Upholding the Adani Power bid, NCLAT directs Shapoorji Pallonji to pursue arbitration

Upholding the Adani Power bid, NCLAT directs Shapoorji Pallonji to pursue arbitration

It was deliberating on the order passed by the Ahmedabad bench of the National Company Law Tribunal

The National Company Law Appellate Tribunal (NCLAT) has upheld the 2019 resolution plan for Adani Power's bid for Korba West Power. It has further directed Shapoorji Pallonji & Co to pursue arbitration proceedings for pending claims.

The two-member bench of the tribunal stated, "There is no illegality in the order of the approval of the RP by the National Company Law Tribunal (NCLT), the adjudicating authority, and it does not see any reason to set aside the resolution plan by Adani Power."

NCLAT was deciding on the petition filed by Shapoorji Pallonji against the June 2019 order passed by the Ahmedabad bench of NCLT approving Adani Pawer's resolution plan.

Meanwhile, Shapoorji Pallonji has Rs.45.22 crore claims and arbitration has been on. However, Korba has triggered the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC).

Since the company came under moratorium, arbitration proceedings could not proceed and were stayed. Later, Shapoorji Pallonji claimed the amount as an operational creditor during the CIRP. But it was rejected by the Resolution Professional (RP), and NCLT approved the Adani Power resolution plan.

Thereafter, Shapoorji Pallonji moved the appellate tribunal challenging NCLT's order.

The RP submitted before the NCLAT that the claim of the appellant was rejected only after due verification. He added that Shapoorji Pallonji's claim was the subject matter of a dispute, which was pending arbitration.

Clarifying Shapoorji Pallonji's claim that no written notice about its rejection was given, the RP said notice to the operational creditors is given only in case the aggregate dues are not less than 10 percent of the 'debt' of the corporate debtor. But In this case, the amount was merely 6 percent of the admitted claims.

On the other hand, Adani Power maintained that CIRP was conducted in a fair manner and its resolution plan was approved by a majority of 69 percent.

The appellate tribunal stated it was not disputable that the RP did not communicate to Shapoorji Pallonji in writing regarding the rejection of the claims. However, it uploaded the status of the claims on the website of the corporate debtor first on 7 March 2019, and again, a day later.

NCLAT thus held, "There is no illegality in the order of the approval of the resolution plan by the NCLT, and we do not see any reason to set it aside per se, except for observing that the RP ought not to have made a contingent provision with respect to the appellant herein having regard to the specific facts of this case, which would be subject to the result of the arbitration proceedings."

While disposing of Shapoorji Pallonji's appeal, the appellate tribunal ruled, "Liberty is being given to the appellant to pursue all contentions available in the pending arbitration proceedings. The same should be decided in the proceedings on its own merits in accordance with the law."