NCLAT rejects Jindal Power’s plea to allow bid for Tuticorin Coal Terminal

The insolvency court NCLAT has rejected Jindal Power’s plea to allow the company to participate in the ongoing resolution process of the debt-ridden Tuticorin Coal Terminal.

A two-judge bench of the National Company Law Appellate Tribunal (NCLAT) upheld the earlier order of the Mumbai Bench of NCLT, which said that Jindal Power Ltd (JPL) was “ineligible to enter into a resolution plan” under the CIRP regulations serve” for Tuticorin coal terminal.

The appellate court said that the process prescribed in the IBC calls for maximization of value, but it cannot ignore the existing specific CIRP regulations, which prevent the entry of companies that are not on the final list of potential resolution applicants stand.

The NCLAT further directed the resolution professional and the Committee of Creditors (COC) to decide on the offer received from Seapol.

“We find no merit in the present appeal, which if allowed would amount to a violation and violation of regulations… The appeal is, therefore, dismissed,” the NCLAT said.

“RP and COC should proceed with their CIR proceedings and decide on the resolution plan available with them in any case,” it added.

JPL had challenged the National Company Law Tribunal’s (NCLT) order of August 2023, which said JPL was “ineligible” as CIRP regulations prevented it from making a mid-term bid.

Earlier, the NCLT had allowed JPL to participate in the resolution process, but it ruled that the company was ineligible as its name was not included in the final list of resolution applicants.

Earlier, the RP of Tuticorin Coal Terminal had filed for liquidation of the company as creditors failed to find a buyer. However, a Seahawk company showed interest and was offered the opportunity, but it did not submit any resolution plan.

Around the same time, Seapol, which was on the final list of selected potential resolution applicants, also approached NCLT. After this, the bankruptcy petition was withdrawn. Seapol submitted its plan on February 18, 2023.

While lenders were considering Seapol’s plan, JPL sent an EoI (Expression of Interest) for Tuticorin Coal Terminal on July 12, 2023, indicating its interest in participating in the Corporate Insolvency Resolution Process (CIRP).

The NCLT allowed her to participate and submit the resolution plan to maximize its value. However, it is said that this option is subject to compliance with the provisions of the CIRP regulations.

However, as there was a contradiction in the NCLT order on the one hand, it allowed the submission of the resolution plan by JPL for maximization, but on the other hand sought compliance with the CIRP regulations, and the RP sought clarification from the tribunal. .

The NCLT clarification order did not allow JPL to submit a resolution plan for the Tuticorin Coal Terminal.

This was challenged before the NCLAT claiming that the intention of the Insolvency & Bankruptcy Code (IBC) was to maximize the value of the corporate debtor’s assets.

However, the NCLAT said, “Undoubtedly, the entire process prescribed in the Code and supported by the regulations is aimed at maximizing value to the corporate debtor, but it cannot ignore the existing specific regulations”.

It further said that resolution plans, received midway and not included in the final list, “could derail and delay CIRP proceedings.”

Tuticorin Coal Terminal is a company, established as a special purpose vehicle, engaged in the development of North Cargo Berth II for the handling of bulk cargoes at the Port of Tuticorin.

In 2019, CIRP was filed against her following the plea of ​​the Bank of India, the largest financial creditor.

First print: January 11, 2024 | 12:06 pm IST