Summary: The Supreme Court of India rejected Power Trust's attempt to stop the insolvency process started by Bhuvan Madan, the temporary manager of Hiranmaye Energy Ltd. The court agreed that the insolvency process was right and couldn't be stopped under a specific rule of the Insolvency and Bankruptcy Code (IBC).
Loans and Missed Payments
The trouble started with a loan deal on June 19, 2013, between Hiranmaye Energy Ltd. and its lender for a loan of Rs. 1859 crore to build a power plant in Haldia, West Bengal. Due to extra costs, they borrowed another Rs. 446.97 crore in October 2015. By June 30, 2018, the lender marked the accounts as bad because Hiranmaye Energy Ltd. missed payments.
First and Second Plans to Fix the Loan
On February 21, 2020, a plan was approved to start paying back by December 31, 2020. A second plan on September 29, 2020, extended the payback period until December 31, 2042. But this plan needed certain things to happen, like getting a good price for electricity and arranging funds, which didn't happen by February 28, 2021.
Start and Legal Fights
The lender filed a request under IBC, saying there was a missed payment on March 31, 2018, with a total claim of over Rs. 2183 crore. The request was accepted by the National Company Law Tribunal (NCLT) and supported by the National Company Law Appellate Tribunal (NCLAT) even though Power Trust tried to challenge it.
COVID-19 Relief and Validity of Fixing Plans
Power Trust argued that the missed payments happened during the COVID-19 relief period (March 25, 2020, to March 24, 2021) and should be blocked under a specific rule. However, the court pointed out that the first missed payment happened before this period, and the plans to fix the loan weren't valid because the required conditions weren't met.
Company's Health and Settlement Offers
Power Trust claimed the company was doing okay, with ongoing operations and income. Even though they made several offers to settle with the Committee of Creditors (CoC), all were turned down due to past failures and doubts about Power Trust's ability to keep their promises.
Rejection and Instructions
The court, led by Justice Joymalya Bagchi, rejected the appeal, saying the insolvency process should continue. The court also ordered the return of a Rs. 125 crore deposit to Power Trust, denying the secured creditor SEFL's claim on it.
