NCLT Admits Oban Fashions Under Insolvency On Application By Sunrise Knitting Mills
NCLT Admits Oban Fashions Under Insolvency On Application By Sunrise Knitting Mills
The wholly owned subsidiary of listed knitwear brand Rupa & Co had failed to pay Rs1.57 crores
The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted Oban Fashions Pvt Ltd into the Corporate Insolvency Resolution Process (CIRP), following an application by its operational creditor, Sunrise Knitting Mills Pvt Ltd.
The tribunal appointed Sanjay Ramdas Mahajan as an Interim Resolution Professional (IRP), with outstanding dues of Rs.1.57 crore.
During 2016-17, Oban Fashions, a wholly owned subsidiary of listed knitwear brand Rupa & Co Ltd, entered licensing agreements with international fashion brands FCUK and Fruit of the Loom to market and distribute their products in India.
The division bench of KR Saji Kumar (Judicial Member) and Sanjiv Dutt (Technical Member) held, “The debt owed by the corporate debtor (Oban Fashions) to the operational creditor (Sunrise Mills) against the supply of garments falls within the definition of 'operational debt' under Section 5(21) of the Insolvency and Bankruptcy Code (IBC).”
The judges added, "We find that the operational creditor has been able to substantiate the existence of an operational debt above the threshold limit prescribed under the Code due and payable by the corporate debtor which remained unpaid.”
Earlier, Rohan Rajadhyaksha, the counsel for Sunrise Mills argued that in 2019, the company supplied certain goods to Oban Fashions, but did not receive the payments.
He added, "Oban Fashions neither denied nor raised any objection on the quality of the goods. It assured the payments, seeking more time.”
However, after Oban Fashions failed to pay Rs1.57 crores, Sunrise Mills filed the case.
In response, through its counsels, Shyam Kapadia and Amogh Joshi Oban Fashions countered that the application failed to disclose how Sunrise Mills calculated the date of default.
The counsels argued, "There is no basis or calculation to show the date of default in the absence of a written contract between the parties.”
Meanwhile, Ashish Pyasi, a Partner at law firm Aendri Legal, remarked, "The management of Oban Fashions has the option to challenge the order before the National Company Law Appellate Tribunal (NCLAT). Else, it can settle the dispute with the operational creditor before the formation of the Committee of Creditors.”
