NCLAT has dismissed the petition and has imposed a penalty of ₹1 lakh on DVI
NCLAT rejects Deccan Value Investors condition on land lease
The three-year-old insolvency case of Amtek Auto has taken yet another interesting twist with the National Company Law Appellate Tribunal (NCLAT) dismissing the petition of the successful resolution applicant, Deccan Value Investors (DVI), and imposing a penalty of ₹1 lakh to be paid in 15 days.
The National Company Law Tribunal (NCLT) of Chandigarh had approved DVI’s ₹2,700-crore resolution plan last July. DVI offered to pay Amtek’s creditors around ₹450 crore in cash upfront.
It would pay the balance amount through future receivables that assumed recovery from tax refunds, sale of non-core real estate and other assets. DVI had also offered ₹300 crore in optionally convertible debentures payable over seven years.
While approving the plan, the NCLT rendered the precondition by DVI for a long- term lease (20 years) of the Ace Complex Land as ‘infructuous’. DVI subsequently moved the NCLAT and the Supreme Court to seek certain clarifications on the NCLT order.
In September, it invoked the force majeure clause, citing the ongoing pandemic that had damped industrial activity and worsened Amtek Auto’s performance.
Later, lenders moved the Supreme Court claiming that DVI was trying to wriggle out of the deal and pleaded for contempt of court proceedings against it.
SC rejects contempt plea
The Supreme Court in February rejected the contempt of court plea and directed the NCLAT to decide on the objections raised by the company.
The NCLAT, in its order on Friday, dismissed the petition filed by DVI challenging the NCLT approval to its resolution plan for Amtek Auto without execution of a lease of a property.
A three-member NCLAT Bench said execution of the long-term lease of the Ace Complex Land was not a condition precedent to the approval of the resolution plan.
“The appeal not only lacks merit but also is frivolous. We, while dismissing the appeal, impose costs to the tune of ₹1 lakh on the appellant (DVI) which shall be deposited in this Appellate Tribunal within 15 days,” said NCLAT Bench headed by Acting Chairperson Justice BL Bhat.
With a resolution process dating back to July 24, 2017, Amtek Auto is one of the longest running cases still awaiting resolution under the IBC. Amtek Auto was identified among 12 large corporate defaulters by the RBI in June 2017 with the companies owing over ₹12,800 crore to financial and operational creditors.