New Delhi, Sep 7 (PTI) Appellate tribunal NCLAT on Monday allowed closure of the Corporate Insolvency Resolution Process (CIRP) against Shalfeyo Industries Pvt Ltd on account of the settlement of all creditors’ claims.
A three-member bench held that all creditors’ claims stood settled or were in the process of being settled. The bench noted that Shalfeyo Industries’ suspended director has made full payment to its financial creditor, Axis Bank, and is willing to make a payment of Rs 17 lakh to the Operational Creditor as full and final settlement.
“We are of the view that in the peculiar circumstances of the present case, continuation of the CIRP would serve no meaningful purpose and would only result in further wastage of precious resources,”
said the National Company Law Appellate Tribunal (NCLAT).
NCLAT was hearing an appeal filed by Deepak Modi, suspended director of the Jaipur-based company, against the order of the Jaipur-bench of the National Company Law Tribunal (NCLT).
NCLT had on December 18, 2024, dismissed his plea for withdrawal of the CIRP under Section 12A of the Insolvency and Bankruptcy Code (IBC) on technical grounds.
The insolvency proceedings were initiated against Shalfeyo Industries in August 2022 on an application by operational creditor Prime Impex over dues of about Rs 11.9 lakh. Axis Bank was the sole financial creditor with a claim of around Rs 1.04 crore.
The NCLAT observed that no resolution plan was available for the corporate debtor and that keeping the CIRP alive would only result in a further increase in insolvency resolution costs.
It also noted that the insolvency proceedings had reached a “procedural stalemate” because the statutory withdrawal mechanism under Section 12A and Regulation 30A could not be completed as the insolvency costs had not yet been determined and the operational creditor was unwilling to furnish a bank guarantee linked to those costs.
NCLAT said the “appellant would pay the CIRP costs as determined by the Adjudicating Authority (NCLT) within two weeks from the order”.
Allowing the appeal, the NCLAT directed closure of the CIRP subject to the appellant paying Rs 18 lakh to Prime Impex within two weeks as full and final settlement.
It also directed the NCLT to determine the CIRP costs within four weeks and ordered the appellant to pay those costs within two weeks of such determination. PTI KRH SHM
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