Raising question on the very order that admitted the Srei group companies for insolvency proceedings, Adisri Commercial, the erstwhile promoter company, on Monday urged the Kolkata bench of the National Company Law Tribunal (NCLT) to set aside its previous order as the date of alleged default fell within the “black out period” mentioned under Section 10A of the IBC (Insolvency and Bankruptcy Code).

Additionally, the counsels appearing on behalf of the erstwhile promoters also urged the NCLT to consider presenting the resolution plan, submitted by them under Section 12 A, to the committee of creditors (CoC). Both the matters will come up for further hearing on March 3.

It is to be noted that the government had, by way of an ordinance in June 2020, suspended initiation of insolvency proceedings by incorporating Section 10A in the IBC, to mitigate the impact of the Covid-induced lockdown and the resultant slowdown on businesses, thereby leading to defaults.

“Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after March 25, 2020, for a period of six months or such further period, not exceeding one year from such date,” it said.

According to the counsels appearing on behalf of erstwhile promoters of Srei, the default for which Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) were admitted into insolvency fell within this period and hence “there is an error on the face of record”.

“There was no default by both the companies prior to Covid. The date of default (basis which the companies have been admitted under insolvency) is November 2020 and February 2021 and it falls within that moratorium period… So there is an error apparent on the face of record,” Rishav Banerjee, the counsel, said.

Resolution plan

It is to be noted that Adisri Commercial had recently submitted a resolution plan under Section 12A to withdraw the companies — SIFL and SEFL — from insolvency and settle the entire claim of around ₹32,000 crore to the creditors. However, the administrator had refused to accept the resolution plan saying that he was not a “competent authority” to accept the plan under Section 12A of the IBC and it would be up to the Reserve Bank of India, which had filed the insolvency petitions against the companies, to either accept or reject the resolution plan in this case.

“The promoters have made an offer under Section 12 A which the CoC should consider prior to considering any resolution plan but the administrator has rejected the plan without sending it to the CoC. We have challenged this and requested the CoC to kindly consider the proposal,” another counsel said.

NARCL’s resolution plan is set to come up for NCLT’s approval on Tuesday.