Beena Parmar Moneycontrol News
The National Company Law Tribunal will be hearing the insolvency petition filed by Era Infra Engineering's lender on July 25. Originally set for hearing on Tuesday, the case against the debt-laden company has been postponed as about 18 winding-up petitions are still pending against it in the Delhi High Court.
On Tuesday, the debt-laden company questioned the Delhi bench of the NCLT over whether insolvency proceedings can be initiated by the Union Bank of India (UBI) considering there were as there were pending winding-up petitions in the High Court.
The company is among 12 loan defaulters identified by the Reserve Bank of India (RBI) to be taken up for insolvency proceedings by creditors under the Insolvency and Bankruptcy Code.
Manoj K. Singh, Founding Partner of Singh and Associates, a law firm that represents Era Infra Engineering, told Moneycontrol that the company has no issues regarding insolvency proceedings, but the overlap with winding-up petitions pending in the court needs to be addressed. “If the High Court has a winding-up judgment which is contradictory to the NCLT, then there can be a conflict.”
These pending petitions are filed by a number of creditors of the company.
If the winding-up petitions are admitted by the High Court, the application under Section 7 of the Insolvency and Bankruptcy Code filed by the bank may become infructuous as NCLT would first look at a resolution process of 6-9 months.
As per rules, the tribunal will have to be notified of winding-up petitions, if any, which are still pending against the company referred for bankruptcy proceedings. These petitions are not transferred to the Tribunal (NCLT).
Singh said there would be lakhs of cases which will be decided based on this.
The insolvency proceedings at the NCLT would help the company repay its debt as there is an attempt at the resolution process first and a liquidation if the resolution fails. On the other hand, petitions favour winding up when the debtors are unable to pay for liabilities.
Era Infra has a large amount of funds tied up in arbitration claims that could help in the revival of the company and enable it to repay debt, he added.
The default amount claimed by the bank is Rs 681.04 crore, along with an overdue external commercial borrowing of USD 11.97 million up to May 31, 2017. Era has contested the amount and it will be decided by the insolvency professional.
Era Infra Engineering owes over Rs 10,000 crore to its creditors.
Last week, the company appointed its Managing Director Hem Singh Bharana as its new CEO on July 3.
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