Restoration Of Plea U/S 7 Of IBC Not Permissible After Payment Of Principal & Interest By Corporate Debtor Upon NCLT's Order: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that Once the principal amount mentioned in Part IV of the application under Section 7 of the IBC along with interest is paid in pursuance of an order of the NCLT, the financial creditor cannot seek restoration of the application merely on the ground that interest on the entire principal amount was not paid, which crossed 1 crore; therefore, the NCLT should have restored the application. These two appeals have been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by National Company Law Tribunal (NCLT) New Delhi by which it dismissed an application seeking restoration of the petition under section 7 of the IBC over non-payment of pendente lite interest. The Appellant submitted that the Corporate Debtor having agreed to pay the pendente lite interest, has paid only Rs.46 Lakhs rather the entire interest amount was amount more than Rs.1 Crore. The Adjudicating Authority ought to have restored Section 7 application. Per contra, the Respondent submitted that the interest paid by the Corporate Debtor was pendente lite interest on the principal amount which was claimed in the Part IV and the Appellant is now claiming pendente lite interest for the entire Part IV amount, which is not permissible. The Tribunal agreed with the findings of the Adjudicating Authority that since the entire part IV amount along with interest to the tune of Rs. 46 Lakhs had already been paid, there was no ground to revive the application under section 7 of the IBC. Once the principal amount and interest are paid in proceedings under section 7 of the IBC, insolvency proceedings cannot be initiated. If the Appellant claims entitled to additional interest, it may pursue the relevant remedies available in law. Accordingly, the present appeals were dismissed. Case Title: Campbell Advertising Pvt. Ltd. Versus Vipul Ltd. Case Number: Company Appeal (AT) (Insolvency) No. 1407 of 2025 & I.A. No. 5503 of 2025 Judgment Date: 12/09/2025 Click Here To Read/Download The Order

Restoration Of Plea U/S 7 Of IBC Not Permissible After Payment Of Principal & Interest By Corporate Debtor Upon NCLT's Order: NCLAT

Mohd Malik Chauhan

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