2019 (9) TMI 1265 - AT - Insolvency and Bankruptcy

Maintainability of petition - Initiation of CIRP - aggrieved person - Corporate Debtor defaulted in payment of financial debt - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Loan Agreement dated 24th September, 2015 which was reached between Odisha Slurry Pipeline Infrastructure Limited - ( Corporate Debtor ) and IDBI Bank Limited also show that a sum of ₹ 400 Crores was borrowed by the Corporate Debtor from Financial Creditor . The terms of repayment have been shown therein. Admittedly, the Corporate Debtor has failed to pay the debt - This apart, curiously, the Promoters/ Directors of the Odisha Slurry Pipeline Infrastructure Limited - ( Corporate Debtor ) who are aggrieved parties have not preferred any appeal under Section 61 of the I B Code . One of the Financial Creditors , namely- SREI Multiple Asset Investment Trust has challenged the order of admission under Section 7 who cannot be held to be an aggrieved person. No case has been made out by the Appellant - appeal dismissed.

Summary

Issues:
1. Admissibility of intervention petition by 'M/s. SREI Infrastructure Finance Limited' in insolvency proceedings.
2. Validity of application under Section 7 of the Insolvency and Bankruptcy Code by 'IDBI Bank Limited' against 'M/s. Odisha Slurry Pipeline Infrastructure Limited'.
3. Interpretation of the 'Business Transfer Agreement' between 'Essar Steel India Limited' and 'Odisha Slurry Pipeline Infrastructure Limited'.
4. Default in repayment by 'Odisha Slurry Pipeline Infrastructure Limited' to 'IDBI Bank Limited'.
5. Lack of appeal by Promoters/Directors of 'Odisha Slurry Pipeline Infrastructure Limited' under Section 61 of the Insolvency and Bankruptcy Code.

Analysis:

1. The Adjudicating Authority rejected the intervention petition by 'M/s. SREI Infrastructure Finance Limited' opposing the insolvency proceedings initiation, stating it was not entertained. However, the National Company Law Appellate Tribunal allowed 'M/s. SREI Infrastructure Finance Limited' to submit written arguments before the Adjudicating Authority.

2. The Appellate Tribunal upheld the admissibility of the application under Section 7 by 'IDBI Bank Limited' against 'M/s. Odisha Slurry Pipeline Infrastructure Limited' for defaulting on a significant financial debt, despite objections raised by 'M/s. SREI Infrastructure Finance Limited' regarding a separate loan agreement.

3. The Appellate Tribunal analyzed the 'Business Transfer Agreement' between 'Essar Steel India Limited' and 'Odisha Slurry Pipeline Infrastructure Limited', emphasizing that although the entities were integral for each other's functioning, they remained separate legal entities under the Companies Act, justifying the separate insolvency application against 'Odisha Slurry Pipeline Infrastructure Limited'.

4. The Tribunal acknowledged the default in repayment by 'Odisha Slurry Pipeline Infrastructure Limited' to 'IDBI Bank Limited', highlighting the loan agreement and terms of repayment, ultimately leading to the rightful admission of the insolvency application under Section 7.

5. Despite the lack of appeal by the Promoters/Directors of 'Odisha Slurry Pipeline Infrastructure Limited' under Section 61 of the Insolvency and Bankruptcy Code, the Tribunal dismissed the appeal by 'SREI Multiple Asset Investment Trust', as no substantial case was established, and the challenging party was not considered an aggrieved person, thus concluding the judgment without imposing any costs.