Canara Bank Vs Syska E-Retails LLP (NCLT Mumbai)
NCLT Mumbai held that application under section 7 of the Insolvency and Bankruptcy Code [IBC] deserves to be admitted once it is proved that there is financial debt in respect of which default has been committed by the Corporate Debtor.
Facts- This Company Petition has been filed by Canara Bank (“Financial Creditor”), is seeking to initiate Corporate Insolvency Resolution Process (“CIRP”) against M/S Syska E-Retails LLP. (“Corporate Debtor”) by invoking the provisions of Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for having committed a default in repayment of total outstanding debt of INR 10,70,26,0611/-.
Conclusion- The Hon’ble Supreme Court in Suresh Kumar Reddy v. Canara Bank (2023) Company Appeal (AT)(CH)(Ins) No.315/2022 held that if the existence of a financial debt and its default on the part of the corporate debtor is proven, the National Company Law Tribunal (NCLT) has no discretion but to admit the petition under Section 7 of the IBC. The Court clarified that the NCLT’s role is to assess the existence of a debt and default. If these elements are established, the application must be admitted.
