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Informist, Wednesday, Nov. 27, 2024

 

--NCLT junks Union Bk plea against Univastu's IBC plan for Setubandhan Infra 

 

NEW DELHI – The Mumbai bench of the National Company Law Tribunal on Wednesday rejected a petition by Union Bank of India against Univastu India Ltd.'s resolution plan for debt-ridden Setubandhan Infrastucture Ltd. 

 

Union Bank had said the proposed amount to be paid under the plan to it was substantially lower than its admitted claim and disproportionate compared to the amounts proposed for other financial creditors, especially State Bank of India. The amount payable to State Bank of India was INR 246.74 million for its admitted claim of INR 1.03 billion, while Union Bank is to be paid INR 13.46 million for an admitted claim of 130.07 million.

 

It is a well-settled principle that the tribunal should not interfere with commercial decisions of the committee of creditors unless there is clear evidence of arbitrariness, mala fide intent, or breach of statutory provisions, said the Mumbai bench. In the present case, the committee has exercised its commercial judgement in approving the resolution plan submitted by Univastu India, the tribunal said. 

 

The tribunal noted that the committee, which included Union Bank as a voting member, had considered all relevant factors and distribution parameters, including the value of security interests and liquidation value. The differential treatment of creditors, including Union Bank of India, was justified by legitimate commercial considerations and does not violate the principle of equitable treatment within the same class of creditors, it said. 

 

The methodology adopted under the resolution plan, which includes an initial allocation based on the claim ratio and subsequent adjustments for security value, was subject to extensive deliberation by the committee, the tribunal noted. The objections raised by the applicant were duly considered in the committee's meetings, it added. "...Union Bank of India, despite its objections, cast its vote in favour of the resolution plan. This vote indicates the applicant's acceptance of the plan within the CoC's (committee of creditors') decision-making framework," the tribunal said.

 

Setubandhan Infrastructure had obtained loans from State Bank of India, Kotak Mahindra Prime Ltd., and Andhra Bank, now merged with Union Bank. In 2022, the tribunal had admitted the petition to start insolvency proceedings against the company.

 

On Wednesday, shares of Union Bank of India ended 1.2% higher at INR 122.88 on the National Stock Exchange, and shares of Univastu India Ltd. ended 4.3% higher at INR 263.54.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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