Jindal Steel and Power (JSPL) has approached the National Company Law Tribunal (NCLT) against the decision of the lenders of Reliance Naval & Engineering to award the bid to a consortium led by Swan Energy and Hazel Mercantile.

JSPL has called the resolution plan submitted by the consortium a ‘flagrant breach of the mandatory provisions of Section 29A of the Insolvency and Bankruptcy Code (2016). The resolution plan of the consortium was approved by committee of creditors (COC) on March 17 and following which a letter of intent was issued.

Promoters of the consortium of Swan Energy and Hazel Mercantile, as per claims submitted by JSPL before the NCLT on Monday, are related to Anil Ambani, the erstwhile promoter of Reliance Naval & Engineering (RNEL). Nikhil Merchant, Managing Director of Swan Energy is the father of Vanita Patel who is married to Naman Patel the nephew of Anil Ambani.

JSPL asserts that this makes Swan Energy an ineligible participant in any resolution plan of RNEL by virtue of the definition of ‘related party’ contained in the IBC (2016).

JSPL further claims that Vijay Shah, a Director at Hazel Mercantile, figures in the ‘defaulters list’ maintained by CIBIL, which makes him a person not eligible to be a resolution applicant under Section 29A. Two directors of Swan Energy — Rajkumar Sukhdevsinji and Nikhil Merchant — are Section 29A non-compliant, JSPL added.

“Rajkumar Sukhdevsinji is also on the (suspended) Board of EPC Constructions India, a company that is under liquidation process, and which has been in the IBC process for over three years. While Sukhdevsinhji has been on the Board of EPC Constructions India Limited since the year 2016, he is continuing on the Board of Swan Energy Limited since 2011,” JSPL stated in its plea.

Nikhil Merchant served as a Director on the board of Navi Mumbai Smart City Infrastructure before resigning in December 2021. This was around four months after Swan Energy submitted the Resolution Plan for RNEL.

“Navi Mumbai Smart City Infrastructure has defaulted on loan repayments, and has been classified as an non performing asset at the time when it was under his directorship, and it is only as a measure to bypass the law under Section 29A that this particular Respondent stepped down from the directorship of this company,” JSPL said. 

JSPL has asked the NCLT to direct the COC of RENL to accept the next-best resolution plan available on their record within a period of one week, or within such other short period that the tribunal deems fit.

In the middle of 2020 lenders of RENL sought expressions of interest from buyers to recover dues to the tune of Rs 11,000 crore admitted by the resolution professional.