Pending NCLAT Appeal Bars Parallel IBC Writ Intervention: Gujarat High Court

Takshashila Resicom Private Limited Vs Sheth Fincap Services Private Limited (Gujarat High Court)

Summary: The Gujarat High Court, in Takshashila Resicom Private Limited & Ors. Vs M/s Sheth Fincap Services Private Limited & Ors., dismissed a writ petition challenging the initiation of corporate insolvency resolution proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, holding that the existence of an already-invoked statutory appellate remedy before the National Company Law Appellate Tribunal (NCLAT), coupled with the absence of exceptional circumstances, justified refusal to exercise writ jurisdiction. The Court clarified that although the existence of an alternative statutory remedy does not absolutely bar a writ petition under Article 226 of the Constitution of India, the High Court ordinarily exercises judicial restraint where the same issues are pending before the competent appellate forum.

The dispute arose from financial transactions between the petitioner companies and M/s Sheth Fincap Services Private Limited. A loan agreement dated 15 March 2024 involved disbursement of ₹11 crore, secured through mortgage of 38 units. Subsequently, a supplementary loan agreement dated 21 March 2025 renewed ₹5.23 crore, with additional security comprising 30 units. Following disputes concerning repayment, interest and penal charges, the financial creditor initiated proceedings before the NCLT, Ahmedabad. The amount claimed as outstanding as on 30 April 2026 was ₹7,40,33,665, comprising principal of ₹5.23 crore, interest of ₹80,03,440, penal charges of ₹1,37,28,750 and cheque-bounce charges of ₹1,475. The Tribunal’s subsequent admission orders resulted in initiation of CIRP and appointment of an Interim Resolution Professional.