NCLAT Allows Withdrawal of Insolvency Case Against Oswal Overseas After Settlement with Creditor

The National Company Law Appellate Tribunal (NCLAT) has allowed the withdrawal of an appeal filed against insolvency proceedings initiated against Oswal Overseas after a settlement with its financial creditor LH Sugar Factories.

A joint application was moved before a NCLAT bench of Justice Mohammad Faiz Alam Khan and Naresh Salecha by Oswal Overseas and its financial creditor LH Sugar Factories to inform the appellate tribunal about an amicable settlement of their dispute.

They also placed the settlement terms on record before the appellate tribunal. Moreover, a demand draft for ₹2.80 crore has already been handed over to LH Sugar Factories following the settlement between the parties.

Counsel appearing for LH Sugar Factories informed the NCLAT that "now the financial debt so far as the Respondent No 1 (LH Sugar Factories) is concerned has been discharged in full and final".

Earlier in this matter, the NCLAT on June 8, 2026, restrained the Interim Resolution Professional (IRP) of Oswal Overseas from taking further steps in the matter.

Parties submitted that an application under Section 12A of the Insolvency and Bankruptcy Code (IBC) is required to be moved before the National Company Law Tribunal (NCLT) for initiating the withdrawal process.

In view of the recent amendments to the Insolvency and Bankruptcy Code, the matter is required to be placed before the Committee of Creditors (CoC), which can be constituted only after the claims are collated.

Accordingly, a request was made to modify the interim order dated June 8, 2026, to allow the Interim Resolution Professional to verify and collate claims and constitute the CoC, while restraining any further steps in the corporate insolvency resolution process, including the invitation of Expressions of Interest (EOIs), until the NCLT decides the application filed under Section 12A of the Code.

Agreeing to the submission, the NCLAT, in its order, said, "...if any withdrawal application is filed by Respondent no 1, financial creditor, the IRP may proceed further to constitute the CoC, after collating the claims, but will not move further for inviting the EOI till the application filed under Section 12A of the Code is disposed of by NCLT".

The NCLAT accordingly also dismissed the appeal filed by Paramjeet Singh, suspended managing director of Oswal Overseas Ltd, challenging the insolvency proceedings initiated against the company.

Earlier, the New Delhi-based bench of the NCLT, on June 8, 2026, directed the initiation of CIRP against Oswal Overseas, admitting the plea of LH Sugar Factories.

This NCLT order was challenged before the appellate tribunal by the suspended board of Oswal Overseas.

In August 2024, Oswal Overseas approached the financial creditor seeking a short-term loan of Rs 2.25 crore, citing acute financial distress and failure to pay sugarcane prices to their supply farmers.

Around the same time, the corporate debtor also presented a proposal for the purchase of the company to the financial creditor, which, according to the financial creditor, was mutually exclusive of the loan transaction.

The financial creditor stated that Oswal Overseas failed to repay the disbursed amount of Rs 2.25 by November 30, 2024, and that it was not interested in pursuing any transaction of purchase of the company.

Following this, it issued a notice and moved the NCLT claiming Rs 2.44 crore due as on October 30, 2025, comprising principal of Rs 2.25 crore and default interest of Rs 19.38 lakh.