Vedanta's Plea Tests Commercial Viability of Committee of Creditors' Approach to Debt Resolution

Adani Enterprises Argues Resolution Process Integrity Before NCLAT

In a recent hearing before the National Company Law Appellate Tribunal (NCLAT), Adani Enterprises defended the conduct of the resolution professional of Jaiprakash Associates Ltd (JAL) seeking information from bidders on specific aspects, arguing that it was not an irregularity. Instead, Adani's counsel Ritin Rai claimed that challenging this conduct would "indirectly permit a judicial review of the commercial wisdom of lenders."

The evaluation metrics, which Vedanta questioned before NCLAT, were disclosed to all parties from the beginning and were accepted by all bidders, according to Adani's counsel. However, Adani's counsel argued that entertaining Vedanta's addendum after the closure of the challenge process would have undermined the integrity of the process.

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The CoC has identified certain ambiguities and directed the RP to seek clarifications from all resolution applicants, following which the RP issued an email on November 5 seeking clarifications from all applicants on specific aspects. The RP did not take any independent or unilateral decision; he merely communicated the CoC's queries and placed the responses before it.

Adani's counsel further argued that the evaluation metrics was disclosed at the very beginning, and all parties knew the rules of the game from inception. The RFRP makes clear that resolution plans are to be evaluated as per the evaluation metrics, along with feasibility and viability under the code and the CIRP regulations.

Vedanta, during the arguments, questioned the evaluation metrics adopted by the lenders of JAL, on which Adani Enterprises was selected as the highest bidder. However, Adani's counsel argued that the RFRP did not specify that NPV is the sole criterion for evaluation.

Vedanta had contended that its addendum bid is about Rs 3,400 crore higher in gross value terms and roughly Rs 500 crore higher in net present value (NPV) than the Adani Group's offer. However, Adani's counsel argued that the challenge process only identifies the highest financial proposal on the identified criterion, and the final evaluation still must take place under the code, the CIRP regulations, the RFRP, and the evaluation metrics.

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The matter has been posted for the next hearing on Wednesday, and Vedanta will reply to the arguments of the RP, CoC, and Adani Enterprises. Vedanta has filed two petitions challenging the March 17 order by the Allahabad bench of NCLT, which approved Adani Enterprises' Rs 14,535-crore bid to acquire JAL through the insolvency process.