NCLAT may look in issue of frivolous bids under CIRP

The National Company Law Appellate Tribunal (NCLAT) Tuesday said it will look into cases where companies file bid to acquire debt ridden firms, but fail to pursue it.

The appellate tribunal indicated that it may pass an order in this regard, where companies file "frivolous" bids in the corporate insolvency resolution process (CIRP) and then fail to take it forward.

"We would decide that what action should be taken against such companies," said a two member NCLAT bench headed by Chairman Justice S J Mukhopadhaya.

NCLAT's observation came during the hearing of ARGL Ltd, a subsidiary of debt ridden auto components maker Amtek, where UK-based Liberty House has emerged as the highest bidder.

The company is asking Liberty House to submit a bank guarantee after emerging as the highest bidder.

However, senior advocate A S Chandiok representing Liberty House, submitted that there are three group companies of Amtek and it would be economical and feasible for the group only if it gets all the three companies.

According to him, all the three companies, where it is a resolution applicant, were inter dependent on each other.

He also requested the appellate tribunal to move the resolution process all together before one bench.

"If they are simultaneously resolved, then we are ready for that," he added.

However, the bench was not inclined towards this and said : "It can not be conditional".

The appellate tribunal has directed to list the matter of ARGL on February 5, 2019 for next hearing.