Dalmia Bharat’s primary argument in the petition rests on the claim that the Kolkata bench of NCLT did not follow the due process of law as mandated under the IBC
The consortium led by Dalmia Bharat Cement, which had previously emerged as the successful bidder for acquisition of the stressed assets of Binani Cement, has filed a petition in the Supreme Court to get order passed by the Kolkata bench of NCLT overturned, which admitted UltraTech Cement’s higher offer for acquisition of the cement maker undergoing insolvency proceedings.
The move follows after Dalmia Bharat failed to obtain a preliminary stay on the NCLT’s order at the NCLAT on May 4. Although the Appellate Tribunal did not immediately direct a stay, which Dalmia Bharat was seeking, it scheduled the petition’s next hearing date on May 22.
Sources said Dalmia Bharat’s primary argument in the petition rests on the claim that the Kolkata bench of NCLT did not follow the due process of law as mandated under the IBC. It has also framed its petition on the basis of it being selected as the H1 or the successful bidder in the race for Binani Cement as per the Insolvency and Bankruptcy Code (IBC) and related legal framework and the company has followed the legal procedure at every step of its selection.The petition also challenges the interim order of the NCLAT, which has given the liberty to the Committee of Creditors (CoC) of Binani Cement to finalise the bidder.
When contacted, Dalmia Bharat did not wish to comment on this development.
The case will be up for hearing on Thursday, May 10 — the same day the CoC will hold a meeting to discuss the UltraTech plan.
The legal counsel of Dalmia Bharat, previously during the course of hearing in the Tribunal, had claimed that its selection was as per the internal process document of the Committee of Creditors (CoC), which was based on guidelines from the Central Vigilance Commission and the Indian Banks Association. Moreover, wherever there were grey areas in IBC, common law was used in course of deciding selection and eligibility of the H1 bidder.
However, the Tribunal had maintained that the internal process document is not legally binding on the stakeholders and it could have been modified by the CoC itself to accommodate UltraTech’s bid, which is atleast Rs 11 billion higher than the one offered by the Dalmia Bharat led consortium.
Despite the CoC issuing a Letter of Intent and accepting part payment from Dalmia Bharat after the bidding process, not only did NCLT admit UItraTech’s proposal, it had asked the CoC to consider this proposal and has provided provision for Dalmia Bharat to raise its offer to outbid UltraTech.
However, sources in Dalmia Bharat had maintained that any offer higher than Rs 67 billion would render the takeover financially unviable and have decided not to revise its bid. Instead, it had opted for legal recourse to reinstate its claim on Binani Cement.
Meanwhile, the CoC has scheduled its meeting in Mumbai to discuss the UltraTech proposal on Thursday, May 10 after NCLAT refused an immediate stay on the Dalmia Bharat petition.
“Dalmia Bharat’s move to the Supreme Court will not affect the CoC meeting and the schedule as it is as per the directives of the NCLAT”, a source opposing Dalmia Bharat’s proposed takeover of Binani Cement opined.
In its interim order, the Appellate Tribunal has stated that during the pendency of Dalmia Bharat consortium’s appeal, the CoC can approve any plan it deems fit which is subject to its decision on the appeal.
Previously, at the insistence of the CoC, Binani Cement had moved the Supreme Court appealing to terminate insolvency proceedings against it and obtain clearance for an out-of-court settlement with its lenders.
This deal was financially backed by UltraTech. However, the country’s apex court had shown its disinclination to interfere in the matter, while maintaining that Binani Cement is actually fronting UltraTech. Nevertheless, Binani Cement withdrew its petition after presenting its case, which resulted in the Supreme Court, not passing any verdict in this case.
Source: Business Standard May 9, 2018