Kunal Structure India Pvt. Ltd. & Anr. vs Kotak Mahindra Bank Ltd.

Ashok Bhushan, J.

This Appeal has been filed by the Corporate Debtor (“CD”) challenging the order dated 17.09.2025 passed by the third Member of the National Company Law Tribunal (“NCLT”) giving his opinion on two questions, referred to the third Member by the Hon’ble President vide order dated 24.03.2025. By the opinion dated 17.09.2025, which is impugned in the present Appeal, Ld. third Member has agreed with the findings and order of Judicial Member delivered on 10.01.2025. The Appellant aggrieved by the order dated 17.09.2025 has come up in this Appeal.

Brief background facts necessary to be noted for deciding the Appeal are:

We in our order dated 25.09.2025 have noted the respective submissions of learned Counsel for the parties. In Paragraphs 10, 11 and 12 of the order, we noted following:

The Appellant from time to time has filed various additional affidavits bringing on record subsequent status and execution proceedings with respect to Award obtained by the CD against Rajkot Municipal Corporation and NHAI.

We have heard Shri Abhijeet Sinha, learned Senior Counsel appearing for the Appellant and Shri Gaurav Mitra, learned Counsel appearing for Respondent.

Learned Counsel for the Appellant submits that law laid down by the Hon’ble Supreme Court in Vidharbha Industries is fully attracted in the facts of the present case. In the present case, Section 7 application was filed by Kotak Mahindra Bank Ltd. for amount of Rs.18,11,06,790.12, whereas the CD has arbitral Award in its favour of much more amount. Total amount, which is recoverable from Rajkot Municipal Corporation and NHAI is Rs.76,87,74,939/- with interest as on 23.09.2025. It is submitted that execution proceedings were initiated by the CD for execution of the Award against Rajkot Municipal Corporation being Commercial Execution Petition No.27 of 2021 and Commercial Execution Petition No.388 of 2021. It is submitted that with regard to Award against NHAI a Commercial Execution Petition No.276 of 2021 and 648 of 2022 were filed and one Execution Petition was disposed of on 08.07.2022, where the amount of payment of Rs.2.50 crores was received on 01.09.2025, which was offered to be paid to the Financial Creditor, but no response was received. Learned Counsel for the Appellant referring to various additional affidavits submits that Section 34 petition filed by NHAI has been dismissed on 30.12.2025. Learned Counsel for the Appellant has also placed reliance on order of Hon’ble Supreme Court passed in Civil Appeal Nos.3640-42 of 2025 – Periyammal (Dead) through Legal Representatives and Ors. vs. V. Rajamani and Anr., where Hon’ble Supreme Court has issued direction to all the High Courts to obtain status of pending Execution Petitions and ensure that Execution Petitions are decided and disposed of within a period of six months. It is submitted that the Appellant has also filed Special Civil Application in Gujarat High Court seeking direction for disposal of execution proceedings.

Learned Counsel for the Appellant submits that the view of the third Member that CD is not entitled for the benefit of judgment of the Hon’ble Supreme Court in Vidarbha Industries, is incorrect. Facts of the Vidarbha Industries and decision laid down therein is fully attracted in the facts of the present case. The Adjudicating Authority itself being satisfied that judgment of the Hon’ble Supreme Court in Vidarbha Industries is applicable has kept in abeyance the proceedings for six months. There cannot be another opinion in the same proceeding taking he view that judgment of the Vidarbha Industries is not attracted. Learned Counsel for the Appellant submits that the Appellant is functioning as Contractor for Government projects and is a running Company with 728 employees and initiation of CIRP will hamper the interest of the Appellant. The Appellant is likely to receive the amount from execution proceedings, which shall be paid to the Financial Creditors. It is submitted that earlier an amount of Rs.10 crores was received in execution proceedings, which was disbursed to Axis Bank, the Financial Creditor having not shown any inclination to accept the amount. Learned Counsel for the Appellant submits that Respondent, Kotak Mahindra Bank during the pendency of the proceedings has received amount of Rs.11,03,92,171/- in terms of ECLGS post filing of Section 7 application.

Learned Counsel appearing for the Respondent refuting the submissions of learned Counsel for the Appellant submits that the Appeal filed by the Appellant is premature. The order impugned in the Appeal is opinion of third Member on reference made by the Hon’ble President due to difference of opinion of judicial Member and Technical Member. The opinion, which is impugned in the Appeal, the third Member has directed the Registry to place the order before NCLT Ahmedabad to a pass appropriate order with respect to CD in Company Petition (IB) No.76 of 2022. No orders having yet been passed, the Appeal is premature and need not be entertained. Learned Counsel for the Respondent submits that arbitral Award, which is claimed was obtained in the year 2018 and more than seven years have elapsed, but no amount has been paid by the CD to the Financial Creditor. It is submitted that the judgment of Vidarbha Industries was subsequently explained by the Hon’ble Supreme Court in subsequent judgments. In the Review Application filed by Axis Bank to review the judgment of the Vidarbha Industries, although the review was dismissed, but it was observed that judgment is in facts and situation of the said case. Learned Counsel for the Respondent has relied on judgment in M Suresh Kumar Reddy vs. Canara Bank, (2023) 8 SCC 387 and the order of the review passed in Vidarbha Industries and certain judgments of this Tribunal. It is submitted that judgment of the Hon’ble Supreme Court in Periyammal (supra) does not absolve the CD to clear his debt and default having been established, which is not even questioned by the Appellant, the Appellant is not entitled for any indulgence in this proceeding.

We heard learned Counsel for the partis and perused the record.

We in our order dated 25.09.2025 has noted the amount receivable by the Appellant under the various arbitral Award in Paragraph 6. It is useful to notice Paragraph 6 of the order, which is as follows:

On 17.01.2023, the Adjudicating Authority after hearing the parties has passed an order for keeping Section 7 application in abeyance for six months relying on judgment of Hon’ble Supreme Court in Vidarbha Industries. In Paragraph 19 of the judgment, following has been directed:

After the lapse of period of six months, Section 7 application came for consideration before the Adjudicating Authority and split verdict was passed on 10.01.2025 in Section 7 application. Learned judicial Member in Paragraph 16 held that Section 7 application needs to be admitted. Paragraph 16 of the order is as follows:

Learned Technical Member rejected Section 7 application by following order:

The Hon’ble President by an order dated 24.03.2025 by the powers conferred under Section 419(5) of the Companies Act, 2013 read with Rule 60(2) and (3) of the NCLT Rules, 2016 made reference to third Member on the point of difference of opinion as noticed in the order, which is as follows:

The third Member has delivered his opinion on 17.09.2025. After hearing the parties, the third Member in Paragraph 28 has concurred with the opinion of Judicial Member and directed the matter to be placed before NCLT Ahmedabad to pass appropriate order. Paragraphs 28, 29 and 30 of the order are as follows:

In the present Appeal, the Appellant has filed various additional affidavits, bringing on record subsequent events and status of execution proceedings initiated by the CD against Rajkot Municipal Corporation and NHAI. The fact, however, remains that no amount to be realised from the above execution proceedings, is paid to the Financial Creditor. The order of Adjudicating Authority on Section 7 application is yet to be passed and opinion of third Member was directed to be placed before NCLT Ahmedabad with record of Company Petition (IB) No.76 of 2022, as noted above.

Learned Counsel for the Appellant in its submission emphasized on various subsequent events, including direction passed by Hon’ble Supreme Court in the case of Periyammal (supra) directing all High Courts to ensure that execution proceedings are decided within six months and the progress made in the execution proceedings including the dismissal of Section 34 application filed by NHAI against the arbitral Award of the CD. The Appellant has also pleaded that Section 7 application filed by the SBI and Punjab and Sind Bank has also been rejected on 20.01.2026 and 29.03.2026 by NCLT. The Appellant has also relied on the order of High Court of Gujarat dated 02.04.2026, where High Court has directed to conclude execution of award within six weeks.

From the facts, which have been brought on record and submissions made by the Appellant, present is a case where due to difference of opinion, an order of split verdict between Judicial Member and Technical Member was passed on 10.01.2025 and the matter was referred to third Member by the Hon’ble President, NCLT under Section 419 sub-section (5) of the Companies Act, 2013. Section 419 sub-section (5) of the Companies Act, 2013 provides as follows:

Section 419 sub-section (5) require reference by President on point of difference between Members and decision on the opinion of majority Members. The opinion of third Member, which is questioned in the present Appeal is opinion given by third Member, due to split verdict between Judicial Member and Technical Member and on reference made by the President, NCLT. The opinion is to be placed before the NCLT Ahmedabad Bench to pass appropriate order with regard to Company Petition (IB) No.76 of 2022.

The law is well settled that in Section 7 proceedings, it is open for the parties to place before the Adjudicating Authority any subsequent event, which has material bearing on the proceedings. We are of the view that it is open for the Appellant to place subsequent events before the Adjudicating Authority, which may have bearing on the outcome of Section 7 application. The opinion of third Member impugned in the Appeal is opinion, which is to be placed before the NCLT Ahmedabad Bench to pass appropriate order. We are of the view that at this stage various submissions raised by the Appellant, need no consideration.

As observed above, it is open for the Appellant to place subsequent facts and events before the Adjudicating Authority. Ends of justice will be served in fixing a date before the Adjudicating Authority for both the parties to appear. The Appellant is also at liberty to file an additional affidavit before the Adjudicating Authority, brining on record subsequent events, which may have material bearing on Section 7 proceedings within two weeks from today. We make it clear that we are not expressing any opinion on merits of submission of either of the parties and it is for the Adjudicating Authority to take a decision in accordance with law.

Let the parties appear before the Adjudicating Authority on 2^nd June, 2026. The parties are at liberty to place this order before the Adjudicating Authority for fixing a date of hearing of Section 7 application. The Appeal is disposed of accordingly. There shall be no order as to costs.