The National Company Law Tribunal has ordered to initiate insolvency proceedings against Aviva Life Insurance in a case filed by Apeejay Trust.
A two-member bench of NCLT Delhi comprising Justice R D Khare and Sumita Purkayastha allowed the plea against Aviva Life Insurance and has also appointed an interim resolution professional to run day-to-day affairs of the company.
Apeejay Trust, which had leased its Mumbai-based (Vashi) premise to Aviva Life Insurance, claimed a default of ₹27.67 lakh as an operational creditor for not receiving payments towards service tax and license fee for the premise.
According to the trust, Aviva — a JV between Dabur Invest Corp (Dabur group) and Aviva International Holding Ltd — has not paid license fee, car parking, maintenance/service charge and service tax. It had made its last payment in this regard on October 5, 2017, and from then the debt was lying due.
“Considering the circumstances this tribunal is inclined to admit this petition and initiate CIRP of the corporate debtor. Accordingly, this petition is admitted,” The National Company Law Tribunal (NCLT) said.
It has also declared a moratorium under section 14 of the Insolvency and Bankruptcy Code, protecting the company from its lenders during the process.
During the proceedings, Aviva had questioned the maintainability of Appeejay Trust’s plea on the ground that it is an insurance company and thus being a financial service provider, IBC can not be applied against it.
According to it, there is an absolute bar under IBC to initiate any proceedings against insurance companies.
This was rejected by the NCLT saying “the operational creditor does not have any claim in respect of contract of insurance. The claim is with respect to the outstanding license fee and the service tax amount”.
“Hence, the corporate debtor can not use the provision of … IBC as a blanket cover to claim exclusion from IBC proceedings on the ground that it is a financial service provider,” said the NCLT in its order dated November 4, 2019.
Meanwhile, Aviva Life Insurance in a statement said: “The issue at hand is a commercial dispute with a vendor and Aviva reserves it rights & remedies in the court of law. Our customers policies are fully secure & we remain committed to growing our business and customers in India”.
Source: Mint