NCLAT sets aside CIRP as appellant tried to settle dues of financial creditors

  • Blog|News|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 21 March, 2022

Recent Posts

Blog, News, GST & Customs

HC Quashed Order Confirming Tax Demand as Disparity Was Due to Wrong Reporting of CGST & SGST Instead of IGST

News, Blog, Income Tax

Sec. 153C Proceedings Can Be Initiated Only if Seized Material is Likely to Have Bearing on Determination of Income

Latest from Taxmann

Corporate insolvency resolution process; Limitation period; Insolvency and Bankruptcy; CIRP

Case Details: Air Travel Enterprises India Ltd. (Green Gateway Leisure Ltd.) v. Union Bank of India - [2021] 133 taxmann.com 462 (NCL-AT)[09-09-2021]

Judiciary and Counsel Details

    • Anant Bijay Singh, Judicial Member and Ms. Shreesha Merla, Technical Member
    • Dr. KSRavichandran, (PCS) and Ms. S. Manjula Devi, Adv. for the Appellant. 
    • Alok Kumar, Shinoj K. Narayanan , Client Li Johny, Advs. and Raju P.K., RP for the Respondent.

Facts of the Case

The appellant was the major shareholder of the corporate debtor which was formed as a special purpose vehicle (SPV) for implementation and operation of the project i.e. Resort. The Corporate debtor had obtained financial assistance from a consortium of the banks.

During the implementation of the project, additional funds were required and lenders agreed to grant additional term loans. However, later banks informed the appellant that they would not provide any additional funds and declared their accounts as Non-Performing Assets (NPA) on 27-10-2017.

One Time Settlement (OTS) proposal was rejected by a consortium of banks. The Financial creditor-bank filed an application under section 7 on 27-12-2019 for initiating CIRP against the corporate debtor. The Adjudicating Authority by impugned order admitted said application.

On appeal, the corporate debtor claimed that said application was time-barred as the application was filed after a prescribed limitation period of three years.

It was held that application filed under section 7 on 27-12-2019 for default dated 27-10-2017 was not barred by limitation as facts substantiated that period of limitation of three years as provided under article 137 of Limitation Act, 1963 was satisfied.

NCLAT Held

The Appellate Tribunal held that since there had been a conscious effort on behalf of the appellant to settle dues of banks and the corporate debtor had more than suffered negative impact of the crisis, an opportunity was to be given to settle which would help to mitigate blow and, therefore, admission of an application filed under section 7 was to be set aside. However, the corporate debtor was to be directed to settle dues in six months.

Case Review

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied