- NCLT admits Rs. 2,888 Cr insolvency petition against Gupta Power Infrastructure
- Canara Bank consortium initiated CIRP under Section 7 of IBC
- Tribunal appoints IRP, imposes moratorium under Section 14
The National Company Law Tribunal (NCLT) Kolkata bench has admitted an insolvency petition of Rs. 2,888 crore filed by Canara Bank and other lenders against Gupta Power Infrastructure Ltd. The case was filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) by a consortium of ten financial creditors led by Canara Bank.
The Tribunal observed that once a consortium establishes valid default exceeding the threshold limit under Section 4 of the IBC, supported by undisputed evidence of debt, the Adjudicating Authority is bound to admit the petition and initiate Corporate Insolvency Resolution Process (CIRP).
Background of the Case
The consortium had sanctioned working capital facilities of Rs. 3,590 crore (revised from Rs. 255 crore in 2006) and an additional COVID-19 relief loan of Rs. 78.56 crore. These were secured through a Joint Deed of Hypothecation dated August 26, 2022. The debtor defaulted from January 2023, with accounts classified as NPAs in August–September 2023. Despite attempts through an Inter-Creditor Agreement, no viable resolution plan was presented, leading to loan recall notices and SARFAESI proceedings.
Arguments by the Parties
- Petitioners: Produced Power of Attorney authorizing Canara Bank as lead bank, consortium meeting minutes recording debtor’s admission of default, NESL certificates, CRILC reports, and NPA certificates.
- Debtor: Challenged maintainability, claimed inadequate authorization, suppression of facts, limitation under Section 10A, and illegal NPA classification. It also alleged lender breaches caused financial distress.
Tribunal’s Findings
The Bench of Smt. Bidisha Banerjee (Judicial Member) and Cmde. Siddharth Mishra (Technical Member) referred to Supreme Court precedents including:
- Rajendra Narottamdas Sheth v. Chandra Prakash Jain (2022) 5 SCC 600
- Pioneer Urban Land (2019) 8 SCC 416
- Innoventive Industries Ltd. (2018) 1 SCC 407
The Tribunal held that the Power of Attorney was valid, the debt far exceeded the Rs. 1 crore threshold, and defaults occurred outside the Section 10A exclusion period. The existence of “financial debt” and “default” was conclusively established.
Orders of the Tribunal
- Admitted the insolvency petition and initiated CIRP.
- Appointed Mr. Pradeep Kumar Kabra as Interim Resolution Professional (IRP).
- Directed financial creditors to pay Rs. 5 lakh to the IRP as advance fees.
- Imposed a moratorium under Section 14, prohibiting legal proceedings, asset transfers, and recovery actions.
- Directed public announcement, document handover, and police assistance if required.
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