NCLAT okays Sarda Energy's Rs 1,950 crore bid for SKS Power Generation

It stated that, according to the Supreme Court, there should be minimal interference in the commercial decision of the committee of creditors

The National Company Law Appellate Tribunal (NCLAT) has given its nod to National Company Law Tribunal's (NCLT) approval of Sarda Energy and Minerals’ Rs 1,950 crore bid to acquire SKS Power Generation.

Within a week of the NCLT approving its takeover of SKS Power Generation Ltd, Sarda Energy and Minerals has deposited Rs 1,950 crore into an escrow account with Bank of Baroda (BoB), ahead of the 45-day deadline set by lenders. This included Rs 1,805 crore paid to lenders of SKS Power, State Bank of India and BoB, as well as expenses of the insolvency process.

The appellate tribunal on Tuesday rejected appeals by three of the unsuccessful resolution applicants- Torrent Power, Jindal Power and Vantage Point Asset Management- against the approval of Sarda Energy and Mining's resolution plan for the debt-ridden SKS Power Generation.

It said that according to the Supreme Court, there should be minimal interference in the commercial decision of Committee of Creditors (CoC).

“In view of the foregoing discussions, and law laid down by the Hon’ble Supreme Court laying down minimal interference in the commercial decision of CoC to approve the resolution plan, we do not find that any sufficient grounds have been made out within meaning of Section 61(3)(ii) of the Insolvency and Bankruptcy Code (IBC) to interfere with the decision of the Adjudicating Authority (that is NCLT) approving the Resolution Plan of Sarda, in these appeals filed by Unsuccessful Resolution Applicant,” NCLAT Chairperson Justice Ashok Bhushan, and members (Technical) Barun Mitra, and Arun Baroka said. 

The NCLAT said that though Vantage has given highest offer, the CoC is not obliged to approve its resolution plan. “The CoC, while approving the resolution plan in its commercial wisdom, takes into account host of factors and overall feasibility and viability of resolution plan. The commercial wisdom of CoC, which did not approve a resolution plan, which has given the highest money, cannot be faulted,” the appellate tribunal said.

In result, all the appeals are dismissed, it ruled.

Earlier on August 13, NCLT Mumbai, while approving Sarda Energy and Mining's (SEML) bid, had rejected applications, including of Torrent Power, to acquire SKS Power Generation (Chhattisgarh).

Torrent Power had raised objections over the selection process, terming it to be discriminatory, and contended that it has proposed the highest upfront payment. The Torrent group firm also sought a copy of the approved plan, which was rejected by the NCLT.

Insolvency Resolution Process was started against SKS Power Generation in April 2022 over the plea of Bank of Baroda, which had total admitted claims of Rs 2,560 crore.

Along with Torrent Power, several other companies like NTPC, Jindal Power, and Singapore-based Vantage Point Asset Management were in the race. However, SEML's resolution plan was voted by the CoC in favour of SKS Power Generation.