Dalmia against out-of-court settlement in Binani deal
Bharat Cement Ltd will move a higher court if the Kolkata bench of National Company Law Tribunal ( NCLT) decides against it in the battle for Binani Cement Ltd, a top company official said. While Dalmia continues to repose faith in the ongoing legal process, it will challenge any move to wrest control of Binani Cement by rival UltraTech Cement Ltd, the Dalmia Bharat official said on condition of anonymity.
Dalmia Bharat was declared the highest bidder for Binani Cement by the committee of creditors ( CoC) in March. The bid submitted by UltraTech, which was marginally lower, was rejected. Dalmia had agreed to invest about ₹6,700 crore in Binani Cement over a period of time. UltraTech swiftly challenged the decision of the CoC at the Kolkata NCLT, stating lack of transparency in decisionmaking. The company also received a nod from the Competition Commission of India to pursue the deal on March 28.
Meanwhile, Binani Industries Ltd, Binani Cement’s parent firm, signed a bilateral agreement UltraTech to sell the company and has approached the NCLT seeking termination of insolvency proceedings against Binani Cement and has offered to settle all its outstanding loans including those of operational creditors and statutory dues. The Binani Industries settlement offer is understood to be based a letter of comfort by UltraTech which has committed ₹7,266 crore payment for Binani Cement subject to termination of insolvency proceedings.
Responding to a query from Mint on whether Dalmia Cement plans further legal action, Mahendra Singhi, CEO, Dalmia Cement said, “One has to follow proper legal processes but we hope that there won’t be any need for it. But if someone wants to further litigate and delay the whole process, it is up to them.”
The case which will be heard by NCLT on Monday is likely to set a precedent for several other bankruptcy cases where promoters are seeking out-of-court settlements. Singhi, however, said that Dalmia Bharat is not keen on an out of court settlement. “With us, no settlement can take place out of court. As a responsible corporate citizen, we are bound by a legal contract so under no case we can settle outside the court,” he said.
Dalmia Cement is also understood to have sent a reminder to the creditors last week about the binding contract it has signed with lenders that lays down legally enforceable conditions and the indemnities thereof.
Last week, the Kolkata bench of the NCLT had told the CoC that in the larger interest of the creditors, it could consider the application by Binani Industries looking for an independent solution outside the insolvency process—its request to UltraTech Cement to take over its subsidiary Binani Cement, the Financial Express reported on March 30.