Power Grid Corporation Of India v. Deepak Cables (India) Limited .

Factual and Procedural Background

In the Corporate Insolvency Resolution Process against M/s. Deepak Cables (India) Ltd. (the Corporate Debtor), the Appellant, Power Grid Corporation of India, filed separate claims region-wise alleging that the Corporate Debtor failed to supply certain goods and complete certain services. The Appellant raised these claims as an Operational Creditor. The Resolution Professional rejected these claims, contending that the Appellant was not an Operational Creditor and that arbitration proceedings were pending involving claim petitions filed by Deepak Cables (India) Limited and counter claims by the Appellant.

The Appellant filed separate applications under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (I&B Code) before the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench), which were rejected by a common order dated 30th January 2019. The Appellant then preferred appeals before this Appellate Tribunal.

Subsequently, the Adjudicating Authority passed an order of liquidation on 4th July 2019.

Legal Issues Presented

1. Whether the Appellant qualifies as an Operational Creditor entitled to have its claims admitted in the Corporate Insolvency Resolution Process against Deepak Cables (India) Ltd.
2. Whether the Appellate Tribunal should adjudicate the claims of the Appellant prior to liquidation and in the context of pending arbitration proceedings.
3. The procedural rights and remedies available to the Appellant post-liquidation under the relevant provisions of the I&B Code.

Arguments of the Parties

Appellant's Arguments

• The Corporate Debtor was obligated to supply goods and provide services which were not fully delivered or completed.
• Based on the incomplete supply and services, the Appellant raised claims as an Operational Creditor in the insolvency proceedings.
• The Appellant sought admission of these claims before the Adjudicating Authority under Section 60(5) of the I&B Code.

Resolution Professional's Arguments

• The Appellant is not an Operational Creditor within the meaning of the I&B Code.
• The claims are subject to pending arbitration proceedings, including a claim petition filed by the Corporate Debtor and counter claims by the Appellant.
• Following liquidation, the claims should be addressed by the liquidator as per the statutory provisions.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court refrained from deciding the Appellant's claims at this stage due to the subsequent order of liquidation passed by the Adjudicating Authority. It reasoned that the Appellant retains the right to file a fresh claim application before the liquidator, who is mandated to decide the claim in accordance with Sections 38 and 39 of the I&B Code. If the liquidator rejects the claim under Section 40, the Appellant may appeal under Section 42 of the Code.

Regarding the arbitration proceedings, the court acknowledged their pendency and allowed that the Arbitral Tribunal may proceed post-liquidation. It declined to express any opinion on the arbitration but noted that if the Corporate Debtor files a claim and the Appellant files a counter claim, the counter claim should be adjudicated. If awarded, the Appellant may benefit accordingly.

The court also noted the existence of multiple arbitration proceedings, some stayed by the High Court of Delhi, but emphasized that such stay should not prevent the liquidator from deciding the claims under the I&B Code provisions.

Overall, the court emphasized procedural propriety and adherence to statutory remedies post-liquidation rather than adjudicating the merits of the claims at this juncture.

Holding and Implications

The court disposed of all appeals with liberty granted to the Appellant to file fresh claims before the liquidator, who will decide them under the applicable provisions of the I&B Code. If the claims are rejected by the liquidator, the Appellant may appeal against such decisions as per the Code.

The decision leaves the merits of the Appellant's claims and the arbitration proceedings open for determination by the appropriate authorities. No costs were imposed, and no new precedent was established. The ruling clarifies the procedural pathway for claim adjudication post-liquidation without prejudging substantive issues.