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Informist, Thursday, May 29, 2025

NEW DELHI – The National Company Law Appellate Tribunal has stayed the National Company Law Tribunal's order rejecting Talwandi Sabo Power Ltd.'s scheme of arrangement for demerger. The stay, which will operate till the next date of hearing on Aug. 4, will come into effect only after Talwandi Sabo Power gives a bank guarantee to the tune of INR 12.45 billion in two weeks, the appellate tribunal said.

 

"The issues raised before us need to be considered at length and presently in view of the submissions made the scheme is severable and thus in case the stay is not granted to the impugned order it may affect the second motion application filed in respect of other three transferor companies pending in different tribunals," the appellate tribunal said. 

 

The Mumbai bench of NCLT had in March rejected the scheme for demerger filed by Vedanta's arm Talwandi Sabo over failure to disclose INR 12.51 billion debt to creditor SEPCO Electric Power Construction Corp. Challenging the NCLT order, Talwandi Sabo Power argued that the tribunal could have rejected their application for convening a meeting, but not the whole demerger scheme. 

 

Vedanta's board had in September 2023 approved the demerger of its operations into five separate subsidiaries--Vedanta Aluminium Metal Ltd., Talwandi Sabo Power, Malco Energy Ltd., Vedanta Base Metals Ltd., and Vedanta Iron and Steel Ltd. Vedanta in December decided not to implement the demerger of its base metals operations.

NCLT had in November asked Vedanta to convene a meeting of its shareholders, secured creditors, and unsecured creditors within 90 days, pursuant to the company's scheme of arrangement. But Talwandi Sabo Power was a non-applicant company in the scheme and had filed a separate company scheme application with the NCLT. Vedanta, Vedanta Aluminium Metal, Malco Energy, and Vedanta Iron and Steel are non-applicants under the application filed by Talwandi Sabo Power in the NCLT.  

 

China-based SEPCO Electric Power had raised objections to the demerger of Talwandi Sabo and said that the power unit had deliberately excluded their outstanding debt of INR 12.51 billion from the list of creditors. Rejecting the scheme in March, the tribunal said, "...material facts have not been disclosed by the applicant company, violating Section 230 (2)(a) of the Companies Act, 2013, which in our considered opinion is bound to prejudice the public interest at large."

 

On Thursday, shares of Vedanta ended 1.1% higher at INR 451.65 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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