New Delhi, May 25, 2026 – Sumeet Industries Limited, through its Resolution Professional, has appealed a National Company Law Tribunal (NCLT) Ahmedabad order dated November 27, 2025, which dismissed its application seeking the restoration of a Rs. 8.30 crore security deposit and the refund of Rs. 3.78 crore allegedly appropriated by Dakshin Gujarat Vij Company Limited (DGVCL). The corporate debtor contends that DGVCL illegally adjusted the security deposit and appropriated pre-insolvency electricity dues after the commencement of its Corporate Insolvency Resolution Process (CIRP), violating the moratorium under the Insolvency and Bankruptcy Code, 2016.
Background of the Insolvency Process
The appeal, filed before the National Company Law Appellate Tribunal (NCLAT), stems from an application (I.A. No. 47/2024) filed by Sumeet Industries Limited (the Corporate Debtor) during its CIRP. The application sought specific directions against DGVCL, the electricity provider and Respondent No. 1, to reverse its actions.
Sumeet Industries Limited entered CIRP, a process designed to resolve insolvency. During this period, a moratorium is typically imposed, which restricts creditors from taking any action to recover debts from the corporate debtor or its assets. This moratorium is a crucial protection mechanism to allow the resolution process to proceed unhindered.
Allegations of Illegal Adjustments
The core of Sumeet Industries’ grievance lies in the alleged actions of DGVCL. The company claims that DGVCL adjusted its security deposit of Rs. 8,30,25,606 after the CIRP had already begun. This adjustment, according to the appellant, was unlawful as it occurred post-initiation of the insolvency proceedings.
Furthermore, Sumeet Industries alleges that DGVCL appropriated an additional Rs. 3,78,78,845.48 towards outstanding electricity dues that accrued before the CIRP commenced. The appellant argues that this appropriation also violated the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, which prohibits such actions by creditors during the insolvency resolution period.
NCLT’s Dismissal and Subsequent Appeal
The Adjudicating Authority (NCLT Ahmedabad Bench) dismissed the application filed by Sumeet Industries’ Resolution Professional. The specifics of the NCLT’s reasoning for dismissal were not detailed in the provided brief facts but led to the current appeal before the NCLAT.
The Eagle Group, identified as the Successful Resolution Applicant (SRA) in the CIRP of Sumeet Industries, has been arrayed as Respondent No. 2 in the appeal. The SRA’s involvement highlights the potential impact of this dispute on the successful resolution plan and the future of the company.
Legal Precedents and Moratorium Significance
The case hinges on the interpretation and application of the moratorium provisions under the Insolvency and Bankruptcy Code. Legal experts emphasize that the moratorium is a cornerstone of the CIRP, ensuring that the corporate debtor’s assets are preserved and that a fair resolution plan can be implemented without undue pressure from individual creditors.
Adjustments of security deposits and appropriation of pre-CIRP dues by utility providers during the moratorium have been contentious issues in numerous insolvency cases across India. Courts have often ruled that such actions, if taken without the Adjudicating Authority’s approval, constitute a violation of the Code and can lead to penalties or directions for reversal.
Implications for Creditors and Debtors
The outcome of this appeal could set a significant precedent for how utility companies and other creditors interact with corporate debtors undergoing CIRP. If Sumeet Industries prevails, it would reinforce the strict enforcement of the moratorium and potentially lead to a surge in similar claims by other corporate debtors against utility providers.
Conversely, if the NCLT’s order is upheld, it might signal a broader interpretation of creditor rights or specific clauses within service agreements that allow for such adjustments, even during insolvency. This could create uncertainty for companies in distress and their resolution professionals.
What to Watch Next
All eyes will be on the NCLAT’s judgment as it scrutinizes the actions of DGVCL and the NCLT’s decision. The appellate tribunal’s interpretation of Section 14 of the Code in this specific context will be crucial. Investors, creditors, and corporate entities will be closely monitoring the proceedings for clarity on the sanctity of the moratorium and the procedures for handling security deposits and outstanding dues during insolvency resolution.
