Armed with a Supreme Court order allowing the promoter’s settlement plan to save the company from liquidation, the ailing Siva Industries and Holding Ltd (SIHL) said on Saturday the company will be placed under new management soon and will focus on settling its creditors as soon as possible.
Commenting on the SC order that quashed both the NCLT and NCLAT orders directing liquidation of the company, Vallal RCK, father of serial entrepreneur and company founder C Sivasankaran, told FE: “I am pleased and humbled by the judgment of the honourable Supreme Court. It has been a long journey to get here and I feel vindicated. In my twilight age of 94, this judgment has reaffirmed my faith in the fairness of the Indian judiciary. I thank everyone who has supported me in the journey to get here.” At the same time, he looks forward to the company using artificial intelligence to find ways to tackle metabolic diseases.
Vallal RCK, a shareholder of the company, had challenged the NCLAT order upholding the NCLT’s order to liquidate SIHL, despite the committee of creditors (CoC) accepting the settlement plan with a voting majority of 94.23%.
In its order on the appeal of Vallal RCK, the apex court bench comprising justices BR Gavai and Hima Kohli said the adjudicating authority (NCLT) or the appellate authority (NCLAT) cannot sit in an appeal over the commercial wisdom of the CoC. The interference would be warranted only when the adjudicating authority or the appellate authority finds the decision of the CoC to be wholly capricious, arbitrary, irrational and dehors the statute or rules.
Through the order, the SC has permitted the lenders to go ahead with the SIHL promoter’s settlement plan under Section 12A of the Insolvency and Bankruptcy Code (IBC) that allows such a provision if 90% of the CoC supports it.
The court reiterated its own observation in Arun Kumar Jagatramka versus Jindal Steel and Power Ltd, wherein it had said the need for judicial intervention or innovation from the NCLT and the NCLAT should be kept at a bare minimum and should not disturb the foundational principles of the IBC. The commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC, the court said.
The decision of the CoC was taken after the members deliberated on the pros and cons of the settlement plan and exercised their commercial wisdom. Neither the NCLT nor the NCLAT was justified in not giving due weight to the commercial wisdom of the CoC, the apex court said.
The NCLT, in August 2021, had ordered liquidation of SIHL and rejected the application filed by the resolution professional of Siva Industries.
Abhishek Manu Singhvi, counsel for SIHL, submitted that it is more than well-settled that the adjudicating authority or the appellate authority cannot sit in an appeal over the commercial wisdom of CoC. He argued that the CoC had accepted the settlement plan with the voting majority of 94.23%, and the NCLT and NCLAT have grossly erred in rejecting the settlement plan and withdrawal of CIRP.
Siva Industries’ promoter has offered to pay Rs 328.21 crore to the IDBI Bank-led consortium of lenders as a one-time settlement to withdraw the company from IBC proceedings at NCLT. The company’s debt is about Rs 4,863 crore and the settlement plan amounted to a haircut of about 93.5% for banks. The Siva group has business interests in communication, renewable energy, media, realty, agriculture and food and wellness, with SIHL the holding company.