26 March 2019: The National Company Law Tribunal (NCLT) for the second time Tuesday questioned the motive of lenders, led by Andhra Bank, to withdraw their bankruptcy application and to choose a one-time settlement with the absconding promotersof Sterling Biotech.
The Mumbai NCLT bench comprising VP Singh and R Duraisamy for the second time questioned the motive of banks who have accepted an out-of-court settlement offered by promoters, the Nitin Jayantilal Sandesara and family, offering Rs 3,100 crore of repayments by June 2019.
At the March 11 hearing also, the tribunal had questioned the one-time settlement by absconding promoters, for a loan of Rs 7,500 crore excluding interest and penalties from a group of lenders led by Andhra Bank, while Sandesara group owes over Rs 15,000 crore to lenders.
The four promoters of the group–Nitin Sandesara, Chetankumar Sandesara, Dipti Chetan Sandesara and Hiteshkumar Patel–are absconding and are facing extradition orders.
The tribunal Tuesday said if the one-time settlement plea is granted it will mean the absconding promoters would get back their company with a clean balance sheet.
The tribunal will hear the matter afresh on April 26.
Earlier, the tribunal had given two weeks to government and various investigation agencies to file their response. It had also sought responses from the Enforcement Directorate (which is probing an Rs 8,000 crore money laundering case against the group) the income tax department, the CBI, Sebi and RBI.
But only the ED and Sebi filed their replies, and the corporate affairs ministry asked for more time. The court asked the others also to file their replies before the next hearing on April 26.
The ED in its reply also said the government wants to attach the entire Rs 14,000 crore and the ED can attach the one-time settlement money. So it’s better for the banks to appeal in special court, it added.
The lawyers representing the lenders had on March 11 had informed the tribunal that they wanted to withdraw the insolvency process as the promoters are willing to pay the dues out-of-court.
“Over 90 percent of lenders have approved the settlement offer of around Rs 3,100 crore and under Section 12A of the Bankruptcy Code, the petition can be withdrawn,” Nishit Dhruva, managing partner of MDP & Partners, who was representing the lenders in the case had argued.
To this, the tribunal had pointed out that the settlement offer was coming from one Farhad Daruwalla, signed on behalf of the Sandasera group when the applicant before the NCLT is a specific legal entity, Sterling Biotech.
The lenders have already got a little over 5 percent of the default amount of Rs 179.67 crore from the outstanding amount on the day of default.
Apart from defaulting on loans to the tune of Rs 7,500 crore, the promoters are accused of fraud, which is being investigated by CBI. That apart, ED and Serious Frauds Investigation Office are also probing various other charges, including money laundering, and have reportedly attached assets worth Rs 4,700 crore.