NCLT Admits Reliance Infrastructure For Insolvency Resolution

(The Corner Office Journal) -- India's National Company Law Tribunal (NCLT) admitted Reliance Infrastructure Ltd. (RInfra) for insolvency resolution following a petition filed by IDBI Trusteeship Services Ltd.

The Mumbai bench of the NCLT admitted the infrastructure developer under the corporate insolvency resolution process (CIRP) on 30 May, the tribunal order showed.

The order was passed by Judicial Member K. R. Saji Kumar and Technical Member Sanjiv Dutt.

The Background

IDBI Trusteeship filed the petition in April 2022 under Section 9 of the Insolvency and Bankruptcy Code for initiating CIRP against RInfra.

The operational creditor had alleged a default of 88.68 crore rupees ($10 million) as of 28 August 2018 as well as interest at 1.25% per month from 30 days of the date of receipt of each invoice until the payment date.

It was based on default in the payment of 10 invoices issued by Dhursar Solar Power Private Ltd. (DSPPL) for supplying solar energy to RInfra as per the energy purchase agreement in 2012.

The invoices were issued between 2017 and 2018, and IDBI Trusteeship, being the security trustee of DSPPL, sought payments against the invoices from RInfra.

In July 2024, RInfra challenged the maintainability of the insolvency petition on the ground that the alleged debt does not amount to operational debt under the IBC.

Analysis & Findings

The NCLT, after hearing the arguments and going through the presented documents, said the bench was aware of the attempts of both the parties to amicably settle the matter.

“We provided sufficient opportunities for the same, but the efforts did not yield any result,” it added, noting that the parties’ pre-mediation process was also not successful and they decided to proceed with the matter.

“Considering the factual and legal aspects, we hold that pending appeals and other proceedings filed by both the parties do not have any bearing on the main application,” the NCLT said, and also decided the issue of pendency of other legal proceedings in favor of IDBI Trusteeship.

The Order

The tribunal said it has come to a definite conclusion that IDBI Trusteeship has become successful in establishing operational debt due and payable against RInfra and that the company is in default.

“The main application is complete in all respects. Hence, we are of the considered view that the same deserves to be admitted,” it noted.

The NCLT, which admitted RInfra for insolvency resolution, also appointed Tehseen Fatima Khatri as the interim resolution professional of the company.

Requests Denied

The bench heard RInfra lawyer Ashish Kamat’s request to stay the CIRP admission order and also that the appointed resolution professional should be directed not to take charge of the company. However, it declined the request.

“We find that there is no provision in the IBC to stay an order of CIRP initiated in respect of the corporate debtor,” the NCLT said. “This adjudicating authority also has no power to direct an Interim insolvency professional appointed, not to take charge of its CD once CIRP is ordered.”

Note: $1 = 85.6032 Indian rupees

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