2022 (7) TMI 1481 - Tri - Insolvency and Bankruptcy

Corporate debtor wins application to resume windmill operations after suspension order set aside

Wind World (India) Limited and Ors. Versus Principal Chief Conservator of Forests and Ors.

NCLT Ahmedabad allowed corporate debtor's application to set aside windmill operation suspension order. Court directed respondents to permit corporate ... Seeking to set aside the order which states to initiate the suspension of the operation of windmills till further order - direction also sought to allow the corporate debtor to run the windmills - also seeking directions to Respondent No. 1 to direct BESCOM to continue releasing 90% of the power sale revenue to the customers of the corporate debtor and continue retaining 10% thereof. HELD THAT:- Since no one appeared on behalf of the Respondents in this proceedings despite service of notice, it is not known that Respondent No. 1's stands on the proposal dated 09.01.2020 submitted by the Corporate Debtor for renewal of the lease - it is considered proper to direct the Respondents to allow the Corporate Debtor to run the windmills as per the Respondents own order dated 23.07.2020 on the same conditions as mentioned therein - thus, to keep windmills working is essential part in relation to resolve insolvency of the Corporate Debtor. Application allowed. Issues:1. Application to quash and set aside an order directing suspension of windmills operation.2. Compliance with EDS queries and suspension of windmills operation.3. Request for renewal of lease and subsequent actions by the Forest Department.4. Legal implications of suspending windmills operation on insolvency resolution.Issue 1: Application to quash and set aside an order directing suspension of windmills operationThe Resolution Professional (RP) filed an application to quash an order directing the suspension of windmills operation by the Forest Department. The order sought to suspend the operation of windmills until further notice, impacting the corporate debtor's revenue generation. The RP argued that the operation of windmills is crucial for maximizing the value of the corporate debtor's assets during insolvency proceedings.Issue 2: Compliance with EDS queries and suspension of windmills operationThe Principal Chief Conservator of Forests directed the suspension of windmills operation due to the corporate debtor's failure to comply with certain EDS queries. The RP highlighted that a detailed proposal addressing all queries had been submitted after the suspension order. The RP emphasized the importance of the corporate debtor remaining a going concern to enhance asset value, as per the Explanation to Section 14(1) of the IBC. The RP requested the suspension order to be set aside to allow windmills operation.Issue 3: Request for renewal of lease and subsequent actions by the Forest DepartmentThe corporate debtor had applied for the renewal of the lease for the windmills installed on forest land. The Forest Department initially accepted the renewal application during the corporate insolvency resolution process. However, subsequent actions by the Forest Department, including the suspension order, raised concerns about the continuity of windmills operation. The RP stressed the need for the corporate debtor to operate the windmills to fulfill its obligations and maintain going concern status.Issue 4: Legal implications of suspending windmills operation on insolvency resolutionThe tribunal considered the legal implications of suspending windmills operation on the insolvency resolution process. Emphasizing the importance of maintaining the corporate debtor as a going concern, the tribunal directed the Respondents to allow the corporate debtor to run the windmills based on a previous order from the Forest Department. The tribunal held that keeping the windmills operational is essential for resolving the insolvency of the corporate debtor and maximizing asset value. The application was allowed to the extent of permitting windmills operation and disposed of with no order as to costs.This detailed analysis of the judgment highlights the key issues addressed by the tribunal regarding the suspension of windmills operation and its impact on the insolvency resolution process.