The National Company Law Appellate Tribunal (NCLAT) has overruled BHEL’s objection and has given nod to the liquidation process of Tamil Nadu-based Surana Power, which was admitted into insolvency in January 2019. In fact, during the liquidation proceedings, the state-run company won an ex-parte arbitration award against Surana Power, which gave it lien over all the equipment and goods lying at the latter’s unit, as well as its partially or fully constructed buildings.

Background:

The Chennai Bench of National Company Law Tribunal had ruled the decision in favour of BHEL, as the company won an arbitration award against Surana Power, which was undergoing liquidation. BHEL opposed the liquidation as BHEL was one of the Secured Creditor. National Company Law Appellate Tribunal has set aside the order of Chennai Bench of NCLT and ordered for liquidation of Surana Power Limited.

Facts of the case:

  • The Adjudicating Authority admitted Section 9 Application for initiation of CIRP vide order dated 20th January,2019.
  • As no resolution plan was approved, as per provisions of I&B Code, the Corporate Debtor (Surana Power Limited) was ordered to be liquidated.
  • During liquidation, an exparte Arbitration Award was passed in favour of Secured Creditor (BHEL), based on Secured Creditor granted lien over equipment’s and goods lying at site of Corporate Debtor.
  • Corporate debtor has hypothecated the assets to all other Secured Creditors vide Deed of Hypothecation dated 24th September 2010.
  • Secured Creditors with a value of 73.76% of secured assets have relinquished their Security Interest and BHEL convey its unwillingness about relinquish.
  • Liquidator filed application seeking permission to sell assets of Corporate Debtor which was rejected by Chennai Bench of NCLT.
  • Liquidator then moved to NCLAT against Impugned Order and NCLAT passed order setting aside order of NCLT Chennai and allowed liquidation of Corporate Debtor.

Findings in order:

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