Termination Of Concession Agreement Does Not Discharge Corporate Debtor's Repayment Obligations When Unrelated To Its Default: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Rakesh Kumar Jain and Mr. Naresh Salecha (Technical Member) has held that termination of a Concession Agreement by the Government of Maharashtra does not discharge the Corporate Debtor from its repayment obligations, especially when such termination has no relation to the default committed by the Corporate Debtor. The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by the National Company Law Tribunal (NCLT) Mumbai by which it admitted an application under section 7 of the IBC. The Appellant submitted that with the termination of the concession agreement (CA) and as per the terms of the CA, the debt stood transferred to the Govt. of Maharashtra (GoM) and nothing was payable by the Corporate Debtor (CD). The Respondent submitted that the debt has been duly acknowledged by the CD in its revival letter dated 22.01.2018. The debt due and payable was also reflected in the balance sheet for the FY 2016-17 of the CD. It was further submitted that default on the part of the CD existed for a period of 7 years, as the account was classified as NPA in November 2016. It was further argued that CD has wrongly claimed that GoM had offered Rs. 174 Cr. which was allegedly sufficient to discharge the debt because, firstly, no material has been placed on record to substantiate the existence of such an offer, secondly, even if it is presumed to be there, though without admitting the same, the said offer is grossly insufficient. The Tribunal noted that the corporate debtor has not disputed the facilities and acknowledged the debt as shown in the revival letter, which was addressed to all lenders.It was stated that in the present case, default is established since the Corporate Debtor's account was declared NPA in November 2016, which is also reflected in its balance sheet of FY 2016-2017. Once the debt and default are established, the NCLT must admit the application as held by the Supreme Court in the Innoventive Industries case. The plea of the Appellant that termination of the Concession Agreement shifted liability to GoM was rejected since the corporate debtor was obligated to make payment to the FC. It further held that the offer given by the Appellant of Rs. 174 crore is not sufficient to discharge the liability of the financial creditor, which is to the tune of Rs. 200 cr. Accordingly, the present appeal was dismissed. Case Title: Vikram Bhawanishankar Sharma Member of the Suspended Board of Directors of Supreme Manor Wada Bhiwandi Infrastructure Pvt. Ltd. Versus Union Bank of India & Anr. Case Number: Comp App. (AT) (Ins) No. 794 of 2023 & I.A. No. 2685 of 2023 & 1531 of 2025 Judgment Date: 11/09/2025 Click Here To Read/Download The Order

Termination Of Concession Agreement Does Not Discharge Corporate Debtor's Repayment Obligations When Unrelated To Its Default: NCLAT

Mohd Malik Chauhan

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