A dedicated bankruptcy court has permitted the liquidator of EPC Constructions India Ltd (formerly Essar Projects) to initiate arbitration proceedings against Indian Oil Corp Ltd (IOC) to recover about Rs 1,005 crore in dues, which relate to work that EPC had carried out under a turnkey contract in 2011 for the Paradip refinery project.
The liquidator moved the Mumbai bench of the National Company Law Tribunal (NCLT) to seek its approval before initiating the arbitration proceedings against the state-owned oil company.
“The liquidator brought to the notice of this bench that since the corporate debtor (EPC) is undergoing liquidation process, the outstanding amount will be helpful and beneficial to the liquidation estate,” the NCLT bench, led by Justice P N Deshmukh and a technical member Shyam Babu Gautam, said. “The recovery of an amount of Rs 1,005 crore is an asset of the corporate debtor (EPC) as it forms part of the liquidation estate…and hence, cannot be left out of the liquidation estate,” the tribunal said in its order.
The right of legal recourse of a company under liquidation is equivalent to that of any other company, said Ankita Singh, partner at law firm A&P Partners. “The chances of recovery depend on the merit of the matter. The company being in liquidation is not a deterrent,” she said.
EPC has a liability of over Rs 11,000 crore towards its creditors and the tribunal had admitted the company for liquidation on May 7, 2021, after lenders failed to receive any viable revival plan.
On a separate plea, the tribunal also allowed the liquidator to initiate proceedings against Matix Fertilizers & Chemicals Ltd to recover about Rs 310 crore for certain off-shore and on-shore contracts that EPC Constructions India had undertaken in 2010.
“Liquidators must effectively pursue sustainable claims against debtors to maximise the asset value of the company and run it as a going concern,” said Pooja Tidke, senior partner at law firm Parinam Law Associates. “It is true that liquidators often face constraints in deploying resources to pursue large litigations but with options like litigation financing gaining popularity these constraints may soon disappear.”
