Case Note & Summary
The Supreme Court dismissed an appeal challenging the initiation of corporate insolvency resolution process (CIRP) against Hiranmaye Energy Ltd. under the Insolvency and Bankruptcy Code, 2016 (IBC). The Court upheld the NCLAT order which had affirmed the NCLT decision admitting the Section 7 application filed by REC Ltd. (financial creditor). The Court found that the Corporate Debtor had defaulted on loan repayments and failed to satisfy key pre-implementation conditions of restructuring agreements, particularly the creation of Debt Service Revenue Account (DSRA), maintenance of priority debt, and demonstration of power plant operational capacity. The Appellant's settlement proposals were rejected by the Committee of Creditors (CoC), which instead approved the resolution plan of Damodar Valley Corporation (DVC). The Court imposed costs of Rs. 5 lakhs on the Appellant for frivolous litigation.
Headnote
The Supreme Court dismissed the appeal filed by Power Trust (promoter of Hiranmaye Energy Ltd.) challenging the NCLAT order dated 25.01.2024 which upheld the NCLT order dated 02.01.2024 admitting Section 7 application under Insolvency and Bankruptcy Code, 2016 (IBC) filed by REC Ltd. -- The Court held that the Corporate Debtor had committed default in repayment of loans and failed to comply with pre-implementation conditions of restructuring proposals -- The financial creditor validly initiated CIRP proceedings as the default was established and restructuring conditions remained unfulfilled -- The Court found no merit in the Appellant's contention that the date of default fell within the period covered under Section 10A IBC -- Settlement proposals made by the Appellant during proceedings were rejected by the Committee of Creditors (CoC) which approved the resolution plan of Damodar Valley Corporation (DVC) -- The appeal was dismissed with costs quantified at Rs. 5 lakhs to be paid to the Supreme Court Legal Services Committee
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Issue of Consideration: The Issue of consideration was whether the National Company Law Appellate Tribunal (NCLAT) erred in upholding the admission of Section 7 application under Insolvency and Bankruptcy Code, 2016 (IBC) and initiation of corporate insolvency resolution process (CIRP) against Hiranmaye Energy Ltd.
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Final Decision
The Supreme Court dismissed the appeal with costs quantified at Rs. 5 lakhs to be paid to the Supreme Court Legal Services Committee within four weeks -- The Court upheld the NCLAT order dated 25.01.2024 which affirmed the NCLT order admitting Section 7 application and initiating CIRP against Hiranmaye Energy Ltd.
