Argument on behalf of ACL

It is respectfully submitted before the hon’ble tribunal that the claim for amount USD 100
million loaned by ALSL to ACL, from the loaned by Citi fin and another Consortium lender to
ALSL is invalid and same cannot be acceptable.

 CIRP initiative on ACL

Under insolvency and bankruptcy code 2016, the corporate insolvency resolution process has
already been initiated against the ACL under §7 of the code. As, company is already facing
with insolvency due to the problem of lacking raw material for the production which result in
heavy reduction in the sales of ACL.As there was reduction in sale the company lack fund for
the payment to creditors and same company become insolvent. As company is already
insolvent which means lacks of fund so, claim of ALSL cannot be accepted.

 Applicable of Moratorium

Under § 14 of the code, once the corporate insolvency resolution process is started against the
company, then under this section it prohibits company for the disposing, transferring, aliening
any assets of the company and same no payment can be made to the outside till a proper
resolution plan is prepared and same is approved. As in instant matter CIRP is already initiative
against ACL and same moratorium is applied so, claim of the ALSL against the loan can not
be accepted

 Holding and subsidiary company

Holding company is the one whom hold majority of shares in another company and the
company whose majority shares is know as subsidiary company. As both the company hold a
separate legal entity so, it creditors and controller are not held liable for its acts. A holding
company cannot be held liable for the dues of subsidiary company. 1 In present case ALSL is
a subsidiary company of ACL (holding company) and a loan was providing by ALSL to ACL.
As ACL has be declared insolvent and same CIRP is started against ACL. During this CIRP
also, initiated against Subsidiary company i.e. ALSL and claim loan payment same from
holding company. As an alliance was made in the case of Polly Peck International Plc 2

1
Industrial development corpn orissa ltd v. regl PF commr.,(2002) 112 comp cas 527(ori);alembic glass
industries ltd. v. CCE, (2002) 9 SCC 463:(2002) 112 Comp Cas 379
2
Polly Peck International Plc (no. 3), re,(1996) 1 BCLC 428 (Ch D).
where it was held that both companies have a separate legal entity and can not held liable for
the default of subsidiary company and same apply to default by holding company.