In a complaint filed by multi-business chemicals firm SRF Ltd, an operating creditor of the BK Birla group firm, the National Company Law Tribunal (NCLT) has ordered the beginning of insolvency proceedings against Birla Tyres Ltd.
After suspending the board and declaring a moratorium, a two-member Kolkata bench of the NCLT appointed Seikh Abdul Salam as Interim Resolution Professional (IRP) to handle the company’s activities. SRF claimed a default in payment of Rs 15.84 crore for the delivery of Tyre Cord Fabric as of July 8, 2021, which included a principal of Rs 10.06 crore and interest of Rs 5.78 crore.
The tribunal stated that it was satisfied on the basis of documents, including pleas from parties, that a default has occurred, and that there has been no payment of the outstanding operational debt, as well as an acknowledgement of this by Birla Tyres, the corporate debtor.
‘The application bearing… filed by SRF Ltd, the Operational Creditor, under section 9 of the Insolvency & Bankruptcy Rules, 2016 for initiating CIRP against Birla Tyres Ltd, the Corporate Debtor, is admitted’, said an NCLT bench in its order passed on May 5, 2022.
The NCLT panel, which included Member (Technical) Harish Chander and Member (Judicial) Suri Rohit Kapoor, also chastised the BK Birla group business for making a quite casual attempt to get the case adjourned.
The NCLT had given notice to Birla Tyres in this case on October 20, 2021, in response to SRF’s request. Birla Tyres requested an adjournment and more time to file a response on December 22, 2021. The BK Birla group business asked extra time on February 28, 2022, and NCLT granted them two weeks.
Birla Tyres requested a further extension on the pretence of certain disturbances at its plant site on April 5, 2022, at the next hearing, which was denied by the NCLT, who has reserved the order.
‘Keeping in view, this matter under IBC wherein the very object of the Code is to finalize the Insolvency proceedings in a time-bound manner for maximization of value of assets, granting adjournment after another and that too without any basis cannot be permitted by this Adjudicating Authority and this Adjudicating Authority thus declined to further extend the time for filing reply affidavit by Corporate Debtor’, it said.