NCLT dismisses Central Bank insolvency plea against Simplex Infrastructures

In an order issued on May 4, a tribunal composed of Pedisha Banerjee and Balraj Joshi said that the application could cause greater harm to the debtor of the company (Simplex Infrastructure).

Relying on the Vidarbha Industries Power Supreme Court ruling stressing the discretion of arbitration power, the NCLT Board said the case before it was a financial failure while the business model was sound in line with general industry practice. Simplex is an engineering, procurement and construction (EPC) company.

“Having said that, it is unlikely that any new administration will be in a position to do something better that the current administration cannot,” she said.

The Board noted that Simplex Infrastructure’s balance sheets do not show a negative net worth and “as such cannot be described as insolvent”. A total of Rs. 554.17 crore has been listed in the application by Simplex on the strength of trade receivables.

Simplex acted as a construction company on the EPC and the order stated “The larger issue relating to the quality of tender documents, competition in the sector, delays in carrying out works due to various impediments – both attributable to the owner and attributable to the debtor to the company and also various permutations – remain unchanged even after a change of management through solution process.”

The Central Bank on July 15, 2021 filed a petition to commence the Corporate Bankruptcy Resolution Process (CIRP) against Simplex Infrastructure. It was brought on the basis that Simplex had defaulted around Rs 105 crore.