NCLT Admits BSE-Listed Cian Healthcare For Insolvency Resolution

India’s National Company Law Tribunal (NCLT) admitted BSE-listed Cian Healthcare Ltd. for insolvency resolution following a petition filed by the company’s operational creditor Shreeji Pharmachem.

The Mumbai bench of the NCLT admitted the Pune-based pharmaceutical company under the corporate insolvency resolution process (CIRP) on 11 June, the tribunal order showed.

The petition was filed by Shreeji Pharmachem through the proprietor Janak Gandhi on 9 December 2021 alleging a default of around 1.15 crore rupees ($137,607) related to supply of goods to the company.

Cian Healthcare, which employs more than 350 persons, manufactures tablets & capsules, nutraceutical and veterinary products as well as soft gelatin capsules and other products. It also supplies its products to the central and state governments.

OPERATIONAL CREDITOR CONTENTION

Cian Healthcare approached Shreeji Pharmachem for delivering certain raw materials for making Albendazole tablets during 2020 to 2022.

Shreeji Pharmachem issued several invoices to Cian Healthcare for supplying goods, but only a part payment was made by the company after the issuance of demand notice.

Cian Healthcare sought more time for the repayment, citing financial issues caused by Covid-19 Pandemic and certain delay in realization of dues from various state governments. The company also gave assurance to Shreeji Pharmachem that all the outstanding dues would be settled within six months by post-dated cheques (PDCs).

The PDCs were later dishonored whenever the Shreeji Pharmachem attempted to encash them and the parties later made attempts for the settlement of dues. During the settlement process, however, Cian Healthcare indicated its lack of willingness or capability to settle the dues.

CORPORATE DEBTOR ARGUMENT

According to Cian Healthcare, there was pre-existing dispute between the parties over quality of supplied goods. The quality of raw materials created an adverse chain of events and the company faced huge financial losses as well as loss of reputation in the pharmaceutical market.

The company later sent various emails to Shreeji Pharmachem during May to October 2023, indicating its attempt to clear the outstanding dues through settlement. However, Shreeji Pharmachem rejected the settlement proposals, citing past record of delay by the company.

Cian Healthcare, via its lawyer, said the company is ready to make the balance payment of the outstanding dues Shreeji Pharmachem.

However, the operational creditor (OC) never tried to settle the matter and its conduct only indicates its intention of recovery of interest and the cost of litigation under the garb of settlement, it added.

“The present application is nothing but a misuse by the OC for the purpose of debt recovery which is not the objective of the IBC,” Cian Healthcare said.

ANALYSIS & FINDINGS

The NCLT said the OC has successfully demonstrated and proved the debt and default in the case and the corporate debtor has admitted about the outstanding debt.

“Therefore, we are of the considered view that this application is complete and satisfies all the necessary requirements for admission under Section 9 of the IBC,” Judicial Member K.R. Saji Kumar and Technical Member Sanjiv Dutt said in the order.

The tribunal admitted Cian Healthcare under CIRP and also appointed Roshen Chordiya as an interim resolution professional of the company.

Cian Healthcare was down 3% at 24.25 rupees per share on the BSE in the afternoon Mumbai trading today.

The company posted a consolidated net profit of 25.43 lakh rupees on income from operations of 61.70 crore rupees in the financial year ended 31 March 2024, according to its financial statement.

Note: $1 = 83.5715 Indian rupees

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