The insolvency appellate tribunal NCLAT has dismissed the plea of Jindal Power to allow the company to participate in the ongoing resolution process of debt-ridden Tuticorin Coal Terminal.
A two-member bench of the National Company Law Appellate Tribunal (NCLAT) upheld the earlier order passed by the Mumbai Bench of NCLT, which said that under CIRP Regulations, Jindal Power Ltd (JPL) was "ineligible to submit a Resolution Plan" for Tuticorin Coal Terminal.
The appellate tribunal said the process prescribed in the IBC asks for maximisation of the value, but it cannot give a go-by to the existing specific CIRP Regulations, which prevent the entry of companies that are not in the final list of prospective resolution applicants.
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The NCLAT further directed the resolution professional and the Committee of Creditors (COC) to decide on the bid received from Seapol.
"We do not find merit in the present Appeal, which if allowed would mean contravention and violation of Regulation...The Appeal is, therefore, dismissed," said the NCLAT.
"RP and COC should proceed with its CIR proceedings and decide the resolution plan available with them either way," it added.
JPL had challenged the August 2023 order of the National Company Law Tribunal (NCLT), which said JPL was "ineligible" as the CIRP Regulations prevented it from submitting any bids midway.
Earlier, the NCLT had allowed JPL to participate in the resolution process, but it held the company ineligible as its name was not in the final list of resolution applicants.
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Earlier, the RP of Tuticorin Coal Terminal had filed for liquidation of the company as creditors failed to find a buyer. However, a firm Seahawk expressed its interest and the opportunity was granted but it did not file any resolution plan.
Around the same time Seapol, which was on the final list of selected prospective resolution applicants, also approached NCLT. After this, the liquidation application was withdrawn. Seapol submitted its plan on February 18, 2023.
While the lenders were considering Seapol's plan, JPL on July 12, 2023, sent an EoI (Expression of Interest) for Tuticorin Coal Terminal, showing its interest in participating in the Corporate Insolvency Resolution Process (CIRP).
The NCLT allowed it to participate and submit the Resolution Plan to maximise its value. However, it said this opportunity shall be subject to compliance with the provisions contained in CIRP regulations.
However, as there was a contradiction in the NCLT order on the one hand, it allowed submission of the resolution plan by JPL for maximisation, but on the other hand, it sought compliance with the CIRP Regulations, and the RP requested clarification from the tribunal.
The NCLT clarification order disallowed JPL to submit a resolution plan for the Tuticorin Coal Terminal.
This was challenged before the NCLAT, claiming that the intent of the Insolvency & Bankruptcy Code (IBC) was to maximise the value of the assets of the corporate debtor.
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However, the NCLAT said, "No doubt the whole process prescribed in the Code and supported by Regulations aims at maximisation of the value for the Corporate Debtor but it cannot give a go by to the existing specific Regulations".
It further said Resolution plans, which enter midway and which were not in the final list, can "derail and delay the CIRP proceedings".
Tuticorin Coal Terminal is a company, formed as a special purpose vehicle, engaged in the business of development of North Cargo Berth II for handling bulk cargo at Tuticorin Port.
In 2019, CIRP was initiated against it over the plea filed by Bank of India, its largest financial creditor.
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