705-day delay costs APSFC ₹46 crore

The Supreme Court threw out the window a special leave petition of Andhra Pradesh State Finance Corporation with the terse observation that “there is an inordinate delay of 705 days in filing the petition, which has not been explained satisfactorily”.

The issue related to Kalpataru Steel Rolling Mills, which owed the SFC ₹46 crore. Andhra Bank (since merged with Union Bank of India) had also lent ₹90 crore. The company defaulted on both dues.

The SFC took possession of the hypothecated land, plant and machinery, but was unable to sell them. In the meantime, Andhra Bank moved the National Company Law Tribunal (NCLT) against Kalpataru under Section 7 of the Insolvency and Bankruptcy Code (IBC), which was admitted on August 14, 2018.

It was not until 2020 that the APSFC filed the special leave petition before the Supreme Court, which dismissed it both on grounds of delay as well as merit.

The SFC then approached the National Company Law Appellate Tribunal (NCLAT), this time objecting that Andhra Bank’s Section 7 application was time-barred. The appellate tribunal, too, dismissed it. It noted that APSFC’s previous objection was only over the apportionment of the amount. “At no point of time any issue regarding limitation of Section 7 application has been raised,” NCLAT said.

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The APSFC had also challenged the resolution plan on the grounds that Kalpataru Steel was not a going concern and, hence, there was no question of approving the resolution plan. NCLAT again disagreed, noting that the NCLT had, in its order, “mentioned that the resolution plan contains the provision for takeover of the corporate debtor as going concern and amalgamation of the corporate debtor with the resolution applicant.”

The resolution plan also contains provision for the implementation of the plan through a monitoring committee, it noted.

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