# In the matter of B L A Power Private Limited

> NCLT judgment dated 2024-02-06. Citation: TCN-2024-NCLT-02745. Silver Bank Limited filed a Company Petition under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 6 Feb 2024
- **Citation:** TCN-2024-NCLT-02745
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/b-l-a-power-private-limited-f95c2ae3

## Summary

### Background

Silver Bank Limited filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against B L A Power Private Limited. The petition arises from defaults related to Compulsorily Convertible Debentures (CCDs) subscribed by Silver Bank in B L A Power Private Limited. The Financial Creditor, Promoters of Corporate Debtor and Corporate Debtor executed and entered into a Subscription Agreement dated 17th June 2013 and a Shareholders' Agreement dated 17th June 2013. The Corporate Debtor defaulted in making payments towards interest and the Put Option amount.

## Facts

Silver Bank Limited (formerly BanyanTree Bank Limited) sought to initiate CIRP against B L A Power Private Limited based on defaults related to Compulsorily Convertible Debentures (CCDs). In 2013, B L A Power Private Limited aimed to raise capital for its thermal power plant. Silver Bank invested INR 7,26,26,400 in CCDs and equity shares of B L A Power Private Limited, formalized through a Subscription Agreement and Shareholders' Agreement both dated June 17, 2013. The CCDs carried a 12% p.a. interest, payable quarterly. An Option Deed granted Silver Bank a put option on the CCDs, requiring 'Call Option Holders' (Promoters of Corporate Debtor, BLA Industries Private Limited) to purchase them. Amendments to the Option Deed occurred in December 2015 and September 2016,

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## Issues and analysis

### Issue 1: Whether the Compulsorily Convertible Debentures (CCDs) constitute a 'financial debt' under the …

**Ratio:** The principal component of the debt arises from Compulsorily Convertible Debentures and

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**Reasoning:** The Tribunal reasoned that the CCDs do not create an obligation for the Corporate Debtor

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**Interpretation:** The interpretation hinges on the nature of CCDs and the specific agreements

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**Application:** The ratio and reasoning are applied to the specific facts of the case, where

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## Parties

- **Judges:** V.G. B…; SH. PRABHAT…
- **Appellants:** Silver Bank…
- **Respondents:** B L A Power…

## Timeline

- **2012-06-11 — Incorporation of…**: The Applicant, formerly known as…
- **2006-11-08 — Incorporation of…**: The Respondent was incorporated…

## 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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