Amidst ‘fraudulent transactions’ charges, Binani seeks stopping insolvency move against subsidiary

Kolkata, March 22 (IANS) Amidst charges of “fraudulent transactions”, Binani Industries Ltd on Thursday submitted an application before the Kolkata bench of National Company Law Tribunal (NCLT) seeking termination of the corporate insolvency proceedings against its subsidiary, company’s counsel said.

The company, in its application, also claimed that it can “pay off all its creditors”.

The move came after it concluded a commercial understanding with Aditya Birla Group firm UltraTech Cement to sell its entire 98.43 per cent stake in its cement manufacturing subsidiary at a consideration of Rs 7,266 crore.

However, Resolution Professional (RP), Vijaykumar V Iyer, has submitted the resolution plan of Dalmia Bharat-controlled Rajputana Properties before the NCLT as the “highest bidder” to take over the debt-laden company.

“We have filed an application before the Tribunal seeking termination of insolvency proceedings commenced against the Binani Cement and we also said Binani Industries can pay off all the creditors. This application is likely to be heard on next Tuesday,” said advocate Ratnanko Banerjee representing Directors of Binani Industries.

He also said the directors of the company also challenged the process of conducting the insolvency proceedings and “expensive charges” made by the Resolution Professional.

Citing a forensic audit report, before the court, RP’s counsel Abhrajit Mitra on Thursday said a loan of about Rs 1,100 crore was given by the corporate debtor, Binani Cement, to its holding company Binani Industries Ltd.

“The loan was given to Binani Industries to buy back shares of its subsidiary. As per the balance sheet, Rs 1,100 crore was payable to the company (Binani Cement) by its holding company. What the fraudulent transaction is was that the interest chargeable was fully waived,” he asked.

According to Mitra, the RP has filed an application based on the forensic audit report of the “fraudulent transaction of the previous management”.

He, however, said the matter of fraudulent transaction was a separate one and it was incumbent on the RP to bring this to the notice of NCLT bench.

“The discovery of fraudulent transaction and its outcome should not impact the resolution process and the finalisation of the resolution plan,” Mitra claimed.

Meanwhile, Binani’s industries, denying such allegations, said any application filed by the RP was an “afterthought”.

“We have not been served a copy of the application…No sooner the application i.e. served upon us we shall deal with the same,” Binani Industries said in a regulatory filing.

One of its senior counsel on Thursday said: “The RP made certain allegations of dubious transactions but there is no documentary support of that. As an afterthought, he has made these allegations. One of Directors of Binani filed an application alleging that the fraudulent transactions were made by the RP.”

The RP has been directed by Justice Jinan K.R. to reply to applications and allegations raised by the company.

“There are some allegations against the RP. He has to deal with that and make a reply. He was also directed to submit a progress report,” Binani Industries’ counsel said.

Despite the allegation of “dubious transactions” made promoters of Binani Industries, the counsel of the Committee of Creditors to the insolvent Binani Cement on Thursday urged the Tribunal that it could consider resolution plan of Dalmia Bharat, as considered by highest bidder, if the court finds it “proper”.

“The alleged fraud is nothing to do with the sale of assets. If the offer is proper, the tribunal can consider it,” the counsel for the Committee of Creditors of the debt-laden company, Pratap Chatterjee said in his submission before the bench.

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