The National Company Law Appellate Tribunal (NCLAT) has dismissed the petition of Deccan Value Investors challenging the NCLT approval to its resolution plan for debt-ridden Amtek Auto without execution of a lease of a property.
A three-member NCLAT bench also imposed a cost of Rs 1 lakh on the US-based hedge fund Deccan Value Investors (DVI) LLP terming the petition as frivolous.
It further said execution of the long-term lease (20 years) of the Ace Complex Land was not a condition precedent in regard to approval of resolution plan.
“The appeal not only lacks merit but also is frivolous. We, while dismissing the appeal, impose costs to the tune of Rs one lakh on the Appellant (DVI) which shall be deposited in this Appellate Tribunal within 15 days,” said NCLAT bench headed by Acting Chairperson Justice B L Bhat.
Earlier, the Chandigarh Bench of the National Company Law Tribunal (NCLT) had on July 9, 2020, approved the resolution plan submitted by DVI for Amtek Auto Ltd.
While approving, the NCLT in its order rendered the precondition by DVI LLP for a long-term lease (20 years) of the Ace Complex Land as infructuous.
This was challenged by DVI LLP before the NCLAT contending that while approving its resolution plan the NCLT had gone beyond its jurisdiction in concluding that the requirement of the prior written consent of the mortgagee of the Ace Complex Ltd as provided in the Resolution Plan.
It had submitted that the execution of the long term lease of the Ace Complex Land was a condition precedent and the integral part of the Resolution Plan as the business of the Amtek Auto as a going concern is dependent on the availability of this leased land.
DVI LLP also urged that NCLAT failed to consider that the parties had agreed that the long term lease they executed over the Ace Complex Land for 20 years and prior written consent of the mortgagee was to be acquired.
However, this was rejected by NCLAT saying “we are of the considered view that the execution of long term lease for the Ace Complex Land with Acceptable Terms was not a condition precedent in regard to approval of Resolution Plan but only in regard to effective date.”
The NCLT order does not travel beyond the scope of enquiry under Section 31 of Insolvency & Bankruptcy Code, under which designate authority (NCLT) approves the resolution.
“The Appellant would not be justified in assailing the impugned order which, in effect, is nothing but yet another effort to wriggle out of its obligations and seek withdrawal of Resolution Plan in a different garb,” said NCLAT.
DVI had bid around Rs 2,700-crore, in which Rs 500 crore was in form of upfront cash and the balance Rs 2,200 crore to be paid in future.
Amtek Auto has total borrowing of more than Rs 12,500 crore.
The corporate insolvency resolution process of Amtek Auto was initiated on July 24, 2017 by the NCLT. It was among the first list of 12 companies sent to the NCLT by the RBI in 2017 for resolution under the Insolvency and Bankruptcy Code (IBC).