Case Law Details
IDBI Bank Limited Vs Minwool Rock Fibres Limited (NCLT Cuttack)
The National Company Law Tribunal (NCLT), Cuttack Bench, considered an application filed by IDBI Bank Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Minwool Rock Fibres Limited for an alleged financial debt of Rs. 20,17,10,235.01. The amount comprised the decretal sum awarded by the Debts Recovery Tribunal (DRT) together with accrued interest, and the Financial Creditor relied upon the Recovery Certificate issued by the DRT as the basis for the date of default.
According to the Financial Creditor, the Corporate Debtor had obtained various credit facilities, including Letter of Credit, Bank Guarantee, Bill Discounting, and Cash Credit facilities, initially sanctioned in November 2006 and subsequently enhanced from time to time until the total exposure reached Rs. 9.75 crore by January 2013. To secure these facilities, the Corporate Debtor executed various facility documents, hypothecation agreements, supplemental deeds, demand promissory notes, omnibus counter guarantees, and personal guarantees. Certain shareholders also pledged their shares in favour of the bank.
The Financial Creditor stated that Bank Guarantees and Letters of Credit amounting to Rs. 3,68,51,529 were invoked, resulting in liability on the part of the Corporate Debtor. Following alleged failure to discharge these obligations, the bank recalled the facilities on 4 September 2015 and demanded repayment. Recovery proceedings were thereafter initiated before the Debts Recovery Tribunal-I, Hyderabad. On 20 April 2018, the DRT directed payment of Rs. 8,20,51,316.21 along with future interest at 14.50% per annum. Subsequently, Recovery Certificate No. 306 of 2022 was issued on 12 December 2022, followed by a demand notice dated 4 January 2023. Based on the DRT order and Recovery Certificate, the Financial Creditor claimed that the outstanding amount as on 1 December 2025 stood at Rs. 20,17,10,235.01, comprising the decretal amount and accrued interest. The Financial Creditor treated 12 December 2022, the date of issuance of the Recovery Certificate, as the date of default.
The Financial Creditor also relied upon One Time Settlement (OTS) proposals submitted by the Corporate Debtor on 16 September 2023 and 14 November 2023, contending that these proposals constituted acknowledgements of the outstanding liability. It further stated that the debt was secured through a first pari passu charge over the current assets and a second charge over the fixed assets of the Corporate Debtor. The bank also disclosed earlier company proceedings before the High Court of Chhattisgarh, stating that the previous petitions had either been withdrawn or dismissed and that, to its knowledge, the Corporate Debtor was not undergoing liquidation, CIRP, or winding-up proceedings when the present application was filed.
In its reply, the Corporate Debtor admitted having availed the credit facilities and acknowledged that they had been enhanced over time to Rs. 9.75 crore. However, it attributed its financial difficulties to prolonged operating cycles, industry slowdown, non-completion of projects, substantial business losses during the financial years 2013-14 and 2014-15, suspension of operations, power shortages during the Telangana agitation, expansion activities, increased turnover without corresponding enhancement of banking limits, and disruption in supplies. According to the Corporate Debtor, these circumstances ultimately led to classification of its account as a Non-Performing Asset during the financial year 2015-16.
The Corporate Debtor further referred to earlier liquidation proceedings initiated before the High Court of Chhattisgarh by other creditors. It stated that a Provisional Liquidator had been appointed during those proceedings but that one company petition was withdrawn following settlement, another was similarly disposed of after settlement, and a third was dismissed for want of prosecution in February 2023. The Corporate Debtor argued that the pendency of those proceedings adversely affected its ability to secure investors and obtain further financial assistance, and contended that its inability to repay resulted from adverse business conditions rather than deliberate default.
The Corporate Debtor also referred to its OTS proposal of 14 November 2023 offering Rs. 2 crore, which the bank rejected. It argued that the Insolvency and Bankruptcy Code could not be invoked merely as a recovery mechanism and contended that the present proceedings had been initiated primarily to recover dues and to exert pressure upon it without adequately considering the settlement proposal.
In its rejoinder, the Financial Creditor maintained that the Corporate Debtor’s explanation regarding business losses and commercial difficulties was irrelevant to determining the existence of financial debt and default. It relied upon the Corporate Debtor’s own admission regarding the credit facilities and asserted that commercial hardships did not negate the debt evidenced by the loan documents and other records. The Financial Creditor also submitted that the earlier company proceedings before the High Court did not affect its independent claim under the IBC, since those proceedings had either been withdrawn, disposed of, or dismissed.
The Financial Creditor further argued that the liability remained subsisting in view of the recall notice, DRT order, Recovery Certificate, demand notice, and OTS correspondence. It contended that the unaccepted OTS proposal neither resulted in settlement nor discharged the liability, while simultaneously constituting an acknowledgement of the outstanding debt. The bank also disputed the Corporate Debtor’s contention that the proceedings were merely for debt recovery.
On limitation, the Financial Creditor relied upon judicial precedents to submit that a Recovery Certificate issued by the DRT gives rise to a fresh cause of action for initiating proceedings under Section 7 of the IBC. It maintained that since the Recovery Certificate was issued on 12 December 2022 and the company petition was filed on 9 December 2025, the application had been filed within three years and was therefore within limitation. It also relied upon judicial precedent to contend that, for admission of a Section 7 application, the Adjudicating Authority is required only to determine the existence of financial debt and occurrence of default.
After hearing both parties and examining the record, the Tribunal observed that the Corporate Debtor had admittedly availed the various credit facilities and had not disputed execution of the facility documents, hypothecation deeds, guarantees, or pledge agreements. The Tribunal noted that the Corporate Debtor itself acknowledged the credit facilities and their enhancement up to Rs. 9.75 crore.
The Tribunal further observed that the DRT had already adjudicated the bank’s claim and directed payment of the decretal amount together with future interest, and that the Recovery Certificate had subsequently been issued. Since the existence of the DRT decree and Recovery Certificate was not disputed by the Corporate Debtor, the Tribunal found that these documents established the debt.
Addressing the Corporate Debtor’s defence regarding financial distress, the Tribunal held that while the circumstances described by the Corporate Debtor might explain its inability to repay, they did not extinguish the debt or negate the liability that had already been adjudicated. Accordingly, financial hardship could not constitute a defence against the existence of financial debt and default under Section 7 of the IBC.
The Tribunal also rejected the argument based on earlier winding-up proceedings before the High Court of Chhattisgarh. It observed that those proceedings had either been withdrawn, disposed of, or dismissed, and that no material had been produced to show that the debt owed to the Financial Creditor had been discharged or extinguished. Consequently, those proceedings did not affect the Financial Creditor’s independent right to invoke remedies under the Insolvency and Bankruptcy Code.
On the contention that the IBC proceedings were merely recovery proceedings, the Tribunal observed that the Financial Creditor had placed on record the facility documents, recall notice, DRT order, Recovery Certificate, and demand notice. It held that although the Code is not intended to substitute debt recovery proceedings, a Financial Creditor is entitled to invoke Section 7 once financial debt and default are established. The Tribunal held that the bank’s earlier recovery proceedings before the DRT did not deprive it of the statutory remedy available under the Code.
The Tribunal then considered limitation. It noted that the Financial Creditor had based its application upon the Recovery Certificate dated 12 December 2022, treated that date as the date of default, and filed the Section 7 application on 9 December 2025. Relying upon the Supreme Court decisions cited by the Financial Creditor, the Tribunal held that a Recovery Certificate gives rise to a fresh cause of action and that an application filed within three years from its issuance is maintainable. It therefore concluded that the present application was within limitation.
The Tribunal also found significance in the One Time Settlement proposals dated 16 September 2023 and 14 November 2023. Although the proposals had not been accepted by the bank, the Tribunal observed that they nevertheless reflected the Corporate Debtor’s acknowledgement of the outstanding liability and therefore supported the existence of the debt claimed by the Financial Creditor.
After considering the entire material on record, the Tribunal concluded that the Financial Creditor had successfully established the existence of a financial debt arising from the credit facilities extended to the Corporate Debtor. It noted that the debt had been adjudicated by the DRT and crystallized through the Recovery Certificate, while the Corporate Debtor had failed to produce any material showing repayment or discharge of the liability. The Tribunal held that the debt and default stood proved, the application was within limitation, and the objections raised by the Corporate Debtor did not constitute a valid defence to the maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code.
Accordingly, the Tribunal admitted the Section 7 application, appointed Arun Kishanlal Bagaria as the Interim Resolution Professional after noting that no disciplinary proceedings were pending against him, declared the moratorium under Section 14 of the IBC, directed commencement of the Corporate Insolvency Resolution Process, required the IRP to make the statutory public announcement and perform duties under the Code, directed the Financial Creditor to deposit Rs. 2,00,000 towards CIRP expenses, and issued consequential directions for communication of the order and conduct of the CIRP. The application was accordingly allowed.
FULL TEXT OF THE NCLT JUDGMENT/ORDER
This is an application filed by IDBI Bank Limited (“Financial Creditor”), under section 7 of the Insolvency and Bankruptcy Code, 2016 (the “Code”), against Minwool Rock Fibres Limited (“Corporate Debtor”), for an amount of 20,17,10,235.01/-(Rupees Twenty Crores Seventeen Lakh Ten Thousand Two Hundred and Thirty Five and paisa one only) as a Financial debt owed by the Corporate Debtor.
FACTS
The averments made by the Applicant in its consolidated amended application are summarised hereunder:
2.1. The present application has been filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by IDBI Bank Limited seeking initiation of Corporate Insolvency Resolution Process against Minwool Rock Fibres Limited on account of alleged default in repayment of various credit facilities availed by the Corporate Debtor.
2.2. The record reflects that the Corporate Debtor had approached the Applicant Bank for financial assistance, pursuant to which credit facilities comprising Letter of Credit, Bank Guarantee, Bill Discounting and Cash Credit facilities aggregating to Rs.4.50 Crores were sanctioned vide sanction letter dated 15.11.2006 and Facility Agreement dated 08.02.2007. The said facilities were subsequently enhanced and renewed from time to time, increasing the overall exposure to Rs.5 Crores on 24.04.2008, Rs.6.75 Crores on 21.01.2010, Rs.8.75 Crores on 22.07.2011 and Rs.9.75 Crores on 29.12.2012.
2.3. To secure the repayment obligations arising from the aforesaid facilities, the Corporate Debtor created security interests in favour of the Applicant Bank by executing an Agreement to Hypothecate Goods and Assets dated 08.02.2007 and subsequent supplemental deeds of hypothecation dated 24.05.2008, 25.01.2010, 26.07.2011 and 31.01.2013. Through these documents, all goods, book debts and other movable assets of the Corporate Debtor were hypothecated in favour of the Applicant Bank. The Corporate Debtor also executed Demand Promissory Notes from time to time acknowledging its liability towards the facilities extended by the Bank.
2.4. The pleadings further indicate that Omnibus Counter Guarantees were executed by the Corporate Debtor on 08.02.2007, 25.05.2008, 25.01.2010, 26.07.2011 and 31.01.2013, whereby the Corporate Debtor undertook to make payment of all amounts that may become due and payable under the facilities upon demand. Personal guarantees were also furnished by Shri S.G. Badruka, Shri Damodar Badruka and Shri R.K. Badruka through guarantee agreements executed from time to time in favour of the Applicant Bank. Further, certain shareholders of the Corporate Debtor created pledge over their shareholdings through pledge agreements executed on 23.03.2007 and subsequent extensions thereof.
2.5. It is stated that Bank Guarantees and Letters of Credit aggregating to Rs.3,68,51,529/- came to be invoked by the beneficiaries and the amounts thereunder became payable by the Corporate Debtor. Despite repeated demands, the Corporate Debtor allegedly failed to discharge its liability. Consequently, the Applicant Bank recalled the credit facilities vide letter dated 04.09.2015 and demanded payment of Rs.8,02,75,492.21 from the Corporate Debtor.
2.6. Upon failure of the Corporate Debtor to regularise the account, Original Application No. 1188 of 2015 was instituted before the Debts Recovery Tribunal-I, Hyderabad. The Debts Recovery Tribunal, Hyderabad, by order dated 20.04.2018, directed payment of Rs.8,20,51,316.21 together with future interest at the rate of 14.50% per annum from the date of filing of the Original Application until realization. Thereafter, Recovery Certificate No. 306 of 2022 was issued on 12.12.2022 for recovery of the said amount along with costs, expenses and interest, jointly and severally from the Corporate Debtor and the guarantors named therein. A consequential demand notice was also issued by the Recovery Officer on 04.01.2023 calling upon the judgment debtors to satisfy the decretal amount.
2.7. The application records that, on the basis of the DRT order dated 20.04.2018 and the Recovery Certificate dated 12.12.2022, the amount claimed to be in default as on 01.12.2025 is Rs.20,17,10,235.01, comprising the decretal amount of Rs.8,20,51,316.21 and accrued interest of Rs.11,96,58,918.80 calculated from 13.11.2015 till 01.12.2025. The date of default has been stated to be 12.12.2022, being the date of issuance of the Recovery Certificate.
2.8. The pleadings further disclose that the Corporate Debtor had addressed One Time Settlement proposals dated 16.09.2023 and 14.11.2023 to the Applicant Bank, which have been relied upon as acknowledgements of the outstanding liability.
2.9. With regard to security, the Applicant has stated that a first pari passu charge was created over the current assets of the Corporate Debtor along with UCO Bank and a second charge was created over the fixed assets of the Corporate Debtor securing repayment of the facilities. The charge was originally created on 08.02.2007 and subsequently modified on 25.01.2010.
2.10. The applicant also places on record the earlier proceedings initiated before the High Court of Chhattisgarh, Bilaspur, including Company Petition Nos. 04 of 2014, 03 of 2015 and 17 of 2015. It has been stated that Company Petition No. 04 of 2014 was dismissed as withdrawn, Company Petition No. 03 of 2015 was withdrawn and disposed of, and Company Petition No. 17 of 2015 was dismissed for want of prosecution. Though the status of the Corporate Debtor is reflected as “Under Liquidation” on the MCA portal, it has been asserted that, to the best of the Applicant’s knowledge, the Corporate Debtor is neither undergoing liquidation nor any corporate insolvency resolution process or winding-up proceedings as on the date of filing of the present application.
2.11. It is further stated that the record of default from the Information Utility would be placed before this Tribunal upon availability of the same.
3. The contentions of the Respondent/ Corporate Debtor in its reply have been summarised hereunder:
3.1. It is noted that the Corporate Debtor was incorporated on 02.08.1988 in the District of Rajnandgaon, Chhattisgarh, and was engaged in the manufacture of mineral wool products. The reply further records that the Corporate Debtor subsequently diversified its business activities by establishing a manufacturing facility for mineral fibre ceiling tiles at Hyderabad in technical collaboration with CEP Ceiling, United Kingdom, and also undertook turnkey contracts relating to the design, supply and application of insulation systems.
3.2. The Corporate Debtor has admitted availing various credit facilities from the Applicant Bank, including Letter of Credit/ Bank Guarantee facilities, Bill Discounting facilities and Cash Credit limits aggregating to Rs.4.50 Crores pursuant to the sanction letter dated 15.11.2006 and Facility Agreement dated 08.02.2007. It is further noted that the facilities were renewed and enhanced from time to time up to January 2013, resulting in the aggregate exposure being increased to Rs.9.75 Crores.
3.3. Attention has been drawn to the circumstances that allegedly resulted in financial distress of the Corporate Debtor. The reply records that the Corporate Debtor incurred losses of approximately Rs.6.01 Crores during the Financial Year 2013-14 and Rs.17.97 Crores during the Financial Year 2014-15 owing to prolonged operating cycles, slowdown in the industry, non-completion of projects and consequential write-offs. It is further stated that operations at both manufacturing units were suspended, affecting recoveries and cash flows. Reference has also been made to power shortages during the Telangana agitation, capacity expansion undertaken in Chhattisgarh, increase in turnover without corresponding enhancement of banking limits and disruption in supplies, all of which are stated to have contributed to deterioration of the account and its eventual classification as a Non-Performing Asset during the Financial Year 2015-16.
3.4. It is further observed that liquidation proceedings had earlier been initiated against the Corporate Debtor before the Hon’ble High Court of Chhattisgarh, Bilaspur, in separate company petitions instituted by IFCI Venture Capital Fund Limited, Consumer Care Parity and Mr. Giriraj Ratan Damani. The said proceedings were subsequently clubbed, and a Provisional Liquidator was appointed by order dated 10.05.2016. The reply further records that Company Petition No. 4 of 2014 was withdrawn pursuant to settlement, Company Petition No. 3 of 2015 was similarly disposed of after settlement, and Company Petition No. 17 of 2015 came to be dismissed for want of prosecution by order dated 28.02.2023.
3.5. The Corporate Debtor has also stated that the pendency of liquidation proceedings from the year 2016 adversely affected its ability to attract investors and secure additional financial assistance. According to the reply, despite exploring various avenues to overcome its financial difficulties, repayment obligations could not be met owing to circumstances beyond its control. It is therefore contended that the default was occasioned by adverse business conditions rather than any deliberate conduct on the part of the Corporate Debtor.
3.6. The reply further records that a One Time Settlement proposal dated 14.11.2023 for an amount of Rs.2 Crores was submitted to the Applicant Bank, which was subsequently declined. Reference has been made to the said proposal to indicate that efforts were undertaken to resolve the outstanding liability.
3.7. It is also contended that the present proceedings have been instituted primarily for recovery of dues and that the Insolvency and Bankruptcy Code, 2016 cannot be invoked as a substitute for recovery proceedings. Reliance has been placed on the settled principle that insolvency proceedings are intended for resolution of insolvency and not for debt recovery. The reply further alleges that the present application was initiated without proper consideration of the One Time Settlement proposal and has been filed with the intention of exerting pressure upon the Corporate Debtor.
4. The submissions made by the Applicant its rejoinder have been summarised hereunder:
4.1. It is noted that the background particulars relating to the business operations of the Corporate Debtor have been stated to be irrelevant for determination of the existence of financial debt, occurrence of default, and maintainability of the present proceedings.
4.2. It is further observed that the Financial Creditor has relied upon the admissions contained in the reply regarding availing of various credit facilities from the Applicant Bank and has asserted that such admissions support the case set out in the Company Petition. The explanation offered by the Corporate Debtor regarding business losses, industry slowdown, suspension of operations, power shortages and other commercial difficulties has been disputed on the ground that such circumstances do not negate the existence of the financial debt or the default evidenced by the documents placed on record.
4.3. With regard to the earlier company proceedings before the Hon’ble High Court of Chhattisgarh, it is noted that the Applicant has pointed out that the same were already disclosed in the Company Petition. It has further been contended that withdrawal, disposal or dismissal of proceedings initiated by other creditors does not affect the independent claim of the Applicant arising out of the financial facilities extended to the Corporate Debtor.
4.4. The rejoinder further records that the present proceedings arise from the continuing default committed by the Corporate Debtor despite recall of the credit facilities, adjudication of the debt by the Debts Recovery Tribunal, issuance of the Recovery Certificate and service of consequential demand notices. Reference has been made to the recall notice, the DRT order, the Recovery Certificate and the demand notice to support the subsisting liability of the Corporate Debtor.
4.5. Attention has also been drawn to the One Time Settlement proposals relied upon by the Corporate Debtor in its reply. It is noted that the Applicant has stated that the proposal for settlement of Rs.2 Crores was merely an offer made by the Corporate Debtor and was never accepted by the Bank. According to the Applicant, the proposal did not result in any concluded settlement, novation or discharge of the outstanding liability. At the same time, the Applicant has relied upon the OTS correspondence as constituting an acknowledgment of the subsisting debt owed by the Corporate Debtor.
4.6. The contention that the present proceedings amount to a recovery action has also been disputed. In this regard, reliance has been placed upon the recall notice dated 04.09.2015, the order dated 20.04.2018 passed by the Debts Recovery Tribunal- 1, Hyderabad, the Recovery Certificate dated 12.12.2022, the demand notice dated 04.01.2023 and the subsequent OTS correspondence to demonstrate the existence of financial debt and default. It is further noted that the inability of the Corporate Debtor to discharge its liabilities or the existence of claims by other creditors has been stated to be immaterial to the maintainability of the present petition.
4.7. A substantial part of the rejoinder is devoted to the issue of limitation. The Applicant has relied upon the judgments of the Hon’ble Supreme Court in Dena Bank (now Bank of Baroda) v. C. Shivakumar Reddy & Anr. [(2021) 10 SCC 330J, and Kotak Mahindra Bank Ltd. v. A. Balakrishnan [(2022) 9 SCC 186], as well as the judgment of the Hon’ble NCLAT in Virigineni Anfaiah v. Prithvi Asset Reconstruction and Securitization. Company Ltd. [Company Appeal (AT)(CH)(Ins.) No. 224/2022], to contend that a Recovery Certificate issued by the Debts Recovery Tribunal gives rise to a fresh cause of action and constitutes a financial debt for the purposes of Section 7 of the Code. It has been emphasized that an application under Section 7 filed within three years from the date of issuance of the Recovery Certificate is maintainable and within limitation.
4.8. The Applicant has also relied upon the recent judgment of the Hon’ble Supreme Court in Catalyst Trusteeship Ltd. v. Ecstasy Realty Pvt. Ltd. [2026 INSC 186 (Civil Appeal No. 7424 of 2025], to contend that, for admission of an application under Section 7 of the Code, the Adjudicating Authority is only required to ascertain the existence of financial debt and occurrence of default, and that disputes raised by the Corporate Debtor do not constitute a valid defence where such debt and default stand established.
4.9. It is further noted that reliance has been placed on the financial facilities granted to the Corporate Debtor, the order dated 20.04.2018 passed by the Debts Recovery Tribunal-I, Hyderabad in O.A. No. 1188 of 2015, the Recovery Certificate dated 12.12.2022 issued in RC No. 306 of 2022, the demand notice dated 04.01.2023 and the OTS proposals dated 16.09.2023 and 14.11.2023. The amount claimed to be in default has been stated as Rs.20,17,10,235.01 as on 01.12.2025, while the date of default has been stated as 12.12.2022, being the date of issuance of the Recovery Certificate. It has further been pointed out that the present Company Petition was instituted on 09.12.2025, i.e., within three years of issuance of the Recovery Certificate.
4.10. On the basis of the aforesaid facts, documents and judicial precedents, the Applicant has maintained that the existence of financial debt and occurrence of default stand duly established, that the present proceedings are ‘within limitation, and that the objections raised in the reply do not constitute a valid defence to the petition under Section 7 of the Code. Accordingly, admission of the Company Petition and initiation of Corporate Insolvency Resolution Process against the Corporate Debtor have been sought.
ANALYSIS AND FINDINGS
5. We have heard the learned counsels for the applicant as well as for the respondent and perused the materials available on record. After the careful perusal of the materials placed on record by both the parties the following observations have been made:
5.1. The record reveals that the Corporate Debtor had admittedly availed various credit facilities from the Applicant Bank under the sanction letter dated 15.11.2006 and Facility Agreement dated 08.02.2007, which facilities were subsequently enhanced and renewed from time to time. The execution of the facility documents, hypothecation deeds, counter guarantees, personal guarantees and pledge agreements has not been disputed. In fact, the reply filed by the Corporate Debtor acknowledges availing of the credit facilities and the enhancement thereof up to Rs.9.75 Crores.
5.2. The material on record further establishes that upon invocation of the Bank Guarantees and Letters of Credit, the Applicant recalled the facilities and initiated recovery proceedings before the Debts Recovery Tribunal-I, Hyderabad. The Debts Recovery Tribunal, by order dated 20.04.2018 in O.A. No. 1188 of 2015, adjudicated the claim of the Applicant and directed payment of Rs.8,20,51,316.21 together with future interest at the rate of 14.50% per annum from the date of the application until realization. Pursuant thereto, Recovery Certificate No. 306 of 2022 came to be issued on 12.12.2022 for recovery of the said amount along with applicable costs and interest. The existence of the DRT decree and the Recovery Certificate is not disputed by the Corporate Debtor.
5.3. The principal defence raised by the Corporate Debtor pertains to the financial difficulties faced by it on account of industry slowdown, losses suffered during Financial Years 201314 and 2014-15, suspension of operations, power shortages and other commercial factors. While the Tribunal takes note of the circumstances narrated by the Corporate Debtor, such factors do not have the effect of extinguishing the debt or negating the liability already adjudicated by a competent forum. The existence of financial hardship may explain the inability to repay but cannot constitute a defence to the existence of debt and default under Section 7 of the Code.
5.4. The Corporate Debtor has also referred to the winding-up proceedings previously instituted before the Hon’ble High Court of Chhattisgarh by other creditors. However, the record indicates that the said proceedings either came to be withdrawn, disposed CP(IB) No. 60/CB/2025 of, or dismissed for want of prosecution. No material has been placed before this Tribunal to demonstrate that the debt due to the Applicant stood discharged, satisfied or otherwise extinguished on account of those proceedings. Consequently, the earlier winding-up proceedings do not affect the Applicant’s independent right to pursue remedies available under the Code. 5.5. The contention that the Applicant has invoked the provisions of the Code merely as a recovery mechanism also does not merit acceptance. The Applicant has placed on record the facility documents, recall notice, DRT order, Recovery Certificate and consequential demand notice. The Hon’ble Supreme Court has repeatedly held that while the Code is not intended to be a substitute for recovery proceedings, a financial creditor is entitled to invoke Section 7 upon establishing the existence of financial debt and occurrence of default. The mere fact that the Applicant has earlier pursued recovery proceedings before the Debts Recovery Tribunal does not denude it of the statutory remedy available under the Code.
5.6. The issue of limitation also requires consideration. The Applicant has founded the present proceedings on the Recovery Certificate dated 12.12.2022 and has pleaded the date of default as 12.12.2022. The present Company Petition has been filed on 09.12.2025. The Hon’ble Supreme Court in Dena Bank (now Bank of Baroda) v. C. Shivakumar Reddy, and subsequently in Kotak Mahindra Bank Ltd. v. A. Balakrishnan, has authoritatively held that a Recovery Certificate gives rise to a fresh cause of action and that an application under Section 7 filed within three years from the date of issuance of the Recovery Certificate would be maintainable. Applying the aforesaid principle, the present petition, having been filed within three years from 12.12.2022, cannot be held to be barred by limitation.
5.7. The One Time Settlement proposals dated 16.09.2023 and 14.11.2023 relied upon by both parties also assume significance. Although the settlement proposal was admittedly not accepted by the Applicant Bank, the correspondence nevertheless reflects acknowledgment of the outstanding liability by the Corporate Debtor. Such acknowledgment lends further support to the existence of the debt claimed by the Applicant.
5.8. On an overall consideration of the material placed on record, this Tribunal is satisfied that the Applicant has established the existence of a financial debt arising from the credit facilities extended to the Corporate Debtor. The debt stands crystallized and adjudicated by the order of the Debts Recovery Tribunal and the Recovery Certificate issued pursuant thereto. The Corporate Debtor has failed to place any material demonstrating repayment or discharge of the said liability. The occurrence of default is therefore established.
5.9. Accordingly, this Tribunal is of the considered view that the debt and default stand duly proved, the present application is within limitation, and the objections raised by the Corporate Debtor do not constitute a valid defence to the maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.
6. The Petitioner has proposed the name of IRP Arun Kishanlal Bagaria, having Registration No. IBBI/IPA-002/IP-N00278/2017-18/ 10836, 701 Stanford, Junction of S V Road and CD Burfiwala Marg, Andheri West, Mumbai-400058.There is nothing on record to show that any disciplinary proceeding is pending against the proposed IRP. This application is defect free.
7. In view of the aforesaid observations, we hereby admit the petition and pass the following Orders:
7.1. The Petition bearing CP (IB) No. 60/CB/2025 filed by IDBI Bank under Section 7 of the Code read with rule 4(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiating CIRP against MINWOOL Roots AND FIBERS PRIVATE LIMITED [CIN: U36104CT1988PLC004711], the Corporate Debtor, stands ADMITTED.
7.2. The moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016, is declared for prohibiting the following actions in terms of section 14(1) of the Code:
7.2.1.The institution of suits or continuation of pending suits or proceedings against the CD, including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
7.2.2.Transferring, encumbering, alienating or disposing of by the CD any of its assets or any legal right or beneficial interest therein;
7.2.3. Any action to foreclose, recover or enforce any security interest created by the CD in respect of its property, including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security interest Act, 2002;
7.2.4.The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the CD.
7.2.5. The moratorium shall remain in force from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves a resolution plan under section 31(1) of the code or passes an order for liquidation of the CD under Section 33 of the Code, whichever is earlier.
7.3. We hereby appoint Mr. Arun Kishanlal Bagaria, having Registration No. IBBI/IPA-002/IP-N00278/2017-18/10836, 701 Stanford, Junction of S V Road and CD Burfiwala Marg, Andheri West, Mumbai-400058, as the Interim Resolution Professional (IRP) in terms of Section 16(4) of the Code. The IRP has filed his written consent as per Form-2 and has affirmed that no disciplinary proceedings are pending against him. The IRP has also filed his Certificate of Registration along with the Authorisation for Assignment (AFA), issued by the ICSI, which is valid from 01.07.2025 to 31.12.2026.
7.4. The IRP may be appointed as RP by CoC separately in accordance with the provisions of the Code and the rules and regulations made thereunder, subject to confirmation of possession of a valid Authorisation for Assignment in terms of Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, at the time of making such an appointment.
7.5. The IRP so appointed shall make a public announcement of initiation of Corporate Insolvency Resolution Process (CIRP) and call for submission of claims in terms of Section 15 read with section 13(1) (b) of the Code.
7.6. The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated, suspended, or interrupted during the moratorium period. The CD shall extend full assistance and co-operation to the IRP in discharge of his duties as and when he takes charge of the assets and management of the CD.
7.7. The IRP shall perform all its functions as contemplated, inter alia, by sections 17, 18, 20 & 21 of the Code. It is further made clear that all personnel connected with CD, its Promoter or any other person associated with the management of the CD are under a legal obligation under Section 19 of the Code to extend every assistance and co-operation to the IRP. Where any personnel of the CD, its Promoter, or any other person is required to assist or co-operate with IRP, but does not assist or co-operate, the IRP is at liberty to make an appropriate application to this Adjudicating Authority with a prayer for passing an appropriate order.
7.8. The IRP shall be under duty to protect and preserve the value of the property of the ‘Corporate Debtor’ and manage the operations of the Corporate Debtor as a going concern as a part of obligation imposed by section 20 of the Insolvency & Bankruptcy Code, 2016.
7.9. The IRP/RP shall submit periodic progress reports before this Adjudicating Authority in accordance with the provisions of the Code and the regulations framed thereunder.
7.10. The Financial Creditor shall deposit a sum of Rs.2,00,000/- (Rupees Two Lakhs only) within 3 days from the date of receipt of this order towards the expenses of the CIRP. Proof of such deposit shall be filed before this Adjudicating Authority along with the first progress report. The IRP shall be at liberty to seek further interim finance, as required, in accordance with law.
7.11. In terms of section 7(7)(a) of the Code, the Registry is hereby directed to communicate a copy of this order to the Financial Creditor, Corporate Debtor, the Interim Resolution Professional and the concerned Registrar of Companies, within seven (7) working days and upload the same on the website of this Adjudicating Authority immediately after pronouncement of the order.
7.12. The IRP shall also serve a copy of this order upon statutory authorities including the Income Tax Department, GST authorities, State commercial Tax Department, Provident Fund authorities and such other authorities as may have claims against the Corporate Debtor, as well as employees or workmen associations, if any.
7.13. The Corporate Insolvency Resolution Process shall commence from the date of this order.
7.14. The Resolution Professional shall submit reports and compliances before this Adjudicating Authority strictly in accordance with the timelines prescribed under the Code and the regulations made thereunder.
8. Hence, the present application CP(IB) No. 60/CB/2025 stands ALLOWED.
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