NCLT dismisses insolvency plea against Kerala State Electricity Board
The Insolvency and Bankruptcy Code (IBC) is not a recovery mechanism available to anyone with a claim exceeding the threshold limit and falling within the limitation period, according to the Kochi bench of the National Company Law Tribunal (NCLT) while dismissing an insolvency petition against Kerala State Electricity Board Limited.
However, the tribunal allowed the petitioner, Poulose Nechupadam Constructions Private Limited, to pursue legal action for recovery of the sum of money from Kerala State Electricity Board Limited (corporate debtor or CD).
“There exists a viable alternative remedy through a commercial suit. The claim itself is not in question here, but rather the nature of its admissibility under the scheme of IBC,” the NCLT stated in its order.
The petitioner was a subcontractor of Silcal Metallurgical Ltd and carried out civil works on its behalf. The petitioner has stated that the CD owed Rs. 11.81 crore to Silcal Metallurgical Ltd, which in turn owes it to the petitioner.
Silical Metallurgical Ltd, a company under liquidation under an order of the High Court of Madras dated 11 December 2006, with its registered office in Coimbatore, Tamil Nadu, had entered into an agreement dated 30 December 1994 with the Kerala State Electricity Board Limited for the execution of civil works at the Bhoothathankettu Hydro Electric Project in Kerala during the years 1997-99.
The tribunal, while acknowledging the existence of an operational debt, said that in order for the petitioner to stand in the shoes of an “operational creditor,” he should be owed the amount either directly or through an assignment or a transfer.
It noted that there is no privity of contract between the petitioner and the CD, so the only question arising is whether the Madras High Court order constitutes an “assignment of debt.”
It further noted that the high court order does not assign any debt on Kerala State Electricity Board but only grants the petitioner “permission” to realize the money due from the CD following appropriate legal action.
Also see: Compulsorily Convertible Debentures are equity, not debt: Supreme Court
