NCLT allows APSEZ and other bidders to submit revised offers for Dighi Port

The Mumbai bench of the National Company Law tribunal (NCLT) has allowed Adani Ports and Special Economic Zone Ltd (APSEZ) and Gannon Dunkerley & Co Ltd to submit revised bids for debt-laden Dighi Port Ltd after state-run Jawaharlal Nehru Port Trust (JNPT) said it was not agreeable to the modifications suggested by the insolvency court to its lenders approved resolution plan.

On May 8, NCLT approved the resolution plan submitted by JNPT with certain conditions and had asked JNPT to file an affidavit conveying its acceptance or rejection of the modifications.

During a hearing on July 2, JNPT told NCLT that the modifications suggested by the Tribunal were not agreeable to it.

The changes suggested by NCLT pertained to sub-lease deeds and sub-concession agreement signed between Dighi Port Ltd and the Veritas Group for setting up a PVC plant and to finance, develop, operate and maintain a cargo berth at the port.

In its resolution plan, JNPT has sought to terminate the sub-lease deeds and sub-concession agreement signed with the Veritas Group citing that the terms and conditions were onerous and not in the long-term interests of the company. The sub-lease, according to JNPT, was “under-valued” compared to lease rentals of other similarly situated land, thereby causing loss to the corporate debtor (Dighi Port).

“ The unilateral termination of the contracts as mentioned in Chapter VII point 7, or at any other place in the resolution plan, is allowed only as per the due process of law applicable on termination of such contracts except as provided under Explanation to section 30(2) of I&B Code. This Tribunal would not allow any unilateral termination of legally binding contracts that were entered into by the Corporate Debtor before the CIRP initiation without adhering to the law applicable for termination of any such contract. The resolution applicant is directed to file an affidavit before this tribunal submitting its acceptance or rejection of the said modification in the resolution plan,” NCLT ordered on May 8.

On May 27, JNPT sought 30 days from NCLT for filing the affidavit regarding its acceptance or rejection of the modified resolution plan ordered by NCLT.

“We think it appropriate to grant 30 days for filing an affidavit, but this will be treated as the last opportunity, failing which, we will be forced to pass the liquidation order under Section 33 of IBC, 2016,” NCLT wrote in its May 27 order.

However, on July 2, NCLT changed track and allowed other bidders (excluding JNPT) in the fray to submit revised resolution plans after some of them offered to better their bids.

APSEZ – India’s biggest private port operator - had quoted Rs 1 crore more than JNPT in its resolution plan but that was rejected by the Committee of Creditors (CoC) led by Bank of India, which, instead approved the bid submitted by JNPT on February 1.

JNPT said it was still in the reckoning for Dighi Port as it has merely told NCLT that “it was not in favour of modifying its resolution plan and had not withdrawn it completely”.

Port industry executives said that liquidation of a port will not benefit potential buyers of individual assets as berths and other facilities would be useless without the rights to run the port through a concession from the Maharashtra government.

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