Amidst 'fraudulent transactions' charges Binani, seeks termination of insolvency proceedings against subsidiary

Amidst charges of "fraudulent transactions" Binani Industries Limited on Thursday sought the termination of the corporate insolvency proceedings against its subsidiary Binani Cement.

The development comes after Binani Industries submitted an application before the Kolkata bench of National Company Law Tribunal (NCLT) seeking termination of the corporate insolvency proceedings against its subsidiary, company's counsel said.

The company, in its application which was made on Thursday, also claimed that it can "pay-off all its creditors".

The move came after it concluded a commercial understanding with Aditya Birla Group firm UltraTech Cement to sell its entire 98.43 per cent stake in its cement manufacturing subsidiary at a consideration of Rs 7,266 crore.

However, the Resolution Professional (RP) submitted the resolution plan of Dalmia Bharat Controlled Rajputana Properties before the NCLT as the "highest bidder" to take over the debt laden company.

Meanwhile, the RP had alleged that the "fraudulent transactions" were made by the Binani group on the basis of a forensic audit report.

"We have filed an application before the Tribunal seeking termination of insolvency proceedings commenced against the Binani Cement and we also said Binani Industries can pay off all the creditors. This application is likely to be heard on next Tuesday," said advocate Ratnanko Banerjee representing Directors of Binani Industries.

He also said the directors of the company (Binani Industries) also challenged the process of conducting the insolvency proceedings and "expensive charges" made by the Resolution Professional.

Citing a forensic audit report, before the court, RP's counsel Abhrajit Mitra on Thursday said a loan of about Rs 1,100 crore was given by the corporate debtor, Binani Cement, to its holding company Binani Industries Limited.

"The loan was given to Binani Industries to buy back shares of its subsidiary. As per the balance sheet, Rs 1,100 crore was payable to the company (Binani Cement) by its holding company. What is the fraudulent transaction was that the interest chargeable was fully waived," he asked.

According to Mitra, the RP has filed an application based on the forensic audit report of the "fraudulent transaction of the previous management".

Mitra, however, said the matter of fraudulent transaction was a separate one and it was incumbent on the RP to bring this to the notice of NCLT bench.

The discovery of fraudulent transaction and its outcome should not impact the resolution process and the finalisation of the resolution plan," Mitra claimed.

Meanwhile, Binani's industries, denying such allegations, said any application filed by the Resolution Professional was an "afterthought".

"We have not been served a copy of the application...No sooner the application i.e. served upon us we shall deal with the same," Binani Industries said in a regulatory filing.

In fact, one of its Senior counsel on Thursday also said: "The RP made certain allegations of dubious transactions but there is no document support of that. As an afterthought, he has made these allegations. One of Directors of Binani filed an application alleging that the fraudulent transactions were made by the RP."

The Resolution Professionals has been directed by Justice Jinan KR to reply to applications and allegations raised by the company.

"There are some allegations against the RP. He has to deal with that and make a reply. He was also directed to submit a progress report," Binani Industries' counsel said.

--IANS

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