Girish Maganlal Limbachiya Vs Dharmil R Mеhtа & Ors. (NCLAT Delhi)
The National Company Law Appellate Tribunal (NCLAT) in Delhi has set aside an order that initiated insolvency proceedings against a Corporate Debtor, following the full repayment of the outstanding debt. The case, Girish Maganlal Limbachiya Vs Dharmil R Mehta & Ors., centered on an appeal against a June 26, 2025, NCLT order that had admitted an insolvency application under Section 7 of the Insolvency and Bankruptcy Code (IBC).
The appellant, representing the Corporate Debtor, argued that the Financial Creditor had claimed a principal amount of ₹1.6 crore, which, with interest, totaled over ₹2.43 crore. The appellant claimed that they had offered to pay the full amount during the NCLT proceedings, but the Financial Creditor refused to accept it. During the NCLAT appeal, the appellant reiterated their readiness to pay the entire amount, including a revised interest, totaling ₹2.62 crore.
On July 10, 2025, the NCLAT issued an interim order directing a halt to further steps in the insolvency process while the payment was being facilitated. The Financial Creditor subsequently informed the Tribunal that they had received the full amount via bank draft and RTGS.
The NCLAT’s final decision hinged on the fact that the debt had been cleared. The tribunal reasoned that since the entire amount claimed in the Section 7 application was no longer pending, the grounds for initiating insolvency proceedings no longer existed. The NCLAT noted that the Corporate Debtor’s previous offer to pay, which was refused by the Financial Creditor, and the eventual settlement during the appeal, made the continuation of the Corporate Insolvency Resolution Process (CIRP) inappropriate. Consequently, the NCLAT disposed of the appeal, thereby closing the CIRP against the Corporate Debtor. This judgment underscores the principle that the primary objective of the IBC is debt resolution, and once the debt is settled, the purpose of insolvency proceedings is fulfilled.
