NCLAT Stays The CIRP Of National Textile Corporation Ltd., A Public Sector Enterprise

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri Naresh Salecha (Technical Member), while adjudicating a petition filed in National Textile Corporation Ltd. v Hero Solar Energy Pvt. Ltd., has stayed the Corporate Insolvency Resolution Process ("CIRP") against National Textile Corporation Ltd. ("Appellant"), which was initiated by NCLT Delhi vide an order dated 27.05.2022. The order has been passed on 31.05.2022. Brief Facts The Appellant, National Textile Corporation Ltd., is a Public Sector Enterprise under the Ministry of Textiles, Government of India. It was incorporated in 1968 and has textile mills pan India for the production of yarn and fabric. In 2015, the Solar Energy Corporation of India (SECI) had granted a Letter of Allocation to Hero Solar Energy Pvt. Ltd. ("Operational Creditor/Respondent"), for 'Designing, Engineering, Manufacturing, Supplying, Testing & Commissioning' of rooftop solar panels in cities of India. The Operational Creditor had entered into an Agreement with National Textile Corporation Ltd. ("Corporate Debtor/Appellant") on 07.06.2016, for installation of rooftop Solar PV power System for power generation. The Agreement did not contain any clause with respect to imposition of penalty. In 2016-17 the Operational Creditor had completed the work in view of the Agreement and the due amount was paid by the Appellant. However, an amount of Rs.13,84,254/- was retained by the Appellant from the total payment. The Operational Creditor had issued a demand notice dated 23.10.2019 under Section 8 of Insolvency and Bankruptcy Code, 2016 ("IBC") to the Appellant, for the remaining payment of Rs.13,84,254/-. Following which, the Operational Creditor had filed a petition under Section 9 of the IBC before NCLT, New Delhi ("Adjudicating Authority"), seeking initiation of CIRP against the Appellant. The NCLT New Delhi Bench had admitted the petition under Section 9 of IBC and CIRP was initiated against the Appellant vide an order dated 27.05.2022, by observing that there was a claim due and payable and the Appellant had failed to prove existence of any 'pre-existing dispute' in respect of the default. Proceedings Before The NCLAT The Appellant filed an appeal against the NCLT order dated 27.05.2022 before the NCLAT, submitting that it has settled the matter with the Operational Creditor, and sought liberty to place on record the Settlement Agreement entered between the parties. The Operational Creditor/Respondent also confirmed that the settlement had taken place. The NCLAT Bench has stayed the CIRP of the Appellant and has listed the matter on 01.06.2022 for taking on record the Settlement Agreement and passing orders accordingly. Case Title: National Textile Corporation Ltd. v Hero Solar Energy Pvt. Ltd., Company Appeal (AT) (Insolvency) No. 631 of 2022. Counsel for Appellant: Mr. Tushar Mehta (SGI), with Ms. Mayuri Raghuvanshi, Ms. Purvat Wali and Mr. Vyom Raghuvanshi, Advocates. Counsel for Respondent: Mr. Pallav Mongia and Mr. Ashok Juneja, Advocates. Click Here To Read/Download Order

NCLAT Stays The CIRP Of National Textile Corporation Ltd., A Public Sector Enterprise

Pallavi Mishra

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NCLAT Stays The CIRP Of National Textile Corporation Ltd., A Public Sector Enterprise

Pallavi Mishra

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INR 1099+GST

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This is a premium content
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