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Judgment
This application has been filed by IDBI Trusteeship Services Limited, Petitioner / Financial Creditor under Rule 11 of the NCLT Rules seeking the following reliefs.
i.Allow the present application and pass directions for restoration / revival of the Company Petitioner bearing 49 of 2023 from the stage of final hearing;
ii.Pass directions to recall the order dated May 2, 2023 passed in C.P. IB. No. 49 of 2023;
Briefly the facts are that IDBI Trushteeship Services Limited was the Debenture Trustee on behalf of Indiabulls Real Estate Fund, acting through its investment Manager, Indiabulls Investment Management Limited and Patni Healthcare Private Limited (Debenture Holders / Financial Creditors). On 03.03.2023, it filed a petition under Section 7 of IBC against the Corporate Debtor Ozone Projects Private Limited for initiating Corporate Insolvency Resolution Process (CIRP). It was listed for final hearing on 02.05.2023. In the interregnum, a petition CP/5/2023 under Section 9 of IBC was filed by an Operational Creditor Shapoorji Pallonji & Company Private Limited seeking initiation of CIRP against the Corporate Debtor Ozone Projects Private Limited. This Tribunal vide an order dated 01.05.2023 admitted the petition CP/5/2023 and initiated the CIRP against the Corporate Debtor. Consequently, on account of admission of the petition under Section 9 against the Corporate Debtor, CP/49/2023 filed by the Petitioner became infructuous and was disposed of vide an order dated 02.05.2023 with a direction to the Petitioner to approach the IRP.
Being aggrieved by the admission of the petition CP/5/2023 vide an order dated 01.05.2023 initiating CIRP against the Corporate Debtor, the suspended management of the Corporate Debtor preferred an appeal CA(AT)(Ins) No. 134 of 2023. The Hon'ble NCLAT vide an order dated 10.05.2023 stayed the further proceedings in the CIRP of the Corporate Debtor. Thereafter, Hon'ble NCLAT on an application filed by the Applicant / Petitioner in IA/816/2025 in appeal, vide an order dated 21.07.2025 modified the stay order to the extent that the operation and effect of the impugned order dated 01.05.2023 would remain stayed / kept in abeyance for a period of two weeks. This order was extended from time to time. It is stated that this modification effectively resulted in the vacation of the moratorium imposed under Section 14 of the IBC. The extract of the order dated 21.07.2025 is as under:
Owing to the aforesaid reasons, the interim order as granted on 10.05.2023 would stand modified, to the extent that the effect and operation of the impugned order dated 01.05.2023, would be kept in abeyance, for a period of two weeks, by which time the alleged settlement process is expected to be matured to be considered in the Execution Petition No. 82/2022.
It is stated that in view of vacation of CIRP and vacation of consequent moratorium against the Corporate Debtor, this application has been filed seeking restoration / revival of Section 7 petition from the stage it was disposed of owing to the same having been rendered infructuous.
It is stated that after the admission of CP/5/2023, IRP had issued a public announcement on 04.05.2023 inviting the claims from the Creditors of the Corporate Debtor. The Applicant / Petitioner in response thereof, on behalf of debenture holders submitted the claim in Form C on 12.05.2023 for an amount of Rs. 274,84,41,285/- which the IRP acknowledged vide mail dated 18.05.2023. He however stated that the suspended management of the Corporate Debtor has preferred an appeal wherein Hon'ble NCLAT has stayed the further proceedings in the CIRP of the Corporate Debtor. It is stated that the Applicant had filed IA/1158/2023 in Company Appeal (AT) (CH) (Ins) No.134/2023 before Hon'ble NCLAT seeking permission to intervene in the appeal and the Hon'ble NCLAT vide an order dated 31.01.2025 after considering the detailed submissions of the Applicant allowed the intervention application and granted the Applicant the right to make submissions during the final hearing of the appeal.
It is stated that the assets of the Corporate Debtor, particularly the assets mortgaged with the Applicant are diminishing in value which is detrimental to the interest of the debenture holders. The CIRP under the Code is intended to maximize the asset value, however the prolonged enforcement of stay order is obstructing this objective by preventing the timely invitation of resolution plans. It is stated that Indiabulls Real Estate Fund being a SEBI regulated fund was under an additional liquidation period until 24.04.2025. The dissolution period of the said fund commenced on 24.04.2025 which comprises a broad base of investors from the general public.
It is stated that in the light of above modification of stay order vide order dated 21.07.2025, the Applicant is now in a position to pursue remedies that were previously barred owing to moratorium. Accordingly, this application has been filed seeking restoration / revival of the petition from the stage it was disposed of. It is stated that the Respondent has committed continuous defaults in repayment of its financial obligations under the trust deed which commenced from 30.09.2021 and the defaults persisted thereafter. It is stated that in view of the provisions under Section 60(6) of IBC, the moratorium period would be excluded and the petition is within limitation. Reference is made of the case Sanjay Kapoor Vs. TDI Infrastructure Ltd, Company Appeal (AT) (Ins) No. 122 of 2019, where the Tribunal disposed of an application under Section 7 of IBC on the ground that the Corporate Debtor was already admitted into CIRP in other proceeding. The Appellate Tribunal recognizing that the Appellant had been rendered remediless due to intervening developments held that the application under Section 7 ought to be restored. Reference is also made of the case of J.C. Flowers Asset Reconstruction Pvt. Ltd. Vs. Essel Infraprojects, CP. IB. No. 172 of 2022, wherein petition was restored which was dismissed as infructuous.
On this application, record of the petition CP/49/2023 was called from the CRC and notice was given to the Respondent / Corporate Debtor. The Applicant was also directed to file orders of Hon'ble NCLAT in Appeal No. 134 / 2023, which the Applicant has filed.
We have heard the arguments advanced by Ld. Sr. Counsel Shri. P.V. Balasubramaniam for the Applicant and Ld. Counsel Shri. Chandramouli Prabhakar for the Respondent / Corporate Debtor.
Ld. Counsel for the Applicant reiterated what has been stated in the application. He also placed the order of Hon'ble NCLAT dated 13.01.2026 where it was held as under:
Apart from it, when at his behest, we have passed the modified order on 21.07.2025, the Intervenor was conscious of the fact that, we have modified the order to the effect of staying the effect and operation of the impugned order of initiation of CIRP process under Section 9 of the 1 & B Code, 2016.
The proceedings under Section 7 is altogether an independent proceedings and that has go no bearing so far as the Instant Company Appeal is concerned, which has to be independently decided. The Applicant/ Intervener has to resort to the resources available to him, and would carve out his own remedies for pursuing his Recall Application preferred under Section 7 of the Code.
Ld. Counsel for the Respondent also referred some paras of the order dated 13.01.2026 which are reproduced as under:
On the contrary, the Ld. Counsel appearing for the Intervener submits that, owing to the pendency of the instant Company Appeal, his Recall Application, in which he has preferred for recall of the Section 7 Application he had earlier filed before Ld. NCLT is not being considered. Hence, he seeks a modification of the interim order, which already stood modified by us on 21.07.2025.
The nature of modification, which is being sought at the behest of the Intervenor at this stage, cannot be granted owing to the fact that his application being IA No. 1158/2023 was confined to seeking permission for intervening in the instant Company Appeal, which stood granted.
Ld. Counsel for the Respondent submitted that the appeal has been reserved for orders. As on date, the management of the Corporate Debtor is with the Promoter Directors, however, the accounts of the Corporate Debtor maintained with HDFC Bank are still frozen. He submitted that the construction activities are going on in the project and separate account is being operated under the supervision of TNRERA where the payments are being received and disbursements are being made.
Ld. Counsel for the Respondent also filed written synopsis vide SR. No. 1557 dated 07.04.2026 and submitted that the Respondent came to be admitted to CIRP vide an order dated 01.05.2023 in CP/5/2023. In terms of the admission order, this Tribunal declared a moratorium under Section 14 of IBC. The petition CP/49/2023 came up for hearing on 02.05.2023 on which date the Tribunal took notice of the admission order in CP/5/2023 and directed the Applicant to file claim before the IRP and closed the petition CP/49/2023. On 12.05.2023, the Applicant filed the claim which was acknowledged by the IRP on 18.05.2023. In the interregnum, the Suspended Director preferred an appeal CA (AT) (Ins.) No. 134 of 2023 before Hon’ble NCLAT impugning the admission order and the Hon’ble NCLAT vide an order dated 10.05.2023 stayed the further proceedings. Hon’ble NCLAT on the application filed by the Applicant vide IA/1158/2023 in the above appeal allowed the Applicant to be added as Respondent No. 4 / Intervenor and granted leave to extend arguments at the final hearing of the appeal. Soon thereafter, the Applicant filed another application IA/816/2025 seeking vacation of stay but the Hon’ble NCLAT on 01.07.2025 denied any substantial relief to the Applicant. When the matter came up on 21.07.2025, Hon’ble NCLAT modified the interim order keeping the effect and operation of the impugned order dated 01.05.2023 in abeyance. It is in the midst of the pending appeal, the Applicant has filed the restoration application. Ld. Counsel submits that the Applicant continued to participate in the appeal. On 13.01.2026, it advanced exhaustive arguments. He submits that no vacation of moratorium was granted. On 23.02.2026, the appeal was finally heard and reserved for orders. Ld. Counsel submits that the order on the appeal has direct bearing on the present case. He submits that the moratorium continues to stay in place even today. He submits that if this application is allowed, it will result into CIRP simultaneously against the same Corporate Debtor. He submits that restoration application can be entertained only after an order of admission in CIRP is set aside. He referred the case of Sanjay Kapoor Vs. TDI Infrastructure Ltd, Company Appeal (AT) (Ins.) No. 122 of 2019 and J.C. Flowers Asset Reconstruction Pvt. Ltd. Vs. Essel Infraprojects, C.P. (IB) No. 172 of 2022. Ld. Counsel further submits that IBC is not for mere debt recovery but a beneficial legislation intended to ensure that the Corporate Debtor is put back on its feet.
We have given our thoughtful consideration to the rival contentions and perused the record.
In the present case, while this petition filed under Section 7 of IBC was pending and listed for final hearing for 02.05.2023, on a petition CP(IB)/5(CHE)/2023 under Section 9 of IBC filed by an Operational Creditor Shapoorji Pallonji and Company Private Limited, vide an order dated 01.05.2023, CIRP was initiated against the Corporate Debtor and moratorium under Section 14 of IBC was declared. On account of the admission of the Corporate Debtor into CIRP, Section 7 petition was disposed of vide an order dated 02.05.2023 with directions to the Petitioner / Applicant to approach the IRP to file claim in accordance with IBC. The suspended management filed an appeal against the order dated 01.05.2023 in CP(IB)/5(CHE)/2023 before Hon’ble NCLAT where further proceedings were stayed vide an order dated 10.05.2023. On 21.07.2025, the order was modified to the extent that effect and operation of the order dated 01.05.2023 would be kept in abeyance which order is still continuing. Hon’ble NCLAT in its order dated 13.01.2026 on an application filed by the Applicant / Petitioner in the aforesaid appeal held as under:
Apart from it, when at his behest, we have passed the modified order on 21.07.2025, the Intervenor was conscious of the fact that, we have modified the order to the effect of staying the effect and operation of the impugned order of initiation of CIRP process under Section 9 of the 1 & B Code, 2016.
The proceedings under Section 7 is altogether an independent proceedings and that has go no bearing so far as the Instant Company Appeal is concerned, which has to be independently decided.
The Applicant/ Intervener has to resort to the resources available to him, and would carve out his own remedies for pursuing his Recall Application preferred under Section 7 of the Code.
The proceedings of 09.02.2026 reveals that as on date, the management of the Corporate Debtor is with the Promoter Directors. The construction activities are going on. The claim made by the Petitioner in the present petition has not been paid in CP(IB)/5(CHE)/2023. It has been held by Hon’ble NCLAT in the order dated 21.07.2025 that the interim order as granted on 01.05.2023 (stay of further proceedings in the CIRP) would stand modified to the extent that the effect and operation of the impugned order dated 01.05.2023 would be kept in abeyance… In the order dated 13.01.2026, Hon’ble NCLAT has held that when the order was modified on 21.07.2025, the Intervenor (Applicant) was conscious of the fact that order has been modified to the effect of staying the effect and operation of the impugned order of initiation of CIRP process under Section 9 of IBC. The proceedings under Section 7 is altogether an independent proceedings and that has no bearing so far as the instant appeal is concerned which has to be independently decided. The Applicant / Interverner has to resort to the process of resources available to him and would carve out its own remedies for pursuing its recall application preferred under Section of the Code.
Further, during the hearing on 23.02.2026, it was submitted by the Counsel appearing for the Respondent that as on date the management of the Corporate Debtor is with the Promoter Directors. The construction activities are going on in the project. Separate account is being operated under the supervision of TNRERA where payments are being received and disbursements are being made. Considering the submissions and the orders, since effect and operation of the order dated 01.05.2023 initiating CIRP against the Corporate Debtor has been kept in abeyance, the present petition CP(IB) No. 49 of 2023 filed under Section 7 of IBC can be revived.
As regards contention that it will result into two CIRP simultaneously against the same Corporate Debtor, in the present case there is no order initiating CIRP against the Corporate Debtor. It is only for restoration of Section 7 petition where the Respondent will have an opportunity to defend. This petition was closed when it was at the stage of hearing after the pleadings were completed. Revival of the petition would not mean that CIRP is initiated against the Corporate Debtor.
As regards contention that IBC is not for debt recovery, in the present case, the Applicant / Petitioner has pleaded that there is a default by the Corporate Debtor in repayment of debt. In the petition under Section 7 of IBC, the Tribunal has only to consider debt and default.
In the light of what has been stated above, we allow the application Rst.A(IBC)/7(CHE)/2025 and restore the petition CP(IBC)/49(CHE)/2023 from the stage it was closed vide an order dated 02.05.2023.
List the petition for final hearing on 04.05.2026.