The Supreme Court on Tuesday dropped the contempt proceedings initiated by lenders of bankrupt Amtek Auto against US-based hedge fund Deccan Value Investors (DVI) on the situation that it doesn’t raise the force majeure clause earlier than the National Company Appellate Law Tribunal (NCLAT). The NCLAT is listening to DVI’s attraction against approval granted to its bid for takeover of the auto elements maker.
The apex courtroom additionally rejected DVI’s software for rectification, terming it to be “an attempt to renege from the resolution plan which it submitted and to resile from its obligations. This is a devious attempt which must be disallowed,” the courtroom stated.
Amtek Auto’s lender wished DVI to be prosecuted for making an attempt to wriggle out of its obligation to accumulate the bankrupt auto elements maker after rising because the profitable decision applicant. DVI’s Rs 12,700-crore bid was authorised by NCLT, Chandigarh, on July 9, 2020. However, the US agency had challenged it within the NCLAT by invoking the force majeure clause throughout the pandemic, which had drastically altered the monetary calculations that shaped the idea for its earlier provide. The hedge fund had stated its industrial assumptions for the sick producer had been rendered redundant as a result of prevailing market circumstances.
In 2019, UK-based Liberty House, which had been the profitable bidder, had backed out citing technical causes.
A bench led by Justice DY Chandrachud, whereas dismissing the contempt petition filed by the Committee of Creditors, held that “it is not expedient in the interest of justice to pursue the contempt proceedings, which stand dismissed” topic to the situation that DVI “shall not set up a plea for force majeure in the proceedings which are pending before the NCLAT in appeal against the order of the NCLT approving the resolution plan”.
“Undoubtedly, the conduct of DVI has not been bona fide … DVI attempted to resile from its obligations and a reading of its application which led to the passing of the order on June 18, 2020, will leave no doubt about the fact that DVI was not just seeking an extension of time but a re-negotiation of its resolution plan after its approval by the CoC. Then again … it continued to persist in raising the same pleas within and outside the proceedings before the NCLAT. The conduct of DVI is lacking in bona fides,” the bench stated.
It requested the appellate tribunal to resolve DVI’s attraction in a month’s time.
Amtek Auto, which owes Rs 12,800 crore to banks and others, featured on the primary checklist of 12 firms referred by the RBI to provoke insolvency proceedings in 2017.
The ruling may also have an effect on different instances the place bidders have invoked force majeure clauses to eliminate their earlier commitments because of monetary constraints imposed by the pandemic.