NCLT Admits Punjab National Bank's Insolvency Petition Against Aban Offshore Ltd
Corporate Insolvency Resolution Process Initiated; Moratorium Declared Despite Debtor's Solvency Arguments
In a significant ruling, the National Company Law Tribunal (NCLT) Chennai Division Bench has admitted the insolvency petition filed by Punjab National Bank against Aban Offshore Ltd, marking the commencement of the Corporate Insolvency Resolution Process (CIRP). The bench, comprising Member (Judicial) Shri Sanjiv Jain and Member (Technical) Shri Venkataraman Subramaniam, delivered the judgment on September 1, 2025, underlining the limited discretion of the Adjudicating Authority in such matters.
The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was filed by Punjab National Bank, the financial creditor, seeking CIRP initiation against the corporate debtor, Aban Offshore Ltd. The bank established the existence of financial debt and default using documentary evidence, including balance confirmation letters and audited balance sheets.
Despite objections from Aban Offshore Ltd, including arguments about solvency and liquidity, the NCLT ruled that such factors were immaterial at the stage of admission. The tribunal reiterated the precedent set by the Supreme Court that once debt and default are proven, the adjudicating authority's discretion to reject the application is limited, barring incomplete applications or disciplinary proceedings against the proposed Interim Resolution Professional (IRP).
Notably, the judgment referenced the Vidarbha Industries case but emphasized it as an exception rather than the rule. The tribunal clarified that solvency or liquidity mismatches do not preclude CIRP initiation if debt and default are established.
The ruling also addressed the legal position regarding proceedings under the SARFAESI Act and OTS proposals, stating that pending SARFAESI proceedings do not legally hinder CIRP initiation. The corporate debtor's reliance on OTS proposals was deemed insufficient to prevent the admission of the insolvency petition, as the financial creditor retains commercial discretion to accept or reject such offers.
The tribunal appointed Headway Resolution and Insolvency Services Private Limited as the IRP and declared a moratorium under Section 14 of the Code. This prohibits suits, transfers, encumbrances, foreclosures, and recovery actions against the corporate debtor, ensuring the continuation of essential services during the CIRP period.
The judgment underscores the importance of adhering to the statutory framework of the Insolvency and Bankruptcy Code, focusing on debt resolution in a timely manner rather than facilitating settlements at the pre-admission stage.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Financial Creditor's petition under Section 7 - Proof of financial debt and default by Corporate Debtor - Admission of Corporate Insolvency Resolution Process (CIRP) despite Corporate Debtor's objections based on OTS proposals and solvency arguments.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016, Section 7, Section 7(5)(a), Section 14, Section 17, Section 18 of Limitation Act, 1963
Punjab National Bank v. Aban Offshore Ltd., (NCLT) : Law Finder Doc id # 2782837
