At least one cinema owner from among the many who have recoveries to be made from the Carnival chain of multiplexes for their cinemas which had been given to the chain for running, has succeeded in obtaining a landmark order from the National Company Law Tribunal (NCLT). The NCLT’s Indore bench has granted interim relief to the operational creditor, Shanti Vijay Sipani (Cine Magic cinema, Bikaner), of defaulting company Carnival Films Pvt. Ltd.
On an application of the Operational Creditor, the NCLT, Indore Bench vide its order dated March 24, 2023 has granted big interim relief to the creditors of Carnival Films Pvt. Ltd. For those who came in late, Carnival has been declared an NPA (Non-Performing Asset) by Yes Bank on a default of Rs. 800 crore. Various petitions are pending against Carnival seeking the initiation of CIRP against it.
The NCLT took note of the facts submitted by the Operational Creditor that Carnival was not only closing its operations at different locations but it was also apprehended that Carnival was in the process of selling its properties.
The NCLT thus directed that any third-party interest or encumbrance qua the assets of the corporate debtor or transfer of share therein would remain subject to the outcome of the company petition.
The Operational Creditor had given its property for commercial use by Carnival. However, Carnival defaulted in making payment. The Operational Creditor filed Section 9 Petition under IBC along with interlocutory application, seeking interim relief to restrain Carnival from creating any third-party interest during the pendency of the Petition.
The Operational Creditor submitted that with the nature of business of the Corporate Debtor, most of the creditors of Corporate Debtor were operational creditors only. If the Corporate Debtor, being in twilight zone and defaulting every debt, disposed of its properties or created third party interest, the Operational Creditor would be remediless on initiation of CIRP. The NCLT, therefore, directed that any transfer of asset or interest therein will be subject to outcome of the petition filed by the Operational Creditor; accordingly, on admission of the Section 9 Petition, all such transfers will be null and void.
The Operational Creditor was represented through senior advocate Dr. Sachin Acharya and advocate Ms. Honey Satpal.