Vedanta Chairman Anil Agarwal-promoted Twin Star Technologies has moved Supreme Court challenging insolvency appellate tribunal NCLAT's order that set aside its Rs 2,692 crore bid for 13 group companies of the debt-ridden Videocon group. Earlier this month, allowing the plea of dissented creditors, the National Company Law Appellate Tribunal (NCLAT) set aside the orders passed by the Mumbai bench of the NCLT, which approved Twin Star's Rs 2,692 crore bid with a 95 per cent hair cut against a total admitted claims of Rs 64,637.6 crore.

The NCLAT has asked the resolution professional of the company to re-run the process, which means a fresh bid has to be invited. Confirming the move, senior advocate Gopal Jain, who had represented the company Twin Star Technologies told PTI, "The appeal (against NCLAT order) has been filed".

Terming the NCLAT order as "legally incorrect", Twin Star in its petition, has said under the Insolvency & Bankruptcy Code, there is no provision for withdrawal of any resolution plan after approval and to send back to the lender for reconsideration after voting in favour of it. According to Jain, NCLAT, while setting aside the resolution plan of Twin Star, the appellate tribunal has "overturned" at least five judgements and principles settled by the Supreme Court in insolvency matters.

Every judgement of the Supreme Court has been violated including Ebix Singapore. IBC has no provision to go back to the Committee of Creditors, he said. In its petition, Twin Star has contended a Resolution Applicant has absolutely zero recourse under IBC and the only assurance investors and Resolution Applicants had than an approved Resolution Plan is sacrosanct, is now also lost with this order.

The NCLAT judgement is contrary to previous Supreme Court judgments, which have emphasised time and again that an approved Resolution Plan is a binding contract and cannot be withdrawn, it said. In its judgement, NCLAT had also observed that the mandatory approval from the Competition Commission of India was also not placed by Twin Star before the Committee of Creditors (CoC) in their meetings.

“NCLAT says CCI approval was not there, therefore plan contravenes law. Strangely CCI approval was taken before the NCLT approved the order and it was not a grievance made by any party during the proceedings before NCLAT,” Jain added. Over the dissenting creditors, he said there is a difference between a resolution plan and distribution mechanism. “You can not upset a plan because of a distribution mechanism,” he said.

Moreover, over the allegations of the dissented creditors and even observed by NCLT that the amount offered by Twin Star was close to the liquidation value of Videocon, it said such points have no relevance. Lastly, passing comments on Liquidation Value have no relevance to a successful Resolution Applicant as these questions need to be addressed to the lenders that how and why could they issued Rs 60,000 crore in debt to a company that was worth a couple of thousand crores, it said.

In fact, by delaying and re-starting the process, the banks shall even get lesser recovery as the assets are deteriorating every day and Videocon is losing more than Rs 10crore/month, Twin Star added. Many plans have been approved which are not only closer to the liquidation value but even lesser than liquidation value such as Reliance Infratel, Alok Industries and Jet Airways.

Videocon was among the first 12 companies pushed into bankruptcy following a 2017 directive of the Reserve Bank of India (RBI) to auction firms that had unpaid dues. NCLT had in August 2019 consolidated insolvency process for the 13 group companies - Videocon Industries, Value Industries, Applicomp, CE India, Century Appliances, Electroworld Digital Solutions, Evans Fraser & Co, Millennium Appliances, PE Electronics, SKY Appliances, Techno Electronics, Techno Kart, Value Industries and Videocon Telecom.

Insolvency for two other Videocon companies - KAIL Ltd and Trend Electronics - were conducted independently.

First Published:Jan 18, 2022 10:01 PM IST