On Friday, the National Company Law Appellate Tribunal (NCLAT) in Chennai temporarily halted the acquisition of Coastal Energen by a consortium led by Adani Power. The decision came after the tribunal noted potential procedural irregularities in the acquisition process.
Order Details
- Judicial Members: Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) issued the status quo order.
- Reason for Halt: The NCLAT observed that prima facie, due process had not been followed, leading to the decision that the consortium members should not benefit from the acquisition during this period.
- Interim Measures: The Interim Resolution Professional (IRP) will continue to operate Coastal Energen’s power plant in Thootukudi, Tamil Nadu, until September 18, the next hearing date. Any funds generated will be held in an escrow account.
Background of the Case
- Appeals: The NCLAT was hearing appeals from Ahmed Buhari, a suspended director of Coastal Energen, and two shareholders—Precious Energy Holdings and Mutiara Energy Holdings.
- Challenge: The appellants contested an earlier NCLT Chennai order that approved a resolution plan allowing the consortium’s takeover of Coastal Energen’s 1,200 MW coal-fired thermal power plant.
- Resolution Plan: The consortium, consisting of Dickey Alternative Investment Trust (DAIT) and Adani Power, had proposed a ₹3,335.52 crore resolution plan approved by NCLT on August 30.
- Insolvency Proceedings: The NCLT initiated insolvency proceedings against Coastal Energen after a plea from the State of Tamil Nadu.
Appellants’ Claims
- Fraudulent Consortium: The suspended directors argued that DAIT was a front for Adani Power and was not eligible to bid due to its recent establishment and lack of financial track record.
- Lack of Consortium Agreement: They claimed that the resolution plan lacked a proper consortium agreement and that DAIT merely served as a façade for Adani Power, which was originally interested in acquiring the plant individually.
Adani Power’s Defense
- Adani Power contended that it had completed the acquisition process, taken over operations, and paid the full ₹3,500 crore as part of the resolution plan.
Next Steps
- Filing Pleadings: All parties are required to file their pleadings by September 19.
- Merits Hearing: The NCLAT will hear the case on its merits at the next scheduled date.
Legal Representatives
- Suspended Director: Senior Advocate PH Arvindh Pandian, Advocates Ananth Merathia, Poornima, and Rangasayee.
- Precious Energy Holdings: Advocates Rahul Balaji, Vishnu Mohan, and Sanjay Krishnan.
- Mutiara Energy Holdings: Senior Advocate TK Bhaskar, Advocates Avinash Krishnan Ravi and Vikram Veeraswamy.
- Resolution Professional: Senior Advocate Vijay Narayanan and Advocate T Ravichandran.
- Resolution Applicants (DAIT and Adani Power): Senior Advocates R Shankaranarayanan and Srinath Sridevan, along with Advocates Sandeep Singhi and P Giridharan.
- Committee of Creditors: Senior Advocate Gopal Jain.
Multiple-Choice Questions (MCQs):
- What action did the NCLAT take regarding the acquisition of Coastal Energen?
- A) Approved the acquisition
- B) Temporarily halted the acquisition
- C) Approved the resolution plan
- D) Dismissed the case
- Who are the judicial members involved in the NCLAT decision?
- A) Justice R Shankaranarayanan and Justice Vijay Narayanan
- B) Justice Sharad Kumar Sharma and Jatindranath Swain
- C) Justice TK Bhaskar and Justice PH Arvindh Pandian
- D) Justice Vishnu Mohan and Justice Rahul Balaji
- What is the amount of the resolution plan offered by the consortium for Coastal Energen?
- A) ₹3,000 crore
- B) ₹3,335.52 crore
- C) ₹3,500 crore
- D) ₹4,000 crore
- Until when will the Interim Resolution Professional manage Coastal Energen’s power plant?
- A) September 15
- B) September 18
- C) September 19
- D) October 1
- What was the primary claim of the appellants regarding the consortium?
- A) The consortium was too costly
- B) The consortium lacked a proper agreement
- C) The consortium was a sham with DAIT as a front for Adani Power
- D) The consortium was too large