In Kampalapura Narasimaiah Jayalakshmi & Ors. v. Vistara Media Pvt. Ltd. & Anr. in Mysore Mercantile Company Ltd. v. Vistara Media Pvt. Ltd., the National Company Law Tribunal (NCLT), Bengaluru Bench dealt with an intervention application filed during the pre-admission stage of a Section 7 Insolvency and Bankruptcy Code (IBC) proceeding. Mysore Mercantile Company Ltd. had initiated insolvency proceedings against Vistara Media Pvt. Ltd. seeking commencement of the Corporate Insolvency Resolution Process (CIRP). During the pendency of the petition, the applicants sought permission to intervene and represent the corporate debtor, claiming that they had invested substantial funds in the company, acquired shares from former promoters, and had been inducted into management positions such as Additional Director and CEO. They argued that the financial creditor and former promoters were attempting to misuse multiple legal proceedings, including the insolvency petition, to jeopardize their investment and disrupt the company’s operations. The applicants also pointed out that proceedings under Section 58 of the Companies Act regarding rectification of the register of members were already pending before the NCLT.

Legal Issue

 

Whether alleged shareholders/investors claiming management and shareholding rights in a corporate debtor can intervene or represent the corporate debtor at the pre-admission stage of a Section 7 Insolvency and Bankruptcy Code proceeding.

 

Brief Facts

A Section 7 petition under the Insolvency and Bankruptcy Code, 2016 was filed by Mysore Mercantile Company Ltd. seeking initiation of CIRP against Vistara Media Pvt. Ltd. During pendency of the petition at the admission stage, the applicants sought intervention and permission to represent the corporate debtor.

The applicants claimed that they had invested substantial funds into the company, acquired shares from erstwhile promoters, and had been inducted into management positions including Additional Director and CEO. They alleged that the financial creditor and former promoters had initiated multiple proceedings, including oppression and mismanagement proceedings, commercial litigation, criminal complaints and the present insolvency petition , with the intention of jeopardising their investment and disrupting the company’s operations. They also pointed out that proceedings under Section 58 of the Companies Act regarding rectification of the register of members were pending before the NCLT.

The financial creditor opposed the intervention application, contending that at the pre-admission stage of a Section 7 petition, only the financial creditor and the corporate debtor are necessary parties, and that disputes regarding shareholding, management or internal affairs cannot be adjudicated within insolvency proceedings.

Court’s Reasoning

The NCLT reiterated the settled position that proceedings under Section 7 of the IBC are summary in nature and the inquiry at the admission stage is confined to determining the existence of a financial debt and occurrence of default. The Tribunal relied upon the NCLAT judgment in Deb Kumar Majumdar v. State Bank of India, wherein it was held that no person other than the financial creditor and the corporate debtor has a vested right to be heard at the pre-admission stage of a Section 7 application.

The Tribunal observed that the applicants’ grievances essentially related to disputes concerning transfer of shares, recognition of shareholding, management rights and alleged oppression by other stakeholders. Such disputes fall within the domain of company law proceedings and cannot be imported into insolvency adjudication at the threshold stage. The Tribunal emphasised that the IBC is not intended to become a forum for adjudicating collateral disputes regarding internal corporate management.

The NCLT further noted that the applicants themselves had already initiated separate proceedings under Section 58 of the Companies Act seeking rectification of the register of members. Therefore, the appropriate forum for adjudicating their claimed shareholder rights already existed. Mere allegations of fraud, pendency of parallel proceedings, or apprehension that the Section 7 petition may proceed ex parte do not create an independent right of intervention in insolvency proceedings.

Importantly, the Tribunal held that the applicants failed to demonstrate how they were either “necessary” or “proper” parties for adjudication of the Section 7 petition. Since the adjudicatory scope at the pre-admission stage is statutorily narrow, permitting intervention by third parties would undermine the time-bound framework and efficiency objectives underlying the IBC.

Judgment 

The NCLT dismissed the intervention application and refused to permit the applicants to represent or intervene on behalf of the corporate debtor in the Section 7 proceedings. However, the Tribunal clarified that dismissal of the application would not prejudice any other legal remedies available to the applicants in separate proceedings.

Legal Significance

The judgment reinforces the limited jurisdiction exercised by the Adjudicating Authority at the pre-admission stage of Section 7 proceedings. It clarifies that insolvency proceedings cannot be converted into a platform for adjudicating shareholder disputes, management conflicts or allegations relating to internal corporate affairs. The ruling also strengthens the jurisprudential distinction between insolvency adjudication and company law remedies by reaffirming that only issues relating to “debt” and “default” are relevant at the threshold stage under the IBC.

Access the Official Judgement here

Case Title

Kampalapura Narasimaiah Jayalakshmi & Ors. v. Vistara Media Pvt. Ltd. & Anr.

in Mysore Mercantile Company Ltd. v. Vistara Media Pvt. Ltd.

Case Number

I.A. No. 768/2025 in CP (IB) No. 21/BB/2025

Court

National Company Law Tribunal Bengaluru Bench

Bench

Shri Sunil Kumar Aggarwal (Member Judicial)

Shri Radhakrishna Sreepada (Member Technical)

Date of Order

16 March 2026