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Binani insolvency: Dalmia Bharat moves SC against NCLAT nod to UltraTech

As the Binani Cement case enters the Supreme Court, it marks the last phase of this takeover battle between UltraTech and Dalmia Bharat raging for 16 months now

Avishek Rakshit  |  Kolkata 

dalmia cement
The consortium, led by Dalmia Bharat Cement, petitioned the Supreme Court (SC) on Thursday on the rejection by an appellate tribunal on its offer to acquire insolvent Binani Cement.

The National Company Law Appellate Tribunal (NCLAT) had, on Wednesday, instead approved UltraTech Cement’s offer, saying this was of higher value. “Our appeal has been admitted for hearing on (the coming) Monday,” said Mahendra Singhi, chief executive officer (CEO) of Dalmia Bharat Cement.

They have informedthe Committee of Creditors (CoC) of Binani, and the Resolution Professional (RP) appointed for the case. “You are (therefore) requested not to give any effect to the (NCLAT) order under challenge," the letter stated.

CoC sources said they had already predicted the matter would be finally settled only at the SC. Singhi refused to divulge any detail over the content of their appeal. The consortium in question, Rajputana Properties, is co-owned by Dalmia Bharat, Piramal Enterprise and Bain Capital. It is the second occasion that it has gone to the SC on this case, the battle being over a year old. They had done so in May, after the Kolkata bench of the National Company Law Tribunal (NCLT) ordered the lenders to Binani to approve UltraTech’s monetarily superior plan -- they were to consider the proposal from Dalmia Bharat only if it matched UltraTech’s offer. The SC referred the case to NCLAT, not passing any judgement.

Sources close to Dalmia Bharat suggest the primary contention of the appeal is in challenging UltraTech’s eligibility under Section 29(A) of the Insolvency and Bankruptcy Code (IBC), acceptance of a late bid by the appellate body and the allegedly flawed selection process of UltraTech.

According to this source, the primary claim rests on the fact that UltraTech had tried to financially back the promoter of Binani Cement, Braj Binani, for an out-of-court settlement with the lenders. This person reasoned that Brij Binani was disqualified to place any bids under section 29 (A), and since UltraTech had cooperated to finance Binani, it also stood disqualified.

In March this year, UltraTech had given a public notice on the stock exchanges that it had concluded an agreement with Binani  Cement, and had also financed a bank guarantee for the latter entity when the lenders wanted “some confidence of guarantee from Binani” for an out-of-court settlement.

Binani Industries, which owns Binani Cement, had also sought approval from its shareholders to finalise the deal with UltraTech.

The agreement between UltraTech and Binani Cement stated that the Aditya Birla Group company would pay Rs 72.66 billion for takeover of about 98 per cent stake, on the condition that insolvency proceedings were terminated.

NCLAT's order had dismissed Dalmia Bharat’s appeal that UltraTech was ineligible under Section 29(A). The order stated that after a Resolution Plan is approved, any transfer of shares from Binani to UltraTech for payment would not render the latter ineligible under Section 29(A). Further, NCLAT said, the revised offer from UltraTech was not illegal and and the CoC had not rejected the offer on legal grounds.

The second contention of Dalmia Bharat rests on the fact that it adhered to the process document as laid down by the CoC and followed the course of law in presenting its proposal.

A second source involved in this case said, “While it seems that the NCLAT, as well as NCLT, weres time and again aiming at maximisation of value, Dalmia Bharat’s contention is on the process of the IBC.”

Against UltraTech’s revised offer of Rs 79.5 bn, Dalmia Bharat’s offer stands at Rs 69.32 bn. This source claimed that the selection process of Dalmia Bharat had been in line with the internal process documents of the CoC, based on guidelines from the Central Vigilance Commission and the Indian Banks Association. More, wherever there were grey areas in the IBC, common law may be used in deciding selection and eligibility NCLAT and earlier

ALSO READ: Binani insolvency: Dalmia Bharat moves SC against NCLAT nod to UltraTech

However, the NCLAT has maintained that this internal document could have been modified at will by the CoC to accommodate a higher offer. It blamed the CoC for not using its discretionary power to take a decision that best suited the interests of the creditors and the public money involved in the resolution process.

“Non-application of mind by the CoC and discriminatory behavior in approving the plan submitted by Rajputana Properties is apparent,” the NCLAT order says.

In July last year, the Kolkata bench of NCLT admitted the Binani Cement resolution case.

Initially, the proposal from the Dalmia consortium was selected as the (highest ('H1') bidder and its plan was sent to NCLT for approval in March 2018. Initially, UltraTech's offer was Rs 65 bn, inferior to Dalmia Bharat. It revised this just after the window of time for applications had closed. The CoC, then, rejected this revised bid.

ALSO READ: NCLAT okays UltraTech bid for Binani Cement, says no to Dalmia Bharat

However, UltraTech, Binani Cement, SBI Hong Kong, EXIM Bank, operational creditors and other stakeholders mounted their opposition to this plan and on May 2, after a number of hearings, the NCLT ordered the CoC to approve UltraTech’s plan and consider the one from Dalmia Bharat only if it matched (in effect outbid) the former offer.

Dalmia Bharat moved the NCLAT for a stay on NCLT’s order but failed. With fresh petitions filed both atn NCLT and NCLAT, the SS in July had ordered transfer of all pending cases on this matter to NCLAT, directing it expedite the hearings and give a verdict.


  • July 25, 2017 - NCLT Kolkata admits Binani Cement insolvency resolution under IBC
  • March 15, 2018 - CoC approves Dalmia Bharat led consortium as H1 bidder
  • March 19, 2018 – RP submits Dalmia Bharat’s resolution plan for approval in NCLT
  • May 2, 2018 – NCLT asks CoC to consider & approve UltraTech’s plan and consider Dalmia Bharat’s plan only if it matches
  • May 8, 2018 – Dalmia Bharat moves NCLAT & Supreme Court to obtain stay but fails
  • May 31, 2018 - CoC issues Letter of Intent to UltraTech
  • July 2, 2018 – Supreme Court orders transfer of all cases on Binani Cement to NCLAT from NCLT
  • November 14, 2018 – NCLAT approves UltraTech’s resolution plan. Terms plan of Dalmia Bharat as “discriminatory”
  • November 15, 2018 – Dalmia Bharat appeals to Supreme Court; case admitted for hearing on Monday

First Published: Thu, November 15 2018. 16:26 IST