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The National Company Law Tribunal (NCLT), Chennai, has dismissed an application of Haldia Petrochemical Ltd (HPL) to appoint one of the valuers registered with the Insolvency and Bankruptcy Board of India (IBBI) to value Nagarjuna Oil Corporation Ltd (NOCL) and submit a report.
HPL had proposed the names of RBSA Valuers, GAA Advisory and Protocol Insurance Surveyors & Loss Assessors Pvt Ltd. It had also sought a direction to NOCL’s Insolvency Resolution Professional (IRP) to provide support to the valuers.
The ₹3,500-crore NOCL project in Cuddalore, Tamil Nadu, was to go on stream in 2012 but various delays escalated the cost by nearly three times before the project coming to an abrupt a halt in December 2011 following a cyclone.
A consortium of 17 banks that funded the project brought in an additional ₹7,000-crore debt as part of a restructuring plan, which, however, did not materialise. Insolvency proceedings were initiated against NOCL.
Resolution plan
On April 16, 2018, HPL submitted a resolution plan, followed by two updated resolution plans, for the consideration of the Committee of Creditors (CoC). The last plan was submitted on June 27, 2018 with a value of ₹1,456 crore. The CoC, however, rejected the plan, which HPL claimed was ‘improper and was not based on sound reasoning’.
HPL also said the CoC was swayed by the liquidation value, which suffered from fundamental errors. Any error made in the valuation of NOCL can potentially have dire implications on the corporate debtor (CD), in whose interest an impartial valuer should be appointed, argued HPL.
However, Mohd Sharief Tariq, Member, (Judicial), NCLT-Chennai, in his April 16 order, rejected HPL’s claims, saying sound procedure was followed by the IRP.
The CoC denied all the allegations of HPL, saying it cannot be expected to “sacrifice its rights and to overlook the huge dues to the secured financial creditors”. “With no viable resolution plan, the only option was to go for liquidation of NOCL,” it said.
Quoting a recent Supreme Court judgment in the K Sashidhar versus Indian Overseas Bank and Others case, the NCLT order said the Tribunal cannot step into the CoC’s shoes and incorporate its own view on accepting or rejecting the resolution plan. The application filed by HPL was devoid of merits and stood dismissed, the order said.
In December 2018, the NCLT had initiated liquidation proceedings against NOCL as it had not received any resolution plan. V Mahesh was appointed as the company liquidator.
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