The Hyderabad Bench of the National Company Law Tribunal (NCLT) has rejected Tata Power’s insolvency petition against Meenakshi Energy, citing pending arbitration proceedings between the companies. an order by the bench noted there is an arbitration proceeding pending between the parties and the arbitration has not come to an end. In their arguments, Meenakshi Energy had contested Tata Power’s insolvency application. The bench noted “…there is a valid and legal dispute raised by the corporate debtor (Meenakshi Energy), and ….” the order said. Tata Power had filed the application as an operational creditor claiming Meenakshi Energy owed it over `22 crore for operation and maintenance (O&M) of its power plant. “The operational creditor rendered services to corporate debtor (Meenakshi Energy) for operation and maintenance of thermal power project..,” the order said. Emails sent to Tata Power and Meenakshi Energy remained unanswered till the time of going to press. The order added that in October 2016, Meenakshi Energy had issued a letter to Tata Power seeking closure of its O&M agreement as the “energy sector has been experiencing severe hardships for its day to day survival”.
Further, the order said, instead of a 180-day notice, Meenakshi Energy cut it short to a 45-day notice in view of “its precarious financial situation”. “Therefore, operational creditor issued a letter dated November 23, 2016 to corporate debtor confirming the balance amount due and payable of Rs 22,05,30,359 as of October 31, 2016 towards O&M contract of 2×150 MW (Unit 1 & 2) MEL,” the tribunal said in its order. Then, on December 29, 2016 Meenakshi Energy nominated Chief Justice (retired) V Eswaraiah of Andhra Pradesh High Court as its arbitrator following the appointment of Justice (retired) Vilas Afzalpurkar as Tata Power’s arbitrator. “Accordingly, after considering the final reconciliation as per Annexure 1 the total outstanding payment agreed by both the party is Rs 15,96,19,780,” the order added.
Meanwhile, in response to Tata Power’s email in February 2017, Meenakshi Energy admitted its liabilities but also acknowledged its inability to pay the installment to Tata Power in January 2017 on grounds that it did not have “adequate cash inflow due to an unprecedented situation”. “The operational creditor vide letter dated March 21, 2017 has acknowledged receipt of payment of Rs 2 crore on March 6, 2017 from the corporate debtor towards the outstanding dues and requested to release the balance outstanding payments,” the tribunal said in its order. After waiting for five months, Tata Power approached the bankruptcy court on August 17, 2017.