New Delhi: the National Company Law Appeal Tribunal (NCLAT) rejected the petition of Deccan value investors challenge NCLT’s approval to its resolution plan for indebted Amtek Auto without execution of a property lease. A three-member NCLAT bench also imposed a cost of Rs 1 lakh on the US hedge fund Deccan Value Investors (DVI) LLP calling the petition “frivolous”.
He added that the execution of the long-term (20-year) lease of the land of the Ace complex was not a prerequisite for the approval of the resolution plan.
“The appeal is not only unfounded, but also frivolous. We, while dismissing the appeal, impose costs in the amount of Rs a lakh on the appellant (DVI) which will be filed in this appeal tribunal within 15 days, “said the NCLAT bench. chaired by the Acting President, Justice BL Bhat.
Previously, the Chandigarh bench of the National Company Law Tribunal (NCLT) approved on July 9, 2020 the resolution plan submitted by DVI for Amtek Auto Ltd.
While approving, the NCLT in its order made the condition precedent by DVI LLP for a long term (20 year) lease of the Ace complex land as unsuccessful.
This was challenged by DVI LLP before NCLAT, claiming that while approving its resolution plan, the NCLT went beyond its jurisdiction in concluding that the requirement for the prior written consent of the Ace Complex mortgagee Ltd as provided for in the resolution plan.
He had argued that the execution of the long-term lease of the land at the Ace complex was a prerequisite and was an integral part of the resolution plan, as Amtek Auto’s business as an operating company depended on the availability of this leased land.
DVI LLP also insisted that NCLAT did not consider that the parties had agreed that the long-term lease they had signed on the land of the Ace complex for 20 years and the prior written consent of the mortgagee must be acquired.
However, this was rejected by NCLAT stating that “we are of the opinion that the execution of the long-term lease for the Ace complex land with acceptable terms was not a precondition for the approval of the development plan. resolution, but only on the effective date. ”
The NCLT order does not go beyond the scope of the investigation under Article 31 of the Insolvency and Bankruptcy Code, under which the Designated Authority (NCLT) approves the resolution.
“The appellant would not be justified in attacking the contested order which, in fact, is nothing more than another effort to evade its obligations and request the withdrawal of the resolution plan in another aspect “said NCLAT.
DVI had bid around Rs 2700 crore, in which Rs 500 crore was in the form of initial cash and the balance Rs 2200 crore to be paid in the future.
Amtek Auto has a total loan of over Rs 12,500 crore.
Amtek Auto’s corporate insolvency resolution process was initiated on July 24, 2017 by the NCLT. It was on the first list of 12 companies sent to the NCLT by the RBI in 2017 for resolution under the Insolvency and Bankruptcy Code (IBC).