The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted listed firm India Steel Works Ltd under the insolvency resolution process in an application filed by its operational creditor Stecol International Pvt Ltd. The tribunal has also appointed Vallabh N Sawana as the interim resolution professional (IRP).
India Steel Works has said in its stock exchange filing that it is in the process of filing an appeal at the National Company Law Appellate Tribunal (NCLAT) for urgent relief in the matter.
“This bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor (India Steel Works) including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority,” said the division bench of judicial member Reeta Kohli and a technical member Madhu Sinha in its order of May 8.
The tribunal has also restrained the company from ‘transferring, encumbering, alienating or disposing’ of any of its assets. The Stecol International had approached the tribunal after it defaulted on its dues of Rs 2.6 crore.
In this case, Stecol International is in the business of contract manufacturing of various steel products and was desirous of procuring certain stainless steel products. While, India Steel Works (ISWL), which is engaged in the business of steel manufacturing, expressed its interest in manufacturing the steel products sought by the operational creditor Stecol International.
As per the tribunal’s order, the parties agreed in January 2021. Subsequently, 53 purchase orders were issued by the operational creditor upon the corporate debtor for the manufacturing of stainless steel products. Thereafter, the corporate debtor raised invoices on the operational creditor and also paid various sums including the advance amount as contemplated in the sales purchase agreement.
The operational creditor claimed that it was compelled to approach the tribunal under the Insolvency & Bankruptcy Code (IBC) since the company failed to repay the dues after supplying goods.
While, India Steel Works, through its counsel, argued that the insolvency proceedings cannot be initiated under section 9 of the Code, since there is a pre-existing dispute.
The company also argued that the petition was filed by the operational creditor on November 05, 2022, and after one year of filing the petition, the petitioner has sought leave to change the date of default in the petition. Therefore, the question of allowing the change of date of default does not arise at such a belated stage.
