21

18.

IBC Moratorium Does Not Exempt Mandatory Pre-Deposit Under RERA; Insolvency of One Project Gives No Such Benefit: HC

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19.

Resolution Plan Binds Only the CD and Does Not Stop Action on the Petitioner’s Mortgaged Property Under SARFAESI

23

20.

PF Claim Based on Post-Moratorium Assessment Is Barred u/s 14(1) of IBC and Cannot Be Admitted in CIRP

24

Introduction The year 2025 saw several significant judicial pronouncements influencing the interpretation and application of the Insolvency and Bankruptcy Code, 2016. Courts and adjudicating authorities dealt with a range of issues concerning insolvency proceedings and the roles of various stakeholders. These decisions have helped clarify important aspects of the insolvency framework and provide useful guidance for those dealing with resolution and liquidation processes.

1.

Homebuyer with Buy-Back Agreement Deemed a Speculative Investor, Not a Financial Creditor Under IBC: SC Mansi Brar Fernandes vs. Shubha Sharma [2025] 178 taxmann.com 359 (SC)/[2025] 190 SCL 230 (SC)

The case arose from a Memorandum of Understanding entered into between the appellant and the corporate debtor for the purchase and buy-back of four apartments in the latter’s real estate project. The appellant paid ₹35 lakhs as part of the consideration. Under the MoU, the buy-back of the apartments was entirely at the option of the corporate debtor.

If the buy-back option was not exercised, the appellant was entitled to receive possession of the flats without making any further payment. Despite the MoU being extended twice, neither possession of the flats was handed over nor was the amount refunded.

The appellant thereafter initiated proceedings under section 7 of the Insolvency and Bankruptcy Code, claiming to be an allottee and financial creditor. The NCLT admitted the application. However, on appeal, the NCLAT set aside the admission order, holding that the appellant was a speculative investor and not a genuine homebuyer or financial creditor.

The Supreme Court examined the terms of the MoU and noted that the arrangement primarily contemplated a buy-back with assured returns within a stipulated period. It held that where an agreement substitutes possession with a buy-back or refund option, or incorporates special arrangements promising assured returns, the allottee is likely to be a speculative investor. Since the appellant’s real interest was in receiving the invested amount along with a premium, and not in obtaining possession of the flats, she could not be treated as a genuine allottee entitled to invoke section 7.

The Court further held that the MoU was, in substance, a buy-back contract rather than an agreement for sale of apartments. Consequently, the NCLAT was correct in treating the appellant as a speculative investor, and no interference was warranted. The appeal was accordingly dismissed.

Top 20 Rulings of the Year 2025 On

Insolvency and Bankruptcy Code (IBC)

5

2. Dues for Workers’ Welfare Can’t Be Part of Liquidation Estate; Must Be Fully Used for Workers’ Payment: HC Stesalit Ltd. vs. Union of India [2025] 172 taxmann.com 33 (Calcutta) In the instant case, the petitioner company had been taken over by new management pursuant to the corporate insolvency resolution process and continued to remain operational. Respondent No. 4, an ex-employee of the petitioner company, resigned and filed an application under the Payment of Gratuity Act, 1972. The Controlling Authority allowed the application and directed the petitioner to pay gratuity along with interest.

The petitioner challenged the order by filing a writ petition, contending that the Controlling Authority had erred in allowing the gratuity claim without considering that the company was governed by the Insolvency and Bankruptcy Code, 2016. It was noted that the gratuity claim of Respondent No. 4 had been considered during CIRP, and although the entire claim was admitted, only an amount of ₹38,808.43 was approved under the CIRP process.

The High Court held that CIRP is not a recovery mechanism for creditors, unlike liquidation, which is a process to bring the life of a company to an end. It further held that dues meant for the welfare of workers are not permissible to be included in the liquidation estate and are required to be utilised only for payment of such dues in full. The Court also held that since no specific fund had been maintained by the company for this purpose, the entire dues of workers would not form part of liquidation assets, and a worker would be entitled to recover his total dues from the assets of the company, with such claim ranking above those of other creditors.

The Court further held that since the petitioner company had never closed down and continued to function after being taken over under CIRP, the jurisdiction of the Controlling Authority under the Payment of Gratuity Act was never ousted. Accordingly, the Controlling Authority had jurisdiction to decide the gratuity claim.

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Insolvency and Bankruptcy Code (IBC)

3. Preference Shareholder Cannot Maintain an Insolvency Petition u/s 7 as CRPS Funds Are Share Capital Not Debt: SC EPC Constructions India Ltd. vs. Matix Fertilizers and Chemicals Ltd. [2025] 179 taxmann.com 650 (SC) In the instant case, the appellant, acting as an engineering, procurement and construction contractor, had entered into contracts with the respondent for setting up a fertiliser complex, under which an amount of about ₹572.7 crores became due. The parties thereafter discussed conversion of a part of the outstanding receivables into a subordinate debt. Pursuant to this, the respondent proposed conversion of up to ₹400 crores of the outstanding dues into preference shares.

The appellant’s board approved conversion into 8% Cumulative Redeemable Preference Shares (CRPS), and the respondent allotted 25 crore CRPS of ₹10 each aggregating to ₹250 crores, carrying a cumulative dividend of 8% and redeemable at par at the end of three years, with an option to redeem earlier at the issuer’s discretion. The appellant accepted the allotment and the CRPS were issued accordingly.

On expiry of the redemption period, the appellant filed an application under section 7 of the Insolvency and Bankruptcy Code claiming about ₹310 crores as payable on maturity of the CRPS. The NCLT dismissed the application, and the NCLAT, by the impugned order, dismissed the appeal.

The Supreme Court held that the fact that the redemption period of the CRPS had expired did not lend greater weight to the appellant’s case. It held that the appellant, being a preference shareholder, was not a creditor and, therefore, an application under section 7 was not maintainable. The Court further held that accounting treatment of the transaction, based on accounting standards, would not be determinative of the nature of the relationship between the parties, which had to be gathered from the documents executed between them.

The Court held that the paid-up money on shares constitutes share capital and does not amount to debt. It further held that shares could be redeemed only out of profits or out of amounts set aside for payment of dividends, which was not the situation in the present case, and therefore the argument that redemption was due was not meritorious.

Accordingly, the Supreme Court dismissed the appeal.

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Insolvency and Bankruptcy Code (IBC)

7

4. Rights Issue During CD’s CIRP Valid; Plea to Restrain EGM and Alteration of CD’s Shareholding Dismissed: SC Glas Trust Company LLC vs. Shailendra Ajmera [2025] 180 taxmann.com 524 (SC) In the instant case, the corporate debtor held about 25.41 per cent shareholding in company ‘A’ and was admitted into the corporate insolvency resolution process. The resolution professional did not attend meetings of the board of company ‘A’. Thereafter, company ‘A’ passed a resolution to increase its share capital through a rights issue at face value and issued a notice convening an extraordinary general meeting of its shareholders.

An appellant, being a shareholder of the corporate debtor, filed an application seeking an interim injunction to restrain company ‘A’ from convening its extraordinary general meeting and from reducing the shareholding of the corporate debtor. It was noted that the proposed increase in share capital was through a rights issue and not by way of a public offer. Consequently, the corporate debtor, as a shareholder, would be entitled to subscribe to shares in proportion to its existing shareholding of 25.41 per cent.

The NCLAT held that if the corporate debtor considered it necessary to sustain the value of its investment or to retain any control arising from its shareholding in company ‘A’, it was open to it to subscribe to the shares offered under the rights issue. If the committee of creditors chose not to subscribe to the shares, the resultant change in shareholding would be a consequence of its own decision and not attributable to company ‘A’. The Tribunal further held that, notwithstanding the order of status quo passed by the NCLT, the decision impacting the shareholding of the corporate debtor rested with it and not with company ‘A’. Accordingly, the application seeking to restrain the extraordinary general meeting and the dilution of shareholding was dismissed.

The Supreme Court declined to interfere with the impugned order passed by the NCLAT. It held that the observations made by the Tribunal were only for the purpose of disposal of the interim application and would not have any bearing on the final adjudication of the appeal pending before the Tribunal.

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Top 20 Rulings of the Year 2025 On

Insolvency and Bankruptcy Code (IBC)

5. Regulatory Penalties Under Consumer Protection Laws Do Not Constitute “Debt” Under IBC; Moratorium u/s 96 Doesn’t Apply: SC Saranga Anilkumar Aggarwal vs. Bhavesh Dhirajlal Sheth [2025] 172 taxmann.com 145 (SC)/[2025] 188 SCL 286 (SC)/[2025] 255 COMP CASE 681 (SC) The Supreme Court held that penalties imposed by the National Consumer Disputes Redressal Commission are regulatory in nature and arise from non-compliance with consumer protection laws, and are therefore distinct from debt recovery proceedings under the Insolvency and Bankruptcy Code. The Court clarified that the moratorium under section 96 has a limited scope and applies only to legal actions or proceedings in respect of any “debt”.

It was held that the moratorium under section 96 does not extend to regulatory penalties imposed for violations of consumer protection laws. The Court further held that penalties and damages awarded by the NCDRC in consumer disputes are not ordinary contractual debts, but are intended to compensate consumers for losses suffered and to deter unethical business practices. Such liabilities fall within the category of “excluded debts” under section 79(15) of the Code and, therefore, do not enjoy the protection of moratorium under section 96.

Top 20 Rulings of the Year 2025 On

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9

6. CIRP Plea u/s 7 Rightly Rejected as Share Application Money Isn’t Financial Debt Without Proof of Private Placement: NCLAT Murlidhar Vincom (P.) Ltd. vs. Skoda (India) (P.) Ltd. [2025] 172 taxmann. com 182 (NCLAT-New Delhi) In the instant case, the appellant, claiming to be a financial creditor, had advanced funds to the respondent–corporate debtor as share application money for allotment of equity shares. No shares were allotted by the corporate debtor, and the amount was also not refunded. On account of such non-refund, the appellant filed an application under section 7 of the Insolvency and Bankruptcy Code alleging default.

The Adjudicating Authority rejected the application holding that share application money, where shares were not allotted, could not be treated as a financial debt. On appeal, the NCLAT examined the applicability of the Companies (Acceptance of Deposits) Rules, 2014.

It held that Rule 2 of the CADR Rules envisages that only where any amount is received pursuant to a private placement offer made in accordance with the provisions of the Companies Act, 2013 and no shares are allotted in respect thereof, the amount can be treated as a deposit.

The Tribunal noted that the appellant had failed to place on record any proof of a private placement offer made in accordance with the Companies Act, 2013. In the absence of any evidence of a valid and concluded agreement between the parties relating to allotment of shares, the amount advanced could not be treated as money received in response to a private placement offer. Since the transaction could not be linked to section 42 of the Companies Act, the appellant could not invoke section 42(6).

Accordingly, the NCLAT held that there was no infirmity in the impugned order passed by the Adjudicating Authority rejecting the application under section 7 and dismissed the appeal.

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Insolvency and Bankruptcy Code (IBC)

7. NCLT Lacks Power to Direct Noida Authority to Revalidate Layout Map as It Falls Beyond Its Jurisdiction Under IBC: HC Arena Superstructures (P.) Ltd. vs. State of U.P. [2025] 172 taxmann.com 273 (Allahabad) The matter concerned a developer, ASPL, which was allotted a plot under the Sports City project in Noida through a sub-lease deed. Under the terms of the lease, ASPL was required to pay land premium in sixteen half-yearly instalments along with interest and other dues. Although ASPL defaulted in payment, the NOIDA Authority did not take steps to recover the outstanding amounts. Thereafter, ASPL developed residential apartments, obtained sanction of the layout map, collected funds from homebuyers, and allegedly siphoned off the money without completing the project. It was further alleged that insolvency proceedings were orchestrated to avoid civil and legal consequences.

The High Court held that the NCLT does not have the power to issue directions to the NOIDA Authority to revalidate a layout map, as such powers vest only with the Supreme Court and the High Courts under Article 226 of the Constitution of India. The Court further held that, in view of the apparent fraud played by the management of ASPL and the misappropriation of homebuyers’ funds, it could not blindly put its seal of approval on the order passed by the NCLT approving reverse insolvency.

Considering the facts and the totality of circumstances, the Court held that there was no other recourse but to refer the matter to the Enforcement Directorate for investigation.

The ED was directed to conduct a fair investigation in accordance with law, trace the trail of siphoned or laundered money, and make all endeavours to bring such funds back into the company so that the outstanding dues of the NOIDA Authority, the State Government, additional compensation payable to farmers, and other liabilities could be discharged.

Consequently, the High Court disposed of the writ petition.

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Insolvency and Bankruptcy Code (IBC)

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8. IBC Moratorium Can’t Be a Shield Against Sec. 138 NI Act; Debtors Can’t Escape Prosecution During CIRP: SC Rakesh Bhanot vs. Gurdas Agro (P.) Ltd. [2025] 173 taxmann.com 249 (SC)/[2025] 188 SCL 748 (SC)/[2025] 258 COMP CASE 193 (SC) The Supreme Court examined the interplay between proceedings under the Insolvency and Bankruptcy Code and criminal prosecution under section 138 of the Negotiable Instruments Act, 1881. The respondent had filed a complaint under section 138 against the appellants for dishonour of cheques due to insufficiency of funds. During the pendency of the criminal proceedings, the appellants filed an application under section 94 before the NCLT seeking initiation of personal insolvency, which was pending adjudication.

Relying on the pendency of the section 94 application and the interim moratorium contemplated under section 96 of the Code, the appellants sought adjournment of the section 138 proceedings sine die. The Trial Court rejected the application, leading to the issue before the Supreme Court.

The Court held that while the legislative intent behind the IBC is to provide a protective shield to debtors during the insolvency process, the scope and nature of proceedings under the Code may result in restructuring or even extinguishment of debt through liquidation, but such extinguishment does not absolve directors or individuals from criminal liability. The Court further held that permitting debtors to evade prosecution under section 138 by invoking insolvency proceedings would defeat the very object of the Negotiable Instruments Act, which is to maintain the integrity and credibility of commercial transactions.

It was held that personal responsibility for offences under section 138 persists irrespective of insolvency proceedings and their outcome. Accordingly, the prayer of the appellants to stay the prosecution under section 138 on the basis of the interim moratorium under section 96 was held to be untenable, and the rejection of their application by the Trial Court was upheld.

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9. Writ Against SARFAESI Action Dismissed as Sec. 94 Plea Isn’t Maintainable Where Borrower Was a Proprietorship Firm: HC Ramesh Kothari vs. State of Madhya Pradesh [2025] 173 taxmann.com 341 (Madhya Pradesh) The matter related to a loan advanced by the respondent bank to the borrowers, for which the petitioner had stood as guarantor. Upon default in repayment, the bank initiated recovery proceedings under section 14 of the SARFAESI Act. Pursuant to the order passed by the District Magistrate for taking possession of the mortgaged property with the assistance of the Tehsildar, a notice was issued to the borrowers as well as the petitioner for taking possession of the secured asset.

The petitioner thereafter approached the NCLT by filing an application under section 94 of the Insolvency and Bankruptcy Code. To protect possession of the secured asset, the petitioner also filed the present writ petition seeking a direction to the respondents to restrain them from taking possession during the pendency of the insolvency proceedings.

The High Court noted that the definition of “corporate debtor” under the Code does not include a proprietorship firm. Since the borrowers were sole proprietorship firms, the Court held that no application under section 94 was maintainable, even at the instance of the petitioner. Accordingly, the writ petition was dismissed.

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10. Sec. 9 Plea Wrongly Dismissed as Service of Notice on KMP at Co.’s Registered Address Was Deemed Valid u/s 8: SC Visa Coke Ltd. vs. Mesco Kalinga Steel Ltd. [2025] 174 taxmann.com 22 (SC)/[2025] 189 SCL 31 (SC)/[2025] 256 COMP CASE 569 (SC) In the instant case, the appellant, an operational creditor, had entered into a contract with the respondent, corporate debtor, for the sale and purchase of Low Ash Metallurgical Coke. The appellant supplied the goods, but the respondent failed to make payment. A legal notice demanding the outstanding amount was first issued to the corporate debtor through its Director. Since there was no response, the appellant thereafter issued a demand notice in Form 3 under section 8 to the corporate debtor at its registered office, addressed through its Key Managerial Personnel, and upon non-payment, filed an application under section 9 of the Insolvency and Bankruptcy Code.

The NCLT dismissed the section 9 application on the ground that the demand notice had been addressed to the KMP and not to the corporate debtor, and therefore did not satisfy the requirement of section 8. This view was affirmed by the NCLAT. The Supreme Court held that a demand notice under section 8 can validly be addressed and delivered to the corporate debtor through its Key Managerial Personnel. It held that the notice sent to the KMP in their official capacity at the registered office address of the corporate debtor clearly established that the demand notice was issued to the corporate debtor in respect of the operational debt due and payable. Such notice was held to constitute deemed service of the demand notice as contemplated under section 8.

Accordingly, the Court held that the approach of the NCLT and the NCLAT in rejecting the section 9 application on the technical ground that no notice was sent to the corporate debtor was incorrect and unsustainable in law.

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11. A Resolution Plan Involving a Combination Needs CCI Approval Before CoC Consideration, as Required u/s 31(4) of IBC: SC Independent Sugar Corporation Ltd. vs. Girish Sriram Juneja [2025] 170 taxmann.com 868 (SC)/[2025] 259 COMP CASE 516 (SC) In the instant case, corporate insolvency resolution proceedings were initiated against the corporate debtor, pursuant to which resolution plans were submitted by the appellant, an unsuccessful resolution applicant, and AGI, the successful resolution applicant. AGI’s proposed acquisition was stated to result in a market share of about 80–85 per cent in the food and beverages segment and 45–50 per cent in the alcoholic beverages segment, raising concerns of adverse effect on competition.

The appellant objected to the approval of AGI’s resolution plan by the committee of creditors on the ground that no prior approval of the Competition Commission of India had been obtained, as mandated under section 31(4) of the Insolvency and Bankruptcy Code. Despite the objection, the CoC approved AGI’s resolution plan with 98 per cent voting share. Approval from the CCI was obtained subsequently, subject to divestment conditions. The NCLT upheld the approval of the resolution plan, relying on subsequent compliance, and the NCLAT affirmed the decision, holding that prior CCI approval was directory and not mandatory.

The Supreme Court held that a resolution plan involving a combination requires prior approval of the CCI before approval by the CoC, as mandated under section 31(4) of the Code. It further held that section 29(1) of the Competition Act mandates issuance of a show cause notice to the parties to the combination if the CCI forms a prima facie opinion that the combination is likely to cause or has caused an appreciable adverse effect on competition in the relevant market. The Court held that the failure of the CCI to issue such mandatory show cause notice to all affected parties, including the corporate debtor, constituted a serious procedural lapse.

The Court further held that AGI’s resolution plan, having been approved without prior CCI clearance, violated the statutory scheme under sections 30 and 34 of the Insolvency and Bankruptcy Code. Consequently, the resolution plan was held to be legally unsustainable and was set aside.

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12. Sale of Pledged Shares by the Lender of the Corporate Debtor’s Subsidiary for Debt Repayment Is Not an Undervalued Transaction Shantanu Prakash vs. Mahendar Singh Khandelwal, Resolution Professional, Educomp Solutions Ltd. [2025] 171 taxmann.com 367 (NCLTNew Delhi) In the instant case, ESL, the corporate debtor, was admitted into the corporate insolvency resolution process. EAPPL was a wholly owned subsidiary of ESL and, through EAPPL, ESL indirectly held about 55 per cent shareholding in TLI, an e-learning company based in the USA. EAPPL had availed a loan facility from SBI, Singapore, for which ESL had provided a corporate guarantee. As security for the loan, EAPPL had pledged its shares in TLI in favour of SBI, Singapore.

Subsequently, pursuant to an order passed by the High Court of Singapore, EAPPL went into liquidation. During this period, SBI, Singapore, contemplated divestment of the pledged shares of TLI. The applicant, being an ex-director and part of the suspended management of ESL, raised a query before the committee of creditors regarding the process to be followed for the divestment of the security. It was alleged by the applicant that the shares of TLI were sold by SBI, Singapore at a throwaway price and that the committee of creditors and the resolution professional ought to have intervened in the sale.

The NCLT held that the sale of shares owned by the subsidiary of the corporate debtor was carried out by the lender and financial creditor of the subsidiary, with whom the shares stood pledged as security for repayment of debt. Such a sale could not be treated as an undervalued transaction under the Insolvency and Bankruptcy Code. Accordingly, the plea of the applicant seeking to declare the sale of shares of TLI by SBI, Singapore as an undervalued transaction was held to be not tenable and was rejected.

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13. IBC Provisions Override IncomeTax; Reassessment Notice Issued to Corporate Debtor Quashed: HC Srei Equipment Finance Ltd. vs. Assessment Unit/Verification Unit/ Technical Unit/Income-tax Department [2025] 173 taxmann.com 982 (Calcutta) In the instant case, the assessee was a corporate debtor in respect of whom an application under the Insolvency and Bankruptcy Code, 2016 was admitted by the NCLT on 8 October 2021, and a public announcement was made on 11 October 2022. The assessment years involved were 2016–17 and 2019–20. During the pendency of the insolvency process, the Assessing Officer issued show cause notices under section 148A(b) of the Income-tax Act on 24 March 2023 and 30 March 2023.

Subsequently, the NCLT approved the resolution plan by order dated 11 August 2023, which was duly intimated to the Assessing Officer. Despite the approval of the resolution plan, the Assessing Officer proposed to proceed with the reassessment proceedings.

The High Court held that the provisions of the Insolvency and Bankruptcy Code, 2016 have an overriding effect over the provisions of the Income-tax Act, 1961. It held that the proceedings initiated by the Assessing Officer, commencing from the issuance of notice under section 148A(b) and culminating in the order under section 148A(d) and the consequential notice under section 142(1), were ex facie without jurisdiction and unsustainable in law.

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14. Revenue’s Appeals on Assessee’s Tax Liability Couldn’t Proceed During Moratorium Under Section 14 of IBC During CIRP Principal Commissioner of Income Tax vs. Shirpur Gold Refinery Ltd. [2025] 177 taxmann.com 30 (Bombay)/[2025] 189 SCL 739 (Bombay) In the instant case, the assessee-company was undergoing the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. During the subsistence of the moratorium under section 14 of the Code, the revenue filed an appeal against the order passed by the Tribunal in relation to the tax liability of the assessee.

The High Court held that the appeal filed by the revenue could not proceed while the moratorium under section 14 was in operation. It further held that the appeals were required to be adjourned sine die, with liberty to the parties to mention the matter after further orders were passed by the NCLT, either approving a resolution plan in respect of the assessee or directing its winding up.

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15. Homebuyers Whose Claim Was Duly Verified and Admitted by RP Were Entitled to Possession of Flats Under IBC: SC Amit Nehra vs. Pawan Kumar Garg [2025] 178 taxmann.com 254 (SC)/ [2025] 190 SCL 209 (SC) The Supreme Court considered the grievance of homebuyers who had booked an apartment in a project of the corporate debtor and paid almost the entire sale consideration, but were not given possession within the agreed period. During this period, CIRP was initiated against the corporate debtor. The appellants submitted their claims before the Resolution Professional, which were duly verified and admitted, and their names were reflected in the list of financial creditors.

A resolution plan submitted by the successful resolution applicant was approved by the NCLT. Under the resolution plan, treatment of homebuyer claims was governed by clause 18.4, which provided different consequences for timely and belated claims. Despite the appellants’ claims having been admitted, possession of the allotted apartment was not handed over. The appellants approached the Adjudicating Authority seeking directions for the execution of the conveyance deed and delivery of possession. The NCLT held that their claim was covered by clause 18.4(xi) of the resolution plan, entitling them only to a refund of 50 per cent of the principal amount. This view was affirmed by the NCLAT. The Supreme Court held that since the appellants had paid nearly the entire sale consideration and had duly submitted their claims, which were verified and admitted by the Resolution Professional, they could not be treated as belated claimants. The Court held that such homebuyers were not confined to the limited relief of refund of 50 per cent of the principal amount under clause 18.4(xi), but were entitled to possession of the apartment.

Accordingly, the Supreme Court set aside the judgment of the NCLAT and the order of the NCLT, and directed the respondents to execute the conveyance deed and hand over possession of the apartment to the appellants.

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16. Section 7 Applications Remain Valid Despite a Defective Affidavit, as the Defect Is Neither Fatal Nor Incurable: SC Livein Aqua Solutions (P.) Ltd. vs. HDFC Bank Ltd. [2025] 180 taxmann. com 696 (SC) In the instant case, the appellant-company had availed a loan facility from the respondentbank, which was later classified as a non-performing asset. The respondent-bank filed an application under section 7 of the Insolvency and Bankruptcy Code. On scrutiny, the application was found to be defective, and the Joint Registrar of the NCLT called upon the respondent to remove the defects within seven days, failing which appropriate orders were to be passed under Rule 28(3) of the NCLT Rules. As the respondent failed to refile the application after curing the defects, the Joint Registrar refused to register the application.

On appeal, the NCLAT held that the proviso to section 7(5)(b) had not been complied with by the NCLT and, therefore, the rejection of the application could not be sustained.

However, the NCLAT restored the company’s petition and remanded the matter to the NCLT for a decision on the merits without requiring the respondent to cure the defective affidavit.

The Supreme Court held that mere filing of a defective affidavit in support of an application would not render the application non est, as such a defect is neither incurable nor fundamental. It further held that the IBC is a substantive legislation, and where an application under section 7 is defective, notice to cure defects must be given in terms of the proviso to section 7(5)(b). Mere compliance with the procedural rules framed for the NCLT would not be sufficient.

The Court held that since no notice was issued to the respondent under the proviso to section 7(5)(b), the NCLAT was justified in holding that the rejection of the application was unsustainable. However, it further held that the NCLAT ought to have directed the respondent-bank to cure the defective affidavit instead of directing the NCLT to proceed on merits without rectification. Accordingly, the Supreme Court held that the NCLAT was in error to that extent and directed the respondent-bank to cure the defects in the application, including the defective affidavit, after which the NCLT was directed to take up the matter for hearing in accordance with law and due procedure.

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Insolvency and Bankruptcy Code (IBC)

17. NCLAT Has No Power to Condone Delay Beyond 45 Days u/s 61(2) & Appeals Filed Later Are Barred Regardless of Reason for Delay: SC Tata Steel Ltd. vs. Raj Kumar Banerjee [2025] 174 taxmann.com 360 (SC)/ [2025] 189 SCL 179 (SC)/[2025] 257 COMP CASE 146 (SC) In the instant case, the resolution plan submitted by the appellant in respect of the corporate debtor was approved by the Committee of Creditors and thereafter by the NCLT by order dated 7 April 2022. The respondent, an erstwhile minority shareholder of the corporate debtor, preferred an appeal under section 61 of the Insolvency and Bankruptcy Code seeking to set aside the order approving the resolution plan. Along with the appeal, an application for condonation of delay was also filed.

The appeal was filed on 22 May 2022, beyond the prescribed limitation period of 30 days as well as the additional condonable period of 15 days under section 61(2). Despite this, the NCLAT, by the impugned order, condoned the delay and entertained the appeal. The appellant challenged the maintainability of the appeal on the ground that it was filed beyond the maximum period permitted under the statute.

The Supreme Court held that once the prescribed period of 30 days and the condonable period of 15 days had expired, the NCLAT had no jurisdiction to entertain the appeal, irrespective of the reasons for delay. It held that the appeal filed on 23 May 2022 was barred by limitation and that the order passed by the NCLAT condoning the delay was ultra vires.

Accordingly, the Supreme Court set aside the order passed by the NCLAT.

Top 20 Rulings of the Year 2025 On

Insolvency and Bankruptcy Code (IBC)

21

18. IBC Moratorium Does Not Exempt Mandatory Pre-Deposit Under RERA; Insolvency of One Project Gives No Such Benefit: HC Umang Realtech (P.) Ltd. vs. Mrs. Daphne Reita Rajan Sharma [2025] 170 taxmann.com 194 (Delhi) In the instant case, the appellant had filed an appeal against an order passed by the Real Estate Appellate Tribunal, which had dismissed the appellant’s application wherein attachment of a flat was offered in lieu of the mandatory pre-deposit required under section 43(5) of the RERA. The appellant contended that since the NCLT had admitted an application under section 7 against it and imposed a moratorium, insisting on a predeposit would be contrary to the spirit of the NCLT’s order.

The High Court noted that the insolvency resolution process was confined to only one of the projects undertaken by the appellant, which was not the project forming the subject matter of the proceedings before the Real Estate Appellate Tribunal. Accordingly, the appellant could not seek the benefit of the moratorium to claim exemption from making the statutory pre-deposit under section 43(5).

The Court further held that the requirement of making a pre-deposit as a condition precedent for hearing an appeal under section 43(5) had already been upheld by the Supreme Court. The provision does not permit any exemption from making the predeposit, nor does it allow substitution of the deposit with any form of security.

Accordingly, the High Court held that there was no merit in the appeal and dismissed the same.

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Top 20 Rulings of the Year 2025 On

Insolvency and Bankruptcy Code (IBC)

19. Resolution Plan Binds Only the CD and Does Not Stop Action on the Petitioner’s Mortgaged Property Under SARFAESI Ashok Harry Pothen vs. Authorised Officer [2025] 175 taxmann.com 631 (Kerala)/[2025] 256 COMP CASE 48 (Kerala) In the instant case, the petitioner had availed a loan from the respondent bank, which was secured by a mortgage over a property belonging to the petitioner. The petitioner had entered into a joint development agreement with a company known as ‘H’ in respect of the said property. Proceedings under the Insolvency and Bankruptcy Code were initiated against ‘H’, and a resolution plan was subsequently approved by the NCLT. Relying on the approval of the resolution plan, the petitioner filed the present writ petition contending that the joint development arrangement formed part of the resolution plan and, therefore, the respondent bank could not proceed against the mortgaged property under the provisions of the SARFAESI Act. The High Court noted that the bar against enforcement of claims outside the resolution plan operates only in respect of claims against the corporate debtor and does not extend to third parties merely because they had contractual arrangements with the corporate debtor.

The Court held that the respondent bank’s right to proceed against the mortgaged property of the petitioner was not affected by the resolution plan approved in respect of ‘H’, particularly when the bank was neither a party to the insolvency proceedings nor to the resolution plan. Accordingly, the Court held that there was no merit in the petitioner’s contention seeking restraint on SARFAESI proceedings merely on the basis of the resolution plan of ‘H’.

The writ petition was, therefore, dismissed.

Top 20 Rulings of the Year 2025 On

Insolvency and Bankruptcy Code (IBC)

23

20. PF Claim Based on Post-Moratorium Assessment Is Barred u/s 14(1) of IBC and Cannot Be Admitted in CIRP Employees’ Provident Fund vs. Jaykumar Pesumal Arlani, Resolution Professional of Decent Laminates (P.) Ltd. [2025] 171 taxmann.com 522 (NCLAT-New Delhi)/[2025] 188 SCL 133 (NCLAT-New Delhi) In the instant case, the corporate debtor was admitted to the corporate insolvency resolution process. During the subsistence of the moratorium under section 14 of the Insolvency and Bankruptcy Code, the appellant, Employees’ Provident Fund Organisation, initiated proceedings under section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 in respect of provident fund dues payable by the corporate debtor.

Thereafter, assessment orders under sections 7A, 14B and 7Q were passed against the corporate debtor.

The appellant filed an application before the NCLT seeking a direction to the resolution professional to admit the total claim towards provident fund dues. The NCLT rejected the application on the ground that the IBC is a time-bound process and that the claim had been filed at a belated stage, after approval of the resolution plan, and was therefore rightly rejected by the resolution professional.

The NCLAT held that after initiation of the moratorium under section 14, no assessment proceedings could be continued by the EPFO. It further held that while section 33(5) does not prohibit initiation or continuation of assessment proceedings after an order of liquidation is passed, the present case pertained to CIRP. Since the claims were based on assessments made subsequent to the commencement of the moratorium, such claims were hit by section 14(1) and could not be admitted in the CIRP. Accordingly, the NCLAT upheld the impugned order passed by the NCLT.

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Top 20 Rulings of the Year 2025 On

Insolvency and Bankruptcy Code (IBC)

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