NCLAT upholds NCLT order to initiate insolvency against Aditya Estates

The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea challenging NCLT's order to initiate insolvency proceedings against Aditya Estates over the claims filed by ICICI Bank UK PLC. A three-member bench of NCLAT headed by Chairman Justice S J Mukhopadhaya upheld the order of NCLT and rejected the claims of Aditya Kumar Jajodia that ICICI Bank UK PLC was not a direct financial creditor of Aditya Estates.

The appellate tribunal said that Aditya Estates in a debt asset swap agreement had undertaken obligation to repay the loans availed by Assam Oil Company from ICICI Bank UK PLC. "We find that ICICI Bank UK PLC has successfully made out a case that it is the financial creditor of the Corporate Debtor and the Adjudicating Authority (NCLT) has rightly admitted the application under Section 7 of I&B Code," said NCLAT.

It further added:"We find no merit in this appeal. It is accordingly dismissed." Earlier, the Principal Bench of the National Company Law Tribunal (NCLT) on February 26, 2019 had admitted the plea filed by ICICI Bank UK PLC to initiate insolvency proceedings against Aditya Estates.

ICICI Bank UK PLC claimed to be a financial creditor of Aditya Estates on account of debt of USD 63 million granted to Assam Oil Company, an overseas company. It had contended that as per terms of debt asset swap agreement Aditya Estates defaulted to pay the debt.

However, in its plea Aditya Kumar Jajodia, who is shareholder of Aditya Estates, contended that the financial creditor has given a loan to Assam Oil Company, which is a UK-based overseas company. For thus no guarantee has been given by Aditya Estates nor any property has been mortgaged or charge has been created, hence, ICICI Bank UK PLC cannot claim to be the financial creditor.

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