HEC Financial Management Under Interim Resolution Professional Over ₹7 Crore Supplier Dues

The news

The National Company Law Tribunal (NCLT) has ordered the withdrawal of all financial and other powers of the chairman and managing director and all directors of Heavy Engineering Corporation (HEC), Ranchi, and appointed an interim resolution professional to manage the company's financial activities. The order, issued on Wednesday, follows a petition by supplier Hasan Brothers, which claimed approximately ₹7 crore in unpaid dues for materials supplied to HEC. The professional visited HEC headquarters, showed the NCLT order to the directors, held a meeting, and then informed the State Bank of India branch at Dhurwa of the tribunal's decision.

According to officials, HEC had manufactured and supplied equipment to the Indian Space Research Organisation (ISRO) using materials provided by Hasan Brothers. The supplier wrote to HEC management several times seeking payment, but HEC cited financial constraints and did not pay the amount. The supplier then approached the NCLT. The tribunal had issued a notice to HEC asking it to present its case and respond on the outstanding payment, but the company did not file its reply within the prescribed time. The NCLT then took a strict stance and intervened in the company's financial management.

Currently, the chairman and managing director of Bharat Heavy Electricals Limited (BHEL) holds additional charge as CMD of HEC, and all four HEC directors are also BHEL officials on deputation. The NCLT order affects the financial decision-making powers of these officials at HEC. The financial management of HEC is now under the appointed interim resolution professional.

What is an interim resolution professional under the Insolvency and Bankruptcy Code?

An interim resolution professional (IRP) is appointed by the National Company Law Tribunal when it admits a corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. The Code came into force in stages from 2016, and the corporate insolvency resolution process is governed primarily by Part II of the Code. Once an IRP is appointed, the powers of the board of directors stand suspended and the IRP takes over the management of the company's affairs. The IRP's duties include collecting information on the company's assets, finances and operations, and constituting a committee of creditors. The Insolvency and Bankruptcy Board of India, established in 2016, regulates the profession of insolvency professionals.

What led to the NCLT intervention?

HEC manufactured and supplied equipment to ISRO using materials supplied by Hasan Brothers. The supplier claimed approximately ₹7 crore remained unpaid despite repeated requests. HEC cited financial constraints for non-payment. The supplier then approached the NCLT. The tribunal issued a notice seeking HEC's response on the outstanding payment, but the company did not submit its reply within the prescribed time, prompting the tribunal to take a strict stance and order the appointment of an interim resolution professional.

How does the order affect HEC's management?

The NCLT order withdraws all financial and other powers of HEC's CMD and all directors. The company's top management currently consists of BHEL officials on deputation: the BHEL CMD holds additional charge of HEC, and all four HEC directors are from BHEL. The order directly impacts their ability to make financial decisions at HEC. The appointed interim resolution professional now controls the company's financial activities and has already met the directors and informed the State Bank of India branch at Dhurwa of the order.