Interim Finance Is Financial Debt Requiring 66% CoC Approval; NCLT Cannot Direct Contribution Without Such Approval: NCLT Mumbai
The National Company Law Tribunal (NCLT), Mumbai Bench, has recently held that the interim finance constitutes financial debt under the provisions of the IBC, 2016, and can only be raised with the approval of at least 66% of the Committee of Creditors (CoC). The tribunal held that “the term contribution is not defined in the code; hence, the contribution is nothing else but...
The National Company Law Tribunal (NCLT), Mumbai Bench, has recently held that the interim finance constitutes financial debt under the provisions of the IBC, 2016, and can only be raised with the approval of at least 66% of the Committee of Creditors (CoC).
The tribunal held that “the term contribution is not defined in the code; hence, the contribution is nothing else but interim finance, which can be raised only with 66% voting by the CoC in compliance with the provisions of Section 28 of the Code.”
The present application was filed by the resolution professional (RP) of Morarjee Textiles Limited seeking directions from the CoC to contribute Rs. 15 Cr. as interim finance for meeting the urgent operational cost (renewal of insurance and payment of electricity dues, etc.).
The bench comprising Judicial Member Sushil Mahadeorao Kochey and Member Technical Prabhat Kumar relied on the ruling of ODAT GmbH…v… CA Santanu Brahma (IRP) and Ors. (2025) ibclaw.in 581 NCLAT, where it was observed that “if the CIRP cost is to be incurred or even the fee as provided in Regulation 34(B), it has to be by way of interim finance for which the resolution has to be voted by 66% voting share of the CoC.”
The resolution professional raised the issue of CIRP cost, relying upon Regulations 33 and 34, which provide for the cost of the resolution professional and interim resolution professional.
The bench observed that the interim finance is a financial debt raised by the RP during the insolvency process; therefore, as per section 28 of the IBC, it can only be raised after approval of a 66% voting share of the CoC.
The bench concluded that the contribution without CoC approval has no basis in the code; therefore, the interlocutory application was dismissed due to lack of merit.
Case Name: AXIS BANK LIMITED V/s MORARJEE TEXTILES LIMITED
Case No.: IA 12/2025 IA(IBC)(PLAN) 45(MB)2025 IA 552/2025 IA(I.B.C)/2316(MB)2025 IA(I.B.C)/3762(MB)2025 IN C.P. (IB)/1318(MB)2022
Coram: Judicial Member Sushil Mahadeorao Kochey and Member Technical Prabhat Kumar
Order Date: 23.09.2025