NCLT Admits Indira Container Terminal For Insolvency Resolution

India’s National Company Law Tribunal (NCLT) admitted Indira Container Terminal Private Ltd. (ICTPL) for insolvency resolution following a petition by its financial creditor Canara Bank.

The Mumbai bench of the NCLT also appointed Dinesh Kumar Aggarwal as the interim resolution professional of the company, the tribunal order dated 9 May showed.

The development comes after Canara Bank filed an insolvency petition against ICTPL last year, alleging a default of 312 crore Indian rupees ($37.34 million).

ICTPL is a joint venture between AJR Infra and Tolling Ltd., formerly known as Gammon Infrastructure Projects Ltd., and Spanish port operation firm Noatum Ports Sociedad Ltd.

THE BACKGROUND

The ICTPL, which was handling the container privatization project at the Mumbai Port for Mumbai Port Trust (MbPT), took a loan from Canara Bank in 2008.

The company’s account was later classified as the Special Mentioned Account as per the guidelines of the Reserve Bank of India since the state-run lender observed financial stress in its account.

ICTPL sought the restructuring of the credit facility on 29 December 2014 and the bank agreed. However, the regulatory timeline for the debt restructuring lapsed on 31 March 2015 and the restructuring could not be implemented by the company.

This prompted Canara Bank to file a recovery application before the Debt Recovery Tribunal in Mumbai on 8 February 2019. The matter later also went for arbitration, but the lender without waiting for the Conciliation and Settlement Committee to complete the process on conciliation initiated the corporate insolvency resolution process against ICTPL.

ICTPL’S ARGUMENT

ICTPL said MbPT was required to perform its obligations and hand over the relevant assets to the company to enable it to perform its share of obligations under the signed license agreement for the container privatization project.

However, due to defaults by MbPT in fulfilling its obligations, ICTPL could not undertake its share of obligations, it added. The build, operate and transfer (BOT) project, awarded in 2007, was to be commissioned by 2010.

“The delays of over 13 years by MbPT increased the project cost substantially,” ICTPL said, noting that from the originally envisaged cost of 1,015 crore rupees, the envisaged project cost is estimated at over 2,500 crore rupees.

ICTPL submitted an interim claim of 904 crore rupees to MbPT for reimbursement of additional costs on account of delays, but the same was rejected by MbPT.

THE VERDICT

After hearing the arguments from the counsels of both parties and perusing the material produced, the NCLT said the claim was made against MbPt, but the same was rejected and even ICTPL’s request for reconsideration could not pass through.

“Accordingly, it cannot be said that any amount is recoverable from MbPT on this account in fact and circumstances of the case,” it added.

The tribunal found there was no dispute regarding existence of a financial debt and its default.

“Therefore, the debt and default stand established and there is no reason to deny the admission of the petition. In view of this, this adjudicating authority admits this petition and orders initiation of CIRP against the corporate debtor,” the division bench of Justice V.G. Bisht (Retired) and Technical Member Prabhat Kumar said in the order.

Ishtiaq Ali, managing partner of law firm Orbit Law Services, represented Canara Bank. ICTPL was represented by advocate Aman Kacheria.

Note: $1 = 83.5523 Indian rupees

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