The bankruptcy court in Mumbai has admitted Essel Group affiliate Primat Infrapower & Multiventures under the corporate insolvency resolution process (CIRP) following an application filed by Axis Finance Ltd.
Axis Finance, a subsidiary of Axis Bank, the country’s third largest private sector lender, had approached the tribunal after the company defaulted on its dues.
The Mumbai bench of the National Company Law Tribunal (NCLT) also appointed Devarajan Raman as interim resolution professional for the company.
“We hold that the debt and default have been satisfactorily established from the records,” said a bench presided by judicial member Kuldip Kumar Kareer and technical member Anil Raj Chellan in its order of July 15.
Ruchi Khatlawala Pandya, partner at law firm Little & Co, said that with the admission of the application a moratorium has kicked in so that there is no further prosecution against the company and that the company would be prohibited from transferring, encumbering, alienating or disposing of any of its assets or any legal right or beneficial interest.
Before the tribunal’s order, counsel Nausher Kohli and Yash Dhruva of MDP & Partners appeared for Axis Finance and argued that the lender had sanctioned a loan of Rs 100 crore to Primat Infrapower & Multiventures in July 2018. However, in January 2019, the Essel Group affiliate company defaulted on its dues of about Rs 87 crore.
Primat Infrapower & Multiventures argued in its application that the date of default recorded with the information utility was September 17, 2020, and the date of NPA (non-performing asset) was June 30, 2020. “Even if either of the above dates is considered as the date of default, it is clear that the present petition is barred by Section 10-A of the Code,” argued the Essel Group affiliate firm through its counsels.
In the wake of the Covid-19 outbreak and subsequent lockdowns, the government on March 25, 2020, brought in Section 10(A), which clarified that no application for initiation of CIRP shall be filed for any default arising on or after March 25, 2020, for six months or such period, not exceeding one year from such date.
However, countering this, Axis Finance argued through its counsel that Primat Infrapower & Multiventures had defaulted on payment of the interest instalments for the quarter ending September 30, 2019, and December 31, 2019. Hence, the corporate debtor committed defaults in payment prior to the 10(A) period, it contended.
Subhash Chandra-promoted Essel Group’s several affiliates, including listed firms such as Siti Networks Ltd, Zee Learn Ltd and Shirpur Gold Refinery Ltd, are also facing insolvency resolution process.
