NCLT orders insolvency proceedings against Aviva Life Insurance

"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 (IBC), protecting the company from its lenders during the process.

During the proceedings, Aviva had questioned the maintainability of Apeejay 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 an 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 and we remain committed to growing our business and customers in india".