The Supreme Court on Monday dismissed Dalmia Bharat’s plea challenging the National Company Law Appellate Tribunal’s (NCLAT) order allowing UltraTech Cement to acquire the bankrupt Binani Cement, bringing to an end to the long drawn-out legal battle. UltraTech said in a release to stock exchanges: “The Supreme Court has today (Monday) dismissed Rajputana Properties’ appeal against the NCLAT order. A certified copy of the order is awaited.” Rajputana Properties is a group company of Dalmia Bharat.
A bench of justices RF Nariman and Navin Sinha upheld the NCLAT’s order, which had allowed the Aditya Birla group firm to acquire Binani Cement by approving its revised Rs 7,950.34-crore bid. The judges noted there was no infirmity in the appellate tribunal’s order. On May 28, the committee of creditors (CoC) voted overwhelmingly in favour of UltraTech’s bid, which was challenged by Rajputana Properties, which took the case to the apex court and NCLAT.
Although the NCLAT had mentioned value maximisation as one of the objectives of the insolvency process, legal experts FE spoke to said the SC’s order on Binani Cement might not really further the case of promoters of Essar Steel.
The promoters have put in a late bid of Rs 54,389 crore, higher than the one put in by ArcelorMittal and have approached the Ahmedabad bench of the National Company Law Tribunal (NCLT). They feel their bid should be considered by the CoC, in the interests of value maximisation. On October 25, the CoC voted overwhelmingly in favour of a proposal by Arcelor Mittal which has promised Rs 39,500 crore by way of cash upfront.
However, legal experts told sources that the maximisation of value in the Binani Cement order pertains only to firms which participated in all stages of the process, which means they were one of the bidders. This was not the case with Essar Steel promoters. Advocate Bishwajit Dubey said the SC order might not help the promoters of Essar Steel in any way since a bidder needs to be part of the process right from the beginning.
“However, the Essar Steel promoters were never part of the process,” Dubey said. He added that the NCLAT order clearly mentions that UltraTech was a part of the process right from the beginning and it had improved its offer as part of the process.
Senior advocate U K Choudhary observed that the Essar Steel matter was an entirely different one. “Its promoters suffer from the eligibility issues under Section 29(A) of the IBC. UltraTech did not suffer any such infirmity and it also submitted its bid within the permissible time frame”Choudhary noted.
The NCLAT order in the case of Binani Cement had rejected RPPL’s bid as it was discriminatory against some financial creditors. The appellate tribunal had said the RPPL’s resolution plan discriminated between some of the financial creditors who are equally situated and not balanced the other stakeholder, such as operational creditors.
“Therefore the adjudicating authority (NCLT Kolkata bench) has rightly held the resolution plan submitted by RRPL to be discriminatory,” it noted. The NCLAT observed both – RPPL and UltraTech — had submitted their plan on February 12, 2018 and subsequently RPPL had revised its plan on March 7 and UltraTech on March 8, much before the CoC voting date of March 14.