Tribunal Directs NCLT to Decide within a Week Insolvency Plea Against Sintex Industries
The National Company Law Appellate Tribunal (NCLAT) directed the National Company Law Tribunal (NCLT) Ahmedabad bench to decide whether to admit or reject an insolvency plea filed against Sintex Industries by Punjab National Bank within a week.
A two-member bench of the NCLAT headed by the Chairperson Justice BL Bhat stated that even after its earlier direction given in December 2020 to the NCLT regarding the passing of an order of either admitting or rejecting the public sector bank's plea, it 'overlooked' the directions of the Appellate Tribunal.
The factual background of the case is that Punjab National Bank had declared its ₹1,203.26 crore exposure to Sintex Industries as a fraud. Sintex Industries is a leading producer of plastic water tanks and manufacturer of corduroy fabrics.
According to Section 7 of the Insolvency Code, a financial creditor can get insolvency proceedings initiated against a corporate debtor. The Appellate Tribunal on 12 December 2020 gave directions to the NCLT to "Expedite the matter and make all endeavours for concluding the Resolution Process within the timelines prescribed under the Insolvency Code."
The said directions were given by the Appellate Tribunal to the NCLT on receiving a plea by Punjab National Bank wherein it alleged that the timelines under the Insolvency Code have not been adhered to and the matter was getting inordinately delayed by the NCLT.
The NCLAT said that "Despite the direction given by this NCLAT to the Adjudicating Authority (NCLT), it failed to pass an order of 'admission' or 'rejection' in respect of such Application in terms of the mandate of Section 7(4) & (5) of the I&B Code and instead embarked upon a course of dealing with an Application of Corporate Debtor (Sintex) at the pre-admission stage transgressing timelines prescribed under Insolvency and Bankruptcy Code (I&B Code) and overlooking the direction passed by this Appellate Tribunal."
It further said that it was unfortunate and added that dealing with the matter in this manner was unjustified. The NCLT is bound to comply with the orders of the NCLAT without delay.
The Appellate Tribunal further remarked that "Without expressing any opinion on the merits of the case, we direct the Adjudicating Authority to pass an order of 'admission' or 'rejection' of the Application filed by the Appellant under Section 7 of the I&B Code within one week and report compliance to this Appellate Tribunal."