# In the matter of Vidharbha Industries Power Limited Vs. Axis Bank Limited CA (AT) (Ins) No. 117 of 2021

> NCLAT judgment dated 2021-03-02. Citation: TCN-2021-NCLAT-00339. The case involves an appeal against an order passed by the Adjudicating Authority (National…

- **Court:** NCLAT
- **Order date:** 2 Mar 2021
- **Citation:** TCN-2021-NCLAT-00339
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/vidharbha-industries-power-limited-vs-axis-bank-limited-ca-86a0a830

## Summary

### Background

The case involves an appeal against an order passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) rejecting an application by Vidharbha Industries Power Limited (Corporate Debtor) seeking a stay of Corporate Insolvency Resolution Process (CIRP) proceedings initiated by Axis Bank Limited (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The Corporate Debtor argued its inability to service debts due to disputes with energy recipients and changes in supply chain management, with related matters pending before the Hon'ble Apex Court and other authorities. The Adjudicating Authority found these disputes extraneous to the Company Petition and declined to stay the proceedings.

## Facts

Vidharbha Industries Power Limited (Corporate Debtor), a power generating company operating a 600 MW coal-fired thermal power plant, faced financial stress. Axis Bank Limited (Financial Creditor) initiated CIRP against the Corporate Debtor under Section 7 of the I&B Code due to alleged default in debt servicing. The Corporate Debtor filed IA No.570 of 2020 in the aforesaid Company Petition being CP(IB) No.264/MB/2020 seeking stay of further proceedings in the Company Petition by projecting its inability in servicing the debts in respect whereof default was alleged by the Financial Creditor. The Corporate Debtor argued that disputes with energy recipients and changes in supply chain management hindered its business. These disputes were pending before the Hon'ble

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was justified in rejecting the Corporate Debtor's application …

**Ratio:** The Adjudicating Authority is bound to admit the application and commence CIRP if a

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**Reasoning:** The court reasoned that the Corporate Debtor's arguments regarding pending disputes and

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**Interpretation:** Section 7 of the I&B Code mandates the Adjudicating Authority to initiate

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**Application:** The court applied the ratio to the facts by noting that the Corporate Debtor

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## Parties

- **Judges:** Bansi Lal…; Ashok Kumar…
- **Respondents:** Vidharbha…; Axis Bank L…
- **Advocates:** Himanshu…; Divyang Chandirama…; +4 more

## Timeline

- **2020-01-01 — CIRP Init…**: Axis Bank Limited initiated Corporate Insolvency Resolution Process (CIRP) against…
- **2020-01-15 — Application…**: Axis Bank Limited filed Application under…

## 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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