Mumbai: Dalmia Bharat Ltd, whose successful bid for debt-ridden Binani Cement Ltd in a bankruptcy auction is under threat from a higher bid from rival UltraTech Cement Ltd outside the bankruptcy process, on Tuesday wrote to the central bank and nine lenders of Binani Cement that entertaining bids outside the established bankruptcy code will flout banking conventions.

The consortium led by Dalmia Bharat is now facing a challenge in the Supreme Court by Binani Industries Ltd, the parent of Binani Cement Ltd, to exit the insolvency proceedings and buy out lenders and creditors in full with financial help from UltraTech Cement.

In a letter addressed to the Reserve Bank of India governor, Rajputana Properties Pvt. Ltd (the Dalmia-Bain-Piramal consortium) alleged that a proposal made outside the bankruptcy process once the details of the winning bid were made public is “fraudulent". Mint has seen a copy of the letter.

“Besides the fact that the Binani Industries Ltd (BIL) is barred as a promoter under Section 29A of the Code to participate in the corporate insolvency resolution process, BIL and other affiliates of Braj Binani have been suspected of undertaking various transactions which are undervalued, fraudulent and extortionary, totaling to approximately Rs2,400 crore, as suggested by a detailed forensic report prepared by Haribhakti and Co., hired by the resolution professional under instructions of the committee of creditors," the letter said.

Binani Industries itself is insolvent, the letter said, and has not paid its own creditors for debts adding to over Rs1,700 crore for several years and has a winding-up petition admitted against it at the Kolkata bench of the National Company Law Tribunal (NCLT). “Banking conventions in India," it concluded, “do not favour any dealings with an indicted promoter."

On 5 April, Dalmia Bharat wrote to the Central Vigilance Commission asking it to intervene in the case. The letter said Binani Cement’s promoters were effectively acting as a proxy for UltraTech Cement by exiting the insolvency process, flouting the vigilance commission’s guidelines.

Refuting the allegations, Sameer Kaji, senior group advisor, Binani Industries told Mint: “On March 12, the forensic auditor formally submitted its report to the Committee of Creditors (CoC). If this report had been material, the resolution professional would have shared this with all bidders, which he did not do. Bids were called independent of the audit process."

Separately, the Supreme Court on Tuesday agreed to hear the Binani Operational Creditors Forum (BOCF), which has alleged discrimination against different classes of operational creditors of Binani Cement Ltd under the provisions of the Insolvency and Bankruptcy Code, 2016.

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