NCLAT halts insolvency process against Essar Oil and Gas Exploration

The National Company Law Appellate Tribunal (NCLAT) on Tuesday stayed the insolvency process against Essar Oil and Gas Exploration and Production Ltd.

The appellate tribunal stayed the National Company Law Tribunal (NCLT) Ahmedabad's order admitting an insolvency plea filed by Greka Green Solutions (India) Ltd for more than Rs 24 crore against Essar Oil. This was on the appeal filed by Pankaj Kalra, the suspended director of Essar Oil.

The appellate tribunal also issued a notice to Greka Green Solutions informing them of the stay and scheduled the next date of hearing for November 6.

Essar Oil said it had made the final payment prior to the insolvency petition's admission. It said it reported a turnover of Rs 800 crore and had 425 employees.

Essar Oil's counsel said the NCLT had overlooked the settlement agreement between the parties while admitting the insolvency petition and that Essar Oil had paid the last instalment of the settlement before the insolvency proceedings.

The earlier NCLT order had admitted the insolvency case, saying the conditions under Section 9 of the Insolvency and Bankruptcy Code were met.

Section 9 of the Insolvency and Bankruptcy Code (IBC) allows operational creditors to start a corporate insolvency resolution process by filing an application with the Adjudicating Authority (that is, NCLT).

Essar Oil, however, said that since the dispute had been resolved through the settlement, the insolvency application should not have been admitted.

"NCLAT in its order today noted Essar's submissions that all the amounts under the settlement agreement has been paid. Our commitment to honouring our financial mandates remains steadfast. We are a profitable company with revenues of Rs 870 crore and an operating profit of Rs 625 crore. The suspension(of insolvency) will provide us to maintain our focus on our core operations and ensure that our business activities continue without disruption.” said Essar Oil & Gas Exploration & Production Ltd spokesperson. 

Mohit B. Adatiya , Director, NPV Insolvency Professionals Private Limited  (NPV IPE), has been appointed as the interim resolution professional. 

"As an Interim Resolution Professional, we have taken over the control of the assets of the Company at Mehsana and Raniganj and are complying with the law. All the process required under the IBC code has been complied with by the NPV team efficiently. We are getting full cooperation from the Erstwhile Directors and the Management of the Company. Their Appeal has been heard by NCLAT notice has been issued and in the interim the NCLT order has been Suspended. Next date of Hearing is 6th November, 2024 We are still awaiting the written order," he said.