The National Company Law Appellate Tribunal (NCLAT) has stayed the insolvency proceedings initiated against Container Corporation of India.
On July 12, the New Delhi-based Principal bench of the National Company Law Tribunal (NCLT) had admitted the petition filed by Roadwings International, an operational creditor of the public sector enterprise, and ordered to initiate Corporate Insolvency Resolution Proceedings (CIRP).
The order was challenged by the Container Corporation of India Ltd (CONCOR) before the appellate tribunal, which passed an order on July 14 to stay the NCLT's decision.
The appellate tribunal also issued notices to the operational creditor Roadwings International and the interim resolution professional (IRP), which was accepted by their counsel present in the hearing.
NCLAT granted one week time to file a reply to the operational creditor and rejoinder by CONCOR, if any, to be filed within two weeks thereafter and directed to list this appeal on September 4, 2023 for the next hearing.
"In the meantime, the order passed by Adjudicating Authority (NCLT) dated July 12, 2023, shall remain stayed," said the appellate tribunal bench comprising chairperson Justice Ashok Bhushan and Justice Barun Mitra.
The dispute is regarding an arbitration award. CONCOR had issued a tender for manufacturing, supply and commissioning along with operations and maintenance of reach stacker machines and Roadwings International was declared as the successful bidder.
Both entered into agreements but certain issues and differences arose between them and as per the terms and conditions, the matter went for arbitration. The Arbitral Tribunal on June 1, 2022 directed the award in favour of Roadwings International and directed CONCOR to pay Rs 81.36 crore.
Based on this, a demand notice was issued on July 15, 2022 by Roadwings International. However, CONCOR in its reply disputed it and informed about approaching the High Court for setting aside the Arbitral Award.
Following this Roadwings International approached NCLT as an operational creditor under the Insolvency & Bankruptcy Code, which had admitted its plea on July 12 after finding it a "fit case for initiation of CIRP" against the public sector unit. It appointed an IRP to supervise the operation of CONCOR during CIRP.
NCLT also observed that the public sector firm has approached the Delhi High Court much after the present insolvency proceedings were set in motion by the operational creditor. Moreover, this was not a case where there was a pre-existing dispute when the operational creditor sent a demand notice to CONCOR.
CONCOR challenged NCLT's order before the appellate insolvency tribunal NCLAT.
During the proceeding Solicitor General of India Tushar Mehta, appearing for CONCOR, submitted that the matter is before the high court and it is listed on August 29, 2023 for a hearing over the limitations issue. The appellate tribunal also noted this.
"We make it clear that the stay of insolvency proceedings has no bearing on the proceedings pending in the High Court which may be preceded in accordance with law," it said.