The NCLAT upheld the initiation of the Corporate Insolvency Resolution Process (CIRP), affirming the correct determination of the default date and the extension of the limitation period.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Rakesh Kumar Jain (Judicial Member) and Arun Baroka (Technical Member) upheld the initiation of the Corporate Insolvency Resolution Process (CIRP) as the default date determined by the NCLT was found valid, the petition was within the limitation period as extended by the restructuring acknowledgement, and the exercise of rights under the restructuring plan was legally sound.
The NCLAT, in its judgment, addressed the appeal challenging the National Company Law Tribunal (NCLT) Mumbai's order dated October 27, 2023, which had initiated the Corporate Insolvency Resolution Process (CIRP) against Vilson Roofing Product Pvt. Ltd. The appeal was filed by a suspended director of the Corporate Debtor, contesting the NCLT's decision to admit Company Petition No. 9 of 2023, arguing several points including incorrect default date, improper determination of default, limitation issues, and non-compliance with regulatory circulars.
The Appellant contended that the NCLT erred in accepting a default date prior to the restructuring of the loan and that the petition was barred by limitation. They argued that the Corporate Debtor's payments and restructuring agreements should have been considered in assessing default and limitation. Additionally, the Appellant claimed procedural and substantive errors, including alleged malicious intent and lack of evidence by Respondent No.1.
On the other hand, Respondent No.1, an Asset Reconstruction Company, justified the initiation of CIRP, asserting that the debt was validly assigned, and the Corporate Debtor defaulted under the terms of a Sanctioned Restructuring Plan. They refuted claims of limitation issues by arguing that the acknowledgement of debt and the restructuring plan extended the limitation period.
The NCLAT upheld the NCLT's decision, affirming that the tribunal's findings were supported by the facts and evidence, including the proper application of the limitation period and valid exercise of rights under the restructuring plan. The Appellant’s objections regarding procedural errors, limitation, and compliance were found to be without merit. Consequently, the appeal was dismissed, and the CIRP against Vilson Roofing Product Pvt. Ltd. was allowed to proceed as per the NCLT’s order, with the appointed Interim Resolution Professional directed to continue the process in accordance with the Insolvency and Bankruptcy Code, 2016.
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