The SC, in its decision dated November 19, 2018, upheld the bid of UltraTech Cement (‘Ultratech’) for Binani Cement Limited (‘BCL’). A review petition filed by Rajputana Properties Private Limited (‘RPPL’) challenging the aforesaid order of the SC, was rejected on January 8, 2019.

RPPL and Ultratech, an entity belonging to the Aditya Birla group, had both submitted bids in the corporate insolvency resolution process (‘CIRP’) of BCL under the Insolvency and Bankruptcy Code, 2016 (‘IBC’). RPPL’s bid was declared the highest bidder (‘H1’) (on the basis of the points obtained as per the evaluation criteria) while Ultratech’s bid was declared the second highest (‘H2’). Subsequently, Ultratech raised its bid amount significantly and agreed to deliver a higher payout to all financial and operational creditors. However, by this time the deadline for submission of bids, as set out in the request for resolution plan (‘RFRP’) formulated by the committee of creditors (‘CoC’), had already lapsed. The CoC refused to entertain the bid submitted by Ultratech on the ground of late submission and approved the bid submitted by RPPL. Ultratech challenged the CoC’s decision to select RPPL as the successful bidder, relying on the provision contained in the RFRP, which permitted the CoC to consider bids from any party, till such time that a resolution plan submitted for BCL was approved by the NCLT.

The National Company Appellate Tribunal (‘NCLAT’) referred to the aforementioned provision in the RFRP and approved the resolution plan submitted by Ultratech on the ground that it was offering a higher amount, thereby ensuring compliance with the primary objective of IBC, i.e. ensuring maximization of the value of the assets of the corporate debtor. The NCLAT also noted that the bid submitted by RPPL was discriminatory on the ground that it differentiated between financial creditors who are equally situated (i.e. financial creditors to whom the corporate debtor owed a debt in its capacity as the primary borrower and financial creditors to whom the corporate debtor owed a debt in its capacity as a guarantor for third party debt) and did not balance the interests of the other stakeholders, such as operational creditors. Finally, the NCLAT also observed that any resolution plan, which is shown to be discriminatory against one or other financial creditor or operational creditor, can be held to be violative of the IBC. RPPL appealed the NCLAT’s decision before the SC. However, the SC refused to set aside the NCLAT’s judgement, while observing that there was no infirmity in the order.