# Operational Creditors Association v. Zenith Steel Industries Pvt. Ltd.

> Operational Creditors Association v. Zenith Steel Industries Pvt. Ltd. — detailed IBC case summary, facts, issues, and ratio decidendi.

- **Court:** NCLT
- **Order date:** 28 Nov 2024
- **Citation:** IBC-2024-NCLT-000004
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-new-delhi/operational-creditors-association-v-zenith-steel-industries-pvt-ltd-45979

## Summary

### Background

Following unsuccessful resolution efforts during extended CIRP, the Committee of Creditors of Zenith Steel Industries Pvt. Ltd. resolved by requisite majority to recommend liquidation under Section 33(2) of the Code. Operational Creditors Association, representing equipment suppliers and logistics providers, filed an application seeking clarifications on asset preservation and priority in distribution of proceeds from moveable property.

Financial creditor Axis Bank supported liquidation citing exhausted resolution timelines and absence of viable plans after two EoI rounds. The Resolution Professional reported that fair value exceeded liquidation value only under hypothetical completion assumptions no longer feasible given plant shutdown and skilled workforce attrition.

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## Facts

Zenith Steel's CIRP extended twice totalling 420 days yielded one non-compliant plan and one withdrawn EoI. Plant operations ceased in October 2024 with partial maintenance shutdown leading to corrosion of critical furnace components.

Workmen dues for eight months remained outstanding though RP disbursed statutory minima from CIRP cost bridge funding. Environmental compliance notices were issued for slag heap management requiring liquidator engagement with state pollution control board.

PowerGrid Equipment Suppliers claimed retention over switchgear and transformers worth Rs. 2.1 crore supplied under contracts with title retention until full payment. Axis Bank held first charge on fixed assets registered with ROC.

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## Issues and analysis

### Issue 1: Whether liquidation is mandatory upon CoC…

**Ratio:** Section 33(2) mandates liquidation order when CoC resolves to liquidate with requisite…

**Reasoning:** CoC complied with voting threshold; RP confirmed no pending compliant plan; timelines…

**Interpretation:** Adjudicating authority cannot substitute commercial judgment of CoC with…

**Application:** Liquidation order issued; CIRP…

## Parties

- **Judges:** Venugop…
- **Appellants:** PowerGrid…
- **Respondents:** Zenith Steel…
- **Other parties:** Axis Ban…; Mr. Rajesh Kumar…
- **Advocates:** Adv. Pinky…; Menaka Gur…

## Timeline

- **15 March 2024 — CIRP admi…**: Original admission order commencing…
- **10 June 2024 — First ext…**: CIRP extended by 90 days…

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