# Hindalco Industries Ltd. vs. Hirakud Industrial Works Ltd. & Ors.

> NCLAT judgment dated 2023-01-09. Citation: TCN-2023-NCLAT-00783. The case involves four Company Appeals filed under Section 61 of the Insolvency and…

- **Court:** NCLAT
- **Order date:** 9 Jan 2023
- **Citation:** TCN-2023-NCLAT-00783
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/hindalco-industries-ltd-vs-hirakud-industrial-works-ltd-ors-a4fd1402

## Summary

### Background

The case involves four Company Appeals filed under Section 61 of the Insolvency and Bankruptcy Code (IBC) assailing an order dated 22.12.2021 passed by the Adjudicating Authority (NCLT, Cuttack Bench). The appeals were filed by Hindalco Industries Ltd. and H.I.W. Workers' Union against the Corporate Insolvency Resolution Process (CIRP) initiated against Hirakud Industrial Works Limited (HIWL) based on an application filed by Nandakini Contractors Pvt. Ltd. The appellants alleged collusion between the corporate debtor and the financial creditor, fraudulent initiation of CIRP, and the inclusion of related parties in the Committee of Creditors (CoC). The workers' union claimed unpaid dues, and Hindalco, as a lessee of the corporate debtor's assets, challenged the CIRP's

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## Facts

Hirakud Industrial Works Ltd. (HIWL) faced financial difficulties, leading to workers' dues accumulating to Rs. 45,66,67,133. The Hon'ble High Court of Odisha directed the auction of HIWL's assets to pay these dues. While this process was underway, Nandakini Contractors Pvt. Ltd. filed a Section 7 application under the IBC, claiming a financial debt of Rs. 14,51,047 based on a loan agreement dated 14.3.2016. The Adjudicating Authority admitted the application on 4.6.2019, initiating CIRP and imposing a moratorium. Hindalco Industries Ltd. (HIL), a lessee of HIWL's assets, and HIW Workers' Union challenged this CIRP, alleging collusion between HIWL and Nandakini to defraud the workers. They argued that Nandakini's financial statements didn't reflect the loan, and the

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## Issues and analysis

### Issue 1: Whether the financial loan claimed in default of payment in the application under section 7 of IBC …

**Ratio:** The trigger for initiating CIRP under Section 7 of the IBC is the occurrence of a default

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**Reasoning:** The tribunal found that Nandakini's Section 7 application lacked sufficient proof of the

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**Interpretation:** Section 7 of the IBC requires the financial creditor to furnish records of

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**Application:** In this case, the lack of a loan agreement, proof of disbursement, and

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## Parties

- **Judges:** Ashok Bh…; Alok Sriv…
- **Appellants:** Hindalco Industrie…
- **Respondents:** Hirakud Industrial…
- **Other parties:** 7th Edition…; Fraudulent…; +5 more

## Timeline

- **2016-03-14 — Purported Loan…**: Nandakini Contractors Pvt. Ltd. allegedly entered into a loan agreement with Hirakud…
- **2019-03-06 — Section 7 Application…**: Nandakini Contractors Pvt. Ltd. filed a Section 7 application under the IBC against…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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