The National Company Law Tribunal has ordered the corporate insolvency resolution process (CIRP) against Wind World (India) Infrastructure following a default on dues to IDBI Bank. The company, a subsidiary of the already distressed Wind World India Limited, argued its revenue source was cut off by its parent's resolution professional.

The Mumbai bench of the National Company Law Tribunal (NCLT) has ordered the initiation of the corporate insolvency resolution process (CIRP) against Wind World (India) Infrastructure following an application filed by IDBI Bank. The tribunal also appointed Megha Agrawal as the interim resolution professional (IRP) for the company.

The state-owned lender approached the tribunal after the company defaulted on dues of about Rs 55 crore. The company is a subsidiary of Wind World India Limited, which is also facing CIRP and has admitted liabilities of more than Rs 6,147 crore.

The division bench of judicial member Mohan Prasad Tiwari and technical member Charanjeet Singh Gulati, while admitting the company for insolvency resolution, observed that there was no denial of the amount disbursed by the financial creditor and no denial of the default committed by the corporate debtor.

The company, while opposing the lender's application, argued that before the initiation of the CIRP, WWIL was paying usage charges under the facility usage agreement to it and the company, in turn, was servicing its debt obligations towards the lender.

Further, the company argued that the resolution professional of WWIL stopped the payment of usage charges for the services availed as per the directions of the committee of creditors, of which the financial creditor (IDBI Bank) was the lead member. Therefore, after the stoppage of the usage charges to the corporate debtor, which was its only source of revenue, the corporate debtor could not service the lender's debt, resulting in the loan account becoming a non-performing asset.

The NCLT rejected the revival plan for WWIL in August 2022. Subsequently, both the resolution professional of WWIL and the committee of creditors filed appeals before the appellate authority (NCLAT), which are currently pending.

Yash Dhruva, partner at the law firm MDP Legal, argued that the CIRP initiated against WWIL was due to defaults on a separate independent loan and that the lenders were rightly entitled under the Insolvency and Bankruptcy Code (IBC) to initiate appropriate proceedings for WWIL's insolvency.

The lender further argued that the fact that Wind World (India) Infrastructure could not make payment due to WWIL's insolvency was not the fault of the financial creditor.

Earlier this month, Omkara Asset Reconstruction Co acquired the debt of Wind World India from the National Asset Reconstruction Company Ltd (NARCL) for Rs 1,250 crore. NARCL had originally purchased the debt of Rs 3,763 crore about 18 months ago.

Wind World India was once among the country's largest wind turbine makers, with more than 6,200 converters and an installed capacity of 4,561 MW. It slipped into distress after a bitter dispute between joint venture partners, Germany's Enercon and brothers Yogesh and Ajay Mehra.