# In the matter of South East U.P. Power Transmission Company Limited Company Petition (IB)No. 107-ALD-2019

> NCLT judgment dated 2020-07-16. Citation: TCN-2020-NCLT-01011. Power Finance Corporation Limited (PFC) filed a petition under Section 7 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 16 Jul 2020
- **Citation:** TCN-2020-NCLT-01011
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/south-east-up-power-transmission-company-limited-company-petition-ibno-107-ald-2-d7a5f694

## Summary

### Background

Power Finance Corporation Limited (PFC) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against South East U.P. Power Transmission Company Limited (SEUPPTCL). PFC, along with Rural Electrification Corporation Limited (REC) and the Bank of India (BOI), collectively referred to as 'the Lenders', had agreed to part-finance SEUPPTCL's project. PFC sanctioned INR 2475.50 Crores to SEUPPTCL. SEUPPTCL was obligated to repay the principal and interest in 48 equal quarterly installments. SEUPPTCL defaulted on its repayment obligations, leading PFC to issue demand letters and recall the facility. UPPTCL arbitrarily rejected a proposal for Adani to invest in the project. PFC

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## Facts

Power Finance Corporation Limited (PFC) extended financial assistance to South East U.P. Power Transmission Company Limited (SEUPPTCL) in the form of a Rupee Term Loan of INR 2475.05 Crores for a project involving the Mainpuri-Bara line. The project cost was estimated at INR 4951 crores. The loan was to be repaid in 48 equal quarterly installments. SEUPPTCL defaulted on its repayment obligations. PFC issued demand letters on July 7, 2017, January 5, 2018, and July 11, 2018. On October 10, 2018, PFC recalled the facility due to the occurrence of Events of Default. PFC invoked bank guarantees of INR 638.88 Crores, realizing INR 580.37 Crores. As of March 31, 2019, SEUPPTCL owed INR 2416, 96, 45,996. SEUPPTCL stated that the project was delayed due to various reasons.

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## Issues and analysis

### Issue 1: Whether there is duly …

**Ratio:** The Adjudicating Authority must determine if a financial debt exists based on records and

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**Reasoning:** The Corporate Debtor did not deny the fact that the debt has been taken from the

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**Interpretation:** Section 7 of the IBC requires the Adjudicating Authority to ascertain the

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**Application:** The Corporate Debtor admitted to taking a Rupee Term Loan through a Facility

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## Parties

- **Judges:** Rajesh Daya…
- **Appellants:** Power Finance…
- **Respondents:** South East U.P.…

## Timeline

- **2017-07-07 — Demand L…**: Financial Creditor issued demand…
- **2018-01-05 — Demand L…**: Financial Creditor issued demand…

## 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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