Just ahead of the scheduled meeting of the Committee of Creditors (CoC) of Binani Cement, which is undergoing bankruptcy proceedings, the Dalmia Bharat Cement-led consortium has moved Supreme Court for the second time — this time challenging UltraTech Cement’s eligibility to bid.
Sources aware of the development said Dalmia Bharat’s primary contention is that UltraTech is ineligible to bid under Section 29(A) of the Insolvency and Bankruptcy Code (IBC), which deals with several conditions making a bidder ineligible to bid.
On May 9, the eve of the first CoC meeting which was scheduled to post the order of the Kolkata bench of NCLT that ordered the CoC to consider the offer from UltraTech, Dalmia Bharat alleged that the Aditya Birla Group firm is ineligible under various sections.
On May 15, the Appellate Tribunal, after hearing the allegations and counter-allegations of the warring camps, stated that the RP can only give comments and the CoC needs to decide on the eligibility.
During the CoC meeting on May 19, the committee had concluded that UltraTech was eligible and asked Rajputana Properties – the Dalmia Bharat-led consortium which previously won the bid for Binani Cement – to match the offer from UltraTech.
“The NCLAT did not decide on UltraTech’s eligibility and instead a decision was taken by the CoC. Dalmia Bharat is of the view that UltraTech isn’t eligible as it had tried to finance an out-of-court settlement with the promoter of Binani Cement and the lenders. It is of the view that such a move has rendered UltraTech ineligible for the bid,” a source said.
When the CoC asked Dalmia Bharat to raise its bid, it had replied to the CoC reinstating, “The CoC cannot even consider UltraTech’s resolution plan without first deciding UltraTech’s eligibility under Section 29A of the IBC and accordingly, there is no question of proceeding further or requiring RPPL to match, until UltraTech is found to be eligible”. Sources in Dalmia Bharat contended that the NCLAT order implies that the CoC must first decide on the objections regarding disqualification of UltraTech under Section 29(A). Once the CoC has taken a decision, it should record its reasons in writing.
However, the RP had called for a CoC meeting on Monday (May 28) where UltrTech’s proposal will be discussed. This prompted Dalmia Bharat to file a petition with the Supreme Court alleging that NCLAT’s order is not heeded.
Sources opposing the takeover of Binani Cement by UltraTech alleged that Dalmia Bharat is “just buying more time via the legal route to stall the CoC meeting and narrow down on a bidder.”
According to a member of the CoC, the scheduled meeting on Monday will still take place despite Dalmia Bharat moving Supreme Court.
On May 8, Dalmia Bharat had first moved Supreme Court to obtain a stay on a CoC meeting which was to consider UltraTech’s proposal but failed in its effort.
Previously, after issuing a letter of intent to the Dalmia Bharat-led consortium after the bidding process, the CoC had approached NCLT for approval of this resolution plan.
In turn, UltraTech had challenged the resolution process and approached the same Tribunal. NCLT’s final order has been in UltraTech’s favour.