NCLT Orders Insolvency Proceedings for Syska LED Lights Following Debt Issues

The National Company Law Tribunal (NCLT) has started insolvency proceedings against Syska LED Lights after admitting a request from its operational creditor, Sunstar Industries. Syska LED Lights, which is part of the Pune-based SSK Group, is involved in various sectors, including LED lights, personal care products, mobile accessories, home appliances, and smartwatches.

The Mumbai bench of NCLT accepted Sunstar Industries’ claim of outstanding dues totaling ₹7.70 crore. As a result, the tribunal has appointed Debashis Nanda as the interim resolution professional and suspended the current board of Syska LED Lights in accordance with the Insolvency & Bankruptcy Code (IBC).

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NCLT rejected Syska LED Lights’ argument of a prior dispute and stated that the email exchanges between the two parties confirmed Syska’s responsibility toward its operational creditor.

The NCLT’s order noted, “We believe that the applicant has shown evidence of operational debt and default by the corporate debtor. The application was filed on time, and there is no prior dispute regarding the transaction.”

Previously, NCLT had also initiated the Corporate Insolvency Resolution Process (CIRP) for Syska LED Lights due to a petition from another operational creditor. However, that process was withdrawn in May 2024 after a settlement. Now, Syska LED Lights faces CIRP again because of the claim from Sunstar Industries, which designs and manufactures electrical home appliances, including irons sold under Syska’s brand.

Syska initially met its payment obligations but later defaulted significantly. Sunstar Industries reported that Syska failed to pay for 25 invoices issued between March and July 2023. The debt was acknowledged by Syska through various emails and post-dated cheques, according to Sunstar.

During the proceedings, Syska disputed these claims, arguing that the petition was based on false information and that there was a prior dispute about the quality of goods supplied. They claimed that they had proposed a one-time settlement (OTS) on August 25, 2024, which Sunstar Industries did not accept.

However, the NCLT panel, consisting of Anil Raj Chellan and Kuldip Kumar Kareer, dismissed Syska’s arguments. They stated that Sunstar Industries had supplied goods valued at ₹7.19 crore and that Syska had acknowledged its debt in a November 22, 2023, email.

The NCLT ruled, “The refusal to accept the OTS proposal cannot be a reason to reject the application under Section 9.” They also clarified that if Sunstar had started any recovery actions under the Micro, Small and Medium Enterprises Development Act, it did not prevent them from filing under the IBC.

The NCLT officially admitted the company petition and placed Syska LED Lights under a moratorium as per the IBC provisions. The order specified that if Syska continued to receive essential goods or services during the moratorium, those supplies should not be stopped or interrupted.

During the CIRP period, the management of Syska will be transferred to the interim resolution professional (IRP). The suspended directors and employees must provide all necessary documents and information to the IRP.