Canara Bank initiates insolvency proceedings against Syska E-Retails

The National Company Law Tribunal (NCLT), Mumbai Bench-I, has admitted a petition filed by Canara Bank to initiate the Corporate Insolvency Resolution Process (CIRP) against Syska E-Retails LLP. The order was delivered on 17 June 2025, by Member (Technical) Prabhat Kumar and Member (Judicial) Justice V.G. Bisht (Retd).

The NCLT has appointed Mr. Vijay Pitamber Lulla (Registration No: IBBI/IPA001/IP-P00323/2017-18/10593; email: Vijayplulla@rediffmail.com; Mobile: 9920279899) as the Interim Resolution Professional (IRP).

Canara Bank, the financial creditor, sought to invoke Section 7 of the Insolvency and Bankruptcy Code, 2016, citing a default in repayment of a total outstanding debt of Rs 10.70 crore. The stated date of default is November 21, 2023, which is also when the corporate debtor’s account was classified as a Non-Performing Asset (NPA). The default was recorded with the Information Utility “NeSL” as of June 13, 2024.

Syska E-Retails LLP was incorporated on 1 October 2015, and is registered with the Registrar of Companies, Pune. The company availed multiple credit facilities from Canara Bank under the category of Advances against Supply Bills for trading activities, sanctioned on August 24, 2022.

Syska also created a security interest in the form of charges on Supply Bills and Hypothecation of goods, registered under CERSAI, to secure the loan facilities. Loan amounts were disbursed on various dates in June 2023, including Rs 1,49,27,437 on June 27, 2023; Rs 2,28,64,635 on June 28, 2023; Rs 2,46,63,127 on June 13, 2023; and Rs 5,89,16,404 on June 5, 2023.

Canara Bank issued a loan recall notice on December 16, 2023, demanding repayment, but the corporate debtor failed to comply. A notice to guarantors under Section 13(2) of the SARFAESI Act, 2002, was also issued on December 16, 2023, and an Original Application (O.A. NDN 1721 of 2024) was filed on April 8, 2024, for recovery of dues, which is pending before the Debt Recovery Tribunal-II, Delhi.

The Corporate Debtor raised several objections, including a lack of proper authorization for the application due to an outdated Power of Attorney , inaccuracies in the claimed debt amount and date of default , a mismatch between the claimed amount and NeSL records (INR 10,70,26,061.11 claimed vs. INR 26,84,191.26 in NeSL) , and inconsistencies in the default date between the application and NeSL records (November 21, 2023, vs. August 29, 2022). The Corporate Debtor also stated that payments were made after the alleged default date , and no notice declaring the account as NPA was received. Furthermore, discrepancies in the claim amounts in the loan recall notice were highlighted , and the absence of a complete statement of dues/accounts and justification for the claimed amount was noted.

The NCLT, however, found no substantive objections to the existence of the financial debt and default. The Tribunal clarified that the Power of Attorney was valid for initiating insolvency proceedings , and while some payments were made by the Corporate Debtor from November 24, 2023, to December 14, 2023, these resulted in a reduction of the outstanding amount, and there were no discrepancies in the account-wise outstanding. The NCLT also stated that there is no requirement under the loan terms to issue a notice upon declaring an account as NPA.

Citing the Supreme Court’s ruling in M. Suresh Kumar Reddy v. Canara Bank, the NCLT concluded that if the existence of a financial debt and its default are proven, the petition under Section 7 of the IBC must be admitted.

A moratorium has been declared under Section 14 of the IBC, prohibiting:

• Institution or continuation of suits or proceedings against the Corporate Debtor, including execution of judgments, decrees, or orders.
• Transferring, encumbering, alienating, or disposing of the Corporate Debtor’s assets or any legal or beneficial interest therein.
• Any action to foreclose, recover, or enforce any security interest created by the Corporate Debtor, including actions under the SARFAESI Act, 2002.
• Recovery of any property by an owner or lessor occupied by or in possession of the Corporate Debtor.

However, the supply of essential goods or services to Syska E-retail will not be terminated, suspended, or interrupted during the moratorium. The moratorium will remain in effect until the completion of the CIRP, approval of a resolution plan, or an order for liquidation.

A public announcement of the CIRP will be made immediately. Canara Bank is directed to deposit Rs 3,00,000 towards the initial CIRP cost with the IRP. During the CIRP, the management of the Corporate Debtor will vest in the IRP, and officers and managers must provide all necessary documents and information within one week.

The Registry is directed to communicate this order to the Financial Creditor, Corporate Debtor, and IRP, and the IRP is directed to send a copy to the Registrar of Companies, Maharashtra, Mumbai, for updating the Master Data of the Corporate Debtor.

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