The two-member bench relied on the Supreme Court’s order of Vidarbha Industries Power for GTL Infra and the failure of lenders to adhere to the central bank’s guidelines for GTL, according to the copies of the order reviewed by ET.
In the case of GTL Infra, the bench observed that the corporate debtor claims from various telcos would be sufficient to pay the debt of the lender. These include a ₹13,394 crore claim against Aircel entities, a separate appeal for recovery of ₹900 crore is pending, and it must recover dues from Tata Teleservices, ATC and BSNL aggregating to ₹421 crore, pending arbitration proceedings.
“The ratio of the Vidarbha Industries is squarely applicable to the present case as the business of the corporate debtor is sustainable and it is a viable going concern under its current management; and the overall financial health of the corporate debtor is not bad enough to be admitted under CIRP,” per the order passed on November 18.
In GTL Ltd’s case, the court observed that 92% of lenders signed inter creditors agreement in line with the June 7 circular of the Reserve Bank of India. The corporate debtor argued that Canara Bank, with 4.4%, breached the RBI rule by not signing it.
GTL argued that Canara Bank may be entitled to reject an OTS offer because its “grossly arbitrary conduct” which is “diverging from the vast majority of lenders’ decision” and “taking steps only for its individual recovery, is a malicious abuse of process.”
Appearing for Canara Bank, advocate Rohit Gupta argued, “None of the member banks has objected to the petition filed by Canara Bank, which shows that they are in favour of Canara Bank’s actions, alternatively, they would have filed an objection.” He said the proceeding is not for recovery but for the revival of the company.
GTL Infrastructure has ₹6,142 crore, while GTL has ₹4,383 crore total debt as on March 31, 2022, according to the company’s annual report.
The two-member bench comprising Shyam Babu Gautam and PN Deshmukh observed that “the initiation of insolvency proceedings, contrary to the decision of the majority of the secured creditors, would be counter-productive, especially if most of the assets are secured, as such assets would neither be available for resolution nor liquidation.” In the case of Vidarbha Industries, the apex court ordered that the mere existence of debt and default cannot be the only criteria to admit a company for corporate insolvency.