Shareholders lack locus standi to challenge a resolution plan that has attained judicial finality and implementation.

In brief

The question

1. Whether an appeal under Section 61 of the IBC is maintainable against an order where the applicant sought to compel a civil forum (NCLT) to exercise criminal jurisdiction under the Bharatiya Nagarik Suraksha Sanhita

The court held

The NCLAT dismissed the appeal, holding that the Appellant lacked locus standi and that the proceedings were an institutional abuse of process

It also directed

The court answered the issues by affirming that the resolution plan’s finality cannot be disturbed by a shareholder through repeated, concealed applications

The Tribunal imposed a cost of Rs. 5 Lakhs on the Appellant, to be deposited in the Prime Minister’s Relief Fund within two months, failing which the amount would be recovered as arrears of land revenue through asset attachment

IA No. 416/2026 for condonation of delay in refiling was allowed, while all other interlocutory applications were dismissed

01Facts

The Corporate Debtor (CD), M/s. Tiffins Barytes Asbestos and Paints Ltd, entered into a Memorandum of Understanding (MoU) with the Financial Creditor (FC), M/s. Udhyaman Investments Pvt. Ltd, on 16.04.2016

p. 5

Following a default, Section 7 proceedings under the IBC were initiated, and the CD was admitted into the Corporate Insolvency Resolution Process (CIRP) on 12.03.2018

p. 5

A resolution plan was approved by the NCLT on 12.06.2019

p. 6

The Appellant, a shareholder of the CD, challenged the plan's approval before the NCLAT and subsequently the Hon’ble Supreme Court, both of which dismissed the challenges by 06.11.2023

p. 7

A further Review Petition was dismissed by the Apex Court on 13.02.2024

p. 7

Despite these finalities, the Appellant filed IA(IBC)/922/CHE/2025 on 02.06.2025, seeking to declare the CIRP fraudulent and illegal

p. 2, 8

The NCLT rejected this application on 16.12.2025. The Appellant then moved the NCLAT challenging this rejection while also seeking to invoke criminal provisions under the Bharatiya Nagarik Suraksha Sanhita, 2023

pp. 2, 3-4

02Issues

i.1. Whether an appeal under Section 61 of the IBC is maintainable against an order where the applicant sought to compel a civil forum (NCLT) to exercise criminal jurisdiction under the Bharatiya Nagarik Suraksha Sanhita

p. 4 · ¶ 5

ii.2. Whether a shareholder has the locus standi to initiate or continue proceedings on behalf of a Corporate Debtor, particularly after a resolution plan has attained finality

pp. 4-5 · ¶ 6

iii.3. Whether the filing of subsequent applications on grounds already adjudicated by the Appellate Tribunal and the Supreme Court constitutes an abuse of the judicial process

pp. 8-9 · ¶ 9-10

03Law Applied

Sections 7, 31, 60(5), 61, and 65 of the Insolvency and Bankruptcy Code, 2016, regarding the finality of resolution plans and penalties for fraudulent initiation of proceedings

pp. 5-8

Rule 11 of the NCLT Rules, 2016, to address the inherent powers of the Tribunal and the limitations of a civil forum in performing criminal functions

p. 4

The court applied the precedent established in its larger bench judgment, Park Energy Private Limited v. State Bank of India & Ors. (CA (AT) (CH) (Ins) No. 62/2023), which settled that shareholders lack locus standi to maintain such proceedings

p. 5

Principles of finality of litigation and the prohibition against "de novo" reopening of settled issues were invoked

p. 9

Provisions in the judgment · 11 · Linked ones open on LawLens

Companies Act, 2013 Section 424

Bharatiya Nyaya Sanhita, 2023 Section 227 Section 228 Section 229

Insolvency and Bankruptcy Code, 2016. Section 7 Section 30 Section 31 Section 60 Section 61 Section 65

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 379

04Reasoning

The Tribunal characterized the appeal as a "malicious recourse" and an abuse of the judicial process

p. 2

It reasoned that since the MoU dated 16.04.2016 and the subsequent Resolution Plan had already been tested and affirmed by both the NCLAT and the Supreme Court, the matter had attained absolute finality

p. 8

The court noted that the Appellant suppressed material facts regarding previous failed litigations and withdrawals of similar applications

pp. 10-11

Regarding jurisdiction, the court held that the NCLT, being a civil forum, cannot be forced to perform functions under penal criminal statutes like the Bharatiya Nyaya Sanhita

p. 4

On the point of locus standi, the court reiterated that as a shareholder, the Appellant has no legal right to agitate causes on behalf of the Corporate Debtor once the CIRP has culminated in an implemented resolution plan

pp. 11-12

The delay of over 1.5 years after the Supreme Court's dismissal in filing the fresh IA was viewed as a "mischievous" attempt to stall the process

p. 9

05Holding

The NCLAT dismissed the appeal, holding that the Appellant lacked locus standi and that the proceedings were an institutional abuse of process

pp. 12-13

The court answered the issues by affirming that the resolution plan’s finality cannot be disturbed by a shareholder through repeated, concealed applications

p. 12

p. 13

IA No. 416/2026 for condonation of delay in refiling was allowed, while all other interlocutory applications were dismissed

p. 2, 13

LawLens.National Company Law Appellate Tribunal

Original Court PDF