Synopsis

Insolvency proceedings against Chintamani's Jewellery Arcade have been revived by the NCLAT after Axis Bank filed a restoration application. The tribunal found the company in material and continuing breach of court-recorded settlement terms, failing to adhere to its repayment schedule. This decision reinstates the corporate insolvency resolution process against the Mumbai-based firm before the NCLT.

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New Delhi, The National Company Law Appellate Tribunal (NCLAT) has revived insolvency proceedings against Chintamani's Jewellery Arcade Pvt Ltd allowing a restoration application filed by Axis Bank, holding that the company had committed a material and continuing breach of court-recorded settlement terms.

A three-member NCLAT bench recalled its earlier order passed on May 9, 2024 that set aside the insolvency admission against the company and restored to its original position.

Consequently, the corporate insolvency resolution process (CIRP) against the Mumbai-based jewellery company was revived before the National Company Law Tribunal (NCLT), Mumbai, also stands revived.

"The record clearly establishes that the respondents (Chintamani's Jewellery Arcade) failed to adhere to the repayment schedule forming part of the consent terms. The breach is neither technical nor insignificant but substantial and continuing," said an NCLAT bench comprising Justice N Seshasayee, Arun Baroka, and Indevar Pandey.

NCLAT further said, "The very foundation on which the appeal came to be disposed of having failed, the applicant is entitled to invoke the liberty expressly reserved by this Tribunal."

Axis Bank had extended various credit facilities to Chintamani's Jewellery Arcade, which later defaulted on repayments. Following the default, the bank filed an insolvency petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) before the NCLT Mumbai.

The NCLT admitted the plea on February 23, 2024 and appointed an interim resolution professional.

The admission order was challenged before the NCLAT by the suspended management of the corporate debtor. During the pendency of the appeal, the parties entered into settlement terms on April 27, 2024 under which the company paid Rs 1.5 crore upfront and agreed to repay remaining dues through a structured repayment schedule.

Taking the settlement on record, the NCLAT on May 9, 2024 set aside the CIRP admission order and closed the insolvency proceedings. However, it granted liberty to Axis Bank to revive the appeal in the event of any default under the settlement.

Axis Bank later moved a restoration application, alleging that the company failed to honour the agreed repayment schedule. The bank submitted that against dues of Rs 3.30 crore falling due between July and December 2024, only Rs 70 lakh had been paid, while several instalments remained unpaid.