NCLAT Directs Starting Liquidation Of Surana Power, Rejects BHEL’s Claim
The National Company Law Appellate Tribunal has set aside an NCLT order, and directed to start the liquidation process of energy firm Surana Power.
A three-member NCLAT bench has rejected the contentions of state-owned Bharat Heavy Electricals Ltd., a secured creditor of the debt-ridden company. The PSU was claiming exclusive rights over the assets following an arbitration award in its favour.
The appellate tribunal said BHEL’s claim on the secured assets is not exclusive.
Moreover, ten out of eleven secured creditors of Surana Power together - representing 73.76% of the admitted claims - have already relinquished their security interest, hence, it would be prejudicial to stall the liquidation process at the insistence of one single operation creditor BHEL.
The Secured Creditors which 73.76% in value have already relinquished the security interest into the liquidation estate. Thus, it would be prejudicial to stall the liquidation process at the instance of a single creditor having only 26.24% share in the secured assets, said the NCLAT.
The appellate tribunal said as BHEL does not have a requisite 60% value in secured interest, therefore, it does not have the right to realise its security interest.
It would be detrimental to the liquidation process and the interest of the remaining ten secured creditors, the NCLAT said.
Earlier, the Chennai bench of National Company Law Tribunal had admitted the insolvency plea against Surana Power on Jan. 20, 2019. However, as no resolution plan was approved, the company was ordered to be liquidated.
During the liquidation process, BHEL succeeded in an arbitration proceeding against Surana Power and an award was passed in its favour.
Based on the arbitral award, BHEL had been granted lien over the equipment and goods lying at the site of Surana Power.
Meanwhile, the liquidator, who was unable to proceed any further with the sale of assets of the company on account of BHEL's refusal to relinquish its security interest, approached the NCLT.
However, his plea was rejected by the NCLT on Nov. 20, 2019, mainly on the ground that BHEL is a secured creditors, entitle to proceed to realise its security interest.
Following this, the liquidator moved to the appellate tribunal, which set aside the NCLT order and directed it to complete the process.
We allow the appeal and set aside the impugned order dated Nov. 20, 2019, and direct the liquidator to complete the liquidation process, the NCLAT said.