Company Law Tribunal Orders Insolvency Proceedings Against National Textile Corporation

The National Company Law Tribunal (NCLT) has ordered to initiate insolvency proceedings against state-run National Textile Corporation
The National Company Law Tribunal (NCLT) has ordered to initiate insolvency proceedings against state-run National Textile Corporation (NTC) after admitting a plea by one of its operational creditors claiming default of around ₹ 14 lakh.
The New Delhi bench of the NCLT has also appointed Amit Talwar as an interim resolution professional (IRP), suspending the board of NTC and has also declared a moratorium against the PSU as per the provisions of the Insolvency & Bankruptcy Code (IBC).
A two-member NCLT bench also rejected the claims of NTC and said the dispute it raised over the due amount claimed by its operational creditor is merely a "moonshine dispute” and said default has occurred for the payment.This is probably for the first time since the code has come into effect that insolvency proceedings against a central government-owned public sector unit (PSU) has been initiated.
NTC is under the jurisdiction of the Ministry of Textile, Government of India. It is engaged in the production of yarn and fabric through its 23 mills in operation, located all over India.The NCLT direction came over a petition filed by Hero Solar Energy Private Ltd (HSEPL) through its counsel Pallav Mongia, claiming a default of ₹ 13.84 lakh for two contracts for installing solar rooftop power projects.
It was informed by the operational creditor that as per the clauses of the agreement, there was no provision for levying any penalty and sent a demand notice to NTC under section 8 of the IBC.
However, NTC in its reply had said HSEPL has committed a delay of 117 days in the execution of the work order and it has suffered losses and hence it has deducted penalties from the amount due.