Case Law Details
Canara Bank Vs Laggar Industries Limited (NCLT Chandigarh)
The case between Canara Bank and Laggar Industries Limited (NCLT Chandigarh) revolves around Canara Bank’s application for initiating the Corporate Insolvency Resolution Process (CIRP) against Laggar Industries Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). Canara Bank claimed that Laggar Industries Limited defaulted on a debt amounting to Rs. 23.50 Crore, consisting of various facilities like open cash credit limit, bank guarantee, and overdraft facility against bill discounting. The default was alleged to have occurred on 01.04.2018, based on the classification of Laggar Industries Limited’s account as Non-Performing Asset (NPA) on that date.
Laggar Industries Limited contested the application, arguing that the date of default should be prior to 31.12.2017 and that the application was time-barred since it was filed on 29.12.2021. Additionally, they challenged the validity of the statement of account provided by Canara Bank, claiming it lacked certification under the Bankers Book Evidence Act, 1891, due to the absence of a date on the certificate.
In response, Canara Bank defended its position, stating that Laggar Industries Limited had failed to make sufficient deposits to cover outstanding interest, thereby defaulting on the debt. They also pointed out that Laggar Industries Limited did not dispute the credit facilities granted by Canara Bank and acknowledged its financial crunch, thus affirming its liability under the IBC.
The National Company Law Tribunal (NCLT) Chandigarh considered these arguments and ruled in favor of Canara Bank. Firstly, they addressed the issue of limitation, noting that the Supreme Court had extended the period of limitation due to the COVID-19 pandemic, thereby allowing the application to be considered within the prescribed time frame.
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