NCLAT Denies Jindal Power's Request to Bid for Tuticorin Coal Terminal

The National Company Law Appellate Tribunal (NCLAT) has rejected the appeal filed by Jindal Power Ltd. (JPL) seeking permission to participate in the resolution process of the financially troubled Tuticorin Coal Terminal. The two-member bench upheld the earlier ruling by the Mumbai Bench of the National Company Law Tribunal (NCLT), which deemed JPL "ineligible to submit a Resolution Plan" under the Corporate Insolvency Resolution Process (CIRP) Regulations.

The NCLAT emphasized that while the Insolvency and Bankruptcy Code (IBC) aims at maximizing the value of assets, it cannot override existing CIRP Regulations, specifically preventing the entry of companies not included in the final list of prospective resolution applicants. The tribunal directed the resolution professional and the Committee of Creditors (COC) to evaluate the bid from Seapol.

"We do not find merit in the present Appeal, which if allowed would mean contravention and violation of Regulation...The Appeal is, therefore, dismissed," stated the NCLAT. "RP and COC should proceed with its CIR proceedings and decide the resolution plan available with them either way."

JPL had contested the August 2023 NCLT order, asserting its eligibility to participate in the resolution process despite being ineligible according to the CIRP Regulations. Initially permitted by the NCLT, JPL was later deemed ineligible as its name was not on the final list of resolution applicants.

The Tuticorin Coal Terminal's resolution professional had initially sought liquidation, but Seahawk expressed interest, leading to a withdrawal of the liquidation application. Seapol, listed as a final prospective resolution applicant, submitted its plan on February 18, 2023.

In July 2023, JPL expressed interest in participating in the CIRP by submitting an Expression of Interest (EoI). Although initially allowed by the NCLT, a contradiction arose regarding compliance with CIRP Regulations. The NCLT clarification order ultimately disallowed JPL from submitting a resolution plan for the Tuticorin Coal Terminal.

Challenging this decision before the NCLAT, JPL argued that the IBC's intent was to maximize the value of the corporate debtor's assets. However, the NCLAT maintained that the IBC process cannot override existing regulations, emphasizing that resolution plans entering midway and not in the final list could disrupt and delay CIRP proceedings.

Tuticorin Coal Terminal, a special purpose vehicle engaged in developing North Cargo Berth II at Tuticorin Port, initiated CIRP in 2019 based on a plea from its largest financial creditor, Bank of India.

BS