NCLAT overturns penalty on Mudra Denim lenders for insolvency delay
27 January 2025, Mumbai
The National Company Law Appellate Tribunal (NCLAT) has nullified aRs55,000 penalty imposed on the Committee of Creditors (COC) for Mudra Denim. The Mumbai bench of the National Company Law Tribunal (NCLT) had earlier imposed the cost on November 11, 2023, citing delays in the insolvency process.
The COC, led by IDBI Bank, challenged the penalty, arguing that the decision to liquidate Mudra Denim was made on December 13, 2023, well within the Corporate Insolvency Resolution Process (CIRP) timeline. E-voting for appointing a liquidator concluded on January 5, 2024, and the application was filed on February 9, 2024.
Acknowledging these facts, NCLAT ruled that there was no laxity by the COC and set aside the penalty. Under the Insolvency & Bankruptcy Code, CIRP must be completed within 330 days, including any litigation or extensions. This decision reinforces the adherence to procedural fairness in insolvency cases.
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