NCLT Admits Oban Fashions Under Insolvency At Behest Of Sunrise Knitting Mills
NCLT Admits Oban Fashions Under Insolvency At Behest Of Sunrise Knitting Mills
The company had failed to pay Rs1.57 crore dues
The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted Oban Fashions Pvt Ltd (corporate debtor), a wholly-owned subsidiary of listed knitwear brand Rupa & Co Ltd, under the Corporate Insolvency Resolution Process (CIRP) in an application filed by Sunrise Knitting Mills Pvt Ltd (operational creditor).
The division bench of KR Saji Kumar (Judicial Member) and Sanjiv Dutt (Technical Member) appointed Sanjay Ramdas Mahajan as an Interim Resolution Professional (IRP).
During 2016-2017, Oban Fashions entered licensing agreements with international fashion brands FCUK and Fruit of the Loom to market and distribute their products in India.
The bench held, “The debt owed by Oban Fashions to Sunrise Knitting against the garments supply, falls under Section 5(21) of the Insolvency and Bankruptcy Code (IBC).”
It added, “Hence, we find that the operational creditor has substantiated the existence of a debt above the threshold limit prescribed under the IBC. It is due and remained unpaid by the corporate debtor.”
Earlier, Sunrise Knitting’s counsel Rohan Rajadhyaksha argued that in 2019, the company supplied goods to Oban Fashions, but it did not receive payments for the same.
The counsel added, “Oban Fashions never denied or raised objection on the quality of the goods supplied. It assured payment of dues by seeking further time.”
Sunrise Knitting filed the case against Oban Fashions after the company failed to pay Rs1.57 crore dues.
However, representing Oban Fashions, its counsels Shyam Kapadia and Amogh Joshi contended that the application did not disclose how the company calculated the default date.
They argued, “There is no basis or calculation to show the date of default in the absence of a written contract between the parties.”
Meanwhile, commenting on the matter, Ashish Pyasi, a partner at Aendri Legal said, “The management of Oban Fashions has the option to challenge the order before the National Company Law Appellate Tribunal (NCLAT) or it can settle the dispute with the operational creditor before the formation of the Committee of Creditors (CoC).”
