NCLT Greenlights Insolvency Proceedings for Primat Infrapower

18 Jul 2024 , 10:16 AM

Following an application filed by Axis Finance Ltd., the Mumbai bankruptcy court admitted Essel Group affiliate Primat Infrapower & Multiventures to the corporate insolvency resolution process (CIRP).

Axis Finance, a subsidiary of Axis Bank, the country’s third largest private sector lender, approached the tribunal after the firm failed to pay its bills.

The Mumbai bench of the National Company Law Tribunal (NCLT) also designated Devarajan Raman as the company’s interim resolution professional.

“We hold that the debt and default have been satisfactorily established from the records,” said a bench presided over by judicial member Kuldip Kumar Kareer and technical member Anil Raj Chellan in a judgement dated July 15.

Ruchi Khatlawala Pandya, partner at law firm Little & Co, stated that with the application’s admission, a moratorium has been imposed, preventing the company from being prosecuted further and prohibiting the company from transferring, encumbering, alienating, or disposing of any of its assets, legal rights, or beneficial interests.

Axis Finance’s attorneys, Nausher Kohli and Yash Dhruva of MDP & Partners, appeared before the tribunal and stated that the lender had sanctioned a Rs 100 crore loan to Primat Infrapower & Multiventures in July 2018. However, in January 2019, the Essel Group subsidiary company failed to pay its dues of approximately ₹87 crore.

Primat Infrapower & Multiventures claimed in its application that the default date recorded with the information utility was September 17, 2020, and the NPA (non-performing asset) was June 30, 2020. “Even if one of the above dates is considered the date of default, it is clear that the current petition is barred by Section 10-A of the Code,” claimed the Essel Group affiliate firm through its counsels.

Following the Covid-19 outbreak and subsequent lockdowns, the government enacted Section 10(A) on March 25, 2020, which clarified that no application for the initiation of CIRP shall be filed for any default arising on or after March 25, 2020, for six months or such period, not exceeding one year from that date.

However, Axis Finance maintained through its counsel that Primat Infrapower & Multiventures had failed to pay the interest payments for the quarters ending September 30, 2019, and December 31, 2019. As a result, the corporate debtor committed payment defaults before the 10(A) term, it claimed.

Several affiliates of Subhash Chandra’s Essel Group, including listed enterprises such as Siti Networks Ltd, Zed Learn Ltd, and Shirpur Gold Refinery Ltd, are also undergoing insolvency proceedings.

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