Coal India arm misses insolvency by a whisker

Coal India has settled its dispute with its supplier, Gulf Oil Lubricants India, thus pulling its mining subsidiary Eastern Coalfields out of the insolvency proceedings initiated after a dispute over bills.

"In view of the fact that the parties have now settled the matter prior to the constitution of the Committee of Creditors and the Adjudicating Authority has failed to notice that the principal amount has already been paid and original plea of the Corporate Debtor was that no interest was payable in terms of the Agreement/ Contract, we set aside the impugned order dated 19th December, 2018 passed by the Adjudicating Authority," a two-member bench headed by chairman of National Company Appellate Tribunal chairman justice S J Mukhopadhaya said.

The Kolkata bench of NCLT had earlier ordered insolvency proceedings against Eastern Coalfields Ltd, which had settled the principal sum of around Rs 84.71 lakh to Hinduja Group-controlled Gulf Oil Lubricants but declined to pay interest amounting to Rs 40.87 lakh calculated for the period it remained outstanding.

The unprecedented order against the subsidiary of the profit making state-owned entity was then stayed and now finally turned down by the appellate authority in its order on Monday.

The counsel appearing for Gulf Oil accepted that the principal amount was paid prior to the admission of Eastern Coalfields under Section 9 and interest has been paid and the matter has been settled by agreement on January 26.

"In effect, order passed by the Adjudicating Authority appointing Interim Resolution Professional, declaring moratorium, freezing of account, and all other orders passed by the Adjudicating Authority pursuant to impugned order and action, if any, taken by the Interim Resolution Professional, including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside," the order said.

The Kolkata bench of NCLT on December 19 initiated the insolvency process against the Coal India arm with the judge Madan B Gosavi ruling that the corporate debtor is liable to pay interest to the operational creditor that has not been paid in spite of demand.

The court even appointed an interim resolution professional Chhedi Rajbhar from C Rajbhar & Co who, according to Insolvency and Bankruptcy Code, would have taken over the Board of Eastern Coalfields represented by officials of Coal India among others which would have created major hurdles for Coal India's operations.

Sensing this, Coal India hurriedly approached NCLAT and got a stay order on December 22.

"The Corporate Debtor is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect," NCLAT ruled on Monday.

THE DISPUTE

• Eastern Coalfields had settled the principal sum of Rs 84.71 lakh to Gulf Oil Lubricants
   
• It declined to pay interest amounting to Rs 40.87 lakh calculated for the period it remained outstanding.