The National Company Law Appellate Tribunal has dismissed an appeal by non-bank financier Authum Investment and Infrastructure challenging a bankruptcy tribunal order that had rejected its objections to a resolution plan for two Srei companies.
The National Company Law Tribunal had in August approved a resolution plan submitted by National Asset Reconstruction Co. Ltd (NARCL) for Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL).
At the time, the tribunal also rejected a plea by Authum, one of the bidders for the two companies under the insolvency process. Following the tribunal’s order, Authum approached NCLAT.
NARCL’s resolution plan offered a net present value bid of ₹5,555 crore for the two Srei companies, which the lenders approved. Authum with a bid of ₹5,526 crore, and Varde Partners along with Arena Investors with a bid of ₹4,680 crore were the two other bidders.
“We do not find any error in the order of the adjudicating authority (NCLT) rejecting the applications,” said an NCLAT bench led by Justices Ashok Bhushan and Barun Mitra in their 42-page order of 5 January.
The tribunal’s approval of the resolution plan was in the commercial wisdom of the committee of creditors, NCLAT said, adding that there were no grounds to interfere with the order. “There is no merit in the appeal. The appeal is dismissed,” it said.
In October 2021, the Reserve Bank of India had superseded the boards of the two Srei companies citing governance concerns and repayment defaults. The regulator then approached the Kolkata bench of the NCLT to initiate insolvency proceedings.
The tribunal subsequently admitted the companies for insolvency proceedings, appointing former Bank of Baroda chief general manager Rajneesh Sharma as the administrator.
“Commercial jurisprudence undoubtedly is the privilege of the CoC (committee of creditors),” said Akshat Khetan, founder of AU Corporate Advisory and Legal Services. “However, the NCLT and other judicial forums ought to scrutinise procedural irregularity and questions of patent illegality while approving any resolution plan.
NARCL completed the acquisition of the two Srei companies in December. “This strategic move sets the stage for the resolution of a significant financial debt amounting to ₹32,700 crore,” NARCL said in a statement on 8 December.
It added that the consolidated resolution plan, as part of the Insolvency and Bankruptcy Code (IBC) process, promised about 50% upfront recovery for the lending consortium, with the potential for substantial upside beyond the committed payment in the resolution plan.
