Reliance Infrastructure Gets Relief From NCLAT, Insolvency Proceedings Stayed

Reliance Infrastructure Gets Relief From NCLAT, Insolvency Proceedings Stayed

Introduction

Reliance Infrastructure Ltd has received relief from the National Company Law Appellate Tribunal (NCLAT) which has stayed the insolvency proceedings against the company following a repayment of ₹92.68 crore towards tariff as per an energy purchase agreement.

Factual Background

Reliance Infrastructure had been facing insolvency proceedings initiated by IDBI Trusteeship, the security trustee of Dhursar Solar Power Pvt Ltd (DSPPL), alleging a default of ₹88.68 crore plus interest as of August 28, 2018. The default was related to payment of invoices raised by DSPPL for supplying solar energy to Reliance Infrastructure.

Procedural Background

The Mumbai bench of the National Company Law Tribunal (NCLT) had directed the initiation of corporate insolvency resolution process and appointment of an interim resolution professional against Reliance Infrastructure on May 30. However, Reliance Infrastructure appealed against the order before NCLAT and made a full payment of ₹92.68 crore to DSPPL.

Reasoning & Analysis

The NCLAT's decision to stay the insolvency proceedings is based on the fact that Reliance Infrastructure has made the full payment of ₹92.68 crore to DSPPL, thereby fulfilling its obligations under the energy purchase agreement. This development highlights the importance of timely payment and fulfillment of contractual obligations to avoid insolvency proceedings.

Impact on the Company

The stay on insolvency proceedings is likely to provide relief to Reliance Infrastructure and avoid any potential damage to its reputation and financial stability. The company's statement that the NCLT order has become infructuous upon full payment having already been made suggests that it has taken steps to resolve the issue.

Final Outcome

The NCLAT has stayed the insolvency proceedings against Reliance Infrastructure, and the company has made the full payment of ₹92.68 crore to DSPPL. The development is a positive outcome for Reliance Infrastructure, and the company can now focus on its business operations without the threat of insolvency proceedings.