The NCLAT has dismissed the plea of Hinduja Leyland Finance Ltd to initiate insolvency proceedings against its creditor Fly Express Logistics. A three-member bench of the appellate tribunal upheld the earlier orders of the Allahabad bench of the National Company Law Tribunal (NCLT), which had on April 5, 2022, rejected the plea of Hinduja Leyland Finance.
The NCLT had said the date of default was December 24, 2022 which falls within prohibition period mentioned in Section 10 A of the Insolvency & Bankruptcy Code (IBC) and no petition can ever be filed for initiation of Corporate Insolvency Resolution Process (CIRP) for a default occurring in such period. This was challenged by the Hinduja Group firm before the National Company Law Appellate Tribunal (NCLAT) contending that December 24, 2022 was wrongly mentioned as the date of default in the petition before NCLT. It wanted to file an amendment application but since the petition was dismissed by NCLT on the first day of the hearing, it could not do so, contended Hinduja Leyland Finance.
However, the appellate tribunal also rejected the petition of Hinduja Leyland Finance after observing that December 24, 2022 was clearly mentioned as the date of default. "We have perused the Section 7 Application 'date of default' is clearly mentioned in Part-IV as 24.12.2022 hence the Adjudicating Authority (NCLT) is not in error in rejecting the Application, thus we do not find any ground to entertain the Appeal," said the bench headed by Chairperson Justice Ashok Bhushan.
However, it also said Hinduja Leyland Finance was at liberty to initiate a fresh proceeding under Section 7 on appropriate materials in accordance with the law. Under Section 7 of the IBC, a financial creditor can get insolvency proceedings initiated against the corporate debtor concerned.