NCLAT remains the CIRP of National Textile Corporation Ltd., a public sector company
The National Company Law Appeals Tribunal (“NCLAT”), main bench, consisting of Judge Ashok Bhushan (President), Ms Shreesha Merla (Technical Member) and Shri Naresh Salecha (Technical Member), while ruling on a motion filed in National Textile Corporation Ltd. against Hero Solar Energy Pvt. Ltd., suspended the corporate insolvency resolution process (“CIRP”) against National Textile Corporation Ltd. (“Appellant”), which was initiated by NCLT Delhi see an order dated 27.05.2022. The order was placed on 31.05.2022.
The appellant, National Textile Corporation Ltd., is a public sector company under the Ministry of Textiles, Government of India. It was incorporated in 1968 and has textile factories all over India for the production of yarns and fabrics.
In 2015, the Solar Energy Corporation of India (SECI) granted an award letter to Hero Solar Energy Pvt. (“Operational Creditor/Intimed”), for the “design, engineering, manufacturing, supply, testing and commissioning” of rooftop solar panels in Indian cities. The Operational Creditor had entered into an Agreement with National Textile Corporation Ltd. (“Company Debtor/Appellant”) on 07.06.2016, for the installation of a photovoltaic solar power system on the roof for the production of electricity. The agreement did not contain any clause relating to the imposition of sanctions. In 2016-2017, the operational creditor completed the work in accordance with the agreement and the amount owing was paid by the appellant. However, an amount of Rs.13,84,254/- was withheld by the Appellant from the total payment.
The operational creditor had issued a notice of formal notice dated 23.10.2019 under section 8 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) to the appellant, for the remaining payment of Rs.13,84,254/-. As a result, the Operational Creditor filed a petition under Section 9 of the IBC before NCLT, New Delhi (“Awarding Authority”), requesting the commencement of CIRP against the Appellant.
The NCLT New Delhi Bench had allowed the petition under Section 9 of the IBC and the CIRP had been initiated against the appellant. see an order of 05.27.2022, noting that there was an exigible debt and that the Appellant had not proven the existence of a “pre-existing dispute” in respect of the default.
Proceedings before the NCLAT
The Appellant appealed the NCLT’s order of 05.27.2022 to the NCLAT, arguing that he settled the matter with the Operational Creditor, and requested freedom to enter the Settlement Agreement entered into between the parts. The Operational Creditor/Defendant has also confirmed that settlement has taken place. The NCLAT Bench suspended the Appellant’s CIRP and entered the case on 06.01.2022 for registering the Settlement Agreement and passing the Orders accordingly.
Case title: National Textile Corporation Ltd. against Hero Solar Energy Pvt. Ltd., Company Appeal (AT) (Insolvency) No. 631 of 2022.
Counsel for the Appellant: Mr. Tushar Mehta (SGI), with Ms. Mayuri Raghuvanshi, Ms. Purvat Wali and Mr. Vyom Raghuvanshi, lawyers.
Counsel for the Respondent: Mr. Pallav Mongia and Mr. Ashok Juneja, lawyers.
Click here to read/download the order