The National Company Law Appellate Tribunal (NCLAT) suspends the lower tribunal’s order of admitting Essar Group entity Essar Oil and Gas Exploration & Production Ltd under the Corporate Insolvency Resolution Process (CIRP).
On Tuesday, the division bench of Justice Ashok Bhushan and technical members Barun Mitra and Arun Baroka, while suspending the National Company Law Tribunal (NCLT) order observed that Section 9 Application has been resorted as a recovery mechanism which is not permissible under the IBC.
“Appellant (Essar Oil and Gas Exploration) is a healthy company which has a turnover of Rs 800 crores and about 425 Employees are working,” observed the appellate tribunal. “Section 9 application ought not to have been admitted by the adjudicating authority and the adjudicating authority has in the order although noticed the settlement but has not appropriately dealt with the settlement,” noted the appellate tribunal in its order.
The appellate tribunal will hear the matter further on November 6.
Essar Group spokesperson said in its statement that the appellate tribunal in its order has noted its submissions that all the amounts under the settlement agreement has been paid.
“Our commitment to honouring our financial mandates remains steadfast,” said the company spokesperson. “We are a profitable company with revenues of Rs 870 crore and an operating profit of Rs 625 crore. The suspension will provide us to maintain our focus on our core operations and ensure that our business activities continue without disruption,” he added further.
On September 6, the NCLT’s Ahmedabad bench had admitted Essar Oil and Gas Exploration & Production Ltd under the Corporate Insolvency Resolution Process (CIRP) in an application filed by the company’s operational creditor Greka Green Solutions (India) Ltd.
The tribunal has also appointed Mohit B. Adatiya, director of NPV Insolvency Professionals Private Limited (NPV IPE) as the Interim Resolution Professional (IRP) for the company.
Subsequently, the Essar Group entity’s suspended director Pankaj Kalra had approached the appellate tribunal to challenge the lower tribunal’s order.
Before the tribunal’s order, Senior Advocate Arun Kathpalia, appearing for the suspended director argued that 20 instalments under the settlement were paid and the last instalment could not be paid and all payments were accepted by the operational creditor and an application under Section 9 was filed by the operational creditor claiming payments disregarding the settlement entered between the parties.
“The last instalment was also paid by the appellant during the pendency of the proceeding before the adjudicating authority (NCLT),” argued lawyers further.
