Authority: National Company Law Appellate Tribunal (NCLAT) Principal Bench, New Delhi

Order Date: 12 October 2026

Case Overview

This appeal, filed under Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016, arises from an order dated 20.08.2026 passed by the National Company Law Tribunal (NCLT), Ahmedabad Bench (the Adjudicating Authority) in IA No. 709 (AHM) 2025 in CP (IB) No. 238 of 2023. The appellant, M/s. Ichhapore Textile Park Limited, challenged the NCLT order which held that a payment of ₹3.30 crore from the Corporate Debtor, Girdhari International Pvt. Ltd., to the appellant fell within the scope of Section 66(1) of the IBC. The NCLT had consequently directed the appellant to contribute ₹3,30,00,000/- along with interest to the assets of the Corporate Debtor.

The dispute centers on payments aggregating ₹3.30 crore made by the Corporate Debtor to the appellant on 10.11.2022 (₹1,55,00,000), 11.11.2022 (₹1,45,00,000), and 02.12.2022 (₹30,00,000). The appellant contends these were bona fide part-payments under a Sub-Lease Agreement dated 02.12.2022 for 36 flats in the appellant's Sayan Textile Park project in Ichhapore, Surat. The Corporate Insolvency Resolution Process (CIRP) against Girdhari International commenced on 29.02.2024, over a year after these payments.

Based on a Transaction and Forensic Audit Report, the Respondent Resolution Professional (RP) for Girdhari International filed an application seeking reversal of the transaction. The NCLT, in its impugned order, found the transaction fraudulent. Key reasons included: a substantial payment (approx. ₹3 crore) was made before the execution of the sub-lease agreement; the agreement was on the appellant's letterhead in Gujarati and not on stamp paper; and the appellant accounted for the ₹3.30 crore receipt as a 'Long-Term Unsecured Loan' in its financial statements for FY ending 31.03.2023, 2024, and 2025, rather than as income or an advance, suggesting it was a deposit/loan and an asset of the Corporate Debtor.

The appellant's primary contention is that the NCLT erred in invoking Section 66(1) without establishing the statutory twin conditions: (1) that the business of the Corporate Debtor was carried on with intent to defraud creditors, and (2) that the appellant was knowingly a party to carrying on the business in such a manner. The appellant argues it is an independent third party with no connection to the Corporate Debtor's management and that the transaction was genuine. It cited judgments like Rakshit Dhirajlal Doshi and Nalinesh Kumar Paurush to emphasize the high burden of proof required for Section 66. The appellant also relied heavily on the Supreme Court's judgment in Gluckrich Capital Pvt. Ltd. Vs. The State of West Bengal & Ors., arguing that a remedy against a third party is not available under Section 66 of the IBC and that the RP must pursue civil remedies instead.

The Respondent RP contested this, arguing that Section 66(1) applies to "any persons who were knowingly parties" to fraud, not just related parties. The RP cited NCLAT judgments like Shri Baiju Trading and Investment Pvt. Ltd. and Tridhaatu Kirti Developers LLP where third parties were held liable under Section 66. The RP also argued that the Gluckrich judgment was distinguishable and had been watered down by subsequent rulings like Royal India Corporation Limited.

Final Outcome

The NCLAT bench, comprising Justice Mohammad Faiz Alam Khan (Member-Judicial) and Arun Baroka (Member-Technical), declined to express a final opinion on the merits of the appeal or the applicability of the Gluckrich precedent at this interim stage. It found that the material on record, including the accounting treatment and timing of payments, required a fuller examination to determine if the ingredients of Section 66(1) were satisfied. Consequently, the appellant's application (I.A. No. 6762 of 2026) for an interim stay of the NCLT's order was rejected. The NCLAT directed the Respondent RP to file a counter-affidavit within two weeks, allowed the appellant to file a rejoinder two weeks thereafter, and listed the matter for further hearing on 18.11.2026. The observations made were stated to be prima facie and would not prejudice the final adjudication.

Topics: Insolvency Litigation, Fraudulent Trading, Third-Party Liability