NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) on Friday issued notice to the monitoring committee of bankrupt Jaiprakash Associates Ltd (JAL) on a plea by Velocity Enterprises, a Bhopal-based contractor, challenging the rejection of its claim under the insolvency process.
The appellate tribunal said the matter warranted consideration and directed that the bank guarantee furnished by Velocity should not be invoked until the next hearing. It also asked the contractor to extend the validity of the guarantee.
The notice was issued to the monitoring committee because, under the Insolvency and Bankruptcy Code, the resolution professional (RP) manages the company during the corporate insolvency resolution process (CIRP). Once a resolution plan is approved, the RP’s role largely ends, and a monitoring committee, comprising lenders, the successful resolution applicant and, in some cases, the RP, oversees implementation.
The development follows the Allahabad bench of the National Company Law Tribunal (NCLT) approving Adani Enterprises Ltd’s ₹14,543 crore resolution plan for the debt-laden JAL on 17 March, while rejecting Velocity’s plea related to termination of its work contract and associated claims.
Velocity was awarded a 2022 work order for design, engineering, supply and commissioning of electrical and substation works for an irrigation project, and furnished a mobilization advance bank guarantee of about ₹1.48 crore.
Disputes arose during execution, after which the contractor invoked arbitration and filed claims of around ₹2.55 crore before the RP. The RP, however, terminated the contract, citing breaches, including failure to supply the required transformers and the stoppage of work, and rejected the claims.
Challenging the move, Velocity argued that the termination and proposed invocation of the bank guarantee were mala fide and that its claims were rejected without adequate opportunity of hearing.
The NCLT declined to intervene, holding that the dispute was contractual in nature and fell outside the insolvency framework’s limited jurisdiction.
Aggrieved, Velocity moved the NCLAT, marking the first challenge by an operational creditor to the rejection of its claim in the Adani-approved resolution plan.
The NCLT had approved Adani Enterprises’ plan with about 93% creditor approval, led by National Asset Reconstruction Co. Ltd (NARCL), which holds over 85% voting share. The plan offers roughly ₹6,000 crore upfront, with the balance payable over two years, and was preferred over Vedanta Ltd’s ₹12,505-crore bid, which proposed a five-year payout.