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2022 (12) TMI 273 - HC - Insolvency and BankruptcySeeking quashing of the impugned show cause notices dated 22nd November, 2022 issued by South Eastern Coalfields Limited (SECL) - HELD THAT - The admitted position on record is that the Petitioner is undergoing insolvency proceedings. It is also admitted that the project is yet to be commissioned. Under these circumstances, prima facie, there appears to be no extension beyond the date of 31st March, 2022, which has been given to the Petitioner. Moreover, a perusal of the show cause notices also shows that the Respondents have called upon the Petitioner to file a reply and to deal with the breach of various conditions in the CSA which required the Petitioner to commission the plant. This Court is not inclined to go into the merits of the petition as to whether there is any justifiable cause for non-commissioning of the plant and as to what would be the effect of the said non-commissioning. The SECL has already issued the show cause notices to the Petitioner. The replies are stated to have been filed. Let a hearing be granted to the Petitioner and an order be passed by the SECL in accordance with law. The Petitioner shall be given two weeks time to avail of its remedies in accordance with law before the NCLT which would be the appropriate forum in terms of Section 60(5) of the IBC. Section 60(5) vests jurisdiction in NCLT to entertain or dispose of an application, proceeding, claim made by or against the corporate debtor. In the aforementioned two weeks period, any order that may be passed shall not be given effect to - Petition disposed off.
Issues:
1. Quashing of show cause notices by SECL. 2. Interpretation of Coal Supply Agreement (CSA) conditions. 3. Effect of moratorium under the Insolvency and Bankruptcy Code. 4. Jurisdiction of NCLT in insolvency proceedings. Analysis: 1. The petition was filed seeking to quash show cause notices issued by SECL, Ministry of Coal, and Ministry of Power. The background involved a Coal Supply Agreement signed between the Petitioner and SECL, requiring the establishment of a power plant in Chhattisgarh within a specified period. The plant remained uncommissioned despite construction progress, leading to the issuance of show cause notices by SECL for potential cancellation of the agreement and forfeiture of security deposits. 2. The Ministry of Power's decision in March 2019 regarding Stressed Thermal Power Projects and subsequent meetings classified stressed projects into three categories, with the Petitioner's plant falling under Category II. The Petitioner claimed an extension till March 2022 based on a communication from the Ministry of Coal. The Court noted the absence of any further extension and the necessity for the Petitioner to respond to the breach of CSA conditions. 3. The Petitioner argued that a moratorium under the Insolvency and Bankruptcy Code had been initiated, preventing actions like cancellation of agreements. The Respondents contended that the moratorium did not apply to the present situation and highlighted the absence of extensions beyond the specified deadline. The Court emphasized the need for the Petitioner to address the show cause notices and reserved judgment on the underlying issues. 4. Regarding the jurisdiction of the National Company Law Tribunal (NCLT) in insolvency proceedings, the Court directed the Petitioner to avail remedies before the NCLT within two weeks after SECL's order. The NCLT was identified as the appropriate forum under the Insolvency and Bankruptcy Code, with Section 60(5) specifying the jurisdiction over applications involving corporate debtors. The Court instructed that any orders during the two-week period should not be enforced until SECL's participation in NCLT proceedings. In conclusion, the Court disposed of the writ petition, allowing the Petitioner an opportunity to address the show cause notices and pursue remedies before the NCLT. The judgment highlighted the importance of compliance with agreement conditions, the impact of insolvency proceedings on contractual obligations, and the role of the NCLT in resolving disputes related to corporate debtors.
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