NCLAT upholds NTPC's eligibility as resolution applicant for Jhabua Power
NCLAT upholds NTPC's eligibility as resolution applicant for Jhabua Power
The company was entitled to revise its Plan from time to time under the Insolvency and Bankruptcy Code
The Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) has upheld the eligibility of the National Thermal Power Corporation (NTPC) under the Insolvency and Bankruptcy Code (IBC) to submit the Resolution Plan for Jhabua Power Ltd.
The bench comprising Justice Ashok Bhushan (Chairperson), Shreesha Merla (Technical Member), and Naresh Salecha (Technical Member) were adjudicating an appeal filed in the Avantha Holdings Limited vs Abhilash Lal case.
The Danish multinational company FLSmidth Private Limited had filed an application under IBC before NCLT, Kolkata's Adjudicating Authority (AA) seeking the initiation of the Corporate Insolvency Resolution Process (CIRP) against Jhabua Power (Corporate Debtor).
Vide its March 2019 order, the AA initiated CIRP against the Corporate Debtor and appointed Abhilash Lal (Respondent No.1) as a Resolution Professional (RP).
The appellant, Avantha Holdings Limited is the Promoter and Shareholder of Avanta Power and Infrastructure Limited, which holds 17.9 percent shares of the Corporate Debtor.
In March 2019, the appellant submitted a One Time Settlement (OTS) proposal to the RP, which was considered by the Committee of Creditors (CoC) and was not found commercially viable. Thereafter, in August, the RP invited the Expression of Interest (EOI) from the prospective Resolution Applicants for the submission of the Resolution Plan.
In October, NTPC (Respondent No.3) submitted an affidavit certifying its eligibility under IBC and in December informed the RP that Ratnagiri Gas and Power Private Ltd. (RGPPL) and Konkan LNG Private Limited (KLL), which were the joint ventures of NTPC, were declared Non-Performing Assets (NPAs).
The Canara Bank had classified RGPPL as NPA in May 2018, with effect from, April 2009. Similarly, the bank had classified KLL as NPA with effect from April 2009.
NTPC submitted its RP in December 2019, revising the same on three subsequent occasions. It stated on the affidavit that No Dues Certificates in respect of KLL were received and there was no overdue amount on RGPPL.
In December 2020, the appellant made a proposal to the CoC under IBC for the settlement of a debt owed by the Corporate Debtor. But in a March 2021 meeting, the CoC rejected the appellant's proposal as not being economically viable.
Thereafter, in April 2021, the NTPC submitted its revised RP and an affidavit claiming that the dues towards the lenders of KLL and RGPPL had been satisfactory, and the lenders had provided No Dues Certificates.
In June 2021, the appellant filed an application bearing I.A. No.537 of 2021 before the AA seeking a declaration that NTPC was not compliant with IBC. It prayed to set aside CoC's decision rejecting the proposal.
But, yet again, NTPC submitted a revised RP in June 2021, which was approved by the CoC with 100 percent votes. Subsequently, I.A. No.586 of 2021 was filed by the RP before the AA for approval of the Resolution Plan. The AA, in March 2021, rejected the I.A. No.537 of 2021 filed by the appellant and held that NTPC was not disqualified under IBC.
Thus, the appellant filed an appeal before NCLAT challenging the order seeking disqualification of NTPC under IBC; and praying to set aside the decision of the CoC rejecting the proposal of the appellant.
The bench held that CoC had not committed any error in rejecting the appellant's proposal and the AA had correctly refused to interfere with CoC's decision.
NTPC being eligible, it was entitled to submit the RP and could revise its Plan from time to time as per the Scheme of the IBC.
Dismissing the appeal, the bench stated, "The Plan having approved by 100 percent vote of CoC, we do not find any error in the decision of the AA rejecting the I.A. No.537 of 2021 filed by the appellant."
