The National Company Law Tribunal (NCLT) on May 27,2022 admitted a petition for initiating insolvency resolution process against National Textile Corporation Ltd (NTC) under the Insolvency and Bankruptcy Code (IBC).
The Delhi bench of the NCLT has appointed Amit Talwar as the Interim Resolution Professional (IRP) and the corporation will be placed under a moratorium as per the provisions of the IBC.
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The petition for initiating insolvency proceedings was filed by a private company namely Hero Solar Energy, after National Textile Corporation allegedly defaulted on its payment. The applicant company was engaged for provided services for solar rooftop power projects. These services were providing under two contracts following which NTC allegedly defaulted on its payments.
The initial engagement between the two entities dates back to 2016 as per the details of transactions furnished before the NCLT. In 2019, Hero Solar sent demand notice to NTC seeking the pending dues.
The Ministry of Textiles-owned corporation told the NCLT that there existed a dispute pertaining to the dues owed and also claimed delay on the part of Hero Solar to finish the projects it was engaged for. NTC claimed to have deducted penalties for the delay.
Hero Solar claimed that the contracts between the two parties did not stipulate for deduction of penalties and that it had already been penalised by the competent authority for the delay.
The NCLAT ruled in favour of Hero Solar finding merit in its arguments and noting that NTC indeed was not entitled to make any deductions towards the penalty. The contracts entered into by the two companies did not stipulate such clauses and the only shortcoming on the part of Hero Solar in fulfilling the contract was the delay.
