‘Creditor’ snubbed for filing unnecessary insolvency application against ONGC arm

The Ahmedabad bench of the National Company Law Tribunal (NCLT) has pulled up a contractor for unnecessarily filing insolvency application against ONGC Petro additions Ltd (OPaL), a Central government-owned company.

The culprit here is Hardwin Construction Private Ltd, a sub-contractor of Fernas Construction India Pvt Ltd, which is the main contractor/supplier to ONGC Petro additions Ltd.

The NCLT noted that the main contractor – Fernas Construction – owed money to sub-contractor Hardwin Construction a sum of Rs 1.51 crore for fabrication work for and supply of labour to ONGC Petro additions Ltd.

The tribunal noted that Fernas being the main contractor, which sub-contracted a part of its work to Hardwin, the latter should have filed the insolvency application against the former, but it instead chose to drag OPaL in NCLT knowing well that it is a public sector company.

The NCLT said while dismissing the petition that normally in these circumstances it could have imposed cost (on Hardwin) for abuse of process of the law but considering the fact that some correspondence executed between Hardwin and Opal, it gave the benefit of doubt to the petitioner and refrain from doing so.

The correspondence mentioned earlier were two letters on behalf of CEO, OPaL to Harwin Construction promising to make all the payment directly for the work done by it. The NCLT noted that these letters in themselves were not sufficed for the ONCG subsidiary to make the payment as it required the main contractor to certify the invoices.

The NCLT, therefore, concluded it was Fernas Construction which owed the money to Hardwin and not OPaL.

ONGC Petro additions Limited (OPaL) is a joint venture company incorporated in 2006. OPaL is promoted by ONGC and co-promoted by GAIL and GSPC.

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