A plea filed by Adisri Commercial, the erstwhile promoter company of Srei Infrastructure Finance (SIFL), requesting the National Company Law Tribunal (NCLT) to set aside its order for initiating insolvency proceedings against SIFL and its subsidiary Srei Equipment Finance (SEFL) has been deemed not maintainable by the RBI-appointed administrator. The solicitor general Tushar Mehta argued that the plea was not maintainable because defaults had continued even after the period when initiation of the corporate insolvency resolution process (CIRP) was barred.
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Mehta contended that during the Covid period, a window was provided where no CIRP could be initiated if there was a default in that period. However, the default had continued even thereafter, and therefore Section 10A would not support Adisri Commercial’s plea.
Earlier, Adisri Commercial argued that SIFL did not owe any debt to lenders due to a business transfer agreement, but Arun Kathpalia, representing the consolidated committee of creditors (CoC), submitted before the bench that the lenders did not sanction the business transfer agreement. The matters will come up for further hearing on April 10.
The consolidated CoC approved the resolution plan of National Asset Reconstruction Company (NARCL) with the highest voting among the bidders. The approved resolution plan was submitted by the administrator, Rajneesh Sharma, to the NCLT on February 18 for its approval.
It is essential to note that when a question of recall of an earlier order arises, the tribunal needs to examine whether it possesses the power of recall and whether the grounds urged would fall within its powers. If the applicant fails in the first step, then the second question of whether it is jurisdictional error, etc will not be relevant.
