The Supreme Court refused to overturn a decision by the National Company Law Appellate Tribunal (NCLAT) that delayed Vedanta Group's winning bid for bankrupt Videocon Industries. The Apex Court instructed the NCLAT to rule on the case on 7 September the next day of the hearing, without entering into the merits of the case.
The victorious resolution applicant, Vedanta Group's Twin Star Technologies, was invited to return to NCLAT, which would eventually determine the matter on 7 September the planned date for a hearing, by a bench chaired by Justice L.N. Rao. Twin Star was represented at the Supreme Court by senior counsel Mukul Rohatgi.
On 19 July the NCLAT delayed Twin Star Technologies' winning bid for Videocon Industries after dissident creditors Bank of Maharashtra and IFCI filed an appeal. Both lenders were dissatisfied with the value realised as a result of the resolution strategy.
Prior to that, the National Company Law Tribunal's Mumbai bench had authorised Twin Star Technologies' settlement plan on 8 June although it had noted that the company was "paying nearly nothing" because the amount submitted was only 4.15 percent of the entire outstanding claim. It had mentioned that the total haircut for all creditors is 95.85%, and it had advised both the creditors' committee and the successful applicant to increase the payout.
Twin Star's proposal was very near to the liquidation value, which was supposed to be kept confidential, thus the NCLT instructed the Insolvency and Bankruptcy Board of India to look into whether secrecy was maintained during the corporate insolvency resolution process.
In its appeal before the SC, Twin Star Technologies said that while staying the implementation of its time-bound resolution plan, the NCLAT "has blatantly ignored the settled law laid down by the SC in a catena of decisions that the commercial wisdom of Committee of Creditors (CoC) in accepting or rejecting the Resolution Plan (RP) is paramount and that there should be no interference to an approved RP unless the same contravenes Section 30(2) of the IBC… As apparent, its RP does not contravene any provisions of the Code or its regulations”.
It further stated that the assailed order did not give any reasons for stopping the approval order based on prima facie case, irreparable loss, or balance of convenience. It stated that the reliance was entirely based on the NCLT's "doubt" about non-compliance with the secrecy requirement in relation to liquidation value and fair market value as classified by NCLT in its approval decision.
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