The National Company Law Tribunal (NCLT) rejected JSW Energy’s plea to withdraw its resolution plan for the takeover of debt-laden Ind-Barath Energy (Utkal) on grounds of deterioration of assets, saying it doesn’t have powers to terminate a plan approved by the Committee of Creditors (CoC) with big majority. At the same time, the tribunal took note of JSW Energy’s concerns over what it called the resolution professional’s negligence and the delay in grant of approval which led to asset deterioration, and advised the CoC to consider the situation in a ‘pragmatic and fair manner’.
Track your NCLT / NCLAT cases or orders in your apple iOS / Google Android smartphones. Available for free trial period of 15 days.
The NCLT Hyderabad bench also urged the government to consider appointing a group of expert professionals and a government nominee collectively to act as RP for meaningful solution rather than single individuals as RPs in cases involving large companies.
The NCLT had, on August 29, 2018, admitted Bank of Baroda’s plea to initiate insolvency proceedings against Ind-Barath Energy, which owns a 700-MW under-construction thermal power plant in Odisha, and appointed Udayraj Patwardhan as its resolution professional.
JSW Energy had emerged as the successful applicant after its plan involving resolution value of Rs 1,026 crore was approved by the lenders with 82.7% votes in October 2019.
The NCLT said that it cannot look into the issues whether the CoC-approved RP is capable of effective implementation or not or ask the CoC for re-consideration. It said that only an assessment can be made to see whether the RP incorporates provisions for its smooth implementation.
The tribunal also said that it is satisfied that the RP is in accordance with law and doesn’t contravene any of the provisions of the IBC, therefore, it shall be ‘binding’ on the corporate debtor, creditors and also the government, etc.
The CoC contended that JSW’s RP is binding and irrevocable and the current insolvency regime does not recognise withdrawal or modification of the RP once it is approved by CoC and filed before NCLT.
