# In the matter of Vidarbha Industries Power Limited

> NCLT judgment dated 2024-03-07. Citation: TCN-2024-NCLT-02135. The case involves an application (I.A. No. 4428 of 2023) filed by CFM Asset Reconstruction…

- **Court:** NCLT
- **Order date:** 7 Mar 2024
- **Citation:** TCN-2024-NCLT-02135
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/vidarbha-industries-power-limited-09f408fa

## Summary

### Background

The case involves an application (I.A. No. 4428 of 2023) filed by CFM Asset Reconstruction Private Limited seeking direction against Vidarbha Industries Power Limited under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, and Rule 11 of NCLT Rules, 2016. The application seeks to substitute CFM Asset Reconstruction Private Limited as the Financial Creditor in place of State Bank of India in a Company Petition (IB) No. 1234 of 2022. State Bank of India, as part of a consortium of lenders, had extended credit facilities to Vidarbha Industries Power Limited, which defaulted, leading to its account being declared a Non-Performing Asset (NPA). Subsequently, State Bank of India initiated Corporate Insolvency Resolution Process (CIRP) against Vidarbha Industries

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## Facts

State Bank of India, as part of a consortium, extended credit facilities to Vidarbha Industries Power Limited. Vidarbha Industries Power Limited defaulted on its payment obligations. State Bank of India declared the account of Vidarbha Industries Power Limited as a Non-Performing Asset (NPA) on June 29, 2019. In November 2022, State Bank of India filed a Company Petition under Section 7 of the Code for initiating Corporate Insolvency Resolution Process (CIRP) against Vidarbha Industries Power Limited, claiming a default of Rs. 2,043.98 crores as of October 31, 2022. During the pendency of the Company Petition, State Bank of India assigned its rights to CFM Asset Reconstruction Private Limited via an assignment agreement dated August 17, 2023. CFM Asset Reconstruction

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## Issues and analysis

### Issue 1: Whether CFM Asset Reconstruction Private Limited can be substituted as the Financial Creditor in …

**Ratio:** Section 5(7) of the Insolvency and Bankruptcy Code, 2016, defines 'Financial Creditor' as

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**Reasoning:** The NCLT reasoned that the assignment of debt is a recognized mode of transfer of rights

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**Interpretation:** The interpretation of Section 5(7) of the IBC is that it recognizes the

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**Application:** In this case, State Bank of India assigned its debt to CFM Asset Reconstruction

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## Parties

- **Judges:** Reeta K…; Madhu S…
- **Appellants:** CFM Asset…
- **Respondents:** Vidarbha Industrie…; State Bank of…

## Timeline

- **2019-06-29 — Account decla…**: State Bank of India declared the account of Vidarbha Industries Power Limited as a…
- **2022-11-01 — Company Petiti…**: State Bank of India filed a Company Petition under Section 7 of the Code for initiating…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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