Violet Corp Limited (VCL) carries on the business of specialised chemicals used in synthetic dyes and its businesses have spread across the globe. Due to environmental impact its products lost markets and started facing

CS Professional · Insolvency and Bankruptcy - Law and Practice · PYQS · June 2025
Violet Corp Limited (VCL) carries on the business of specialised chemicals used in synthetic dyes and its businesses have spread across the globe. Due to environmental impact its products lost markets and started facing financial difficulties. The Purple Bank of India (PBI) one of its financial creditors had filed an application under Section 7 of the IBC, 2016 against VCL. The Adjudicating Authority passed order against VCL initiating the Corporate Insolvency Resolution Process (CIRP) in the middle of 2022. However, before kickstart of the aforesaid CIRP, one more Bankruptcy proceeding was initiated against its overseas assets provided as security to a foreign Bank in a European country, and a Trustee was appointed by the European court having jurisdiction over its overseas properties. The Trustee has approached Adjudicating Authority (NCLT) to recognize their proceedings and to halt Indian proceedings. However, The NCLT declined to accept/consider the application and declared that their proceedings as null and void, mentioning their reasons/observations. Aggrieved by the decision, the Trustee made an appeal before the NCLAT to consider their appeal and preyed relief as stated above. In this background, state the decision for denial by the NCLT and also the decision of the NCLAT by citing appropriate case law in this regard.

Answer & Explanation:

The facts are similar to the first cross-border insolvency case of Jet Airways (India) Ltd v. State Bank of India and another . The NCLT referred to Sections 234 and 235 of the Insolvency and Bankruptcy Code, 2016 and also mentioned the absence of any sure-shot legal regime on the cross-border insolvency declared in that European country, the Netherland. So, the NCLT declared that Dutch proceeding is null and void. Aggrieved by that order of NCLT, the Dutch court appointed Trustee filed appeal against that order of NCLT-Mumbai. The NCLAT allowed stating that it is a matter of cross-border insolvency protocol arranged between the 2 officials based on the model law. The Centre of Main Interests (COMI) of the Jet Airways was recognized to be India as the Jet Airways (India) limited was incorporated in India and its primary business is operated in India. This is the first cross-border insolvency case in India, so the AA was somewhat shaky to arrive at a constructive decision at the same time the IBC being a newer law and is ever-evolving. The 'Dutch Trustee (Administrator)' will work in cooperation with the 'Resolution Professional of India' and, if any, suggestion is required to be given, he may give it to the 'Resolution Professional'. NCLAT set asides part of the impugned order dated 20th June, 2019 passed by the NCLT, Mumbai Bench in so far it relates to the observations that the 'Dutch Court' has no jurisdiction in the matter of 'corporate insolvency resolution process' of 'Jet Airways (India) Limited, (Offshore Regional Hub) and the consequential directions as given to the 'Resolution Professional' in respect of 'Offshore proceedings. However, it was made clear that NCLAT have not interfered with the order of admission of application under Section 7 of the I&B Code filed by the 'State Bank of India' against 'Jet Airways (India) Limited', therefore, joint 'Corporate Insolvency Resolution Process' will continue in accordance with 'Insolvency and Bankruptcy Code, 2016.

Topics: Cross-Border Insolvency

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