Mapping insolvency: UltraTech moves NCLAT in Binani case

UltraTech Cement has filed an application with the National Company Law Appellate Tribunal (NCLAT) complaining that the order of the National Company Law Tribunal’s (NCLT) Kolkata Bench, which mandated the committee of creditors (CoC) of Binani Cement to consider its revised offer, has not been followed and has pleaded the appellate to direct the CoC to consider its offer.

According to the order passed on May 2 by the Kolkata Bench of the NCLT, the CoC had to meet to consider UltraTech’s Rs 79.60 billion offer latest by May 5. However, the CoC had decided to meet on May 10, which exceeded the deadline set, the resolution professional (RP) cancelled the meet after objections over UltraTech's eligibility to bid under Section 29(A).

A source in the UltraTech said their appeal rests on the claim that the CoC meeting was according to the directives of the NCLT, which even the NCLAT had also upheld. Dalmia Bharat had moved the appellate to obtain a stay on this meeting. The NCLAT, however, decl-ined to stay the meet and had directed the CoC to go ahead with the meeting to finalise the bidder.

However, on March 10, the scheduled day of the meet, Dalmia Bharat wrote to the RP and the CoC, claiming UltraTech was disqualified to bid. The company quoted several Sections of the IBC that mandates the RP to investigate the eligibility before a bid could be submitted to the CoC. The RP had cancelled that meeting.

UltraTech has contested that such an action is contravening the directions of both the NCLT and the NCLAT. The NCLAT will hear UltraTech's appeal on Tuesday.

According to sources, other than in UltraTech, who are opposing the takeover of Binani Cement by Dalmia Bharat, opined that in case the RP had doubts over the eligibility criteria of UltraTech, he could have approached the NCLT or the appellate tribunal for direction.

"However, despite there being an order from the Tribunal, the RP has decided to take the matter in his own hands instead of referring Dalmia Bharat's allegations to the court of law", a source said. Under the order of the NCLT, the operational creditors can select one representative to be a part of the CoC.

The day the planned CoC meeting was cancelled, the operational creditors wrote to the RP seeking full disclosure with supporting documents on 11 different issues on cancellation. These creditors are yet to receive a reply from the RP.

Another source, opposing the Dalmia Bharat’s takeover, said since Dalmia Bharat was a third party to the scheduled meeting, the RP should not have paid heed to the allegations and proceeded with the meeting.

"Moreover, during the bidding process, when UltraTech was termed as an unsuccessful bidder, then the RP did not find any problem with eligibility. Now, he needs to look into these allegations again," the source said.

NCLT adjourns Andhra Bank’s case

The National Company Law Tribunal Bench in Mumbai will hear the case against Sterling Biotech, brought by Andhra Bank on 8 June. The NCLT bench, comprising Justice BSV Prakash Kumar and Justice Duraiswamy, also issued directions for the Registrar of Companies to explain the facts of the case at the next hearing. Last week, Andhra Bank, took Gujarat-based pharmaceutical firm Sterling Biotech to the NCLT in Mumbai, to recover Rs 54 billion. Sterling Biotech owes banks Rs 40 billion, while the entire group company owes Rs 50 billion.