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The National Company Law Appellate Tribunal (NCLAT) has set aside the NCLT order rejecting the insolvency plea filed against Andhra Pradesh-based Coastal Oil Gas Infrastructure on the grounds of delay in filing.
A three-member NCLAT bench has now directed the Hyderabad bench of the National Company Law Tribunal (NCLT) to admit the plea filed by the financial creditors -- Bank of India and Central Bank of India -- and decide it "expeditiously" within one month.
The NCLAT held that the NCLT had "wrongly considered" the date of default as March 16, 2015 for computation of limitation period to file an application before it and rejected the insolvency plea filed by the financial creditors.
On October 30, 2019, the NCLT had dismissed the plea filed by the financial creditors on the grounds of delay after observing that it was filed on September 25, 2018, which was more than three years of default occurred on March 16, 2015.
"We set aside the impugned order dated October 30, 2019, passed by NCLT, Hyderabad.
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"We are further remanding back the matter to the adjudicating authority to admit the application under section 7 after issuing notice and examining all other aspects under section 7 of I&B Code," said the NCLAT.
As per the Limitation Act, which is also applicable on the Insolvency and Bankruptcy Code (IBC) cases, if a default has occurred over three years prior to the date of filing of the application, then such application are barred under article 137 of the Act.
The NCLAT's direction came over a petition filed by Bank of India and Central Bank of India, challenging the NCLT order.
The appellate tribunal observed that first loan agreement between the lenders and the debtor was entered on August 1, 2011 and after the corporate debtor failed to repay the dues in accordance with the agreed terms, a second agreement was entered between the consortium of lenders after debt restructuring.
After the company failed to comply with the terms of the second amendment agreement, a default notice was issued on December 7, 2017, and filed a plea to initiate insolvency before NCLT on September 19, 2018.
According to the NCLAT, after entering into the second agreement on March 15, 2015, the earlier agreement shall be subsumed with it and all the prior defaults shall become irrelevant. The date of default shall be decided as per the second agreement.
"Therefore, we are of the opinion that the adjudication authority (NCLT) has wrongly considered the date of default to be March 16, 2015 for computation of limitation period to file an application before it," it said.
The appellate tribunal suggested that the default would occur from December 22, 2017, on the expiry of 15 days from the date of default notice which was served upon the company for recalling the loans.
"We are of the view that the application filed by the corporate debtor under Section 7 was required to be admitted by the adjudicating authority, but the adjudicating authority failed to consider the matter in proper perspective.
The NCLAT further said that the limitation is a mixed question of law and facts therefore, unless it becomes apparent from the reading of the company petition that the same is barred by limitation, the petition should not be rejected by "selectively considering the documents" on record.
The consortium members had sanctioned term loan limit of Rs 641.85 crore to Vishakhapatnam-based Coastal Oil Gas Infrastructure to construct, operate and maintain 12 crude oil tank facilities and other project facilities and services and a refinery at Poochimedu in Cuddalore District, Tamil Nadu.
Coastal Oil and Gas Infrastructure is a Special Purpose Vehicle incorporated by Abir Infrastructure and Nagarjuna Group developing liquid bulk storage terminal facility for Nagarjuna Oil Corporation, for its 5.94 million metric tonne per annum (MMTPA) oil refinery.
Nagarjuna Oil Corporation Ltd (NOCL) is also facing liquidation after the financial creditors could not find a suitable resolution plan for the company. Haldia Petrochemicals Ltd has shown interest to take over the assets of the NOCL.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
