The National Company Law Tribunal (NCLT) in Kolkata has dismissed the Central Bank of India’s insolvency application against Simplex Infrastructures.
In an order dated May 4, the bench, comprising Bidisha Banerjee and Balraj Joshi, said the application could cause greater harm to the company’s debtors, Simplex Infrastructures.
Relying on the Supreme Court’s Vidarbha Industries Power judgment, which emphasised the discretion of the adjudicating body, NCLT judges said the previous case was a financial failure. At the same time, the business model was sound and in line with general industry practice. Simplex is an engineering, procurement and construction (EPC) company.
“Having said that, no new management is likely to do better than the current management could,” it said.
The bench noted that Simplex Infrastructures’ balance sheet does not show negative net worth and “therefore cannot be called insolvent”. Simplex provided listings totalling Rs 554.17 crore in the accounts receivable transaction application.
Simplex, an EPC construction company, said the order referred to “larger problems with the quality of tender documents, competition in the industry, delays in the execution of works due to various impediments – both attributable to the owner and the debtors and their various permutations – remain the same even after changes in management through the resolution process.”
The Central Bank petitioned to initiate the Corporate Insolvency Resolution Procedure (CIRP) against Simplex Infrastructures on July 15, 2021. The lawsuit was filed because Simplex defaulted on around Rs 105 crore payments.