Financial Debt Default of over Rs. 45 Crores: NCLT Admits SBI's Application and Initiates CIRP Against Giga Pipe Systems [Read Order]

The National Company Law Tribunal (NCLT), New Delhi, has admitted an application filed by the State Bank of India (SBI) under Section 7 of the (IBC), thereby initiating the Corporate Insolvency Resolution Process (CIRP) against Giga Pipe Systems India Pvt. Ltd. The application was based on a financial debt default exceeding Rs. 45 Crores.

SBI, the financial creditor, argued that Giga Pipe Systems, the corporate debtor, had defaulted on an aggregate sum of Rs. 45,06,15,949.53 as of April 30, 2025, with the default occurring on October 11, 2022. The bank supported its claim with documents including sanction letters, loan agreements, account statements, a loan recall notice, and the debtor's own provisional balance sheets acknowledging the liability.

Giga Pipe Systems contested the application, asserting it was facing only a "transient shortage of funds" and not insolvency. The corporate debtor's primary contention was that the application was barred by limitation. They pointed to inconsistencies in the dates of default cited by SBI, arguing that the actual default occurred prior to 01.05.2022, making the petition filed on 01.05.2025 time-barred. They also raised procedural objections, claiming the bank had not followed RBI guidelines for classifying the account as a Non-Performing Asset (NPA) and that the application was an abuse of process, using the NCLT as an alternative recovery forum.

In its analysis, the NCLT bench, comprising Judicial Member Manni Sankariah Shanmuga Sundaram and Technical Member Atul Chaturvedi, held that the existence of a financial debt and the occurrence of default were established on record. The Tribunal addressed the limitation issue, stating that even if the earliest date of default (03.05.2022, as per NeSL records) was considered, the application filed on 01.05.2025 was still within the three-year limitation period.

Relying on the precedent set in Innoventive Industries Ltd. v. ICICI Bank, the Tribunal clarified that its role at the admission stage is limited to confirming the existence of debt and default, not delving into the merits of the case or the debtor's defences.

Consequently, the NCLT admitted the application and initiated CIRP against Giga Pipe Systems Pvt. Ltd. The Tribunal appointed Mr. Manoj Kumar Anand as the Interim Resolution Professional (IRP) and declared a moratorium in terms of Section 14 of the IBC, prohibiting any legal action against the corporate debtor during the resolution process.

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