In Absence of Fraud or Misrepresentation, Order Admitting CIRP cannot be Recalled: NCLT rules in favour of Canara Bank [Read Order]
Since NCLT had the power to issue such an order under Section 7 of the law, the decision to admit CTPPL into CIRP was not without jurisdiction
![In Absence of Fraud or Misrepresentation, Order Admitting CIRP cannot be Recalled: NCLT rules in favour of Canara Bank [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Absence-of-Fraud-Misrepresentation-Admitting-CIRP-CIRP-Cannot-be-Recalled-NCLT-NCLT-rules-NCLT-rules-in-favour-of-Canara-Bank-Canara-Bank-taxscan.jpg "In Absence of Fraud or Misrepresentation, Order Admitting CIRP cannot be Recalled: NCLT rules in favour of Canara Bank [Read Order]")
The National Company Law Tribunal, Mumbai bench partially granted Canara Bank's interim plea concerning the CIRP of Carnival Techno Park Pt. Ltd (CTPPL). Although Canara Bank's request to recall CIRP admission was denied by the Tribunal, the forensic audit was permitted to look into the validity of the RCFL claim and its classification as secured financial debt. Not All Cash Is...
The National Company Law Tribunal, Mumbai bench partially granted Canara Bank's interim plea concerning the CIRP of Carnival Techno Park Pt. Ltd (CTPPL). Although Canara Bank's request to recall CIRP admission was denied by the Tribunal, the forensic audit was permitted to look into the validity of the RCFL claim and its classification as secured financial debt.
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The application stems from Carnival Techno Park Pvt. Ltd.'s (CTPPL) Corporate Insolvency Resolution Process (CIRP), which is governed by the 2016 Insolvency and Bankruptcy Code. The case started with a company petition against CTPPL filed by Reliance Commercial Finance Ltd. (RCFL), which was accepted into CIRP by the Mumbai Bench of the National Company Law Tribunal (NCLT) on February 13, 2024.
A secured financial creditor, Canara Bank, has demanded that the corporate debtor pay them Rs. 116,99,83,474.66 (Rupees One Hundred and Ninety-Nine Lakhs Eighty-Three Thousand and Four Hundred and Seventy-Four and Sixty-Six Paise only). By accusing RCFL, RP, and the Prospective Resolution Applicant of collaboration and fraudulent activity, the Bank challenged the CIRP proceedings.
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According to the Bank, RCFL's claim was exaggerated to Rs. 294.30 crores for an initial loan of Rs. 75 crores, which had an impact on its ability to vote in the Committee of Creditors (CoC). Additionally, it said that CTPPL was no longer a debtor to RCFL because the latter's obligation had been transferred to Asian Business Connections Pvt. Ltd. To bolster its argument, the bank also provided NeSL's credit facility report and financial statements.
Canara Bank contended that RCFL's claim was exaggerated to acquire Rs. 294.30 crores for an initial loan of Rs. 75 crores, so impacting its ability to vote in the Committee of Creditors (CoC). Additionally, it asserted that CTPPL was no longer a debtor to RCFL because the latter's obligation had been transferred to Asian Business Connections Pvt. Ltd. Additionally, the applicant claimed that the RP had conspired with RCFL and other parties by accepting its claim without confirming important records such the ROC records and financial statements.
Since the NCLT had previously rejected the IA that sought the identical documents and specifics of RCFL's claim, the Resolution Professional (RP) argued that the application submitted by Canara Bank was precluded by the res judicata principle.
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The tribunal examined into Canara Bank's main complaint, which was that CTPPL's admittance into CIRP was improperly secured by RCFL using an exaggerated claim of Rs 294.30 crores rather than Rs 75 crores. The Tribunal recognized that Canara Bank had provided CTPPL's financial documents, all of which implied that RCFS's debt had been transferred to another entity.
The bench composed of Prabhat Kumar, a member of the technical division, and Justice V.G. Bisht, a member of the judicial division viewed that since NCLT had the power to issue such an order under Section 7 of the law, the decision to admit CTPPL into CIRP was not without jurisdiction.
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The financial accounts provided by Canara Bank did not unequivocally demonstrate that RFCL owed no money to CTPPL at the time of CIRP admission, and there was insufficient proof of fraud or deceit to support reversing the decision. The bank's attempt to get the CIRP order recalled was denied. However, the tribunal permitted the forensic audit, adding that the RP was instructed to take the appropriate legal measures if it turned up evidence of fraudulent activity.
To Read the full text of the Order CLICK HERE
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