NCLT admits Essar Oil and Gas Exploration to insolvency

Essar Oil and Gas Exploration and Production Ltd., a major player in the oil and gas sector, has been admitted to insolvency by the National Company Law Tribunal (NCLT) in Ahmedabad. [Greka Green Solutions (India) Ltd. v. Essar Oil and Gas Exploration and Production Ltd.].The company, part of the Essar Group, engages in the exploration, development and production of oil and natural gas. The insolvency proceedings were triggered by a default of over ₹24 crore (approximately USD 2.96 million) related to drilling services provided by Greka Green Solutions India Ltd..The tribunal has appointed Mohit Bipinchandra Adatiya as the Interim Resolution Professional (IRP) to manage the company’s affairs until a Committee of Creditors (CoC) is formed. Adatiya is expected to take immediate control of Essar’s assets and documents and he may seek police assistance if needed..The tribunal rendered its decision following a series of payment disputes. The debt originated from services provided by Greka between May 2016 and March 2023. Although a settlement agreement was reached in 2019 specifying payment in nine installments, Essar failed to comply. A revised payment plan agreed upon in February 2020 also went unmet, prompting a demand notice in October 2022 and the subsequent insolvency petition..Essar Oil and Gas contested the debt, claiming in June 2024 that nearly ₹7.4 crores of the debt had already been paid and accusing Greka of withholding this information. Additionally, Essar argued that Greka was not an operational creditor and that the services were not directly provided to Essar Oil and Gas and that it was a mere assignee of the debt. .However, the tribunal upheld the claim, stating that the debt was valid and exceeded the threshold limit for insolvency applications. The tribunal noted that the debt arose from operational expenses and was acknowledged by Essar. “A work contract in USD terms seems to have been kept alive on non-payment of debt till the final settlement agreement was arrived by the parties after an application was initially filed before this Tribunal for default and withdrawn based on an earlier settlement,” the tribunal observed.In its ruling, the tribunal referred to past judgments by the National Company Law Appellate Tribunal (NCLAT) which supported the admission of insolvency proceedings when settlement agreements were breached..Advocates Vishal Raval and Shalabh Gupta appeared for Greka Green Solutions (India) Ltd.Advocates Raheel Patel and Yash Dhadich represented Essar Oil and Gas Exploration and Production Ltd..[Read Order]