The National Company Law Appellate Tribunal (NCLAT) has set aside an order by the Kolkata bench of the National Company Law Tribunal which allowed initiation of insolvency proceedings against Eastern Coalfields (ECL), a subsidiary of India’s largest miner Coal India.
Earlier, the NCLAT had stayed the order passed by the tribunal to initiate the corporate insolvency resolution process against ECL after the state-run Coal India (CIL) had moved the appellate tribunal challenging the order.
The NCLT’s Kolkata bench on December 19, 2018, admitted an insolvency petition, filed by the Hinduja Group-controlled Gulf Oil Lubricants India (GOLIL), against ECL under Section 9 of the Insolvency & Bankruptcy Code (IBC), as the coal miner allegedly refused to pay the interest amount on the original debt towards goods supplied.
During the appellate tribunal’s hearing of the matter, the counsel appearing on behalf of GOLIL, an operational creditor, accepted that the principal amount was paid prior to the admission of the insolvency application, and interest has been paid and matter has been settled by agreement dated January 26, 2019. The counsel also submitted that such settlement has already been made prior to the constitution of the committee of creditors (CoC).
Notably, ECL had paid the principal sum of around Rs 84.71 lakh to GOLIL. The Hinduja Group company was asking the miner to pay the amount of interest at the rate of 18% per annum.
“In view of the fact that the parties have now settled the matter prior to the constitution of the CoC and the Adjudicating Authority has failed to notice that the principal amount has already been paid and original plea of the ‘Corporate Debtor’ was that no interest was payable in terms of the Agreement/Contract, we set aside the impugned order dated 19th December, 2018 passed by the Adjudicating Authority,” the NCLAT bench, comprising chairperson justices SJ Mukhopadhaya and Bansi Lal Bhat, said in its order dated February 11.
“In effect, order(s), passed by the Adjudicating Authority (NCLT) appointing ‘Interim Resolution Professional’, declaring moratorium, freezing of Company Appeal (AT) (Insolvency) No. 807 of 2018 -5- account, and all other order (s) passed by the Adjudicating Authority pursuant to impugned order and action, if any, taken by the ‘Interim Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent under Section 9 of the ‘I&B Code’ is dismissed. Learned Adjudicating Authority will now close the proceeding,” the appellate tribunal added in its order.
In his order dated December 19, Justice Madan B Gosavi of the NCLT’s Kolkata bench had said: “Considering the facts and materials on record, I hold that the corporate debtor, Eastern Coalfields, is liable to pay interest to the operational creditor, that has not been paid in spite of demand.”
Pronouncing the order, Justice Gosavi had said: “The application filed by the operation creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016 is hereby admitted for initiating the Corporate Insolvency Resolution Process in respect of Eastern Coalfields. Moratorium order is passed for a public announcement as stated in Section 13 of the IBC, 2016.”
According to the latest annual report of ECL, lenders to the company are: State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Union Bank of India, ICICI Bank, Axis Bank, Canara Bank, Oriental Bank of Commerce, Syndicate Bank, Allahabad Bank, United Bank of India, Corporation Bank and United Commercial Bank.
On Thursday, Coal India’s scrip fell 1.50% to end the day at `217 on the BSE. Shares of Gulf Oil Lubricants India, one of the leading players in the domestic lubricants market, ended the day with at `885.40 a piece, losing 0.90%.
Source: Financial Express, February 15,2019