NCLAT dismisses Tata’s appeal in Bhushan Power case

Tata Steel Ltd suffered a setback on Monday when the National Company Law Appellate Tribunal (NCLAT) dismissed a petition by the steel giant that alleged that the committee of creditors (CoC) for Bhushan Power and Steel Ltd (BPSL) allowed rival JSW Steel Ltd to change the basic parameters of its bid despite Tata Steel having been declared the highest bidder.

“We hold that this appeal preferred by Tata Steel Limited is premature, uncalled for, in absence of any final decision taken by the adjudicating authority under Section 31,” said a two-member NCLAT bench headed by chairperson Justice S.J. Mukhopadhaya.

The appellate tribunal also upheld the CoC’s right to change, update, supplement, add to, delay or otherwise annul or cease the resolution process at any time.

“Thus, the resolution plan can be modified as per dates or other terms and conditions set out in the process document,” the bench said.

The judgement by the appellate tribunal comes one-and-a-half months after it finished hearing arguments on the plea. BPSL, which operates a 3.5 million tonne (mt) steel plant in Odisha, owes more than ₹ 48,500 crore to a group of lenders led by Punjab National Bank. It is one of the 12 large companies identified by the Reserve Bank of India for early resolution.

In October, more than two-thirds of BPSL’s lenders voted in favour of a revised offer by JSW Steel, turning up the heat in a contest for an asset that is also being pursued by Tata Steel and UK’s Liberty House.

In the initial round of bidding, BPSL received bids of ₹11,000 crore from JSW Steel, ₹17,000 crore from Tata Steel and ₹18,500 crore from Liberty House. However, Liberty House failed to participate and provide necessary documents, including confidentiality affidavit within the time lines as provided by the resolution professional. Sajjan Jindal-promoted JSW Steel subsequently revised its bid, which won the lenders’ approval.

NCLAT had, in an interim order on 6 August, allowed all three contenders—Tata Steel, Liberty House and JSW—to file additional unconditional “resolution plans” by 13 August 2018, improving their financial offer without compromising the basic parameters of the resolution plans already submitted by them. However, the committee of creditors allowed JSW to change the basic parameters of its resolution plans, according to Tata Steel.

“In fact, 97.12% voting shares of members being present in the meeting of the committee of creditors and all of them have casted vote in favour of JSW Steel, we hold the resolution plan submitted by JSW Steel’ as been approved with 100% voting shares,” the bench said on Monday and directed the resolution professional to immediately place the approved resolution plan before the National Company Law Tribunal (NCLT) Delhi for its order.

NCLAT also asked NCLT Delhi to ensure no discrimination is made between the financial creditors and operational creditors while approving the resolution plan. In case, such an observation is made with respect to JSW Steel’s plan, then “it (NCLT Delhi) may give opportunity to JSW Steel to improve its plan and by substituting the approved resolution plan with such improvement,” the bench said.

The NCLAT also ordered the period of pendency of the appeal (from 7 May 2018 till date) to be excluded for the purpose of counting of the period of 270 days. Under the Insolvency and Bankruptcy Code, a resolution plan has to be arrived at within 270 days, failing which the firm goes into liquidation.