In a major blow to Binani Industries, the Supreme Court has refused to allow the company's plea seeking out-of-court settlement.
Binani said the the apex court called the plea "premature" and said the matter will be decided by NCLT on April 16.
The National Company Law Tribunal (NCLT) Kolkata earlier postponed the hearing to April 16 while awaiting some clarity from the Supreme Court.
The Supreme Court observed that what could not have been achieved directly, was being sought indirectly and said that Binani was looking to reintroduce UltraTech which lost out in the bidding process.
UltraTech despite ousted from the bid, is now entering the race through Binani industries, the apex court observed. "Binani Industries is a mere front for UltraTech and the firm is putting up a bidder in the form of Binani," it observed.
Dalmia Bharat's lawyer said that if such a mechanism is allowed, the insolvency proceedings "will collapse" and no serious bidders will come forth for the resolution process. "Binani Industries and Ultratech are in an unholy alliance," he said and reiterated that promoters participating in the bidding process is clearly barred by the law.
Rajendra Chitale, advisor at Chitale Legal, said that order means the integrity of the resolution process matters most.
Shardul Shroff, executive chairman at Shardul Amarchand Mangaldas and company, said "The Supreme Court has confirmed that the matter has to be resolved under the IBC (Insolvency and Bankruptcy Code."
Shroff said, " The Supreme Court order has made it clear that the promoters can't indulge in behind the scene tactics. Dalmia Bharat stands vindicated."
Supreme Court had agreed on Monday to hear Binani Industries' special leave petition (SLP) for an out-of-court settlement to which it refused today.
The National Company Law Appellate Tribunal (NCLAT), New Delhi had ordered for an out-of-court settlement to be vetted by an “appropriate court.”
Developments so far:
Binani Industries sought Supreme Court's nod for termination of insolvency.
Credit exposure with various lending banks will be massive and multiple non-performing assets (NPAs) will be created, Binani Industries said in a statement.
"The total amount due to operational creditor has been wrongly verified by the Resolution Professionals (RP) as Rs. 503.37 crore of which Dalmia's offer to pay 151 crore is unfair and arbitrary and not in line with the basic values of IBC Code," Hitesh Bindal, aggrieved operational creditor of Binani operational creditors’ forum (BOCF) said in a statement.
The creditors should be paid in full without any haircuts, he said.
"Suppliers to members of BOCF too will not be paid leading to multiple MSME's (Micro, Small and Medium Enterprises) landing up in NCLT," Bindal said.
Earlier, the company in a petition to the court said that it is challenging the order by NCLAT which would cause grave prejudice to public interest, interest of nationalised banks and operational creditors.
Lenders of Binani Industries, which include SBI, IDBI Bank, Canara Bank and BoB, met on April 7 to finalise the decision before the hearing. All lenders except Canara Bank accepted the settlement offer, said sources.
However, the lenders had raised some questions regarding the decision saying that Rs 7,266 crore offered by the company was inadequate. "It must settle dues worth Rs 8,100 crore", the banking sources said.