Authority: National Company Law Appellate Tribunal, Principal Bench, New Delhi (Bench comprising Justice Yogesh Khanna - Officiating Chairperson, Mr. Barun Mitra - Member (Technical), Mr. Ajai Das Mehrotra - Member (Technical))

Order Date: 24 August 2026

Case Overview

The appeal was filed by Aayush Prashant Agarwal, suspended director of EPIC Yarns Private Limited, against the order dated 23.07.2026 passed by the National Company Law Tribunal, Mumbai Bench-VI in C.P.(IB) No. 898/MB/2025. The NCLT had admitted the company into Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 and appointed Klass Insolvency Resolution Professionals Private Limited as the Interim Resolution Professional (IRP).

The appellant contended that the operational creditor (Uma Export Limited) and corporate debtor had amicably resolved all disputes and entered into a comprehensive settlement agreement dated 06.08.2026. The settlement was a tripartite agreement between the appellant as suspended director, Uma Exports Limited, and the corporate debtor. As per the agreement, ₹50,00,000 was paid on 23.07.2026 and a further sum of ₹2,57,05,145 was paid on 06.08.2026 by RTGS, totaling ₹3,07,05,145.

The IRP's status report revealed that public announcement of CIRP commencement was made on 25.07.2026 and published in two Mumbai-based newspapers on 26.07.2026. The Corporate Debtor is a going concern engaged in yarn manufacturing with approximately 600 workers and has filed returns up to 31.03.2025. Control and custody had not been handed over to the IRP by the suspended board of directors. The IRP had received one claim from Employees Provident Fund Organisation (EPFO) amounting to ₹1,28,58,295. The last date for verification and admission of claims was 13.08.2026, and the Committee of Creditors (CoC) constitution report was due by 15.08.2026.

The tribunal examined the amended Section 12A of IBC, 2016 (as amended by IBC Amendment Act, 2026, Act No. 6 of 2026, enforced w.e.f. 26.05.2026), which prohibits withdrawal of applications admitted under Sections 7, 9, or 10 before constitution of CoC or after the first invitation for resolution plans. The settlement agreement itself acknowledged in paragraphs 6 and 7 that withdrawal would be subject to compliance with IBC provisions and required approvals from the adjudicating authority.

Final Outcome

The NCLAT disposed of the appeal and directed the IRP to make an appropriate application before the NCLT Mumbai under Section 12A of IBC, 2016. The NCLT was requested to dispose of any such application within 15 days of receipt as per law. All pending applications were closed with no order as to costs.

Topics: Insolvency Settlement, Corporate Debtor Resolution, NCLAT Jurisdiction