# In the matter of Lanco Vidarbha Thermal Power Limited IA No.515 of 2022 in CP(IB) No. 529-7-HDB-2018

> NCLT judgment dated 2022-10-10. Citation: TCN-2022-NCLT-00797. The case involves an application (IA 515/2022) filed by Maharashtra State Electricity…

- **Court:** NCLT
- **Order date:** 10 Oct 2022
- **Citation:** TCN-2022-NCLT-00797
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/lanco-vidarbha-thermal-power-limited-ia-no515-of-2022-in-cpib-no-529-7-hdb-2018-a2e63f5a

## Summary

### Background

The case involves an application (IA 515/2022) filed by Maharashtra State Electricity Distribution Company Limited (Applicant) under Section 42 of the Insolvency and Bankruptcy Code, 2016, in a corporate insolvency resolution process against Lanco Vidarbha Thermal Power Ltd (Corporate Debtor). The Applicant sought to set aside an order by the Liquidator rejecting its claim of Rs.752.28 crores as a 'Contingent Claim'. The claim arises from a Power Purchase Agreement (PPA) where the Corporate Debtor allegedly failed to meet its obligations, leading to the invocation of a bank guarantee and a demand for liquidated damages. The Liquidator rejected the claim based on an order by the Maharashtra Electricity Regulatory Commission (MERC) which was under appeal before the

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## Facts

Maharashtra State Electricity Distribution Company Limited (MSEDCL) entered into a Power Purchase Agreement (PPA) with Lanco Vidarbha Thermal Power Ltd for the supply of 680 MW of electricity. The Scheduled Commercial Operation Date (SCOD) was fixed as 04.09.2012. Lanco Vidarbha failed to provide the Fuel Supply Agreement (FSA) and Environmental Clearance (EC) in time, and also failed to submit the additional bank guarantee. MSEDCL invoked and encashed a Bank Guarantee of Rs. 51 crores and demanded liquidated damages on 09.10.2013. Lanco Vidarbha issued a termination notice on 20.09.2014, which MSEDCL rejected. Cases No.136/2015 and 85/2016 were filed before the Maharashtra Electricity Regulatory Commission (MERC), which were decided against MSEDCL on 02.05.2018.

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## Issues and analysis

### Issue 1: Whether the findings of the Liquidator dated 28.04.2022 while rejecting the claim of the Applicant …

**Ratio:** The Liquidator is obligated to follow the directions of the Adjudicating Authority. When

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**Reasoning:** The Adjudicating Authority had specifically directed the Liquidator to consider the

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**Interpretation:** The Adjudicating Authority's direction for fresh consideration implies a clean

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**Application:** The Liquidator's reliance on the MERC order, despite the Adjudicating

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## Parties

- **Judges:** Venkata Ramakrishn…; Veera Brahma Rao…
- **Appellants:** Maharashtra State…
- **Respondents:** Lanco Vidarbha…; Vijay Kuma…

## Timeline

- **2008-09-25 — Power Purchase…**: Maharashtra State Electricity Distribution Company Limited (MSEDCL) executed a Power…
- **2012-09-04 — Scheduled Commercial…**: The Scheduled Commercial Operation…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 42 — Appeal against the decision of liquidator](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-42)

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