Srei promoters dispute insolvency proceedings; next hearing on March 31

The Srei companies – Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL) – could not have been admitted for insolvency proceedings, counsels representing Adisri Commercial, the largest shareholder, said before the National Company Law Tribunal (NCLT), Kolkata Bench, on Tuesday.

Counsels appearing for Adisri raised that the date of default in SIFL and SEFL fell during the period suspended for initiation of corporate insolvency resolution process (CIRP) under Section 10A of the Insolvency and Bankruptcy Code (IBC).

It may be mentioned that the government had suspended fresh insolvency proceedings through an ordinance in June 2020 by inserting Section 10A in the Insolvency and Bankruptcy Code (IBC) to help businesses cope with Covid-related stress.

"Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date,” it read.

For SIFL, the date of default in payment of interest, cited at the time of initiating CIRP, was November 2020 and the date of default in payment of principal amount, February 13, 2021. For SEFL, the reference dates of default were January 9, 2021 and February 1, 2021.

In the SIFL matter, the counsel representing Adisri submitted before the Bench that a business transfer agreement was entered into between SIFL and SEFL and the entire debt of SIFL was transferred to SEFL with effect from October 1, 2019. The two requisite criteria for Section 7 were debt and default. Since there was no debt in SIFL, there could not have been a default, he said.

The hearing in the matter will continue on March 31.