NCLAT dismisses bankruptcy case against Essar Oil

The National Company Law Appellate Tribunal (NCLAT) has dismissed a bankruptcy case against Essar Oil and Gas Exploration and Production Ltd (EOGEPL). This decision overturns an earlier order from the National Company Law Tribunal (NCLT), which accepted a petition from Greka Green Solutions (India) Ltd. Greka claimed that it was owed ₹24.38 crore, or about $2.96 million. On September 10, 2024, the NCLAT had already issued an interim order that paused the NCLT's ruling. The NCLT had admitted the insolvency case on September 6, 2024, and appointed Mohit Bipinchandra Adatiya as the interim resolution professional to oversee EOGEPL's operations. The tribunal had noted that Greka's claim was valid and met the threshold for insolvency. It pointed out that the debt arose from recognized operational costs and referenced past cases supporting insolvency actions where settlement agreements were not honored. EOGEPL's suspended director, Pankaj Kalra, argued that a final payment was made as part of a settlement before the insolvency petition. He claimed the earlier decision didn't take this settlement into account. He stressed that EOGEPL, with a revenue of ₹870 crore and a profit of ₹625 crore, should not have been declared insolvent without recognizing the settlement. The ongoing dispute originates from a 2013 contract between Essar Oil Limited and Greka. After transferring obligations to EOGEPL in 2017, both parties agreed on a 2019 settlement with staggered payments. However, Greka later accused Essar of failing to comply with this agreement, leading to the insolvency petition. The NCLAT's recent ruling has now set aside that petition.