The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea challenging NCLT's approval to the resolution plan of debt-ridden Uttam Value Steel.
A three-member bench has upheld the orders of the Delhi-based principal bench of the National Company Law Tribunal (NCLT) approving the resolution plan submitted by a consortium of US-based CarVal Investors and Nithia Capital.
Uttam Value Steels has an admitted debt of Rs 3,003 crore.
"We find that there is no merit in this Appeal and the Appeal is hereby dismissed," said an NCLAT bench headed by Acting Chairperson Justice B L Bhat.
The appellate tribunal order came over a petition filed by five operation creditors of Uttam Value Steel challenging the two orders passed by the NCLT on April 30 and May 6.
The creditors had alleged that the resolution plan was approved by the Committee of Creditors, even before the mandatory approval from the Competition Commission of India was granted. According to them, it was contrary to the provision to Section 31(4) of the Insolvency & Bankruptcy Code, which required prior mandatory approval from the CCI for submission of bids.
They have also alleged submission of false information in the resolution plan where the consortium had mentioned Johannes Sittard as a Director of Nithia Capital Resources Advisors LLP, in its revised bids on April 19, 2019 and again on May 15, 2019.
According to them, it was incorrect as Sittard had resigned as a Director from Nithia Capital with effect from April 1, 2018 and not a part of the management team.
He was the only person with technical knowledge in the field of mining and metals and the consortium had no technical expert and raised a question over their ability in running of the plants slated to be taken over.
They have also alleged that the bank guarantee of Rs 250 crore was not provided by the consortium in terms of RFRP (Request for Resolution Plan).
However, the appellate tribunal rejected the allegations and said: "It is found that the Bank Guarantee for the requisite amount was kept for one year for full amount of Rs 250 crore but after one year due to the financial crisis due to pandemic COVID-19, the Resolution Applicant requested for reduction of amount of Performance Bank Guarantee and CoC has accepted the lower amount of Rs 50 crore in place of PBG of Rs 250 crore as required by RFRP after expiry of the PBG on April 30, 2020.
The NCLAT said that CoC has exercised its right under clauses of the RFRP, agreed to allow for modification in the validity period of PBG.
Regarding the technical expertise, the NCLAT said Sittard was still continuing with the company.
According to the appellate tribunal, the NCLT has already made appropriate arrangement by putting a specific condition that the resolution applicant would appoint an observer.
Observing that individual can come and go and a company is to run, the NCLAT fixed responsibility on CarVal Investors that Sittard should continue for next one year or for such extended period till the Corporate Debtor (Uttam Value Steels) stands on its feet.
Regarding the CCI approval, the NCLAT said it is complied with in the present case.
The approval from CCI has been obtained in June, 2019 and NCLT had approved the resolution plan in April and May 2020.
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