NCLAT stays insolvency proceedings against Container Corporation of India

The National Corporations Law Appeal Tribunal (NCLAT) has stayed the insolvency proceedings initiated against the Container Corporation in India.

On July 12, the New Delhi-based National Corporations Law Chief Tribunal (NCLT) bench granted the petition by Roadwings International, the operating creditor to the public sector corporation, and ordered the initiation of a corporate insolvency resolution (CIRP) proceeding.

The order was challenged by Container Corporation of India Ltd (CONCOR) to the Court of Appeal, which issued an order on July 14 to stay the NCLT’s decision.

The Court of Appeal also issued notices to Rodwings International’s operating creditor and Interim Resolution Professional (IRP), which were accepted by their attorneys present at the hearing.

Grant NCLAT one week to file a response to the Operational Creditor and compensation by CONCOR, if any, to be filed within two weeks thereafter and directed to insert this appeal on September 4, 2023 for the next hearing.

“In the meantime, the Order by the Tribunal (NCLT) dated 12 July 2023 will remain outstanding,” said the Court of Appeal panel consisting of Chief Justice Ashok Bhushan and Judge Barun Mitra.

The dispute relates to the arbitral award. CONCOR had issued a tender for the manufacture, supply, commissioning as well as operation and maintenance of stacker stackers and Roadwings International was announced as the winning bidder.

Both of them have entered into agreements but some issues and differences arose between them and according to the terms and conditions, the matter was transferred to arbitration. The arbitral tribunal on 1st June 2022 directed the award in favor of Roadwings International and directed CONCOR to pay Rs.81.36 crore.

Accordingly, an order notice was issued on 15 July 2022 by Roadwings International. However, CONCOR in its response disputed this and reported going to the Supreme Court to set aside the arbitral award.

Following this, NCLT was approached by Roadwings International as an operating creditor under the Insolvency and Bankruptcy Act, which admitted its claim on 12 July after finding it to be a “suitable case to commence a CIRP” against the public sector unit. Appointed IRP to oversee the operation of CONCOR during CIRP.

The NCLT also noted that the public sector company had approached the Delhi High Court long after the current insolvency proceedings had been initiated by the Operating Creditor. Furthermore, this was not the case where there was a pre-existing dispute when the Operational Creditor sent a Demand Notice to CONCOR.

CONCOR has challenged the NCLT order to the NCLAT Appeal Insolvency Tribunal.

During the case, the Attorney General of India Tushar Mehta, who is representing on behalf of CONCOR, submitted that the matter is before the Supreme Court and he is listed for August 29, 2023 for a hearing on the restrictions issue. The Court of Appeal also noted this.

And she added, “We make it clear that the suspension of bankruptcy proceedings has no effect on the pending procedures in the Supreme Court, which may be preceded by law.”