NCLT Chandigarh: Once CIRP Is Set Aside After Settlement With Initiating Creditor, No Further Claims Maintainable

April 9, 2026 : The Chandigarh Bench of the National Company Law Tribunal (NCLT) has held that once a corporate insolvency resolution process (CIRP) is set aside and the dues of the initiating financial creditor are fully settled, the insolvency proceedings come to a definitive end and no further claims can be entertained within that framework.

The ruling came while dismissing two applications filed by Bharat Food and Agro Products and its partner Kamal Kant Dewan, who had sought recognition and payment of their claims as financial creditors in the CIRP of White Water Hospitality Private Limited.

The applications, filed under Rule 11 of the NCLT Rules, 2016, sought directions to take on record claims earlier submitted before the Resolution Professional and to direct payment of ₹4.59 crore and ₹52.79 lakh respectively, along with interest.

The Tribunal noted that the CIRP had originally been initiated on November 21, 2019, at the instance of V.I.R. Foods Ltd. However, the admission order was set aside by the National Company Law Appellate Tribunal (NCLAT) in August 2023. Subsequently, the Supreme Court, by its order dated December 12, 2023, set aside both the NCLT and NCLAT orders while recording the corporate debtor’s willingness to settle the dues of the initiating creditor.

Pursuant to the Supreme Court’s directions, the corporate debtor paid ₹52.64 lakh to V.I.R. Foods Ltd., which was duly recorded by the Tribunal in January 2024. The Bench held that this payment satisfied the primary condition imposed by the Supreme Court, thereby bringing the CIRP to an end.

Rejecting the applicants’ contention that their claims should still be adjudicated, the Tribunal observed that once the admission order initiating CIRP is set aside, all actions taken during the process—including constitution of the Committee of Creditors and submission or verification of claims—lose their legal foundation.

It further held that in the absence of a subsisting insolvency proceeding, entertaining such claims would effectively convert the insolvency forum into a recovery mechanism, which is contrary to the scheme and object of the Insolvency and Bankruptcy Code, 2016.

The Tribunal also rejected the argument that the Supreme Court’s order was conditional and that CIRP could revive if other claims were not adjudicated. It clarified that the central condition was payment to the initiating creditor, which stood fulfilled, leaving no scope for continuation or revival of the insolvency process.

While dismissing the applications as not maintainable, the Bench clarified that the applicants are not without remedy and are free to pursue appropriate legal proceedings before competent forums in accordance with law.

Case Title: Bharat Food and Agro Products & Anr. v. White Water Hospitality Pvt. Ltd.
Case No.: IA(IBC) 713/2025 & IA(IBC) 714/2025 in CP(IB) No. 90/Chd/2018
Coram: Khetrabasi Biswal (Member Judicial) and Shishir Agarwal (Member Technical)