UltraTech Cement on Thursday urged the Kolkata bench of the National Company Law Tribunal (NCLT) to reject rival bidder Rajputana Properties’ plan and accept its revised resolution plan for debt-laden Binani Cement on the ground that the process of approving Dalmia Bharat-controlled Rajputana Properties’ resolution plan by the creditors’ committee was ‘flawed’.
UltraTech Cement on Thursday urged the Kolkata bench of the National Company Law Tribunal (NCLT) to reject rival bidder Rajputana Properties’ plan and accept its revised resolution plan for debt-laden Binani Cement on the ground that the process of approving Dalmia Bharat-controlled Rajputana Properties’ resolution plan by the creditors’ committee was ‘flawed’. It claimed that negative points had been wrongly assigned to its bid, which wrongfully made it the H2, and not H1, bidder.“We should not be the H2 (second highest bidder), we should be H1. We have been given some negative marking because of some penalties levied by the Competition Commission of India (CCI).
According to us, it is wrong because the CCI has itself clarified that it is not so,” senior advocate Mukul Rohatgi, appearing for UltraTech Cement, said in his submission before the tribunal. “UltraTech’s first bid was the best bid, it was wrongly made H2. We are challenging the CoC’s decision. But even accepting that I am H2, I have the right to bring more money before the sale is confirmed and I have brought in Rs 1,000 crore more, which is for the benefit of the banks,” Rohatgi told the division bench, comprising justices Jinan KR and Madan Balachandra Gosavi.
When Justice Gosavi asked Rohatgi that whether UltraTech wants the entire CIRP proceedings to be repeated for the insolvent cement maker, the senior advocate replied, “We want that the tribunal to set aside the declaration of the committee of creditors (CoC) meeting held on March 14.” He said the bankruptcy court can ask the lenders, by issuing an interim order, to reconsider both the offers, to conduct a fresh auction ensuring maximisation of proceeds.
“Our revised offer is for the benefits of all concerned, and therefore all the creditors will get full money including interests,” Rohatgi stated.
Notably, the committee of creditors (CoC) of the insolvent cement maker had approved the Rs 6,600 crore resolution plan of Rajputana Properties on March 14 after the Dalmia Bharat-controlled company was declared as the highest bidder (H1) on February 27.The Aditya Birla Group’s cement company had submitted its revised offer on March 8. UltraTech believes its revised bid, which was submitted to the resolution professional (RP) Vijaykumar V Iyer, was not considered by the CoC at its March 14 meeting.
However, in his submission before the bench on April 16, Iyer’s counsel Abhrajit Mitra had said, “The RP left two options before the committee—either to negotiate with Dalmia Bharat for a higher bid or to go with the revised offer of UltraTech. The CoC voted in favour of Dalmia’s plan.”
According to CoC’s counsel Pratap Chatterjee, the creditors’ committee’s decision to negotiate only with the H1 bidder (Rajputana Properties) was based on the rules laid down in the “process document” and CVC (Central Vigilance Commission) guidelines.
Countering this argument, Rohatgi on Thursday said the CVC guidelines were for public sector units and had nothing to do with the sale of an insolvent company under the Insolvency and Bankruptcy Code (IBC), where maximisation of the value of assets should be the key objective. Justice Jinan asked the UltraTech counsel that whether the NCLT has the power to reject a resolution plan, which had already been approved by the CoC, submitted by a resolution applicant.
To this, Rohatgi said, “The tribunal has all the powers to see that ultimately maximum money is realised in an auction. Even you can ask for a fresh auction.” As per the latest revised offer, UltraTech has offered to pay over Rs 7,900 crore for Binani Cement.The tribunal heard the matter in part and fixed the same for further hearing on Friday, April 20. Creditors to Binani Cement include State Bank of India, IDBI Bank, Canara Bank, Bank of Baroda, Bank of India,
Exim Bank, Edelweiss Asset Reconstruction Company. As per details on Binani Cement’s website, financial creditors of the company had claimed Rs 6,470.26 crore, while the NCLT had admitted claims worth Rs 6469.36 crore. Dues to operational creditors, they claim, amount to be about Rs 510 crore. The Kolkata bench of the NCLT had admitted the insolvency petition against Binani Cement on July 25, 2017 after Bank of Baroda referred the company to the bankruptcy court. In FY17, Binani Cement had posted a net loss of Rs 348 crore on revenues of Rs 1,527 crore, according to data from Capitaline.