Chennai: Can insolvency proceedings be initiated against a company for failing to refund the security deposit it took to lease premises? No, says National Company Law Appellate Tribunal (NCLAT). The reason such dues do not fall within the meaning of ‘operational creditor’, who along with financial creditors, can file for insolvency against a company under the provisions of IBC (Insolvency and Bankruptcy Code).
Jindal Steel and Power, which took premises owned by DCM International in Gurugram on lease, initiated corporate insolvency resolution process against the latter stating that it failed to pay the security deposit of Rs 1 crore after the termination of the lease. “We hold that the appellant tenant (Jindal Steel and Power) do not …
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