The National Company Law Tribunal (NCLT) has ordered to initiate Corporate insolvency resolution process (CIRP) against Aviva Life Insurance Co. India Ltd.in a case filed by Apeejay Trust.
It has also declared a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) protecting the company from its lenders during the process.
The order was passed by a two-member bench of NCLT, Delhi comprising Justices R. D. Khare and Sumita Purkayastha in a Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Court allowed the plea against Aviva Life Insurance and has also appointed an interim resolution professional to run day-to-day affairs of the company.
The Corporate Debtor, Aviva Life Insurance and the Operational Creditor, Apeejay Trust had entered into an agreement of Leave and License in June 2008 for office premises and other services for the former. However, despite several requests, the Aviva Life Insurance defaulted in making payments towards service tax and license fee of Rs. 27,67,203.
It had made its last payment in this regard on October 5, 2017. Subsequently, the Operational Creditor issued a demand notice under Section 8 of IBC in April 2019.
In response to the notice, the Corporate Debtor denied any liability and stated that no dues are payable.
The Operational Creditor thus moved the NCLT under Section 9 of IBC.
During the proceedings, the Corporate Debtor had questioned the maintainability of Apeejay Trust's plea on the ground that it is an insurance company and thus being a financial service provider, IBC cannot be applied against it.
According to Operational Creditor, there is an absolute bar under IBC to initiate any proceedings against insurance companies.
This was rejected by the NCLT saying “the operational creditor does not have any claim in respect of contract of insurance. The claim is with respect to the outstanding license fee and the service tax amount.”
The NCLT thus concluded, “Hence, the corporate debtor cannot use the provisions of Section 3 of the Insolvency and Bankruptcy Code, 2016 as a blanket cover to claim exclusion from IBC proceedings on the ground that it is a financial service provider.”
In the view of the above, the NCLT admitted the Section 9 petition and initiated a Corporate insolvency resolution process against the Aviva Life Insurance.
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