NCLAT revives Chintamani Jewel

The National Company Law Appellate Tribunal (NCLAT) has revived the insolvency proceedings against Chintamani’s Jewelery Arcade Pvt Ltd, allowing a reinstatement application filed by Axis Bank, saying the company has consistently violated the settlement terms filed in the court.

The three-member NCLAT bench withdrew its earlier order passed on May 9, 2024, quashing the bankruptcy declaration against the company and restoring it to its original position.

As a result, the Corporate Insolvency Resolution Process (CIRP) against the Mumbai-based jewelery company was revived before the National Company Law Tribunal (NCLT), Mumbai.

The NCLAT bench of Justices N Seshasayee, Arun Baroka and Indeevar Pandey said, “The record clearly establishes that the respondent (Chintamani’s Jewelery 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.”

NCLAT further said, “Failing the grounds on which the appeal was disposed of, the applicant is entitled to avail of the liberty expressly reserved by this Tribunal.” Axis Bank had provided various loan facilities to Chintamani’s Jewelery Arcade, which later defaulted on payments. Following the default, the bank filed an insolvency petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) before the NCLT Mumbai.

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

The entry order was challenged before the NCLAT by the suspended management of the corporate debtor. Pending the appeal, the parties signed settlement terms on April 27, 2024, under which the company made an upfront payment of Rs 1.5 crore and agreed to repay the remaining dues through a structured repayment schedule.

Taking the settlement on record, NCLAT quashed the CIRP entry order and closed the insolvency proceedings on May 9, 2024. However, it gave Axis Bank the freedom to revive the appeal in the event of any default under the agreement.

Axis Bank later filed a reinstatement application, alleging that the company failed to adhere to the agreed repayment schedule. The bank submitted that only Rs 70 lakh was paid against Rs 3.30 crore due between July and December 2024, while several installments were outstanding.