Water technology firm VA Tech Wabag Ltd has filed an appeal with the National Company Law Appellate Tribunal (NCLAT) against an order of the National Company Law Tribunal (NCLT) initiating corporate insolvency resolution process. NCLT, last week, issued an order under the provisions of the Insolvency and Bankruptcy Code, 2016, and appointed an Interim Resolution Professional (IRP) to take charge of the management of the company, in a petition filed by Consolidated Construction Consortium Ltd (CCCL).
VA Tech Wabag said that the company is completely solvent. CCCL had worked as a sub-contractor for the company's 50 million-gallons-a-day water treatment plant, Dwarka Project. CCCL had filed an application with NCLT against the company in respect of an alleged default in payment of dues to CCCL involving a principal amount of Rs 1,50,013,529.
The company said that CCCL had not fully peformed their contractual obligations as per the contract with the company and hence Wabag has disputed the claim.
"The company has a track record of continous profits over the last 10 years. The company has one of the best Debt-Equity ratio in the industry and has a credit rating of AA-(Stable) for long term and A1+ for short term by Icra," it said. As on March 31, 2017, the company had a net-worth of Rs 1,010 crore and gross cash of Rs 261 crore. Its consolidated revenue in FY 2016-17 was Rs 3,207 crore and its net profit was Rs 102 crore.
In an order delivered on Friday, the NCLT, Chennai Bench comprising of Ch Mohd Sharief Tariq, member (Judicial) and S Vijayaraghavan, member (Technical), said, "We order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed." The water treatment company is referred to as the corporate debtor in the matter. The IRP has been directed to take charge of the corporate debtor's management immediately. It has also declared the moratorium which shall have effect from the date of the order till completion of the process.
The NCLT said that it had provided a chance to the debtor to repay the principal amount along with interest and posted the matter for reporting settlement or for passing necessary order on October 3, 2017. However, the counsel for VA Tech Wabag said that it was admittedly willing to pay only half the principal amount, but wasn't ready to pay any interest. The Bench observed that the submission appeared to be contrary to what the counsel had submitted during final hearing on September 11, 2017.
The counsel for CCCL did not agree to the submission and urged that the principal amount along with interest, which may be fixed by the Bench, should be paid by the corporate debtor.
The Bench observed that the default by the debtor in making payment to the creditor was established, and further fortified by the company's admission to pay 50 per cent of the principal amount, which CCCL refused to accept.