# In the matter of Vidarbha Industries Power Limited

> NCLT judgment dated 2024-03-07. Citation: TCN-2024-NCLT-02144. The case involves an application (I.A. No. 4450 of 2023) filed by CFM Asset Reconstruction…

- **Court:** NCLT
- **Order date:** 7 Mar 2024
- **Citation:** TCN-2024-NCLT-02144
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/vidarbha-industries-power-limited-c78e4a5f

## Summary

### Background

The case involves an application (I.A. No. 4450 of 2023) filed by CFM Asset Reconstruction Private Limited ('Applicant') in an ongoing Corporate Insolvency Resolution Process (CIRP) against Vidarbha Industries Power Limited ('Corporate Debtor'). The Applicant seeks to be impleaded as a co-petitioner/Financial Creditor No. 2 in the Company Petition (IB) No. 264 of 2020, which was originally filed by Axis Bank Limited ('Financial Creditor No. 1'). The Financial Creditor No. 1, along with other lenders of a consortium, had extended credit facilities to the Corporate Debtor. The Corporate Debtor defaulted on its payment obligations, leading to the declaration of its account as a Non-Performing Asset (NPA). During the pendency of the CIRP, Financial Creditor No. 1 assigned

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## Facts

Axis Bank Limited, as part of a consortium of lenders, extended credit facilities to Vidarbha Industries Power Limited (VIPL). VIPL defaulted on its payment obligations on March 31, 2019, leading Axis Bank to declare VIPL's account as a Non-Performing Asset (NPA) on June 28, 2019. In January 2020, Axis Bank filed a Company Petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) against VIPL, claiming Rs. 553,27,99,322/- as the amount in default. During the pendency of the Company Petition, Axis Bank, along with other lenders of the consortium, assigned its rights in respect of the amounts due from VIPL to CFM Asset Reconstruction Private Limited (CFM-ARC), except for External Commercial Borrowings aggregating to USD 15,00,00,000. CFM-ARC then filed an

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## Issues and analysis

### Issue 1: Whether the Applicant, CFM Asset Reconstruction Private Limited, can be impleaded as a …

**Ratio:** Section 5(7) of the IBC defines 'financial creditor' to include a person to whom a

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

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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, Axis Bank Limited assigned its rights in respect of the amounts

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## Parties

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

## Timeline

- **2019-03-31 — Default by Corporate…**: Vidarbha Industries Power Limited…
- **2019-06-28 — NPA Decla…**: Axis Bank Limited declared the account of Vidarbha Industries Power Limited as a…

## 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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