NCLT Chennai: Pre-Admission Withdrawal of IBC Petition No Bar to Fresh Filing

March 26, 2026 : The National Company Law Tribunal (NCLT), Chennai Bench, has ruled that the withdrawal of an insolvency application at the pre-admission stage does not preclude a creditor from filing a subsequent petition, even if explicit liberty to refile was not granted at the time of withdrawal. The Tribunal emphasized that the Insolvency and Bankruptcy Code (IBC), 2016, is a self-contained statutory framework, and the restrictive provisions of the Code of Civil Procedure (CPC), specifically Order XXIII Rule 1, do not strictly apply to these proceedings unless expressly adopted. In a ruling pronounced on March 26, 2026, the Coram of Shri. Sanjiv Jain (Judicial Member) and Shri. Venkataraman Subramaniam (Technical Member) admitted a Section 7 petition filed by Malco Gems against Prince Foundations Limited and initiated the Corporate Insolvency Resolution Process (CIRP).

The Petitioner, Malco Gems, a proprietary concern represented by Mr. Jitendra Singh Rathour, moved the Tribunal seeking to resolve a financial debt totaling ₹29,32,14,975. Between September 2020 and August 2021, Malco Gems disbursed ₹16,90,50,000 to the Corporate Debtor through regular banking channels for business requirements. On March 31, 2022, the Corporate Debtor executed a Demand Promissory Note acknowledging the outstanding liability and agreeing to an interest rate of 18% per annum. Despite a demand notice served on August 3, 2022, the Corporate Debtor failed to repay the dues, leading to a recorded date of default on August 14, 2022.

The Corporate Debtor challenged the maintainability of the petition, arguing that a previous application (CP(IB)26(CHE)2023) for the same debt had been withdrawn by Malco Gems without seeking liberty from the Tribunal to file afresh, which they claimed created a bar under Order 23 Rule 1(4) of the CPC. However, the Tribunal rejected this contention, noting that under Section 424 of the Companies Act, 2013, the Tribunal is guided by the principles of natural justice and is not bound by the strict procedures laid down in the CPC. Furthermore, Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, specifically permits the withdrawal of applications before admission without imposing a statutory bar on refiling. The Tribunal observed that the previous withdrawal was “simpliciter” to cure formal defects and occurred before any notice was issued to the debtor or any adjudication on merits took place.

Regarding the nature of the transaction, the Respondent argued that the funds were a “project investment” rather than a loan. The Tribunal dismissed this defense, observing that the Demand Promissory Note clearly established a repayment obligation with interest, signifying the “time value of money”. Additionally, the Petitioner’s audited Balance Sheets and NeSL (Information Utility) records consistently classified the amount as “loans,” while the Corporate Debtor’s financial claims were found to be unreliable due to a lack of statutory audit reports or UDIN. Ultimately, the Tribunal concluded that the petitioner successfully established the existence of a financial debt and a default exceeding the statutory threshold of ₹1 Crore, leading to the appointment of Shri. Sudhir GS as the Interim Resolution Professional (IRP) and the declaration of a moratorium under Section 14 of the IBC.