NCLAT Delhi holds cooperation order appeal cannot justify parallel corporate insolvency resolution closure

The Delhi bench of the National Company Law Appellate Tribunal (NCLAT) delivered a judgment ruling that an appeal concerning a cooperation order cannot support parallel relief for closing a Corporate Insolvency Resolution Process (CIRP). The tribunal determined that distinct statutory procedures must be strictly followed for terminating insolvency proceedings rather than seeking closure through collateral appeals. In insolvency litigation, corporate applicants occasionally attempt to leverage interlocutory orders or cooperation directives to fast-track the closure of main insolvency proceedings.

The established framework requires formal applications under specific statutory provisions, such as Section 12A of the Insolvency and Bankruptcy Code, to withdraw or close a CIRP. Allowing collateral appeals to dictate substantive insolvency closures would undermine the structured mechanism established for creditor resolution. Insolvency professionals and legal practitioners must file proper, dedicated applications for CIRP closure rather than relying on pending appeals related to procedural cooperation directives.

Stakeholders should monitor appellate trends concerning procedural shortcuts in insolvency matters. Bottom line: Corporate insolvency proceedings cannot be closed through parallel appeals on cooperation issues and require dedicated statutory petitions.