NCLAT Upholds Insolvency Against Frost International, Says Bank Can't Be Faulted Over Unfiled Plan

The National Company Law Appellate Tribunal (NCLAT), New Delhi, on 27 February, dismissed an appeal filed by the ex-director of Frost International Ltd., rejecting the argument that Bank of India acted unfairly by not considering a restructuring under the RBI's Prudential Framework dated 7 June 2019 before initiating insolvency.

A Bench comprising Judicial Member Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha, upheld the National Company Law Tribunal (NCLT), Mumbai order admitting the Section 7 application.

The Bench observed:

“We wonder if the Corporate Debtor has not even submitted the Resolution Plan in terms of extant RBI guidelines of 07.06.2019, how the Appellant can at this stage accuse the Respondent No. 1 for not considering the same.”

The appeal arose from the NCLT's 9 February 2023 order admitting a Section 7 application filed by Bank of India against Frost International. The bank had extended credit facilities aggregating 756.75 crore. Default was recorded on 12 April 2018, and the account was classified as NPA with effect from 30 June 2018. The total amount claimed in default exceeded 872 crore. The Corporate Debtor's account was later classified as “fraud” pursuant to a forensic audit.

Before the NCLAT, the promoter argued that the company was commercially viable and relied on the Supreme Court's decision in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. to contend that admission under Section 7 is not automatic. It was also argued that the bank violated principles of fairness by refusing to entertain restructuring proposals and by failing to act under the RBI's 2019 stressed assets framework.

Rejecting the plea, the Tribunal noted that the Corporate Debtor had not submitted any resolution plan under the RBI circular dated 7 June 2019, rendering the allegation of non-consideration untenable.

Relying on the Supreme Court's February 2026 judgment in Power Trust vs. Bhuvan Madan, the NCLAT noted that as per this ruling, the Adjudicating Authority has “scarcely any discretion to refuse admission” once default is proven. The decision emphasised that the scope of enquiry for admission by a financial creditor is strictly limited to the existence of a default of a debt due and payable, “and nothing more.”

Finding no infirmity in the NCLT's order admitting the application, the NCLAT dismissed the appeal and allowed the Corporate Insolvency Resolution Process against Frost International Ltd. to continue.

For Appellants: Advocates Malak Bhatt, Neeha Nagpal, Samridhi, and Shreyansh Chopra

For Respondent: Advocates Prakash Shinde, and Ruchita Jain for Bank of India, Advocate Varun Kalra for Frost International