NCLAT Upholds NCLT Order On Acquisition Of SKS Power Generation By Sarda Energy

NCLAT Upholds NCLT Order On Acquisition Of SKS Power Generation By Sarda Energy

The unsuccessful bidders had approached the appellate tribunal to challenge the lower tribunal’s ruling

The National Company Law Appellate Tribunal (NCLAT) has upheld the order of the Mumbai bench of the National Company Law Tribunal (NCLT) approving the acquisition of SKS Power Generation (Chhattisgarh) Ltd (SPGCL) by the Bombay Stock Exchange (BSE)-listed Sarda Energy & Minerals Ltd (SEML).

The unsuccessful bidders of SPGCL, including Torrent Power Ltd, Jindal Power Ltd and Vantage Point Asset Management Pte had approached the appellate tribunal challenging the lower tribunal's order.

The bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (technical member) and Arun Baroka (technical member) held, "We do not find that any sufficient grounds were made under Section 61(3)(ii) of the Insolvency and Bankruptcy Code (IBC) to interfere with the decision of the adjudicating authority (NCLT) approving the resolution plan of Sarda Energy, in these appeals filed by unsuccessful resolution applicant.”

The NCLT recently approved the acquisition, wherein SPGCL admitted liabilities of Rs.2,697 crore, while the successful bidder's resolution plan proposed to pay Rs.2,000 crore to acquire the company.

In April 2022, the company was admitted under the Corporate Insolvency Resolution Process (CIRP) in an application filed by its lender Bank of Baroda.

Before the tribunal's approval, the Committee of Creditors (CoC) led by the State Bank of India and Bank of Baroda approved the resolution plan with 100 percent voting in favor of Sarda Energy.

Subsequently, the unsuccessful bidders approached the appellate tribunal to challenge the NCLT's order.

They argued that the resolution professional (RP) and the Committee of Creditors (CoC) of the company 'selectively permitted' Sarda Energy to modify its commercial offer after the conclusion of the negotiation process on 19 April 2023.

However, Akshat Khetan, the founder of AU Corporate & Legal Advisory Services explained that the case underscored the importance of transparency and adherence to the IBC framework, with the judiciary playing a limited role in interfering with the CoC's decisions unless material irregularities were evident.

"The outcome reinforces the IBC's objective to ensure timely resolution and maximize asset value,” he stated.

SPGCL had set up a coal-based thermal power plant at Binjkote and Durramuda in the Raigarh District of Chhattisgarh.

Due to the rarity of the working power plant’s availability for sale, with 25 years of fuel agreement accompanying a railway line, the facility has been in high demand.

The thermal power project consists of 4X300 MW capacity power generating units, utilizing Indian coal as the main fuel. The company is currently amid the execution of Phase II 2X300 MW capacity.

Sarda Energy & Minerals was represented by law firms Chandhiok & Mahajan and Agarwal Law Associates.

The company's RP and the Committee of Creditors (CoC) were represented by law firms Trilegal and Cyril Amarchand Mangaldas, respectively.