The National Company Law Tribunal (NCLT) has ordered the initiation of insolvency proceedings against Birla Tyres Ltd in a case filed by multi-business chemicals firm SRF Ltd, an operational creditor of the BK Birla group firm.
A two-member Kolkata bench of the NCLT has also appointed Seikh Abdul Salam as Interim Resolution Professional (IRP) to run the operations of the company after suspending the board and also declared a moratorium as per the procedures of the Insolvency & Bankruptcy Board (IBC).
SRF had claimed a default in payment of Rs 15.84 crore, which includes a principal of Rs 10.06 crore and interest of 5.78 crore, for the supply of Tyre Cord Fabric as of July 8, 2021.
Also Read:
The tribunal said it was "satisfied upon the basis of documents", including pleadings of parties as "default has occurred" and observed there is no payment of the unpaid operational debt and also there is an admission 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.
Besides, the NCLT bench comprising - Member (Technical) Harish Chander and Member (Judicial) Suri Rohit Kapoor - also slammed the BK Birla group firm for taking a "very casual attempt" to seek adjournments in the matter.
In this matter, the NCLT had issued notice to Biral Tyres on October 20, 2021, over SRF's plea. On December 22, 2021, Birla Tyres sought some time to file a reply and sought adjournment.
Again on February 28, 2022, the BK Birla group firm sought some more time and NCLT granted two weeks to them. On April 5, 2022, at the next hearing, Birla Tyres again sought a further extension on the pretext of some disruptions at its factory premise, which was rejected by the NCLT and has reserved the order.
"Keeping in view, this matter under IBC wherein the very object of the Code is to finalise the Insolvency proceedings in a time-bound manner for maximisation 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.
From the fact on record, it is clear that Birla Tyres was afforded a reasonable opportunity to file its Affidavit-in-Reply, however, it has failed to file despite repeated opportunities.
Commenting on the insolvency proceedings against Birla Tyres, a senior company official said that this will derail the revival process that has been underway. He said the revival exercise could have saved the jobs of close to 1,000 employees.
"The company had initiated a process of composite scheme of demerger and compromise to take care of around Rs 1,050 crore secured debt by banks and small operational creditors. But, the insolvency proceedings will derail the entire revival process. We are evaluating and may approach the Appellate Tribunal," the official told PTI.
First Published: May 9, 2022 6:29 PM IST
