NCLT Guwahati Bench initiates CIRP, appoints IRP amidst financial default claims by IL&FS Financial Services.
In a significant ruling, the National Company Law Tribunal (NCLT), Guwahati Bench, has admitted the insolvency petition filed by IL&FS Financial Services Limited against Adhunik Meghalaya Steels Private Limited. The tribunal, comprising Mr. Rammurti Kushawaha, Member (Judicial), and Mr. Yogendra Kumar Singh, Member (Technical), ordered the commencement of the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
The case, marked by a complex financial dispute, saw IL&FS Financial Services Limited, the financial creditor, seeking recovery of an unresolved financial debt amounting to Rs. 55,45,97,395 as of November 15, 2023. The tribunal's decision was anchored on the establishment of a financial debt and default exceeding the threshold of INR 1 crore, with the application deemed within the limitation period due to acknowledgments in financial statements and Supreme Court directives excluding certain periods due to the COVID-19 pandemic.
Despite the respondent, Adhunik Meghalaya Steels Private Limited, contesting the petition as mischievous and an abuse of the legal process, the NCLT ruled in favor of the financial creditor. The tribunal dismissed arguments concerning the manner of invocation and realization of pledged securities, emphasizing that these did not constitute a valid defense against the Section 7 application, as the financial debt and default were conclusively established.
The tribunal appointed Mr. Sanjay Kumar Poddar as the Interim Resolution Professional (IRP) to oversee the CIRP, directing immediate public announcement of the proceedings. The moratorium under Section 14 of the IBC will be in effect, ensuring no further legal actions against the corporate debtor during the resolution process.
This decision underscores the tribunal's limited jurisdiction at the admission stage, focusing solely on the existence of debt and default, as reiterated in recent Supreme Court judgments. The case now proceeds under the CIRP framework, with the IRP tasked with managing the corporate debtor's assets and operations.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - A financial debt and default having been established, and the application being within the limitation period, the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC must be admitted without delving into disputes regarding the invocation and realization of pledged securities.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 5(8), 7, 13, 14; Limitation Act, 1963 - Section 18.
