NCLT Hyderabad Approves Resolution Plan Of Jindal Saw Limited Of Merger With Sathavahanaispat Limited
LIVELAW NEWS NETWORK
4 April 2023 9:24 AM GMT
The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badrinath (Member Judicial) and Shri. Charan Singh (Member Technical) has approved the Resolution Plan submitted by Jindal Saw Limited (JSL), a flagship company of the P.R. Jindal Group. This decision allows for the merger of Sathavahana Ispat Limited (SIL), the Corporate...
The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badrinath (Member Judicial) and Shri. Charan Singh (Member Technical) has approved the Resolution Plan submitted by Jindal Saw Limited (JSL), a flagship company of the P.R. Jindal Group. This decision allows for the merger of Sathavahana Ispat Limited (SIL), the Corporate Debtor, with JSL.
Both JSL and SIL are listed on NSE and BSE. JSL, a leading manufacturer of submerged arc and spiral welded pipes for various industries, will benefit immensely from SIL's expertise in producing and selling pig iron and ductile iron pipes. The fusion of these two giants will amplify JSL's manufacturing capabilities, solidifying its position within the industry.
Background Facts:
The approval of this Resolution Plan comes after a tumultuous journey, as JSL's eligibility was persistently challenged by multiple Operational Creditors, including Trimex Industries Pvt. Ltd. (Trimex), a Prospective Resolution Applicant, who dogged challenges to JSL's eligibility on two separate occasions, asserting that JSL is a related party under Section 29A of the Insolvency and Bankruptcy Code (IBC) and therefore ineligible to submit a resolution plan. For one such Application of Trimex, Special Bench was constituted at Cuttack due to divergent opinion between the Judicial Member and Technical Member of Hyderabad Bench of NCLT however the Application was finally rejected by the Hyderabad Bench of NCLT.
Trimex has challenged the order of NCLT Hyderabad of rejecting its application before the Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) and NCLAT, Chennai Bench directed Trimex to present its grievances before the NCLT. In the end, the NCLT dismissed Trimex's objections filed by way of second application, cementing JSL's eligibility to submit the resolution plan by imposing an exemplary cost of Rs. 5 Lakhs for filing frivolous applications that consumed the Tribunal's valuable resources and time.
In a notable development, a motivated Public Interest Litigation (PIL) [Writ Petition(C) 979 of 2022] was filed before the Supreme Court in a bid to derail JSL's resolution plan. However, the Supreme Court dismissed the PIL. On a later occasion, an application by operational creditor Maa Tara Enterprises to stall JSL's plan was also rejected with costs.
SIL entered the Corporate Insolvency Resolution Process (CIRP) in 2019, with several potential bidders, including Sarda Mines Limited, Vedanta Limited, Welspun Corp Limited, KhandwalaFinstockPvt. Limited, Trimex Industries Pvt. Ltd., and ARES SSG Capital Management (Singapore) Pte Limited, vying to become Prospective Resolution Applicants (PRA). Ultimately, only Vedanta Limited and Jindal Saw Limited submitted resolution plans. JSL's superior bid surpassed Vedanta Limited's offer of Rs. 620 Crore to creditors, including an upfront payment to financial creditors. Consequently, JSL's Resolution Plan received unanimous approval, with 100% votes from the Committee of Creditors (CoC).
Case Title: Trimex Industries Vs. Sathavahana Ispat Limited
Case No: IA (IBC) No.1475 of 2022 in CP IB No.17/9/HDB/2020
Counsel For Trimex Industries: Shri Avinash Desai, Senior Advocate assisted by Ms.Mrudula Sarampally and Ms.Mahathi Reddy, advocates.
Counsel For Sathavahana Ispat Limited: Shri Alay Razvi and Shri Shank Agarwal, Advocates.
Counsel For Jindal Saw Limited: Shri Daizy Chawla, advocate for S&A Law Offices.
