The National Company Law Appellate Tribunal rules that parallel CIRP proceedings against the same corporate debtor are impermissible, leaving Mekaster Finlease to pursue statutory remedies within the ongoing process.
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal by Mekaster Finlease Limited as infructuous, following the initiation of Corporate Insolvency Resolution Process (CIRP) against Prayag Polytech Private Limited by Union Bank of India. The NCLAT's Principal Bench in New Delhi, comprising Mr. Justice Sharad Kumar Sharma and Technical Members Mr. Arun Baroka and Mr. Indevar Pandey, delivered the judgment on September 18, 2026.
Mekaster Finlease had initially filed a Section 7 application under the Insolvency and Bankruptcy Code, 2016, seeking to initiate CIRP against Prayag Polytech, which was dismissed by the National Company Law Tribunal (NCLT) Jaipur Bench in July 2025. Mekaster appealed this decision, arguing that the finding in the impugned order affected its status as a financial creditor in the ongoing CIRP.
However, during the pendency of Mekaster's appeal, Union Bank of India successfully initiated CIRP against Prayag Polytech, with the process commencing in February 2026. This subsequent development led the NCLAT to conclude that the relief originally sought by Mekaster had become incapable of being granted, as the Code does not permit the initiation of two parallel CIRPs against the same corporate debtor.
The Tribunal emphasized the collective nature of the CIRP process, which treats all creditors of the same class equally, and underscored that any grievances Mekaster had concerning the rejection of its claim by the Resolution Professional must be pursued through the remedies available within the framework of the ongoing CIRP.
The Tribunal referenced the Supreme Court judgment in P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., which reinforces the principle that the moratorium under Section 14 of the Code is intended to prevent individual proceedings against the corporate debtor outside the insolvency resolution process.
Mekaster had argued that its transaction with Prayag Polytech constituted a financial debt under the Code, but the NCLAT clarified that any such determination must occur within the existing CIRP. The appeal, therefore, was rendered infructuous, and Mekaster was advised to seek appropriate legal remedies under the Code concerning its claim.
This ruling highlights the NCLAT's adherence to the principles of collective insolvency resolution and its commitment to ensuring that all claims against a corporate debtor are addressed within the statutory framework of an ongoing CIRP.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Appeal against rejection of Section 7 application becomes infructuous once CIRP has subsequently been admitted against the same corporate debtor in another proceeding - Parallel CIRP cannot be initiated - Creditor's grievance regarding rejection of its claim by Resolution Professional must be pursued under remedies available in the ongoing CIRP.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 7, 14, 61
