TaxTMI 
TaxTMI 
2026 (4) TMI 789
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be noticed for deciding the Appeal are: (i) Public Works Department ("PWD"), Govt. of Maharashtra entered into a Concession Agreement with Supreme Infrastructure India Ltd. for implementing a road project of four-laning of the existing road from Shiroli (Kolhapur) to Ankali on State Highway No.33 and from Ankali to Sangali on State Highway No.75, on a design, build, finance, operate and transfer basis. (ii) Special Purpose Vehicle ("SPV") namely - Supreme Best Value Kolhapur (Shiroli) Sangali Tollways Pvt. Ltd. was incorporated on 31.12.2011 to execute the project. The project work was to be completed within 24 months. (iii) The CD availed finance from Consortium of Lenders amounting to Rs. 247.50 crores in the year 2012. The Financial Creditor on 01.04.2013 on the request of the CD, sanctioned a term loan of Rs. 75 crores and certain additional finance was also granted by Financial Creditor to the CD and total disbursement to the CD was made by Financial Creditor was of Rs. 85.80 crores. (iv) The PWD failed to issue Provisional Completion Certificate. In May 2016, the CD was informed of a potential takeover of the project by National Highways A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... filed on 29.11.2024. (ix) The Adjudicating Authority after hearing the parties held that Company petition was well within limitation as after subsequent to date of default on 30.04.2017, the CD issued revival letters on 11.08.2018 and thereafter there is acknowledgement in the balance sheets of the CD for Financial Years 31st March, 2019, 31st March, 2021 and 31st March, 2022. Hence, the application under Section 7, thus, was well within time. The Adjudicating Authority also considered the submissions of the CD based on arbitration award and reliance on judgment of the Hon'ble Supreme Court in Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. - (2022) 8 SCC 352. The Adjudicating Authority held that there being debt and default, the judgment of the Hon'ble Supreme Court in Vidarbha Industries Power Ltd. shall not come to aid of the CD. The submission of the Financial Creditor that the CD is neither financially sound nor commercially viable was accepted and Section 7 application was consequently admitted. 3. We have heard Shri Shyam Kapadia, learned Counsel appearing for the Appellant; and Shri Yash Dhruva and Ms. Ruchita Sain, learned Counsel appearing for the Responden....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Highway No.33 and State Highway No.75. The work was to be completed within 24 months from 20.10.2012 from the date of issuance of work order. (ii) The CD could not complete the work and PWD did not issue Provisional Completion Certificate. The CD was informed in May 2016 that project is now taken over by NHAI. (iii) The consortium lending, which was taken by the CD with L&T Infrastructure Finance Company Ltd. as lead Banker was Rs. 247.50 crores in the year 2012. The Financial Creditor (Canara Bank) has disbursed an amount of Rs. 85.80 crores to the CD in the year 2013-2016. (iv) Arbitral award was issued in favour of the Appellant dated 21.06.2022 for amount of Rs. 318,94,70,738/- with 12.5% interest. (v) Section 7 application was filed by Financial Creditor claiming an amount of Rs. 346,83,19,536.66/-. The amount admitted in CIRP of the CD of Consortium Lenders is Rs. 1113 crores. 8. The present is a case where there is no challenge to the finding of the Adjudicating Authority regarding outstanding default of more than Rs. 1 crore and the default committed by the CD in repayment of the term loan. 9. The only submission which has been pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Supreme Court in Vidarbha Industries Power Ltd. has observed that the CD, who is in the red should be resolved, however, the viability and overall financial health of the CD are not extraneous matters. In Paragraph-59 of the judgment, following was observed: "59. There can be no doubt that a corporate debtor who is in the red should be resolved expeditiously, following the timelines in the IBC. No extraneous matter should come in the way. However, the viability and overall financial health of the corporate debtor are not extraneous matters." 11. The Hon'ble Supreme Court in the above case in Paragraphs 61 and 62 laid down following: "61. In our view, the Appellate Authority (Nclat) erred in holding that the adjudicating authority (NCLT) was only required to see whether there had been a debt and the corporate debtor had defaulted in making repayment of the debt, and that these two aspects, if satisfied, would trigger the CIRP. The existence of a financial debt and default in payment thereof only gave the financial creditor the right to apply for initiation of CIRP. The adjudicating authority (NCLT) was required to apply its mind to relevant factors including the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tor. 13. What was laid down by the Hon'ble Supreme Court in the above case is that the Adjudicating Authority while considering the proceeding for initiation of CIRP, must take into account - (1) all relevant facts and circumstances; (2) including the overall financial health; and (3) viability of the CD. The Adjudicating Authority may in its discretion not admit the application of a Financial Creditor, after considering the aforesaid facts. The Hon'ble Supreme Court further laid down following in Paragraphs 86, 87 and 88: "86. Even though Section 7(5)(a) IBC may confer discretionary power on the adjudicating authority, such discretionary power cannot be exercised arbitrarily or capriciously. If the facts and circumstances warrant exercise of discretion in a particular manner, discretion would have to be exercised in that manner. 87. Ordinarily, the adjudicating authority (NCLT) would have to exercise its discretion to admit an application under Section 7 IBC and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the corporate debtor in payment of the debt, unless there are good reasons not to admit the petition. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upreme Court in Vidarbha Industries Power Ltd. and has submitted that the said judgment gives clear discretion to the Adjudicating Authority to reject Section 7 application in the facts of the present case. We, thus, proceed to examine the submission of the Appellant on merits, placing reliance on the judgment in Vidarbha Industries Power Ltd. 17. There are two reasons due to which we are unable to accept the submission of learned Counsel for the Appellant that in the facts of the present case, Section 7 application could not have been entertained. They are: (I) The debt which is owed by the CD is not debt only to the Canara Bank, but the CD owed debt to Consortium of Lenders and as submitted by learned Counsel for the Respondent that the debt of the Consortium Lenders, which is admitted in the proceedings is of Rs. 1113 crores, which includes the debt of Financial Creditor - Canara Bank. As per the case of the Appellant in the execution proceedings, which has been filed for execution of the award, the amount claimed in the execution proceeding is Rs. 561.23 crores. The amount, thus, claimed in the execution proceedings by the CD, which is pending before the Bombay High....