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A single-member judge in the Kolkata bench of the National Company Law Tribunal (NCLT) has ordered the resolution professional for Binani Cement to submit by March 26 the criteria and the procedure for selection of the bidder, minutes of meetings, and a timeline of proposals and decisions taken after counsel for Binani Cement and UltraTech Cement mounted their opposition to the way the resolution plan had been concluded.
The judge also sought details of the proceedings and outcome of the March 14 meeting when the Committee of Creditors (CoC) approved the joint resolution plan of Dalmia Bharat Cement and Bain Capital’s Resurgent India Fund.
According to the directive by Jinan K R, member judge at the Kolkata NCLT, Iyer will also have to submit the final progress report on the resolution plan.
Iyer has already submitted the resolution plan approved by the CoC to the NCLT for approval.
Citing pending cases, the judge did not hear Binani Cement’s plea for termination of insolvency proceedings. After obtaining a ‘comfort letter’ from UltraTech Cement by agreeing to a 98.43 per cent stake sale by the promoters for Rs 72.66 billion, Binani Cement had on March 19 informed the NCLT that it was seeking termination of insolvency proceedings against it.
Meanwhile, the counsel representing the lenders stated the alleged fraud by the company’s promoters as claimed by Iyer will not impact the selling procedure and appealed to the judge to consider the proposal if he finds it “proper”.
A source close to the lenders said that when the bidders had placed their bids, they knew about a series of questionable transactions and their bids had taken this factor into consideration.
The primary charge levelled against the Iyer by Binani Cement is over the money spent in the resolution process. The counsel representing the company alleged that excessive funds were spent by the resolution professional in the process.
Binani Cement has said apart from a monthly remuneration of Rs 3.5 million, insurance worth Rs 7.25 million was also claimed as expenses by the resolution professional. The company also alleged that Rs 24 million had been facilitated towards Deloitte India, the firm Iyer is associated with.
The legal counsel claimed that such practices had led to an increase of the Rs 23 billion liquidity value of Binani Cement.
Iyer’s counsel defended the claims, stating the resolution professional had to visit many factories of Binani Cement where labour protests were occurring and hence he needed insurance.
The judge pointed out there was no cap on remuneration or costs associated with the resolution process. But all expenses by the resolution professional will need the approval of the creditors.
According to sources close to Binani Cement, the remuneration and other allowances of the resolution professional should be on a par with employees of government-owned companies.
The Binani Cement counsel further alleged that despite an order of the Delhi bench of the NCLT directing the resolution professional to allow participation by a representative of Binani Cement, the person was not allowed entry in meetings.
The UltraTech Cement counsel argued that no reason was provided to the firm why its bid was rejected and the resolution professional did not provide an explanation. Moreover, it wanted to know from the resolution professional that despite it revising its bid to Rs 72.66 billion, higher than that made by Dalmia Bharat Cement, why its offer was not considered.
“Maximisation of value is the ultimate goal of the NCLT and a time-bound process is just the procedure,” a source close to UltraTech Cement said.
Out of a total of 14 applications in this case that were up for hearing on Thursday, only four were heard in part and other applications, including one by State Bank of India Hong Kong, one of the secured lenders that voted against the Dalmia Bharat-led consortium’s proposal, have been put up for hearing on March 27.