Vedanta Challenges Commercial Wisdom, Evaluation Matrix in JAL Insolvency Case; NCLAT Reserves Order

Vedanta Ltd Challenges Adani Enterprises' Selection as Successful Bidder for Jaiprakash Associates Ltd

The National Company Law Appellate Tribunal (NCLAT) reserved its order on Wednesday over two petitions filed by Vedanta Ltd against the National Company Law Tribunal (NCLT) order, which had approved Adani Enterprises' bid for debt-ridden Jaiprakash Associates Ltd (JAL) on March 17.

Vedanta Ltd's senior advocate Abhijeet Sinha questioned the evaluation matrix, sanctity of commercial wisdom, and transparency in the process of selecting Adani Enterprises as the successful bidder. Sinha argued that the Committee of Creditors (CoC) has abandoned its own chosen process for value maximisation and has forgotten about transparency and predictability.

The CoC had selected Adani Enterprises' bid of Rs 14,535 crore, while Vedanta Ltd's higher bid of Rs 17,926 crore was rejected. Vedanta Ltd's counsel questioned the evaluation metrics adopted by JAL lenders, which were used to select the bid from Adani Enterprises.

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Sinha argued that the evaluation matrix and scoring cannot be substituted for laying down a binding agreement. He further submitted that the NCLAT and the Supreme Court, through various judgments, have said that commercial wisdom should be worth its name, and it must be reflected from the record.

Comparison of Bids

The NCLAT bench, comprising Chairperson Ashok Bhushan and Member Technical Barun Mitra, concluded its hearing following arguments from Vedanta Ltd and respondents, including the Resolution Professional, Committee of Creditors (CoC), and Adani Enterprises. The tribunal asked both parties to submit written submissions within the next two days.

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Sinha also contested the allegation of getting help from a leak of the valuation during the insolvency process and said such an allegation should not be made during the arguments. He further argued that the CoC's decision to select Adani Enterprises' bid was arbitrary and lacked transparency.

The NCLAT had declined an interim stay over Vedanta Ltd's plea against the order passed by the NCLT on March 17, approving Adani Group's bid. However, it had said that the plan would be subject to the outcome of the appeals filed by the Anil Agarwal-led Vedanta Group. This order was challenged before the Supreme Court, which declined to grant a stay but directed that if the monitoring committee planned to take any major policy decision, it should first obtain the tribunal's sanction.

Adani Enterprises had outbid Vedanta Ltd and Dalmia Bharat to win the bid for JAL. Adani got the maximum 89 per cent votes from creditors, followed by Dalmia Cement (Bharat) and Vedanta Group.