India: NCLT cannot give a debtor business time to repay its debt once it is satisfied that the default has occurred and the debt is owed – NCLAT
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National Company Law Appeals Tribunal, Chennai (“NCLAT”) quashed the decision of the National Company Law Tribunal of Bengaluru (“NCLT”) that the NCLT had found that the Respondent / Debtor Company had sufficient income and assets to repay its debt and therefore could not be characterized as “insolvent”.
This took place in the case of Drip Capital Inc. v Concord Creations (India) P. Ltd. (Company appeal (AT) (CH) (Ins.) N ° 167 of 2021) decided on 8e November 2021
The NCLAT found that the NCLT had exceeded its jurisdiction by defending the debtor Company, in particular in the absence of any “Reply” or objections projected by the debtor Company and by noting that the Respondent was not an “insolvent business” and that the Respondent should be allowed additional time to repay the debt, and ordered the Respondent to repay the balance of the debt or the amount settled with the appellant within six months, failing which the respondent The appellant / applicant would be free to file a new application. NCLAT was of the opinion that this would run counter to the principles set out by the Honorable Supreme Court in paragraph 30 of the Innovative Industries Ltd. Banque ICICI (2018) 1 SCC page 407.
Therefore, the NCLAT found that the impugned ordinance suffered from obvious legal infirmities and ordered the NCLT to restore the company’s petition to its record, “admit it” and proceed according to law.
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