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

Order Date: 27 August 2026

Case Overview

This is an appeal (Comp. App. (AT) (Ins) No. 1568 of 2026) filed by Santu Karar (Appellant) against Stemztech Industries Private Limited & Anr. (Respondents). The appeal challenges an order from the Adjudicating Authority (NCLT) that admitted a Section 7 application of the Insolvency and Bankruptcy Code (IBC) filed by Respondent No. 1 against Stemztech, initiating Corporate Insolvency Resolution Process (CIRP).

The core legal dispute centers on the nature of the transaction between the parties. The Appellant's counsel, Mr. K. Datta, argued that the Adjudicating Authority committed a "manifest illegality" by accepting the Section 7 application. The Appellant's case is that the agreements and memoranda of understanding (MoUs), including an addendum, along with email exchanges, demonstrate that the transaction was an investment for a 50:50 profit-sharing business venture, not a disbursal of a loan or commercial borrowing that would constitute a "financial debt" under the IBC.

Counsel for Respondent No. 1, Mr. Kumarjit Banerjee, countered that the transactions were purely loan agreements with no element of profit sharing. The tribunal, comprising Justice Mohammad Faiz Alam Khan (Member-Judicial) and Naresh Salecha (Member-Technical), reviewed the records, including the emails and MoUs, and considered the arguments from both sides.

Final Outcome

The NCLAT granted an interim stay on the operation of the impugned order till the next date of hearing. As a condition for this interim protection, the Appellant was directed to deposit Rs. 2.25 crore in the form of a Fixed Deposit Receipt (FDR) made in the name of the Registrar of the NCLAT, New Delhi. The Interim Resolution Professional (IRP) is barred from taking any further steps in the CIRP until the next hearing. The matter is listed for further hearing on 3 September 2026, where arguments on the grant of a continued interim stay and the appeal's further course will be heard. Both parties also submitted their intent to explore an amicable resolution.

Topics: IBC Section 7, Financial Debt, Interim Stay