Kolkata Bench Initiates Corporate Insolvency Resolution Process, Imposes Moratorium Under IBC
In a significant development, the National Company Law Tribunal (NCLT), Kolkata Bench, has admitted the insolvency petition filed by ICICI Bank Limited against Anuj Textiles Private Limited. The tribunal's decision marks the initiation of the Corporate Insolvency Resolution Process (CIRP) against the textile company under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
The petition, filed by ICICI Bank, alleged that Anuj Textiles had defaulted on a financial debt amounting to Rs. 49.92 crore. The financial creditor had initially granted a credit limit of Rs. 297 million to the corporate debtor, which was later enhanced to Rs. 300 million. The account was classified as a Non-Performing Asset (NPA) on November 30, 2018. Despite multiple attempts to recover the dues through legal notices and a proposed One Time Settlement (OTS), the debt remained unpaid.
The tribunal, presided by Member (Judicial) Smt. Bidisha Banerjee and Member (Technical) CMDE Siddharth Mishra, found sufficient grounds to admit the application. The NCLT observed that the acknowledgment of debt in Anuj Textiles' balance sheet for FY 2022-23 and the OTS proposal extended the limitation period under Section 18 of the Limitation Act, 1963. This acknowledgment, according to the tribunal, was crucial in keeping the claim alive and within the limitation period.
The tribunal's order imposes a moratorium under Section 14 of the IBC, effectively halting all legal proceedings against Anuj Textiles during the resolution process. The public announcement of the CIRP will be made immediately, and Mr. Anup Kumar Singh has been appointed as the Interim Resolution Professional (IRP) to oversee the process.
The NCLT's order directs Anuj Textiles' management to cooperate fully with the IRP and provide all necessary documents and information. The tribunal also instructed ICICI Bank to deposit Rs. 3,00,000 with the IRP to cover initial expenses related to the public notice and claim invitations.
This case highlights the critical role of balance sheet acknowledgments and OTS proposals in insolvency proceedings, setting a precedent for similar cases under the IBC. The tribunal's decision reinforces the importance of adhering to statutory timelines and procedural requirements in financial disputes.
Bottom Line:
Insolvency and Bankruptcy Code - Admission of Section 7 application for initiation of Corporate Insolvency Resolution Process (CIRP) - Application filed by Financial Creditor alleging default in repayment of financial debt by Corporate Debtor - Limitation period extended under Section 18 of Limitation Act due to acknowledgment of debt in OTS proposal and balance sheet entries.
Statutory provision(s):
- Insolvency and Bankruptcy Code, 2016, Sections 7, 14
- Limitation Act, 1963, Section 18
- SARFAESI Act, 2002, Section 13(2)
- Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016, Rule 4(1)
- Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
- Insolvency Professional Regulations, 2016, Regulation 7A
ICICI Bank Limited v. Anuj Textiles Private Limited, (NCLT)(Kolkata) : Law Finder Doc Id # 2831336
