Abhyudaya Co-Operative Bank Limited Vs A.Navinchandra Steels Private Limited (NCLT Mumbai)
Summary: NCLT Mumbai Bench VI admitted the application filed by Abhyudaya Co-Operative Bank Ltd under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against A.Navinchandra Steels Private Limited. The Financial Creditor claimed a default of Rs.70,71,96,999.99 and relied, among other material, on credit facilities, security documents, the account’s NPA classification, recall notice, an arbitral award dated 05.11.2022 and subsequent demand notice. The Bank had renewed cash-credit and letter-of-credit facilities of Rs.35 crore and Rs.15 crore respectively. An arbitrator appointed under Section 84 of the Multi State Co-operative Societies Act, 2002 had directed the Corporate Debtor and guarantor to pay Rs.52,89,51,162.15 calculated as on 30.06.2021 with further interest. The Financial Creditor thereafter demanded Rs.70,71,96,999.99 calculated as on 31.03.2025, with further interest, and asserted default on 28.06.2025. :chatgpt-content-reference{index=”1″}
The Corporate Debtor raised extensive objections. It contended that the petition filed on 25.10.2025 was barred by limitation because the account had become NPA on 13.02.2020; that the arbitral award was void and had been made by a unilaterally appointed arbitrator; that the Corporate Debtor was an MSME entitled to the statutory framework for revival and rehabilitation under Notification S.O. 1432(E) dated 29.05.2015; and that the Bank had failed to constitute a stressed MSME committee despite being aware of its financial stress. Reliance was placed on, among other decisions, Pro Knits, Perkins Eastman, TRF Limited and the Constitution Bench decision concerning Central Organisation for Railway Electrification. The Corporate Debtor also relied on a commercial suit claiming damages against the Bank, questioned parallel recovery proceedings and challenged the constitutional validity and applicability of the IBC.
