The long-simmering financial tussle around Karnataka’s Cauvery Neeravari Nigama Ltd (CNNL) finally snapped this week, with the National Company Law Tribunal stepping in and pushing the State-owned corporation into the Corporate Insolvency Resolution Process.
The move came after SPML Infra knocked on the tribunal’s doors under Section 9 of the Insolvency and Bankruptcy Code, arguing that CNNL had simply stopped paying for work already done under the decades-old Nanjapura Lift Irrigation Scheme. The Bengaluru bench agreed: the default was real, the debt was operational, and the excuses had run their course.
Mediation? Tried and failed.
The tribunal noted that attempts to resolve the deadlock outside litigation had gone nowhere, leaving no option but to begin insolvency proceedings. In a pointed observation, the bench remarked that whether the entity is a “going concern” or a government arm makes little difference when it repeatedly shrugs off its financial obligations.
The story traces back to the Extra Items of works executed by SPML—tasks completed by 2009, with the final bill landing in 2013. Over the next decade, CNNL’s own officials sent letter after letter acknowledging dues, revising figures, and even urging approvals. A 2012 direction from the Chief Engineer fast-tracking over ₹4 crore was singled out as a clear acknowledgment of debt.
But when insolvency proceedings loomed, CNNL switched tone, labelling the debt “disputed” and pointing to an arbitration that began in 2004. The tribunal wasn’t convinced. That arbitration, it held, concerned an entirely different set of disputes. For the EIRL work—at the heart of this case—no genuine pre-existing dispute was shown. Vague denials offered years later couldn’t pass the Mobilox test.
With the debt acknowledged across a chain of official communications from 2009 to 2019, the tribunal ruled that the insolvency petition must be admitted. A moratorium is now in force, and insolvency professional Addanki Haresh has been tasked with steering the corporation forward through the resolution process—keeping it running, issuing public notices, collecting claims, and assembling the Committee of Creditors.
The corporate machinery will move on. But for CNNL, a chapter of postponed payments and protracted correspondence has finally collided with legal reality.
