The Supreme Court on Thursday showed for the second time its disinclination to intervene in the Binani Cement takeover case. Although it disposed of the plea by Dalmia Bharat for overriding the National Company Law Tribunal’s (NCLT’s) order, it asked the National Company Law Appellate Tribunal (NCLAT) to expedite hearing on Dalmia Bharat’s plea without adjournment.
Noting that Dalmia Bharat’s allegations were pending before the NCLAT, Justice Rohinton Nariman and Justice A M Sapre sent the case back to the NCLAT, and directed the tribunal to hear the case on a daily basis from May 22.
A source close to Dalmia Bharat said the Supreme Court’s ruling on Thursday on its appeal did not close the door for further appeal.
“In case Dalmia Bharat is not happy with the NCLAT order, it may again appeal to the Supreme Court,” the source said, adding, Thursday’s ruling would only speed up the case at NCLAT.
Dalmia Bharat had sought a stay on the order passed by the Kolkata Bench of the NCLT.
Earlier, when Binani Cement approached the Supreme Court to seek permission for an out-of-court settlement with lenders and for a termination of insolvency proceedings, the court had shown its disinclination to hear the matter. The applicant, however, withdrew its plea before any order was passed.
However, following Dalmia Bharat’s letter to Binani Cement’s resolution professional (RP) and its Committee of Creditors (CoC), which said UltraTech Cement should be disqualified from bidding under Section 29A of the Insolvency and Bankruptcy Code (IBC), the resolution professional is likely to conduct an internal investigation and also ask UltraTech for its views.
Although the Supreme Court’s decision does not stop the CoC from discussing the UltraTech offer, the letter may lead to further delay of the crucial CoC meeting. Sources aware of the development told Business Standard that the cancellation of the CoC meeting was evidence of the resolution professional’s inclination to go ahead with his investigation into the allegations.
The resolution professional had called for a meeting of the CoC on Thursday, but cancelled after receiving the letter from Dalmia Bharat.
According to Section 29 (A) (c) of the IBC, any person or promoter managing a company, whose loans have been classified as a non-performing asset by banks for one year, cannot bid.
Referring to several statutory sections of the IBC, Dalmia Bharat’s letter has pointed out that in case the RP submits UltraTech’s plan for discussion to the CoC, he will end up violating the law. In case he submits the proposal and the CoC deliberates on it, the CoC stands guilty of not following the rules under the IBC.
“It is highly unlikely that after receiving this letter, the RP will call for a CoC meeting without undertaking his own inquiries. It is also likely that the CoC or individual lenders will seek legal advice on their own as the plan has already been submitted before them,” the source said.
But RP’s own inquiries and UltraTech’s responses would take time and might not conclude before May 22, the source added.
“We have to be very cautious now and not rush things. During the bidding process in February this year, the RP had checked the eligibility of UltraTech and submitted its plan to the CoC. Now, after this allegation, the RP again needs to verify the eligibility and resubmit his findings to the CoC. Only after that, a CoC meeting can be held according to IBC rules,” a lead lender to Binani Cement said.
However, the CoC is likely to seek legal opinion after the RP submits his proposal.