NCLAT Grants Liberty to Bank of Baroda to File Application for Withdrawal of CIRP

NCLAT Grants Liberty to Bank of Baroda to File Application for Withdrawal of CIRP

Introduction

The National Company Law Appellate Tribunal (NCLAT) has allowed the withdrawal of insolvency proceedings initiated against SE Transstadia Pvt. Ltd., under Section 12A of the Insolvency and Bankruptcy Code, 2016, after the lead lender Bank of Baroda, along with other financial creditors, consented to a revival plan supported by the Government of Gujarat.

Factual Background

SE Transstadia had submitted a One-Time Settlement (OTS) proposal worth ₹108 crore to the lenders, and the Gujarat government had agreed in principle to infuse funds to support the company’s revival.

Procedural Background

The National Company Law Tribunal (NCLT) had admitted a Section 7 application filed by Bank of Baroda against SE Transstadia for default on its dues on April 8, 2024, initiating the Corporate Insolvency Resolution Process (CIRP). The NCLAT Bench, comprising Justice Ashok Bhushan and Technical Member Barun Mitra, granted an interim stay on the CIRP order on April 12, 2024.

Issues

The main issue in the case was whether the insolvency proceedings should be continued or withdrawn, considering the consent of the lenders and the Government of Gujarat to support the company’s revival.

Contentions of the Parties

Appellant’s Contentions:

• The company had submitted an OTS proposal worth ₹108 crore to the lenders.
• The Gujarat government had agreed in principle to infuse funds to support the company’s revival.
• The company’s bookings and revenue had suffered significantly following the NCLT admission.

Lenders’ Contentions:

• Bank of Baroda, Union Bank of India, and Bank of India were in-principle agreeable to withdraw the CIRP proceedings, subject to finalisation of restructuring within six months.
• The lenders had issued No Objection Certificates (NOCs) allowing SE Transstadia to create a charge over shares and assets to secure the proposed government-backed funding.

Reasoning & Analysis

The NCLAT took note of the developments and affidavits filed by both the appellant and Bank of Baroda confirming consent terms dated July 5, 2025. The Tribunal found that “no useful purpose shall be served in keeping the appeal pending.”

Implications

This decision highlights the importance of considering revival plans and settlements in insolvency proceedings. It also emphasizes the need for lenders and companies to work together to find mutually beneficial solutions.

Outcome

The NCLAT granted liberty to Bank of Baroda to file an application under Section 12A of the Insolvency and Bankruptcy Code, 2016, seeking formal withdrawal of the CIRP before the Adjudicating Authority. The Tribunal disposed of both appeals, directing the Interim Resolution Professional (IRP) to file necessary affidavits and assist with the withdrawal process.

Company Appeal (AT) (Insolvency) No. 780 of 2024