# In the matter of GVK Power (Goindwal Sahib) Ltd. CP (IB) No. 43/7/HDB/2020

> NCLT judgment dated 2022-10-10. Citation: TCN-2022-NCLT-00813. Axis Bank Ltd., a financial creditor, filed an application under Section 7 of the Insolvency…

- **Court:** NCLT
- **Order date:** 10 Oct 2022
- **Citation:** TCN-2022-NCLT-00813
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/gvk-power-goindwal-sahib-ltd-cp-ib-no-437hdb2020-17df3773

## Summary

### Background

Axis Bank Ltd., a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against GVK Power (Goindwal Sahib) Ltd., the corporate debtor, for defaulting on a financial debt of Rs. 442,20,14,321.40. The debt includes interest and penal interest on term loans and working capital facilities. The corporate debtor contested the application, citing RBI directions and inter-creditor agreements, arguing that the debt was not due and payable due to a standstill period and priority lender obligations. The NCLT Hyderabad bench considered the arguments and evidence presented by both parties.

## Facts

Axis Bank Ltd. (Financial Creditor) sanctioned loans totaling Rs. 355.4 crores to GVK Power (Goindwal Sahib) Ltd. (Corporate Debtor) starting in 2010, including term loans and working capital facilities. Twelve other financial institutions also provided loans, totaling over Rs. 3000 crores, to finance a 540 MW coal-fired thermal power plant in Taran Taran, Punjab. The project faced cost overruns financed by additional loan facilities. In 2017, Deutsche Bank AG and DB International (Asia) Ltd. became priority lenders. An Inter-Creditor Agreement (ICA) was entered into on July 21, 2017, among 13 senior lenders and 2 priority lenders, but the Corporate Debtor was not a party to it. A Master Amendment Agreement was also executed with the Corporate Debtor, amending

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## Issues and analysis

### Issue 1: Whether the financial debt claimed by the financial creditor as due and payable by the corporate …

**Ratio:** The Inter-Creditor Agreement (ICA) and RBI Directions do not create a legal embargo on

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**Reasoning:** The NCLT reasoned that the standstill period under the ICA was contingent on the approval

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**Interpretation:** The ICA is interpreted as a mechanism to facilitate a time-bound resolution,

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**Application:** The NCLT applied the ratio to the facts, noting that no resolution plan was

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. VEERA BRAHMA…
- **Appellants:** Axis Ban…
- **Respondents:** GVK Power…

## Timeline

- **2010-01-01 — Loan San…**: Axis Bank and other financial institutions sanctioned loans to GVK Power (Goindwal Sahib)…
- **2017-07-21 — Inter-Creditor…**: Senior lenders entered into an Inter-Creditor Agreement (ICA) and a Master Amendment…

## 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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