Supreme Court Seeks CBI, ED Probe Into ₹150 Crore Transactions During Stalled CIRP

The Bench of Chief Justice of India Surya Kant and Justice Joymalya Bagchi took cognisance of the petition filed by a Director of Bengal Cold Rollers Private Limited, an Operational Creditor of M/s KLSR Infratech Limited.

During the hearing, Advocate Ashwini Kumar Upadhyay appeared for the petitioner.

The Court has issued notice to the CBI, ED and SFIO in the matter.

The petitioner has alleged a 30-month delay in completion of CIRP, collusion between State authorities and the Corporate Debtor, manipulation of statutory records, and illegal financial transactions worth approximately ₹150 crore during the subsistence of a statutory moratorium under the Insolvency and Bankruptcy Code, 2016 (IBC).

The Corporate Debtor was admitted into CIRP by the National Company Law Tribunal (NCLT), Hyderabad on July 14, 2023, following proceedings initiated under Section 9 of the IBC. With the admission, a moratorium under Section 14 came into force, the Board of Directors stood suspended under Section 17, and an Interim Resolution Professional (IRP) was appointed.

However, the National Company Law Appellate Tribunal (NCLAT), Chennai Bench, passed an interim order on July 18, 2023 staying further proceedings. The petitioner contends that the stay neither set aside the admission order nor restored management to the suspended directors. Relying on the Supreme Court’s judgment in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association (1992), the plea asserts that the moratorium and suspension of the Board continued to operate in law.

Despite this, the suspended directors allegedly resumed control of the Corporate Debtor by misrepresenting facts before statutory authorities, resulting in the company’s status being reflected as “Active” on the Ministry of Corporate Affairs portal. During the moratorium, multiple charges were allegedly created and loans aggregating nearly ₹148–150 crore were raised without approval of the IRP, in alleged violation of Sections 14, 17 and 23 of the IBC. The IRP has reportedly informed the NCLAT that the suspended directors never handed over management and continued to operate the company.

The petition further highlights that the appeal before the NCLAT has remained pending for over 30 months, far exceeding the outer limit of 330 days prescribed under the IBC. Citing Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020), the petitioner argues that such prolonged delay defeats the very object of time-bound insolvency resolution and erodes asset value.

The matter, according to the petitioner, took a grave turn on August 13, 2025, when a Member of the NCLAT recused himself in open court after disclosing that he had been approached by a sitting Chief Justice of a High Court seeking a favourable order for the suspended directors. The Member reportedly stated that he possessed call records and messages evidencing the approach. However, the subsequent written order did not clarify on whose behalf the approach was made, and the petitioner’s request for access to video recordings and records of the open-court proceedings was denied by the Registry.

Alleging violation of Articles 14 and 21, the petitioner has sought restoration of control to the IRP, preservation and supply of court records, a CBI and SFIO investigation into the alleged fraud and manipulation, and expeditious disposal of the pending NCLAT appeal.