The National Company Law Appellate Tribunal (NCLAT) on Friday asked the Chandigarh Bench of the NCLT to proceed with the liquidation of Amtek Auto in accordance with law, saying there remained no approved resolution plan for the company despite the passage of the statutory period of 270 days.
“As we have noted that more than 270 days have been completed much earlier and no case is made out to exclude any period, we hold that the adjudicating authority has no other option but to pass order of liquidation,” a two-judge Bench, headed by Chairperson Justice S J Mukhopadhaya, said.
Amtek Auto has a debt of Rs 12,603 crore. The liquidation value of its assets was determined at Rs 4,119 crore.
The NCLT had initiated the Corporate Insolvency Resolution Process (CIRP) against the auto components maker on July 24, 2017. On July 25, 2018, the adjudicating authority approved Liberty House’s Rs 4,025-crore resolution plan, which included an upfront payment of Rs 3,225 crore and a fresh infusion of Rs 500 crore for stabilising and improving operations.
However, when the committee of creditors (CoC) and the resolution professional (RP) of Amtek Auto moved applications for the implementation of the resolution plan, Liberty House backtracked, citing “blatant discrepancies in the condition of machineries, valuations, and representations made in the information memorandum and valuation reports”.
Following this, the RP and the CoC had approached the NCLT with a plea to extend the CIRP period beyond 270 days and sought to restart the bidding process. The lenders and the RP had sought more time to make another attempt for a fresh bidding process rather than forcing Amtek Auto into liquidation on account of “fraud” committed by Liberty House.
In their submission, the RP and the CoC had said there were some seven parties, including the promoters of Amtek Auto, which had shown an interest in making bids, after Liberty House withdrew its offer. They had also sought the NCLT’s permission to consider the resolution plan submitted by Deccan Value Investors, which had submitted a bid but withdrawn it following a better plan submitted by Liberty House. All these pleas were, however, rejected by the tribunal.
The lenders and the RP had then moved an application seeking to bar Liberty House from applying for a fresh resolution plan and sought the NCLT’s directions to the Insolvency and Bankruptcy Board of India (IBBI) for initiating proceedings under Section 74(3) of the Insolvency and Bankruptcy Code.
Section 74(3) says officials of successful resolution applicants can be imprisoned for a minimum of one year with a maximum tenure of five years, and fined a minimum of Rs 100,000 with the maximum penalty of up to Rs 1 crore if they violate terms of the plan approved by the adjudicating authority.
In its order on February 13, 2019, the Chandigarh Bench of the NCLT allowed the CoC and the RP to approach the IBBI or the central government to initiate criminal proceedings against Liberty House. The order was set aside on Friday by the NCLAT, which said the lenders or the RP should move a fresh application before the NCLT, which should then hear Liberty House out before passing any orders against it.
“We are of the opinion that before referring any matter to the Insolvency and Bankruptcy Board of India or the central government, the tribunal is required to provide reasonable opportunity of hearing to the parties concerned or alleged offenders of provisions…and if satisfied may request the central government to investigate the matter by an inspector or inspectors,” the NCLAT said.