NCLT Mumbai Initiates Insolvency Process Against Carnival Films Entertainment Pvt. Ltd.

Tribunal Admits Application by J.C. Flowers Asset Reconstruction for Corporate Insolvency Resolution, Declares Moratorium

In a significant development, the National Company Law Tribunal (NCLT), Mumbai Bench, has admitted an insolvency application filed by J.C. Flowers Asset Reconstruction Pvt. Ltd. against Carnival Films Entertainment Pvt. Ltd. The tribunal, consisting of Member (Technical) Anil Raj Chellan and Member (Judicial) K.R. Saji Kumar, delivered the judgment on November 27, 2025, ordering the initiation of the Corporate Insolvency Resolution Process (CIRP).

The application, filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, was based on a default amounting to Rs. 71,00,44,358.66. The Tribunal found that the debt and default were satisfactorily established, with the corporate debtor, Carnival Films, having admitted the default. The financial creditor, J.C. Flowers Asset Reconstruction, acting as a trustee of JCF YES Trust, had acquired the debt through an assignment agreement with the original lender, Yes Bank Limited.

The NCLT's order includes a declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, which prohibits the continuation or initiation of suits, transferring or encumbering assets, and recovery actions against Carnival Films during the resolution process. Additionally, the tribunal has appointed Mr. Ashok Kumar Gulla as the Interim Resolution Professional (IRP) to oversee the management and assets of the corporate debtor.

Carnival Films, primarily in the cinema business, has been adversely affected by the COVID-19 pandemic, leading to its financial distress. The company's operations have been significantly hampered, with its cinema activities halted for over two years, resulting in an inability to repay its debts.

The tribunal's decision underscores the emphasis on the timely resolution of insolvency cases, as highlighted by precedents set by the Supreme Court in cases such as Innoventive Industries Limited v. ICICI Bank and E.S. Krishnamurthy v. Bharath Hi Tech Builders Pvt. Ltd. The NCLT reiterated that its role is to ensure the existence of a financial debt and default, not to assess the solvency or business viability of the debtor.

This judgment marks a critical step in addressing the financial challenges faced by Carnival Films, providing a structured mechanism for resolution under the Insolvency and Bankruptcy Code. The tribunal has directed the financial creditor to deposit Rs. 5,00,000 with the IRP to cover initial costs of the CIRP, further emphasizing the procedural rigor involved in insolvency proceedings.

Bottom Line:

Insolvency and Bankruptcy Code, 2016 - Application filed under Section 7 for initiation of Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor - Default and debt satisfactorily established - Application admitted and moratorium declared.

Statutory provision(s):  

• - Insolvency and Bankruptcy Code, 2016 - Section 7  
• - Insolvency and Bankruptcy Code, 2016 - Section 14  
• - Insolvency and Bankruptcy Code, 2016 - Section 17  
• - Insolvency and Bankruptcy Code, 2016 - Rule 11

J.C. Flowers Asset Reconstruction Pvt. Ltd. v. Carnival Films Entertainment Pvt. Ltd., (NCLT)(Mumbai) : Law Finder Doc Id # 2817218