The Mumbai Bench of the National Company Law Tribunal (NCLT) has dismissed a petition by Monnet Ispat’s resolution professional against the ministry of coal for issuing a termination notice of its coal mine in Chattisgarh.The tribunal said that the action of the ministry is not hit by section 14 (1) (d) of the Insolvency and Bankruptcy Code (IBC), which deals with moratorium on recoveries. Section 14 (1) (d) of the IBC says that the “adjudicating authority shall by an order declare moratorium for prohibiting the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor”. “In the code itself, it has been categorically mentioned that if notification comes from the government side in respect to any of the issues, then the provisions of 14 (1) will not apply to the transactions notified by the central government. In view of the reasons aforementioned, this miscellaneous is hereby dismissed as misconceived,” the order said.
The Gare Palma IV/7 coal mine in Chattisgarh was allocated to Monnet Ispat in August 2015 and a Coal Mining Development And Production Agreement (CMDPA) was signed between the company and the government. The company had furnished a performance bank guarantee of Rs 329.23 crore issued by State Bank of India (SBI) dated March 28, 2015. Thereafter, on April 13, 2017, the government issued a show cause notice to Monnet Ispat to renew the performance security expired on March 19, 2017. Then on September 26, 2017, the company issued a letter to the government stating that it is already under corporate insolvency and requested it to bear with the company till a resolution plan is in place by January 2018. On December 30, the government issued the termination letter for the CMDPA.
The order added there is a clause for termination of the agreement of events including failure in making payments, replenishing the performance security, dissolution, liquidation, insolvency or commitment of bankruptcy by the successful bidder, and if the government is of the view that the agreement should be terminated in public interest. “In the termination notice itself, it has been mentioned that the government has been incurring an estimated loss of revenue of Rs 314.3 crore to the state exchequer annually, and therefore the opinion of the central government for termination of CMDPA in view of public interest cannot be invalidated or stayed…” the tribunal said in its order.The NCLT had admitted State Bank of India’s (SBI) insolvency petition against Monnet Ispat on July 18 and granted a six-month moratorium prohibiting legal suits against the company. It is among the 12 companies named by the Reserve Bank of India (RBI) in its first list of large loan defaulters to be referred to the NCLT.