NCLT Initiates Insolvency Proceedings Against Diksha Greens Limited

In a significant development for the Indian corporate sector, the National Company Law Tribunal (NCLT) in Kolkata has admitted an insolvency petition against Diksha Greens Limited , initiating the Corporate Insolvency Resolution Process (CIRP) for the company.

Key Details of the Case

The petition, filed by Punjab and Sind Bank under Section 7 of the Insolvency and Bankruptcy Code (IBC), was admitted by the NCLT on July 2, 2025. The bank had extended credit facilities totaling ₹22.45 crore to Diksha Greens in January 2018, which included various forms of credit such as cash credit, letters of credit, bank guarantees, and term loans.

Financial Troubles and Default

The account of Diksha Greens was classified as a non-performing asset (NPA) on February 22, 2019. As of September 30, 2024, the outstanding dues had escalated to ₹46.90 crore. The company's failure to service its debt obligations despite repeated demands from the bank led to this legal action.

Company's Defense

Diksha Greens argued that a major setback occurred in December 2018 when a fire at its factory destroyed stock worth ₹146.20 crore. The company claimed that this incident significantly impacted its operations and financial standing. Furthermore, Diksha Greens contended that it had been in restructuring discussions with the bank and had even deposited ₹1.32 crore as part of a potential restructuring plan.

NCLT's Decision

Despite the company's arguments, the NCLT found sufficient evidence of debt and default. The tribunal noted that Diksha Greens had acknowledged the liability in its balance sheets for the financial years 2020-21 and 2022-23, which was considered a valid acknowledgment of debt under the Limitation Act.

Appointment of IRP and Moratorium

The NCLT has appointed Pankaj Khaitan as the Interim Resolution Professional (IRP) to oversee the insolvency process. A moratorium under Section 14 of the IBC has been put into effect, which prohibits the initiation or continuation of legal proceedings against the company, among other protective measures.

Implications and Next Steps

This development marks the beginning of the insolvency resolution process for Diksha Greens Limited. The IRP will now take control of the company's assets and operations, and will be responsible for managing its affairs during the CIRP period. Creditors will be invited to submit their claims, and efforts will be made to find a resolution plan to revive the company or liquidate its assets to settle the debts.

The case highlights the ongoing challenges in the Indian banking sector related to non-performing assets and the increasing use of the IBC as a tool for debt resolution. It also underscores the importance of proper financial management and timely debt servicing for corporate entities to avoid insolvency proceedings.

As the CIRP unfolds, stakeholders will be closely watching the proceedings, which could have significant implications for Diksha Greens Limited's future operations and its ability to meet its financial obligations.