On Tuesday, the National Company Law Appellate Tribunal (NCLAT) dismissed a plea from an operational creditor seeking to initiate insolvency proceedings against Aditya Birla Fashion and Retail Ltd (ABFRL). The appellate tribunal upheld the Mumbai bench’s order from October 11, 2023, which had dismissed In Style Fashion’s plea based on the existence of a pre-existing dispute.
“Considering the overall facts and circumstance of the present case and in view of the foregoing discussion, we are satisfied that the Adjudicating Authority (NCLT) did not commit any error in rejecting the Section 9 Application filed by the Appellant on the ground of pre-existing dispute,” said the NCLAT.
In Style Fashion served as a franchisee and commission agent responsible for operating ABFRL’s showroom.
NCLAT Disagrees on Time-Barring in Aditya Birla Fashion Case
However, the NCLAT also said, “We do not agree with the finding of the Adjudicating Authority that the Section 9 application was time-barred and hit by limitation”.
Meanwhile, the appellate tribunal said the operational creditor has the liberty to seek remedy of its contractual disputes before any other appropriate forum.
It entered into an agreement to run showrooms for Planet Fashion and Allen Solly in 2011. However, it was closed in February 2016.
Following the closure of the showroom, the stock in trade was sent back to ABFRL by the Operational Creditor. However, it made only part payment of INR 51,283.28 on April 28, 2017.
Aggrieved by this, it sent a demand notice of INR 1.05 crore and moved the NCLT.
However, the NCLT dismissed it, which was later challenged before the appellate tribunal NCLAT.
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