The National Company Law Appellate Tribunal (NCLAT) on Friday set aside National Company Law Tribunal, Kolkata bench’s June 28 order that rejected State Bank of India’s insolvency petition against Rohit Ferro Tech. SBI had moved a plea in the NCLT under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Rohit Ferro Tech, but the adjudicating authority dismissed the appeal “on the ground that the circular issued by the RBI, dated February 12, 2018, to file Corporate Insolvency Resolution Process (CIRP) has been declared to be ultra vires and illegal” by the Supreme Court.
According to the RBI’s circular, an application under Section 7 can be filed only on completion of the period of 180 days after August 31, 2018. SBI filed the application on August 23, 2018. NCLAT said, from the record, it was found that SBI did not file the application pursuant to the RBI circular.
In its order, the NCLT, however, accepted the fact that there was a default and debts are payable by Rohit Ferro to the state-run lender. As of end of July, 2018, Rohit Ferro’s debt to SBI stood at Rs 1,792 crore. SBI took the company to the insolvency court after Rohit Ferro committed default in paying the debt.
The NCLAT, however, said, “Petition under Section 7 of the IBC is to be considered by the adjudicating authority on its own merits taking into consideration the records and in absence of any evidence to show that SBI filed the application only because of the circular issued by RBI, it was not open to the adjudicating authority to reject the application.”
“We set aside the impugned order dated June 28, 2019, and remit the case to the adjudicating authority, Kolkata bench, Kolkata with direction to admit the application under Section 7 after notice to the corporate debtor (Rohit Ferro), so as to enable the corporate debtor to settle the matter, if it so chooses before admission,” the NCLAT order said.
Source: Financial Express, September 21, 2019