The National Company Law Appellate Tribunal (NCLAT) has set aside the order of the NCLT’s Mumbai bench, dismissing a plea to initiate corporate insolvency resolution process (CIRP) against Mittal Corp Ltd and has asked the tribunal to decide on the admission of the application on merits in an expeditious manner.
In its appeal, Punjab National Bank (PNB), the financial creditor, submitted that the total outstanding debt and dues payable by the maker of steel products to the erstwhile Oriental Bank of Commerce (now merged with PNB) is to the tune of over Rs 244.85 crore.
According to the bank, the Joint Lenders Forum (JLF) decided to classify the account as ‘Special Mention Account’ (SMA) as per Reserve Bank of India guidelines. The JLF sanctioned a restructuring package pursuant to which a master restructuring agreement was entered into between the appellant and the corporate debtor on March 30, 2015, but the corporate debtor did not adhere to the financial norms, as a result of which a Strategic Debt Restructuring Scheme (SDR) was invoked.
On account of failure of the SDR, the account was classified as NPA with effect from June 30, 2016 and on March 20, 2018, the appellant submitted an application under Section 7 of the Insolvency and Bankruptcy Code before the National Company Law Tribunal, Mumbai Bench. The bench dismissed the plea in December last year, following which the bank moved the appellate tribunal.
The NCLAT, in its judgement, noted that it is an admitted fact that the appellant filed an application under Section 7 on March 20, 2018, much before the 180 days.
A three-judge bench noted that the absence of any cogent evidence to show that the lender has filed the application only pursuant to the ‘Circular’ issued by the RBI, and it was not applicable to the facts of the instant case, it was not open to the adjudicating authority to reject the application on this ground.
“For the reasons aforesaid, we set aside the impugned order dated 20th December, 2019 and remit the case to the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, with a direction to decide the admission of the application on merits as expeditiously as practicable,” said the order.