NCLAT Fortnightly: Important orders on IBC (Feb 16 – Feb 28, 2026)

The following is a snapshot of the important orders passed by the National Company Law Appellate Tribunal (“NCLAT”), under the Insolvency and Bankruptcy Code, 2016 (“Code”), during the period between February 16, 2026, to February 28, 2026.

For ease of reference, the orders have been categorized and dealt with in the following categories i.e., Pre-Corporate Insolvency Resolution Process (“CIRP”), CIRP stage, and Miscellaneous stage.

1. In Uday J. Desai v. Bank of India (Company Appeal (AT) (Insolvency) No. 187 of 2023), the NCLAT held that once the existence of financial debt and default is established, the Adjudicating Authority is required to admit an application under Section 7 of the Code. It was further held that the principle of res judicata would not apply where an earlier Section 7 application was dismissed due to the invalidation of the RBI Circular dated 12.02.2018 and not on merits, thereby permitting the filing of a fresh application based on the subsequent RBI framework dated 07.06.2019. The NCLAT also clarified that the ratio in Vidarbha Industries Power Limited v. Axis Bank Limited would not apply where the corporate debtor fails to demonstrate concrete financial material showing that its assets or net worth exceed the outstanding dues or that it possesses imminent receivables sufficient to discharge the debt. It was further observed that the past or historical turnover and positive net worth was insufficient to reject a Section 7 application.

2. In Navin Ashokkumar Aswani v. Falcon Industries (Company Appeal (AT) (Insolvency) No. 109 of 2026), the question before the NCLAT was whether a winding up application admitted by the Hon’ble High Court and subsequently transferred to the Adjudicating Authority under Section 433 and 434 of the Companies Act, 2013, would be eligible for deemed admission under the Code. Answering the reference in negative, the NCLAT observed that when an admitted winding up petition has been transferred to the Adjudicating Authority, such application is required to be considered as per the scheme of the Code to ascertain whether all the requirements for such admission has been fulfilled, and that admission of winding up petition under the Companies Act would not obviate such exercise and must be examined independently in accordance with the Code.

It was further held that the threshold under Section 4 of the Code shall be the date of conversion of the winding up petition into the Section 9 application and not the date of filing of the original winding up petition.

1. In the cases of Vistra ITCL (India) Limited v. Radius Estate Projects Private Limited (Company Appeal (AT) (Insolvency) No. 1110 of 2024) and J.C. Flowers Asset Reconstruction Private Limited v. Radius Estate Projects Private Limited (Company Appeal (AT) (Insolvency) No. 1801 of 2024), the NCLAT had an occasion to examine whether a ‘covenant to pay’ in a mortgage deed qualifies the mortgagee as a ‘financial creditor’ under the Code. While both cases affirmed the status of the mortgagee as a financial creditor, they arrived at this conclusion through distinct legal ratios.

In the case of Vistra ITCL, the NCLAT observed that the existence of a covenant to pay cannot be treated merely as a security enforcement mechanism and, when read with the underlying financial documents, it may establish the mortgagor (corporate debtor) as a guarantor or co-obligor in the borrowing transaction. It noted that such a covenant would amount to a contract of guarantee under Section 126 of the Indian Contract Act, 1872 thereby creating an independent personal liability of the corporate debtor and giving rise to a financial debt, even if the original disbursement was made to a third party. A similar stance was taken in the case of J.C. Flowers Asset, wherein the NCLAT noted that direct disbursement of funds to the corporate debtor is not a sine qua non for a claim to qualify as financial debt, particularly where the transaction has the commercial effect of borrowing or where obligations arise from guarantee-like undertakings. The NCLAT further distinguished between a covenant that creates personal repayment liability akin to a guarantee and one that only reinforces security enforcement rights, holding that only the former can support classification as financial debt under the Code.

2. In Kotak Mahindra Bank Limited v. Infinia Solutions and Services Private Limited (Company Appeal (AT) (Ins) No. 1013 of 2024), the issue before the NCLAT was whether a creditor is permitted to withdraw its claim after the same having been filed and admitted. Answering the reference in affirmative, the NCLAT relied upon Regulation 12A of the CIRP Regulations, 2016 to note that a creditor whose claim has been fully satisfied after the insolvency commencement date is duty bound to update its claim. Following the same, the NCLAT held that the word ‘updation’ under Regulation 12A would also mean an update when the claim has been satisfied ‘partly’ or ‘fully’- and in an instance where the claim has been fully satisfied, it would also include withdrawal of such claim. It was further held that the resolution professional does not possess any adjudicatory power to act on such a request unilaterally, and therefore a decision in this regard has to be taken by the Adjudicating Authority.

1. In Purusottam Behera v. State Bank of India (Company Appeal (AT) (Insolvency) Nos. 258, 259, 260, 261, 262 & 292 of 2026), the NCLAT held that while the moratorium under Section 101 of the Code is statutorily limited to a maximum period of 180 days and cannot be extended by the Adjudicating Authority, there is no statutory bar on extending the duration of the Personal Insolvency Resolution Process (PIRP) itself in appropriate circumstances. The NCLAT observed that the timeline prescribed under Regulation 19 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors) Regulations, 2019 for filing the repayment plan is procedural and directory in nature, and the Code does not mandate automatic termination of the process upon expiry of the prescribed period. Accordingly, the NCLAT held that the Adjudicating Authority retains jurisdiction to extend the PIRP period where necessary to facilitate consideration of the repayment plan, provided that such extension does not amount to an extension of the statutory moratorium.

2. In Vibu Venkatasubramanian v. State Bank of India (Company Appeal (AT) (Insolvency) No. 1228 of 2024), the NCLAT held that where a personal guarantee is a continuing guarantee, renewal or variation of the underlying loan facilities does not discharge the guarantor’s liability, particularly when the guarantee deed expressly provides that variations in loan terms or extensions of facilities will not affect the guarantor’s obligations. It was also clarified that there is no bar to initiating insolvency proceedings against a personal guarantor under Section 95 of the Code even when proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) are pending.

3. In Vivek Parti v. Uttarakhand Power Corporation Limited (Company Appeal (AT) (Insolvency) No. 1475 of 2025), the NCLAT held that for the purposes of limitation under Section 61 of the Code, the period for filing an appeal commences from the date on which the order is pronounced in open court (after excluding such date from computation), and not from the date on which the order is subsequently uploaded on the NCLT website. It was further held that while the time taken for obtaining a certified copy may be excluded if an application is made in time, a party cannot postpone the running of limitation by waiting for the order to be uploaded. Consequently, where the appeal is filed beyond the statutory maximum period of 30 days plus the condonable period of 15 days, the delay cannot be condoned and the appeal is liable to be rejected as time-barred.

4. In Encore Asset Reconstruction Company Private Limited v. Pandhe Constructions Private Limited (Company Appeal (AT) (Ins) No. 2372 of 2024), the NCLAT observed that an acknowledgment of debt by the principal borrower, such as a one-time settlement proposal, constitutes acknowledgment by the corporate guarantor as well, given that the liability of the guarantor is co-extensive with that of the principal borrower, and such acknowledgment would further extend the period of limitation under Section 18 of the Limitation Act, 1963. It was also observed that whether a guarantee may be deemed to have been invoked by a notice issued under Section 13(2) of the SARFAESI Act, would depend on the facts and circumstances of each case, read in light of the terms of the guarantee deed.

5. The NCLAT, while, in Insolvency and Bankruptcy Board of India v. Truvisory Insolvency Professionals Private Limited (Company Appeal (AT) (Insolvency) No. 110 of 2026), acknowledged the locus of  Insolvency and Bankruptcy Board of India (“IBBI”) to file an appeal against an order as ‘any person aggrieved’ under Sections 61 and 62 of the Code, and refused to condone the delay in filing such appeal under Section 61(2) of the Code on the basis of Section 198 of the Code (which empowers the relevant Adjudicating Authority to condone delay where the IBBI fails to perform any function within the period specified under the Code), by observing that the two provisions operate in entirely distinct objects and purposes and the delay under Section 198 can only be condoned by the Adjudicating Authority.

About the authors: Arka Majumdar is a Partner, Aakriti Garodia and Milind Anand are Associates at Argus Partners.