NCLT Ahmedabad Dismisses Insolvency Plea Against Suzlon Energy

The Ahmedabad Bench of the National Company Law Tribunal (NCLT) has recently rejected an insolvency plea against Suzlon Energy Limited.

The plea was rejected after finding that the claim was time-barred and arose out of a pre-existing dispute.

The petition was filed by Harri Wind Farms, which sought initiation of insolvency proceedings after claiming Rs 9.70 crore towards land procurement, No Objection Certificates (NOCs), and Power Evacuation (PE) connectivity for a proposed 25 MW wind power project in Tamil Nadu.

A bench of Judicial Member Chitra Hankare and Technical Member Dr. Velamur G. Venkata Chalapathy observed, "There is a dispute on delivery and clearly the demand notice does not comply with the IBC 2016, barred by limitation, the dispute if any is only through the arbitration process, if to decide the matter, and this application is not admissible to pass any order under Sec 9 of IBC 2016."

Harri Wind Farms said it entered into an MoU with Suzlon Energy Limited in 2011 for procuring land parcels, NOCs and Power Evacuation (PE) licences.

In 2015, it entered into a Development Agreement with Suzlon Gujarat Wind Park Limited, which was later merged into Suzlon Energy Limited. The firm claimed it fulfilled its obligations by procuring land, obtaining NOCs, and facilitating PE connectivity. It alleged that Suzlon acquired only a few land parcels and failed to clear invoices raised in July 2016.

According to Harri Wind Farms, negotiations between the parties culminated in Minutes of Meeting dated October 16, 2019, under which Suzlon allegedly agreed to pay Rs 4.62 crore.

It later issued a legal notice claiming Rs 17.47 crore and subsequently served a demand notice under Section 8 of the IBC seeking Rs 9.70 crore. The firm argued that the limitation began only on January 7, 2020, when Suzlon first denied liability.

Suzlon opposed the plea, contending that the claim was barred by limitation because the invoices were raised in July 2016 and the insolvency petition was filed only in 2022.

Suzlon also argued that Harri Wind Farms had failed to carry out its contractual obligations. It contended that the claim did not qualify as an operational debt and that disputes between the parties had existed long before the Section 8 demand notice.

The tribunal was not persuaded by Harri Wind Farms' case. It observed that the material on record indicated the firm had not fully discharged its obligations under the MoU and the Development Agreement.

The tribunal also noted that Suzlon had independently obtained PE connectivity from TANGEDCO in April 2016. It found that the invoices raised thereafter fell outside the scope of the agreements.

The tribunal further held that the legal notice issued in December 2019 was already barred by limitation. It observed that the Section 8 demand notice issued in August 2022 sought recovery of a debt that was already time-barred. It also held that the dispute, if any, should be resolved through arbitration rather than insolvency proceedings. The insolvency petition was therefore rejected.