The National Company Law Appellate Tribunal on Monday set aside the order of the Kolkata bench of NCLT, which had rejected the plea of Asset Reconstruction Company to initiate insolvency proceedings against Uniworth Textiles Ltd (UTL), and remanded the matter back to hear it again. A two-member NCLAT bench comprising justices Rakesh Kumar Jain and Naresh Salecha said the NCLT had erred in rejecting the application filed under Section 7 of the Insolvency & Bankruptcy Code by Asset Reconstruction Company on the ground of limitation.
“The appeal therefore succeeds and the impugned order dated March 17, 2020 is set aside. The case is remanded back to the Adjudicating Authority (NCLT) for decision on the merit of the application in accordance with the law,” said NCLAT in its 36-page order.
It had directed both parties to appear before the NCLT on July 28, 2023.
Meanwhile, NCLAT also clarified it is not expressing any opinion regarding the merits of the case and the same needs to be decided by the NCLT “uninfluenced by any of the observations of this Appellate Tribunal”.
Earlier, the Kolkata bench of the National Company Law Tribunal had on March 17, 2020 dismissed the plea, which was challenged by Asset Reconstruction Company before NCLAT.
UTL had taken loans of Rs 41.50 crore from the Industrial Finance Corporation of India Limited (IFCIL) and Investment Corporation of India Ltd (ICICI) in 1992. The loan documents were registered between the corporate debtor, IFCIL and ICICI, respectively.
Both of the lenders later assigned their debts to the Asset Reconstruction Company. In 2004, UTL initiated proceedings under Sick Industrial Companies before the Board for Industrial and Financial Reconstruction and the account was declared as NPA (non-performing asset) in August 2007.
The proceedings continued till 2013 and were abated. Later appellant filed an Application to the Debt Recovery Tribunal, Nagpur, which was allowed on December 4, 2018.
Later UTL came forward for settlement with the appellant and sent a proposal on September 19, 2016 to clear its dues submitted by five companies, namely – Uniworth Limited, Uniworth International Limited, Indoworth Limited, Textprint Overseas Limited and Uniworth Textiles Limited.
It paid Rs 51.10 crore, which was adjusted, however despite acknowledgement of debts, it was not getting payment of outstanding dues from UTL, Asset Reconstruction alleged.
Hence, on November 22, 2018, it issued a letter for revocation of the terms of the settlement. Later, it moved NCLT to claim an amount of Rs 205.83 crore. However, it was dismissed primarily on the ground of limitation.
