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The National Company Law Appellate Tribunal (NCLAT) has set aside an NCLT order allowing insolvency proceedings against the Essel group firm Zee Learn and directed the Mumbai bench of NCLT to pass a fresh order.
Earlier on February 10, the National Company Law Tribunal (NCLT) had admitted the plea filed against Zee Learn by its financial creditor Yes Bank Ltd (YBL) and directed to initiate insolvency proceedings against it.
This was immediately challenged by Zee Learn before the appellate tribunal NCLAT, which "allow this Appeal and set aside the order dated February 10, 2022".
The appellate tribunal has said the corporate debtor (Zee Learn) had also moved an interim application before NCLT requesting to dismiss the Section 7 Application against it.
This was entertained by NCLT and notices to YBL and others were issued on January 19, and the date of February 21 was fixed for a hearing.
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"We are of the view that the Adjudicating Authority (NCLT), it having already issued notice on the application, granted time to the Financial Creditor to reply to the Application, ought to have considered the Application," said NCLAT.
The fact that NCLT itself has fixed the date of February 21 on the application, before considering the said application it was not appropriate to deliver the order under Section 7 Application.
"In the present case, NCLT has issued Notices and prayer of the Financial Creditor to file Reply was acceded to, it was necessary to decide the said application. Hence, before the date fixed for consideration of the case, the NCLT ought not to have admitted Section 7 Application," said NCLAT.
The NCLAT further said :"In view of the above, we allow this Appeal and set aside the order dated February 10, 2022.
The appellate tribunal also made clear that it is not expressing any opinion on the merits of the Section 7 Application and it is open for the parties to raise all submissions as permissible in law.
"Let Adjudicating Authority (NCLT) consider the Application and pass fresh order both on Application IA No. 210 of 2023 and Section 7 Application in accordance with law," said NCLAT.
Under Section 7 of the Insolvency and Bankruptcy Code (IBC), a financial creditor can get insolvency proceedings initiated against the corporate debtor concerned.
YBL had claimed a default of Rs 468.99 crore by the Essel Group company.
Out of the default amount of Rs 468.99 crore, the principal amount was Rs 410.67 crore and Rs 58.32 was interest. The date of default was August 2, 2021.
YBL moved NCLT last year and Zee Learn received notice over the petition on April 25.
Zee Learn mainly operates in the education segment. It has a chain of K-12 schools, Mount Litera Zee School, and a pre-school network -- Kidzee.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
