IBC, 2016 : Casual Approach Adopted by NCLT, Ahmedabad

IBC, 2016 : Casual Approach Adopted by NCLT, Ahmedabad

In a recent decision dealing with IBC, 2016, casual approach of NCLT was pointed out. 

In this case, Z had entered into a Credit agreement with corporate debtor Sumeet Industries Limited where by Z granted a term loan facility of up to EUR 10,444,450 to the corporate debtor. The CD defaulted on the repayment of the amount due under the facility as per the repayment schedule and Z issued several reminders and demand notice, however the loan amount was not paid.

It was also evident that an amended agreement, supplementing the original agreement was also executed between the parties whereby they agreed to suspend the payments due on 10th August 2015 and 8th February 2016 and extended the maturity of the facility by one year including additional payments on 8th August 2020 and 8th February 2021.

In the meantime, the CD also made payment of EUR 83,724.45. Z thereafter issued legal notice calling upon the CD to make payment of EUR 1,346,783.82 and the CD also issued letters on 5th March 2018 and 18th April 2018 acknowledging the payments due under the facility and sought sometime for repayment.

Z argued that the adjudicating authority (NCLT) has committed a manifest illegality in rejecting the application moved on the ground that the RP has admitted the claim of Z to the extent up to which the Z is yet to receive the amount due to default which has been insured and also on the ground that an action for recovery of the loan amount is to be taken within a certain stipulated time and that the date of default and notice have clearly exceeded the period of limitation.

Findings 

NCLAT noticed that NCLT in order to arrive at a finding that the claim of Z is time barred has not considered any date nor has considered any document written by the parties to each other and without discussing anything on the merits and appreciating the evidence available on record, has approved the decision taken by the RP. It is also reflected that Learned NCLT has not considered any clauses of the buyer insurance policy and in fact no discussion has been made as to how the Tribunal is arriving at a finding that the claim of Z is barred by limitation or how Z would be unjustly benefitted in the background of the indemnity amount received by him from the Federal Government of Germany under buyer coverage insurance policy, even no clause of this policy, which was available on record, has been considered. 

It was held that a casual approach appears to have been adopted by NCLT while disposing of the application moved by Z.

Appeal filed against order of NCLT was allowed. 

Case reference is Oldenburgische Landesbank AG v Satyendra P. Khorania [2025] GCtR 1858 (NCLAT).