The Supreme Court on Thursday allowed the consortium of Adani Power and Dickey Alternative Investment Trust to continue to operate Coastal Energen‘s 1,200 MW-thermal power plant till the National Company Law Appellate Tribunal (NCLAT) decided various appeals against the approval granted to the resolution plan for the debt-laden firm.
However, the apex court said that the Adani-Dickey consortium, the successful resolution applicant (SRA), would not dismantle the Coastal Energen’s power plant in Tuticorin, Tamil Nadu, or create any third party rights or create any financial obligations except in the ordinary course of business.
The Bench led by Chief Justice D.Y. Chandrachud said that “prima facie, we are of the view that the September 6 order (of NCLAT) suffers from internal inconsistency. The first part indicates status quo ante has to be restored and the second part shows status quo has to be maintained as on date.”
While observing that prima facie due process was not followed and members of the consortium should not be allowed to make any gains, the NCLAT had on Friday (Sep 6) directed that the erstwhile resolution professional would continue to run Coastal Energen’s power plant till September 18, the next date of hearing.
The apex court noted the arguments of the parties that the NCLAT would hear the challenge by Ahmed Burari, the suspended director of Coastal Energen, and Precious Energy Holdings and Mutiara Energy Holdings, the two shareholders of the company on September 18. They had challenged the NCLT’s approval given to Dickey Alternative and Adani Power‘s resolution plan for the debt-ridden firm.
However, the SC clarified that its observations would not affect the final proceedings before the appellate tribunal.
Senior counsel Mukul Rohatgi and AM Singhvi, appearing for Adani-Dickey consortium, argued that Adani had the right to run the plant as the committee of creditors had approved their resolution plan on August 31 and accordingly they paid Rs 3,335 crore to 16 banks and took over the possession of the power plant.
During the hearing, the CJI enquired about “the great hurry for NCLAT to disturb the status quo on a Saturday? The CoC has approved them (the consortium) by 97% vote and if they have done it in their commercial wisdom, then what is the issue?”
Senior counsel Kapil Sibal, representing the former director of Coastal Energen, contended that Adani was never an eligible bidder as its expression of interest email in its independent capacity was rejected by the lenders. And later Dickey brought back Adani as part of the consortium and this “backdoor entry” can not be permitted under IBC.
The consortium in its appeal had told the SC that the Friday’s order did not disclose any reason for “grant of such an extraordinary order,” and had divested it from the operations of the power plant and put it back under the control of the erstwhile resolution professional, thereby restoring the status quo ante and that too at the instance of the erstwhile director of Coastal Energen.
