NCLAT Rejects Impleadment Pleas in ₹1300 Crore CIRP Cost Dispute Post Resolution Plan Approval [Read Order]

The National Company Law Appellate Tribunal (NCLAT), Principal Bench in New Delhi, has dismissed a plea filed by the SREI Multiple Asset Investment Trust (SMAIT), which sought to be impleaded in an ongoing insolvency appeal tied to a hefty ₹1300 crore CorporateInsolvency Resolution Process (CIRP) cost dispute. The Trust, which claimed to have held a 69.80% equity stake in Odisha Slurry Pipeline Infrastructure Ltd. (OSPIL) before it went into insolvency, had filed Interlocutory Application No. 705 of 2022, arguing that it should be heard in the matter.

The case arose from the insolvency proceedings of Essar Steel India Ltd. and OSPIL. After both companies went through successful resolution processes, each approved by the Supreme Court, SREI Infrastructure Finance Ltd. (SIFL), one of OSPIL’s financial creditors, approached the NCLT Ahmedabad with a demand that ArcelorMittal Nippon Steel India Ltd. (AMNSIL), now in control of OSPIL, should pay ₹1300 crore as right-to-use (RTU) charges for using OSPIL’s pipeline infrastructure. SIFL argued that the amount qualified as a CIRP cost.

The NCLT agreed with SIFL’s position and directed AMNSIL to make the payment. AMNSIL, however, challenged the order through a company appeal before the NCLAT. At this stage, SMAIT stepped in, seeking to be added as a party to the case. They argued that as a majority shareholder of OSPIL before the insolvency, they would be entitled to a share of the ₹1300 crore payout if the NCLT order was upheld.

SMAIT contended that since SIFL had already been paid under the approved resolution plan, it no longer had any stake in the outcome. The Trust went further, alleging that the CIRP process at OSPIL was fraudulent and that if it materialised, it should not go to a financial creditor like SIFL, but instead be routed to pre-CIRP shareholders like themselves.

AMNSIL’s counsel argued that SMAIT had no legal footing to be involved. They reminded the Tribunal that SMAIT had earlier challenged OSPIL’s resolution plan in a separate appeal, which was dismissed by the NCLAT in January 2022 and never appealed further. In their view, SMAIT was simply trying to reopen a matter that had already been settled up to the Supreme Court.

The Tribunal agreed. Justice Ashok Bhushan (Chairman) and Braun Mitra (Technical Member) pointed out that once a resolution plan is approved by the Adjudicating Authority and confirmed by the Supreme Court, it becomes binding on all stakeholders. That includes former shareholders, whose rights are extinguished unless the plan explicitly preserves them. In SMAIT’s case, the resolution plan for OSPIL made no such exception.

Relying on Supreme Court precedents like Mumbai International Airport v. Regency Convention Centre, the Tribunal ruled that SMAIT did not meet the threshold to be considered a necessary or proper party to the appeal. The Bench noted that the Trust had no direct legal interest in the outcome and was merely attempting to re-enter a dispute that had already been conclusively resolved.

The Tribunal observed that SMAIT was ”trying to expand the contours of the present proceeding and raise issues already concluded.” As a result, the application was dismissed. A similar application, which SMAIT also filed, was rejected on the same grounds.

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