New Delhi: Binani Industries Ltd on Friday withdrew its plea seeking permission for an out-of-court settlement and an end to insolvency proceedings against its debt-laden subsidiary Binani Cement Ltd.

The company said it would now argue the debt settlement plea pending before the Kolkata bench of the National Company Law Tribunal (NCLT).

The plea was withdrawn after a bench comprising justices A.K. Goel and Rohinton F. Nariman said they were not inclined to interfere with the order of the National Company Law Appellate Tribunal (NCLAT). “Why should we interfere at this stage? UltraTech (Cement Ltd), the second highest bidder, seems to have ‘put you up’ to this," justice Nariman observed.

According to legal experts, withdrawal of insolvency proceedings at an advanced stage could be an attempt to subvert the process. “It is a matter of great satisfaction that the Hon’ble Supreme Court of India has unequivocally upheld the principles of decision-making on resolution plans under the IBC. Demands for out-of-court settlement and attempts to withdraw insolvency proceedings after they have reached an advanced stage, at the instance of the disqualified promoter or a losing bidder, have been seen through as a device and an attempt to do indirectly what could not be done directly," said Shardul Shroff, executive chairman of law firm Shardul Amarchand Mangaldas.

The NCLAT had directed the adjudicating authority, the NCLT, to proceed with the resolution process of Binani Cement as per the Insolvency and Bankruptcy Code.

“The Hon’ble Supreme Court gave a landmark message today by not entertaining the plea of Binani Industries to terminate the insolvency proceedings in relation to Binani Cement. The message is loud and clear that once an H1 bidder has been chosen through a rigorous process as laid down by the IBC, the sanctity of the same needs to be preserved," said Mahendra Singhi, group CEO, Dalmia Bharat Cement Ltd.

Singhi added that primacy of the IBC in insolvency cases had been established and this would help in attracting high quality domestic and international capital to facilitate resolution of the mounting non-performing assets of the banking sector in an expeditious manner.

Dalmia Cement’s bid of Rs6,350 crore for Binani Cement was held to be successful by the committee of creditors of Binani Cement in March. Subsequently, Binani Industries said that it had struck a deal with UltraTech for Rs7,266 crore. UltraTech, incidentally, was one of the initial bidders in the resolution process. Its latest offer was conditional on insolvency proceedings being terminated.

UltraTech’s offer to Binani Industries came after the cement maker challenged the sale of Binani Cement to Dalmia Cement, alleging lack of transparency in the bidding process. It had complained to the NCLT and had also written to Binani Cement’s resolution professional offering to increase its bid.

The total liability of Binani Cement stands at Rs7,290 crore, including the liability of Rs4,049 crore towards secured lenders.

Binani Industries argued that the UltraTech offer would result in its subsidiary being restored to its full financial health.

The apex court was also hearing a plea by Binani’s operational creditors, which have alleged discrimination against different classes of operational creditors of Binani Cement under the provisions of the insolvency code.

The petitioners include Swastik Coal Corporation, Mangalalaxmi Industries, Sakhti Energy, Rajasthan Flexible Packaging, Prakash Enterprises, Dhuleva Industries and Yajur Commodities.

The petitioners sought that provisions under the code and rules that are discriminatory, arbitrary, excessive vis-a-vis operational creditors be interpreted by the resolution professional and the NCLT before any scheme is finalized.

The operational creditors submitted that despite claims being legally valid, substantiated and submitted under applicable laws, yet they had not been verified.