The National Company Law Tribunal (NCLT) has dismissed IDBI Trusteeship Services’ petition seeking Corporate Insolvency Resolution Process (CIRP) proceedings against Essel Group entity Cyquator Media Services for default in payment.
In its petition against Cyquator Media, IDBI Trusteeship had invoked the provisions of Section 7 Insolvency and Bankruptcy Code read with Rule 4 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for resolution of financial debt worth ₹599 crore.
In their order, the NCLT bench of Technical Member Anuradha Sanjay Bhatia and Judicial Member Kuldip Kumar Kareer noted that the contentions raised on behalf of IDBI Trusteeship are devoid of any force or substance.
“We are of the considered view that in this case, the default took place in the month of June 2020 which is clearly covered under the period excluded under Section 10A of the Code. That being so, the instant Petition cannot be maintained being barred by Section 10A of the Code and is, therefore, dismissed,” the order reads.
As per the provisions of Section 10A of the Insolvency and Bankruptcy Code, no application for initiation of corporate insolvency resolution process can be filed in respect of a default that has occurred on or after 25th March 2020 till 24th September 2020.
Section 10A was introduced in the wake of the Covid-19 outbreak and subsequent lockdown, on March 25, 2020.
NCLT said that the default took place when Cyquator didn’t make the payment even after the guarantee was invoked by IDBI Trusteeship vide notice dated June 12, 2020. IDBI counsel had argued that the date of default should be considered as May 13, 2022. Cyquator Media was represented by Advocate Nausher Kohli.
The bench, however, clarified that this order will not prevent IBDI Trusteeship from recovering dues from Cyquator before any other competent forum/court of law.
“Nothing observed herein before should be construed to mean that the debt in question has extinguished,” the order stated.
In 2015, Essel Infra Projects issued 425 rated, unlisted, redeemable, non-convertible debentures in 2 Series, each debenture having a face value of ₹1 crore, aggregating to ₹425 crore on a private placement basis. The date of maturity of the NCDs was May 22, 2020.
