NCLAT shelves insolvency proceedings initiated against Indian container firm
Post Date – 10:20 PM, Tuesday – July 23rd 18th
New Delhi: The National Company Law Appellate Tribunal (NCLAT) has stayed bankruptcy proceedings against the Indian container company.
On July 12, the presiding judge of the National Company Law Tribunal (NCLT) in New Delhi admitted the petition filed by Roadwings International, the operating creditor of the public sector enterprise, and ordered the commencement of the Corporate Insolvency Resolution Procedure (CIRP).
The order was challenged by Container Corporation of India Ltd (CONCOR) to the Court of Appeal, which passed an order on July 14 staying NCLT’s decision.
The Court of Appeal also issued notices to operating creditors Roadwings International and the Interim Resolution Professional (IRP), which were accepted by lawyers present at the hearing.
NCLAT gave one week to submit a response to operating creditors and two weeks to submit CONCOR’s rebuttal, if any, and directed that this appeal be included in the next hearing on September 4, 2023.
“In the meantime, the order passed by the adjudication body (NCLT) on July 12, 2023 shall stand,” said the appeals court judges, comprising Chairman Justice Ashok Bhushan and Justice Barun Mitra.
The dispute involved an arbitration award. CONCOR has issued a tender for the manufacture, supply and commissioning as well as operation and maintenance of the reachstackers and Roadwings International has been declared the successful bidder.
The parties entered into an agreement, but certain issues and disagreements arose between the parties, and the matter was referred to arbitration under the terms and conditions. The arbitral tribunal ruled in favor of Roadwings International on 1 June 2022 and directed CONCOR to pay Rs 8,136 crore.
Accordingly, Roadwings International issued a Notice of Need on 15 July 2022. However, in its reply, CONCOR disputed this and informed that it would apply to the High Court to set aside the arbitral award.
Roadwings International has since approached NCLT as an operating creditor under the Bankruptcy Code and NCLT admitted its request on 12 July after finding that NCLT was an “appropriate case to initiate a CIRP” against a public sector unit. During CIRP, it appointed an IRP to oversee the operations of CONCOR.
NCLT also observed that the public sector company had sought help from the Delhi High Court long after operational creditors had initiated the current insolvency proceedings. Furthermore, this case is not one that was already in dispute when the operating creditors sent notice of their claim to CONCOR.
CONCOR challenged NCLT’s order in NCLAT, the bankruptcy court of appeal.
During the proceedings, India’s Solicitor General Tushar Mehta, who appeared on behalf of CONCOR, said the matter had been referred to the High Court and had been listed for a hearing on restrictions on August 29, 2023. This was also noted by the Court of Appeal.
“We make it clear that the stay of the bankruptcy proceedings has no effect on pending proceedings that may be regulated by the High Court,” it said.
