Rolta Moves Bombay High Court Against NCLT’s Order To Initiate Insolvency Proceedings
Rolta India Ltd. moved the Bombay High Court on Nov. 18, challenging the National Company Law Tribunal’s order to initiate insolvency proceedings against the software firm.
The NCLT pronounced its order on Oct. 22 but it was neither listed on the court’s causelist nor was the pronouncement made in an open court, according to the arguments made by Rolta’s lawyer in court. The company claimed an additional board for Oct. 22 was set up on a later date to list the case for order. Rolta said it found out about the NCLT decision only when the interim resolution professional visited the company office with a copy of the order.
The NCLT’s Mumbai bench had admitted an insolvency plea against Rolta on Nov. 7, reported Business Standard. The application was filed by two foreign funds—Value Partner Greater China High Yield Mutual Fund and Pinpoint Multi Strategy Fund—claiming total dues worth more than Rs 1,050 crore from Rolta LLC and Rolta Americas LLC, the overseas subsidiaries of Rolta India. Rolta India had extended guarantees towards its overseas subsidiaries. The funds moved the tribunal after the principal borrowers failed to fulfill payment obligations.
A lawyer close to the matter told BloombergQuint that the order admitting the company to insolvency has not been pronounced in an open court, and hence is not a valid judgment.
Rolta’s counsel argued in the high court that any further process pertaining to insolvency resolution can have drastic consequences as it would result in displacement of the company’s entire board. If the insolvency process commences, the company’s right to settle with the creditors will be lost, the counsel said.
Ordinarily any appeal of an NCLT decision lies in the NCLAT, but as this was a writ petition, the company moved the high court.
Rolta India has yet to respond to BloombergQuint’s emailed queries regarding its legal action and case.