The bankruptcy tribunal has ordered proceedings against Aviva Life Insurance in a case by Apeejay Trust for failure to pay Rs 27.67 lakh towards service tax and licence fee, among others, for leased premises in Mumbai. With this, Aviva has become the first financial company to come under the Insolvency and Bankruptcy Code (IBC).
No payment was made after October 2017. Subsequently, Apeejay Trust issued a demand notice under the IBC in April 2019. The insurer -- a 51:49 joint venture of the Burman family that controls consumer goods maker Dabur and Britain’s Aviva Plc. – and Apeejay Trust had entered into a lease agreement in June 2008 for the office premises in Vashi, Mumbai.
The National Company Law Tribunal (NCLT) has appointed Jatin Madan as an interim resolution professional to run the day-to-day operations of the company. It has also declared a moratorium under the IBC, protecting the company from its lenders during the process.
During the proceedings, Aviva had questioned the maintainability of Apeejay Trust's plea on the ground that it is an insurance company and being a financial service provider, IBC cannot be applied to it. This was rejected by the NCLT which said "the operational creditor does not have any claim in respect of contract of insurance. The claim is with respect to the outstanding licence fee and the service tax amount.”
In a statement, Aviva said: "The issue at hand is a commercial dispute with a vendor and Aviva reserves it rights and remedies in the court of law. Our customers’ policies are fully secure and we remain committed to growing our business in India."