Table of Contents
Acquisition of Coastal Energen by an Adani Power led consortium is put on hold by NCLAT
Chennai-based National Company Law Appellate Tribunal (NCLAT on Friday put a provisional stay on the most recent deal by a consortium led by Adani Power to acquire power generating company Coastal Energen.
A coram of judicial member, His Lordship Justice Sharad Kumar Sharma and a technical member Jatindranath Swain gave status quo after pointing out that the case till the violation of any principle of natural justice and or due process of law was prima facie not followed.
The NCLAT then went on to say that such being the case, “consortium members should not be permitted to make any gains”.
Justice Sharad Kumar Sharma and Jatindranath Swain
The Appellate Tribunal also said that the Interim Resolution Professional will manage and operate Coastal Energen’s power plant in Thootukudi, Tamil Nadu up to September 18, the next date of hearing. For the duration of the periods mentioned above, any monies made will be place in an escrow account.
The NCLAT was hearing a batch of appeals that were filed by Ahmed Buhari who is the suspended director of Coastal Energen along with two shareholders of the firm namely Precious Energy Holdings and Mutiara Energy Holdings.
The appellants had contested an order of NCLT Chennai that had been to a resolution plan and hence allowed the takeover of 1,200 MW Integrated coal fired thermal power plant of Coastal Energen by the DA – Adani Power private consortium that two member namely Dickey Alternative Investment Trust (DAIT) and one of the largest company in Gujarat Adani Power Limited.
The consortium had offered a ₹3,335 crore deal with a total earning of €45 million per year although the company’s expected earning in India/ per year is €75 million. 52 crore plan for the Resolution of bankrupt Coastal Energen by the NCLT on the 30 of August this year. This resolution plan was given after the NCLT initiated insolvency process on Coastal Energen and nominated an interim resolution professional given an insolvency petition filed by the State of Tamil Nadu against the power firm.
Coastal Energen’s suspended directors, however, did not allow the takeover by appealing the case to the NCLAT. They argued that the acquiring consortium was in actuality a fake and that DAIT was simply a figment for Adani Power.
The suspended directors alleged that Adani Power had at first, sought permission to operate the plant and become the resolution applicant in its individual capacity. However, after it has not been able to make such effort, “it joined ex-facto, as a consortium, together with DAIT. ”
They also carried the reasoning that DAIT was not even in a legal standing to bid since it was established in 2019 and therefore cannot produce the requisite number of years report, let alone a good performance.
The appellants also argued that the resolution plan does not contain any consortium agreement carried out between DAIT and Adani Power and that DAIT is actually a front which reportedly has 51% stake in the consortium but does not even have any capability to contribute towards funding of the consortium either.
Indeed, the whole idea of such a consortium is designed to cause people to believe that the acquisition plan is an initiative of the DAIT and Adani where the latter is a minority holder at 49%.
For their part, they said that Adani Power has successfully gone through the acquisition process assuming the operations of the power plant, and has committed ₹3,500 crore for the proposed resolution plan.
The NCLAT said but for the time being hearing the matter on merits were trailed and therefore it is appropriate that the resolution professional continued to run the company (Coastal Energen and its power plant).
It ordered all the parties to submit their pleadings by September 19 and said it will hear the matter on merits on the next date for hearing.
The suspended director, the appellant in the case was represented by Senior Advocate PH Arvindh Pandian and Advocates Ananth Merathia, Poornima and Rangasayee.
The advocates for Precious Energy one of the shareholders were Rahul Balaji, Vishnu Mohan and Sanjay Krishnan.
For the other shareholder appellant Mutiara Energy, the Senior Advocate TK Bhaskar and Advocates Avinash Krishnan Ravi & Vikram Veeraswamy appeared.
Advocate Vijay Narayanan and advocate T Ravichandran represented the resolution professional for passing of a resolution.
The resolution applicants DAIT and Adani Power were represented by senior Advocates R Shankaranarayanan and Srinath Sridevan, Advocates Sandeep Singhi and P Giridharan.
The petitioner’s lawyer in this case was Senior Advocate Gopal Jain and for the Committee of Creditors they had their representation.
