A coram comprising Justice Ashok Bhushan (Chairperson) and Technical member Indevar Pandey while upholding the order of the NCLT, Mumbai observed:

“The sustainability of proceedings at the behest of the shareholder would not be a reasonable proposition…permitting shareholders to pursue such proceedings would run contrary to the object of the Code, besides leading to multiplicity of proceedings.”

The Appeal was filed by Peninsula Holdings, a majority shareholder and owner of preference shares in the Corporate Debtor, arguing that the order of admission of insolvency was “legally unsustainable and procedurally flawed”. Further, based on having majority shareholding in the Corporate Debtor, Peninsula Holdings argued that it qualified as “person aggrieved” to file an appeal challenging the initiation of insolvency proceedings. The present dispute arose from an order dated 14th July 2025, passed by NCLT Mumbai, admitting insolvency application under IBC filed by JM Financial Credit Solutions Limited (Financial Creditor) against the Corporate Debtor. The Financial Creditor had extended a series of loans to an Entity known as Hem Bhattad. The Corporate Debtor owned shares in the Entity and executed six corporate guarantees to secure a loan from the Financial Creditor. Upon default by the Entity, the Financial Creditor filed an insolvency application against the Corporate Debtor.

The NCLAT on whether a shareholder irrespective of the shareholding could be treated as a 'person aggrieved' entitled to file an appeal, held that Peninsula Holdings lacked locus standi to challenge the said insolvency proceeding. The Tribunal observed:

“Even otherwise, the right to appeal under Section 61 is a statutory right, not an equitable one. It must be exercised strictly within the scope of the statute. The IBC restricts appellate jurisdiction to those “persons aggrieved” whose legal rights under the Code are directly affected by the impugned order. A shareholder's financial loss or dilution of value does not constitute such a right; it is merely a consequence of the insolvency process……”.

The Tribunal also analysed the statutory framework of preference shares in the Companies Act, 2013, observing that preference shares form part of a company's share capital and not its financial liabilities. Therefore, preference shareholders do not enjoy creditor status unless an explicit contractual clause converts their investment into a financial debt obligation. The Tribunal referred to Peninsula Holdings own pleadings and submissions where it admitted to having no “independent business, revenue, employees, or assets” and functioning only as “passive investor”.