With the Supreme Court unwilling to interfere in the proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), Binani Industries (BIL) on Friday withdrew its appeal for termination of the insolvency process under the IBC. BIL was hoping to pursue an out-of-court settlement for the sale of its subsidiary Binani Cement. With this, Dalmia Bharat is set to take control of the loss-making cement manufacturer, subject to clearance by the National Company Law Tribunal (NCLT). Dalmia Bharat’s resolution plan was approved by the committee of creditors (CoC) in March and it is believed to have submitted a bid of about Rs 6,600 crore.
The apex court’s verdict assumes significance for the IBC process as it will deter bidders from seeking resolutions outside of the purview of the IBC. A bench comprising justices AK Goel and Rohinton Nariman was unimpressed with BIL’s plea to terminate insolvency proceedings. Nariman questioned BIL’s urgency in the matter when the National Company Law Appellate Tribunal (NCLAT) was scheduled to hear the matter on April 19. “What is going to happen till then… Why should we interfere? UltraTech, the second highest bidder who was outbid, has put you up. Now the owner is taking a loan from UltraTech to repay the lenders so that it can come back,” the judge said.
Senior counsel CA Sundaram contended the code bars promoters and the company acting in consort with it from making any offer. “Here is the promoter who has defaulted, winding up petition against it is already pending in the Calcutta High Court and has siphoned off
Rs 2,400 crore. Now he has brought a failed bidder. They are barred from giving any resolution plan. I have gone through the whole process and my resolution plan has been approved by the creditors,” he said. Senior counsel NK Kaul, appearing for Dalmia Bharat, argued that it was an “unholy alliance between a promoter and a failed bidder… They can’t introduce settlement in this manner.”
In early April, the NCLAT had instructed the NCLT to follow the IBC guidelines while resolving the Binani Cement case. On March 16, the CoC had approved the resolution plan submitted by Dalmia Bharat-controlled Rajputana Properties. A large financial creditor to Binani Cement said, on condition of anonymity, the out-of-tribunal offer had been considered because the Kolkata bench of the NCLT had asked the CoC to do so. “If the tribunal gives the CoC directions, we will meet,” he said.
Binani Industries had reached an in-principle understanding with UltraTech Cement last month that would allow the latter to buy Binani Industries’ 98.43 per cent stake in Binani Cement for Rs 7,266 crore provided the resolution process under the IBC was terminated.