NCLAT Stays Insolvency Resolution Process (IRP) Against Indraprastha Gas Limited

In what could be termed as an extreme step, a two-member National Company Law Tribunal (NCLT) Bench, on September 16, last, admitting the Petition filed by Shanivi Construction Private Limited, passed an order initiating Corporate Insolvency Resolution Process against Indraprastha Gas Limited (IGL).

Legal luminaries are of the opinion that this is a matter of financial dispute between two parties and not a case of accepted borrowing or lending and thus it not fall within the jurisdiction of the NCLT. They say that this is more of a civil dispute and this dispute is already sub-judice before the Hon’ble Delhi High Court.

The matter pertains back to Febraury, 2012, when Shanivi Construction Private Limited, was declared as the successful bidder for tender for Operation & Maintenance of PNG activities and in a contract to this effect was awarded to this company. Later, the IGL management found cases of poor workmanship, non-furnishing of supporting documents concerning statutory compliances, non-reconciliation of material etc. against this company. And here is when the dispute started between the IGL and Shanivi Construction Private Limited.

In August 2014, Shanivi Construction Private Limited filed a reference Petition with the Micro and Small Entrepreneur Facilitation Council against IGL claiming Rs. 3.6 crores plus interest. IGL filed a detailed reply giving full details of every deduction made and explained that no amount was due.

The MSE facilitation Council attempted to conciliate the matter between the parties. At this point, the IGL without admission of any liability, offered as a gesture of goodwill, to pay a sum of Rs 9,48,152/- which Shanivi Construction Private Limited, did not accept and asked that the dispute be referred to arbitration. In May 2016, the MSE facilitation Council referred the matter to arbitration for adjudication since it was unable to resolve the dispute between IGL and Shanvi. Subsequently, the Arbitration commenced by DIAC and it issued a letter dated 01.07.2016. IGL challenged this reference order before the Hon’ble High Court and a stay order was passed on 04.08.2016.

While this matter is still sub-judice with the Hon’ble High Court, Shanivi Construction Private Limited, issued a Demand Notice on 25.09.2018 under Section 8 of IBC. IGL gave notice of dispute on 08.10.2018. Shanivi Construction Private Limited, then filed a petition under Section 9 before the Hon’ble NCLT in October 2018. Here, the IGL informed the Hon’ble NCLT Bench that there is a pre-existing dispute between the parties over the amount and that the matter is sub-judice before the Hon’ble Delhi High Court.

On September 16, 2021, Hon’ble NCLT pronounced the order admitting the petition filed by Shanivi Construction Private Limited and initiated the Corporate Insolvency Resolution Process. However, on September 20, 2021, an Appeal being Company Appeal (AT) was filed before the Hon’ble National Company Law Appellate Tribunal (NCLAT) against pronouncement made by Hon’ble NCLT. The Hon’ble NCLAT passed a stay order on this appeal on September 20, and the next date of hearing has been fixed for October 06, 2021.