NCLT Approves Withdrawal Of Insolvency Resolution Proceedings Against Syska LED Lights Following Settlement
The National Company Law Tribunal in Mumbai, in an application to commence the Corporate Insolvency Resolution Process
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NCLT Approves Withdrawal Of Insolvency Resolution Proceedings Against Syska LED Lights Following Settlement The National Company Law Tribunal in Mumbai, in an application to commence the Corporate Insolvency Resolution Process (CIRP) against Syska LED Lights Pvt. Ltd. (Corporate Debtor), dismissed the CIRP proceedings, acknowledging a settlement between the parties. The division...
NCLT Approves Withdrawal Of Insolvency Resolution Proceedings Against Syska LED Lights Following Settlement
The National Company Law Tribunal in Mumbai, in an application to commence the Corporate Insolvency Resolution Process (CIRP) against Syska LED Lights Pvt. Ltd. (Corporate Debtor), dismissed the CIRP proceedings, acknowledging a settlement between the parties. The division bench, consisting of Prabhat Kumar (Technical Member) and V. G. Bisht, J. (Judicial Member), directed the return of control of Syska LED Lights Pvt. Ltd. to its management and disposed of all related applications.
In the present case, the petitioner, the proprietor of M/s. N. J. Electronics (the operational creditor), sought to initiate the Corporate Insolvency Resolution Process (CIRP) against Syska LED Lights Pvt. Ltd. (the corporate debtor). The operational creditor is involved in manufacturing various electronic products and has a business relationship with the corporate debtor, supplying items such as transformers and inductors. Initially, the business transactions proceeded smoothly until December 2022.
However, thereafter, the corporate debtor began delaying or halting payments and issued 11 post-dated checks (PDCs), out of which eight were dishonored due to insufficient funds. On November 1, 2023, the operational creditor dispatched a demand notice to the corporate debtor under Section 8 of the IBC.
Although the corporate debtor responded on 11-11-2023, it failed to settle the outstanding dues. The total claim amount by the operational creditor, including interest, amounted to ₹ 1,26,75,456.
Subsequently, on April 22, 2024, the corporate debtor proposed a settlement by offering two demand drafts of ₹ 10 lakhs each, which the operational creditor rejected considering the corporate debtor's past behavior.
The NCLT determined that the debt and default were substantiated, and no dispute concerning the defaulted debt was contested. As a result, through an order dated May 7, 2024, the NCLT commenced the Corporate Insolvency Resolution Process (CIRP) against Syska LED Lights Pvt. Ltd. and designated an Interim Resolution Professional (IRP) to manage the proceedings. Additionally, the NCLT instructed the operational creditor to deposit ₹ 3,00,000 with the IRP to cover expenses related to public notices.
The NCLT observed that on May 7, 2024, a settlement agreement was reached between the financial creditor and the corporate debtor, accompanied by a joint application indicating the settlement of dues. Considering the settlement agreement, the NCLT concluded that Syska LED Lights Pvt. Ltd. should be removed from the Corporate Insolvency Resolution Process (CIRP). Accordingly, the NCLT directed the Resolution Professional to relinquish control of Syska LED Lights Pvt. Ltd. to the corporate debtor, if it had been assumed, and dismissed the company petition as withdrawn. Additionally, all pending applications were deemed moot, and no costs were imposed.