Case Overview

The judgment disposes of five consolidated appeals arising from insolvency proceedings against KKSPUN India Limited, a MSME company engaged in manufacturing precast concrete products for infrastructure projects. The main appeal (Company Appeal (AT) (Ins.) No. 1015 of 2025) was filed by Mr. Kavish Gupta, Suspended Director of KKSPUN India Limited, challenging the order dated 11.07.2025 passed by NCLT New Delhi Bench-IV in CP (IB) No. 36/ND/2024. This order had admitted the Section 7 application filed by Yes Bank Limited and initiated Corporate Insolvency Resolution Process (CIRP) against KKSPUN India, appointing Mr. Harvinder Singh as Interim Resolution Professional.

The other four appeals challenged procedural orders passed during the CIRP proceedings:

  • Appeal No. 812/2025: Against dismissal of restoration application for recall of orders dated 19.03.2025 and 02.04.2025 in SBI's Section 7 proceedings
  • Appeal No. 813/2025: Against dismissal of recall application for same orders in SBI's proceedings
  • Appeal No. 815/2025: Against dismissal of recall application for orders dated 19.03.2025 and 02.04.2025 in Yes Bank's proceedings
  • Appeal No. 816/2025: Against dismissal of restoration application for recall of same orders in Yes Bank's proceedings

The corporate debtor had outstanding debts of Rs. 32.57 crores to Yes Bank (declared NPA on 05.08.2022) and Rs. 190.49 crores to State Bank of India (declared NPA on 10.08.2022). The appellants contended that the admission order was passed without effective hearing opportunity and despite advanced-stage settlement negotiations under Sections 230-232 of Companies Act, 2013 with consortium lenders.

Key allegations included denial of natural justice, suppression of material facts regarding ongoing settlement negotiations, and conflict of interest since the Committee of Creditors consisted of banks against whom KKSPUN had filed a counterclaim of approximately Rs. 817 crores before Debt Recovery Tribunal-III, New Delhi. The corporate debtor also claimed arbitral receivables of nearly Rs. 1200 crores against government authorities.

The tribunal examined the procedural history showing multiple opportunities were granted to the corporate debtor between April 2024 and April 2025, including several adjournments and opportunities to file written submissions. The settlement proposal of Rs. 83 crores submitted on 30.01.2025 failed because the corporate debtor didn't make any upfront payment.

Final Outcome

The NCLAT dismissed all five appeals, upholding the NCLT's admission order. The tribunal found:

1. No violation of natural justice principles as the corporate debtor was granted sufficient opportunities to present its case

2. Debt and default were clearly established through loan documents, NPA declarations, NeSL records, and the corporate debtor's own settlement proposals and balance sheet acknowledgments

3. Pending settlement negotiations under Section 230 of Companies Act cannot override the mandatory provisions of IBC once debt and default are established

4. The pendency of counterclaim before DRT does not affect the maintainability of Section 7 application under IBC

5. The discretionary power under Section 7 cannot be exercised to defeat the object of IBC when statutory requirements are satisfied

The tribunal relied on precedents including Innoventive Industries Ltd. v. ICICI Bank Ltd., E.S. Krishnamurthy v. Bharath Hi Tech Builders Pvt. Ltd., and M. Suresh Kumar Reddy v. Canara Bank, reaffirming that once debt and default are established, admission of Section 7 application is mandatory.

Topics: Corporate Insolvency, Debt Default, Natural Justice