AHMEDABAD: The National Company Law Appellate Tribunal has turned down the plea of bureaucrat-turned-businessman Sanjay Gupta, to allow bankruptcy proceedings to be initiated for Neesa Infrastructure Ltd.
This is a rare instance where the tribunal has disallowed filing for insolvency by the promoter of a corporate debtor under Section 10 of Insolvency and Bankruptcy Code, 2016.
The order, recently posted on its website, upholds the verdict passed by the National Company Law Tribunal, Ahmedabad on the grounds that the applicant Gupta was no longer a director of the company and did not qualify for the filing. This came after the company did not file financials with the ministry of corporate affairs for more than three years as is legally required. As a result, the entire board of directors for Neesa Infra was disqualified in the past.
The appellate tribunal is of the view that the applicant did not approach NCLT with bona fide intention and hence the adjudicating authority had rightly rejected the insolvency application.
The Small Industries Development Bank of India (SIDBI) and Indian Overseas Bank, the creditors, strenuously opposed the admission of a Section 10 application by filing counter affidavits.
“The petition under Section 10 of the IBC for initiation of insolvency proceedings was filed to stop the wheel set in motion by the defendant bank to secure their debts,” said the objection raised by SIDBI at NCLT, Ahmedabad.
Some promoters have started using insolvency as a tool to stop recovery by banks and are also avoiding filing of the financial statements with the RoC.
“Such malafide initiation of insolvency should be rightly nipped in the bud,” said Vikash G Jain, an insolvency professional and regional council member of ICAI.
Gupta had approached NCLAT to challenge the NCLT order dated September 17, 2020, which dismissed his plea for initiation of the corporate insolvency resolution process for the company.