Deepak Modi Vs Shalfeyo Industries Private Limited (NCLAT Delhi)
Summary: NCLAT, Principal Bench, New Delhi disposed of the appeal and directed closure of the CIRP of Shalfeyo Industries Private Limited, subject to the appellant paying Rs.18 lakhs to the Operational Creditor, Prime Impex, within two weeks as full and final settlement and paying the CIRP costs to be determined by the Adjudicating Authority. The CIRP had commenced on 16.08.2022 on Prime Impex’s Section 9 application involving an operational debt of approximately Rs.11.90 lakhs. Axis Bank Limited was the sole Financial Creditor with a claim of approximately Rs.1.04 crore. During the CIRP, the Financial Creditor’s exposure was fully discharged, while attempts were made to settle the Operational Creditor’s claim.
The appellant, a suspended director, had sought withdrawal under Section 12A of the Insolvency and Bankruptcy Code, 2016 read with Regulation 30A of the CIRP Regulations. NCLT dismissed that application on 18.12.2024 because it had been filed by the suspended director rather than through the Resolution Professional and lacked the prescribed approval/procedural compliance. NCLAT noted that the statutory requirements could not ordinarily be ignored and that the proceedings could not simply be closed by allowing the defective Section 12A application.
However, material subsequent developments had changed the factual position. The appellant filed an affidavit dated 29.07.2026 undertaking to settle the creditors and pay the CIRP costs as ultimately determined by NCLT. His offer to Prime Impex was subsequently enhanced from Rs.17 lakhs to Rs.18 lakhs during the hearing on 05.08.2026, which the Operational Creditor accepted as full and final settlement. Axis Bank stated that its entire exposure had already been discharged and it had no subsisting financial claim. NCLAT found that there was no other creditor, no resolution plan was available, the appellant had undertaken to pay the CIRP costs, and the process had reached a procedural stalemate because the CIRP costs had not yet crystallised and consequently the amount of the bank guarantee required with Form FA could not be determined. The Tribunal observed that keeping the CIRP alive would serve no useful purpose and would cause further wastage of time and increase in CIRP costs.
