NCLT admits insolvency plea against textile company Shrivallabh Pittie
- Indian Overseas Bank, one of the financial creditors, had dragged the debt-laden firm to NCLT over non-payment of dues
Mumbai: The National Company Law Tribunal on Wednesday admitted Indian Overseas Bank’s petition seeking initiation of corporate insolvency resolution process against textiles manufacturer Shrivallabh Pittie South West Industries.
Indian Overseas Bank, one of the financial creditors, had dragged the debt-laden firm to NCLT over non-payment of dues after it failed to make a payment of ₹73.92 crore to the bank.
A bench led by Justice Kuldeep Kumar Kareer said, “We are of the considered view that the petitioner, in this case, has been able to establish the factum of existence of financial debt and its default having been committed by the Corporate Debtor and further that the petition has been filed well within the period of limitation. Therefore, we find the present petition to be a fit one for admission under Section 7 of the Code.”
Section 7 allows a financial creditor to initiate insolvency proceedings against a corporate debtor for non-payment of dues owed to them.
The tribunal appointed Avil Menzes as the interim resolution professional to take over the day-to-day affairs of the company.
According to the order, the lender's consortium, including the bank, and the company executed a working capital consortium agreement in March 2012.
Pertinently, Shrivallabh Pittie repeatedly defaulted in repaying the amount due and payable under the working capital facility, and was declared as a non-performing asset (NPA) in March 2022.
The bank recalled the facility and demanded payment of an outstanding amount of ₹69 crore within ten days. The company, however, gave frivolous reasons for non-payment of the outstanding amount but never denied the obligation to pay. The company’s dues stood at a total of over ₹73 crore, the order showed, and the bank filed the petition based on this.
Advocate Nausher Kohli along with counsel Ajiz M.K. represented the Indian Overseas Bank while advocate Avinash Khanolkar appeared for Shrivallabh Pittie in the matter.
Kohli, counsel appearing for the bank argued that the company has not disputed the outstanding dues but has only stated that due to covid-19 pandemic, the textile industry has been badly impacted due to which revenues could not be generated.
The company had stated that it was trying to infuse ₹28 crore by way of equity and optionally convertible debentures to meet the working capital requirements.
The tribunal in its order observed that no points were raised on behalf of the company.
“Even otherwise in the absence of any reply having been filed on behalf of the Corporate Debtor, no substantive defence has been raised. Besides, the averments made in the petition are deemed to have been admitted as correct as the same have not been controverted at all by way of reply,” NCLT said.
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First Published:11 Oct 2023, 05:48 PM IST
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