Tribunal Initiates Corporate Insolvency Resolution Process; Acknowledgment of Debt Resets Limitation Period
In a significant ruling, the National Company Law Tribunal (NCLT) Amaravati Bench has admitted an insolvency petition filed by Canara Bank against KGOC Terminals Pvt. Ltd. The tribunal's decision, delivered on June 16, 2026, initiates the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
The case was brought before the tribunal by Canara Bank, formerly Syndicate Bank, alleging a default in repayment of a financial debt amounting to Rs. 64.69 crore as of December 1, 2020. The loan was initially sanctioned for setting up bulk liquid terminals, but defaults in repayment led to the account being classified as a Non-Performing Asset (NPA) on the same date.
A key aspect of the tribunal's decision was the acknowledgment of debt through a One Time Settlement (OTS) proposal submitted by the corporate debtor, which was deemed sufficient to reset the limitation period. This acknowledgment was crucial in determining the petition's admissibility, given that the initial default occurred over three years before the filing of the petition.
The tribunal also addressed the applicability of Section 10A of the IBC, which suspends insolvency proceedings for defaults occurring during a specified period due to the COVID-19 pandemic. The tribunal clarified that protection under Section 10A did not apply as the default occurred prior to this exclusion period.
The NCLT Amaravati Bench, comprising Mr. Kishore Vemulapalli, Member (Judicial), and Mr. Umesh Kumar Shukla, Member (Technical), found the petition to be complete and free from disciplinary proceedings against the proposed Interim Resolution Professional (IRP). Consequently, the tribunal appointed Mr. Dommeti Surya Rama Krishna Saibaba as the IRP to oversee the CIRP.
In conclusion, the tribunal declared a moratorium as per Section 14 of the IBC, preventing the initiation of any suits or continuation of pending suits or proceedings against the corporate debtor. This order marks a significant development in the ongoing insolvency proceedings involving KGOC Terminals Pvt. Ltd.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process (CIRP) initiated under Section 7 of the Code - Acknowledgment of debt through One Time Settlement (OTS) proposal considered sufficient to restart limitation period - Protection under Section 10A of the Code not available for defaults occurring before the specified suspension period.
Statutory provision(s):
- Insolvency and Bankruptcy Code, 2016 Section 7
- Insolvency and Bankruptcy Code, 2016 Section 10A
- Insolvency and Bankruptcy Code, 2016 Section 4
- Insolvency and Bankruptcy Code, 2016 Section 14
Canara Bank v. KGOC Terminals Pvt. Ltd., (NCLT)(Amaravati Bench) : Law Finder Doc id # 2942492
