NCLAT Upholds CIRP Against Tollway SPV, Declines Relief Despite Arbitral Award

April 10, 2026 : The National Company Law Appellate Tribunal (NCLAT) has upheld the initiation of Corporate Insolvency Resolution Process (CIRP) against Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Pvt. Ltd., holding that the existence of a favourable arbitral award does not, by itself, justify deferring insolvency proceedings when the corporate debtor’s overall financial position remains unsustainable.

The appeal, filed by a suspended director in Vikram Sharma v. Canara Bank, challenged the order of the NCLT Mumbai Bench admitting a Section 7 application filed by Canara Bank for a default of ₹346.83 crore. The total admitted dues of the corporate debtor to a consortium of lenders stood at approximately ₹1113 crore.

The corporate debtor, a special purpose vehicle (SPV) formed for a highway project in Maharashtra, had ceased operations after the project was taken over by the National Highways Authority of India in 2016. It subsequently secured an arbitral award of about ₹318.94 crore (with interest) against State authorities, which is currently under challenge before the Bombay High Court.

Before the Appellate Tribunal, reliance was placed on the Supreme Court’s ruling in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. to argue that CIRP admission could be deferred in light of the award exceeding the financial creditor’s claim.

Rejecting the contention, the NCLAT held that the principle in Vidarbha Industries applies only where the awarded or realizable amount is sufficient to cover the corporate debtor’s overall liabilities. In the present case, the arbitral award fell significantly short of the total debt owed to lenders. The Tribunal observed that even the amount claimed in execution proceedings was “much less than” the aggregate outstanding dues.

The Tribunal also underscored the financial condition of the corporate debtor, noting that it was a defunct SPV with no ongoing business or revenue stream. These factors, it held, were crucial in determining whether discretion under Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016 could be exercised.

Concluding that the corporate debtor lacked financial viability and that the arbitral award did not materially alter its insolvency position, the NCLAT refused to interfere with the NCLT’s admission order and dismissed the appeal.

In contrast, a recent order of the Appellate Tribunal under the Prevention of Money Laundering Act illustrates how tribunals assess financial transactions differently in enforcement contexts. In Avinash Bhosale v. Directorate of Enforcement, the Tribunal partly set aside attachment orders, holding that several transactions predated the alleged offence and could not be retrospectively treated as proceeds of crime, while sustaining attachment only to the extent of ₹25 crore.

The NCLAT ruling reinforces that discretionary relief under Section 7 is narrowly applied and hinges on a holistic assessment of the debtor’s financial health rather than isolated recoveries or pending claims.