After After obtaining a stay order from the National Company Law Appellate Tribunal (NCLAT) over initiation of insolvency proceedings against its subsidiary – Eastern Coalfields (ECL) – the mother company, Coal India, hit back at Gulf Oil Lubricants India, alleging the latter didn’t follow the grievance redress mechanism and instead took a “hasty decision” to move court.
On December 19, after hearing a petition from Gulf Oil Lubricants for recovery of an alleged amount of Rs 4.09 million, the Kolkata Bench of the National Company Law Tribunal (NCLT) had ordered commencement of insolvency proceedings against ECL and appointed Chhedi Rajbhar from C Rajbhar & Co as the interim resolution professional.
Even as ECL lost the case in the NCLT to stall insolvency proceedings against it, Coal India (CIL) stepped in on behalf of its subsidiary, challenging the order passed by the NCLT.
Gulf Oil Lubricants stated that Rs 4.09 million is still pending from CIL, which the latter has denied.
The NCLAT, on December 22, ordered a stay on the NCLT’s verdict and prevented an immediate commencement of insolvency proceedings.
“It is natural on our part to get involved in this case when we see our child (subsidiary) being dragged to the NCLT,” a senior CIL official said, when asked the reason for CIL getting directly involved in this case.
Interestingly, Gulf Oil Lubricants, which is an operational creditor to ECL, went unrepresented in the NCLAT.
A source in CIL alleged that Gulf Oil Lubricants India, part of the Hinduja Group, didn’t opt for the grievance redress mechanism of ECL or CIL, which would have settled the matter “amicably” and instead “acted hastily”.
According to this source, Gulf Oil Lubricants first had the option to take up its issues, if any, with CIL, if the company felt it remained unattended in ECL, and if Gulf Oil Lubricants wasn’t satisfied with the resolution, then it should have moved court.
“A grievance redress cell (GRC) is fully in place and processes and its scope and boundaries are well defined. At the time, when any creditor signs up with CIL or its subsidiaries for any business purpose, the creditor is made fully aware of the GRC,” the source said.
“The first complaint should have been made to the CIL and only after that should Gulf Oil Lubricants moved NCLT. It is a hasty and ill-advised decision,” the person added.
At the time of going to press, Gulf Oil Lubricants didn’t respond to questions asked by Business Standard.
A source in ECL involved in this case contested that the contract with Gulf Oil Lubricants doesn’t mention any part of interest payment at 18 per cent per annum on principal overdue – a claim contested by Gulf Oil Lubricants.
The dispute between ECL and its operational creditor arose over interest payment of an overdue amount of Rs 8.47 million. While Gulf Oil Lubricants alleged that the overdue amount will accrue interest, CIL has claimed otherwise.
The case in the NCLAT is slated for its next hearing on January 29. Both CIL and ECL will be jointly representing ECL in the NCLAT.
Source: Business Standards, December 24, 2018