NCLT Admits Corporate Insolvency Proceedings Against Navi Mumbai-Based Firm On Bank Of India's ₹117.50 Crore Plea

Mumbai, June 27: The National Company Law Tribunal (NCLT) has admitted a Corporate Insolvency Resolution Process (CIRP) against Navi Mumbai-based Supreme Engineering Limited. The order was passed on a petition filed by Bank of India over an outstanding financial debt of more than Rs 117.50 crore.

"When the financial creditor initiates the insolvency process for the purposes of admission, the Adjudicating Authority is only to ascertain the existence of a default from the records of the information utility or the evidence furnished by the financial creditor within 14 days from the receipt of such application. At this stage, neither is a corporate debtor entitled nor is the Adjudicating Authority required to examine any dispute regarding the existence of such debt. This significantly reduces the scope of enquiry at the stage of a time-bound admission of an insolvency process by a financial creditor. The Adjudicating Authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the Adjudicating Authority must then either admit or reject an application, respectively. Accordingly, in our view, there exists a debt which is in default, and the said debt is within limitation and exceeds the threshold prescribed under Section 4 of the IBC, 2016," the order reads.

NCLT Admits Insolvency Plea

The order was passed by a bench comprising Judicial Member Nilesh Sharma and Technical Member Sameer Kakar, which admitted the Section 7 petition under the Insolvency and Bankruptcy Code (IBC), holding that the bank had established the existence of a financial debt and default. The tribunal also dismissed the company's interlocutory application seeking a stay on the insolvency proceedings.

According to the order, Bank of India claimed that Supreme Engineering had defaulted on credit facilities aggregating nearly Rs 98.17 crore, with the total outstanding reaching Rs 117.50 crore as of March 2, 2025. The bank stated that the company's account was classified as a non-performing asset (NPA) in August 2021 after repeated defaults.

Liability Acknowledged Through OTS

The NCLT further observed that the company had repeatedly acknowledged its liability by submitting multiple one-time settlement (OTS) proposals between July 2023 and February 2025, thereby extending the limitation period under Section 18 of the Limitation Act.

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The tribunal also rejected the company's argument that proceedings against its personal guarantors under Section 95 of the IBC triggered a moratorium preventing action against the corporate debtor. It held that the interim moratorium under Section 96 applies only to personal guarantors and does not bar insolvency proceedings against the principal borrower.

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