Authority: National Company Law Appellate Tribunal Principal Bench, New Delhi
Order Date: 12 August 2026
Case Overview
The appeal (Comp. App. (AT) (Ins) No. 1465 of 2026) was filed by Prajit Prasannan against Bhagwati Trading Co (through its proprietor) and Mr. Gopal Garg, the Interim Resolution Professional (IRP). The dispute originated from insolvency proceedings before the Adjudicating Authority (NCLT), which had reserved judgment on 29 July 2026 after hearing arguments.
Key background includes:
- The Adjudicating Authority had initially encouraged settlement discussions on 25 May 2026, scheduling a settlement report for 7 July 2026
- On 7 July 2026, parties reported they were exploring settlement possibilities and requested more time, resulting in adjournment to 29 July 2026
- On 29 July 2026, while parties initially disagreed on certain settlement terms, they ultimately reached a memorandum of understanding (Annexure A-3) on the same day
- Despite this settlement, the Adjudicating Authority proceeded to pass the impugned order on 5 August 2026, initiating corporate insolvency resolution process against Bhagwati Trading Co
The Appellate Tribunal found that passing the insolvency order when settlement had been achieved on the judgment reservation day was inappropriate.
Final Outcome
The NCLAT stayed the insolvency process initiated by the Adjudicating Authority's order dated 5 August 2026. Respondents were given 10 days to file replies, with appellant granted 3 days thereafter for rejoinder. The matter was listed for next hearing on 3 September 2026. The stay will remain in effect until the next listing date.
Topics: Insolvency, Legal Settlement, NCLAT