Since the hearing over the plea against approving Dalmia Bharat’s plan is still pending, the NCLT on Friday asked Binani Cement’s resolution professional to continue management of the company till further orders. The tribunal said it would hear all the cases before taking a final call on the resolution plan.
From the arguments put forward by stakeholders, it has been indicated to the tribunal that the selection of Dalmia Bharat-led consortium as the H1 bidder was in accordance to the process document framed by the lenders themselves, based primarily upon guidelines from the Central Vigilance Commission (CVC) with references from the Indian Bank Association and others.
The legal counsel of the CoC has also told the tribunal that because the Insolvency and Bankruptcy Code (IBC) is an evolving process, the grey areas have been filled by referring to common law.
K R Jinan, member (judicial) at the Kolkata Bench, has, however, been questioning various parties to know if there was any possibility of modifying the CoC’s process document by the CoC itself to accommodate the revised bid of UltraTech Cement and consider it.
In insolvency cases, process documents are framed by the CoC in consultation between themselves, which outlines the bidding process, eligibility criteria, and which accords grades to the bidders. It acts as a guiding principle for the lenders to evaluate bidders.
On April 17, Jinan questioned the CoC counsel why it didn’t modify its own process document after it received a monetarily superior offer from UltraTech Cement when the objective of the IBC is maximising value.
On April 20, the Bench questioned the legal counsel of Dalmia Bharat-led consortium if any laws prevent the CoC from amending the process document.
Both the CoC and the H1 has maintained that the document should not be changed after the insolvency process has begun as it can create uncertainty for future cases in the NCLT. UltraTech Cement has, however, claimed that the CVC guideline is used for tenders and has no role for closed bids.
Arguing that IBC and CVC guidelines are two entirely different cases, Manu Rohatgi, representing UltraTech Cement in the NCLT, said: “It is like trying to fill a circle with a square.”
While establishing his case that the process document cannot fulfill the objective of value maximisation, he said: “If you negotiate only with H1, they will increase the offer by only Rs1. What’s the point of such negotiation?”
The Dalmia Bharat-led consortium’s counsel, who is pleading his case entirely based on the process document, said the consequence of altering the process document, after the insolvency process has started, will “be a recipe of disaster for future NPA (non-performing asset) cases”.
However, on April 20, Jinan said: “There are so many applications challenging the resolution plan.”
UltraTech Cement has pleaded before the tribunal to order the CoC to reconsider its revised proposal of Rs 79.6 billion while Dalmia Bharat has pleaded the tribunal to approve their offer.
The Dalmia Bharat-led consortium’s counsel also said that alterations or modifications to a submitted plan cannot be done without the CoC’s approval and new bids cannot be placed according to the process document.
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