Essar Oil and Gas Exploration and Production Ltd., a key player in the oil and gas industry, has been admitted into insolvency by the National Company Law Tribunal (NCLT) in Ahmedabad. The case, titled Greka Green Solutions (India) Ltd. v. Essar Oil and Gas Exploration and Production Ltd., revolves around a default of over ₹24 crore (approximately USD 29.6 million) related to drilling services provided by Greka Green Solutions India Ltd.
As part of the Essar Group, the company focuses on the exploration, development, and production of oil and natural gas. The NCLT’s decision came after a series of payment disputes between the two parties. The debt originated from services rendered by Greka between May 2016 and March 2023.
Initially, a settlement agreement in 2019 outlined payments in nine installments, but Essar failed to meet these terms. A revised payment plan in February 2020 was also not honored, leading to a demand notice in October 2022 and the eventual insolvency petition.
Despite contesting the debt, Essar claimed that approximately ₹7.4 crores had already been paid and accused Greka of withholding this information. Additionally, Essar argued that Greka was not an operational creditor, and the services were not directly provided to Essar Oil and Gas, as they were only an assignee of the debt.
However, the tribunal rejected these claims, affirming the validity of the debt, which exceeded the threshold for insolvency applications. The tribunal emphasized that the debt stemmed from operational expenses and had been acknowledged by Essar. It also highlighted that a work contract in USD terms remained unresolved until the final settlement agreement was reached after an initial application for default was withdrawn based on an earlier settlement.
The tribunal’s decision also referenced previous judgments by the National Company Law Appellate Tribunal (NCLAT), which supported the admission of insolvency proceedings when settlement agreements were breached.
Mohit Bipinchandra Adatiya has been appointed as the Interim Resolution Professional (IRP) to manage the company’s affairs until a Committee of Creditors (CoC) is formed. He is expected to take immediate control of Essar’s assets and documents, with the authority to seek police assistance if necessary.
Advocates Vishal Raval and Shalabh Gupta represented Greka Green Solutions (India) Ltd., while Advocates Raheel Patel and Yash Dhadich appeared for Essar Oil and Gas Exploration and Production Ltd.
