NCLAT sets aside nod for Ricoh acquisition by Dharamshi-Jhunjhunwala consortium
Mumbai: The National Company Law Appellate Tribunal (NCLAT) has set aside the bankruptcy court’s approval to a consortium led by investor Kalpraj Dharamshi and including Rekha Jhunjhunwala to acquire Ricoh India.
The order deals a setback to the efforts of Dharamshi and Rekha Jhunjhunwala, the wife of ace investor Rakesh Jhunjhunwala, to revive the printing and document solutions company that their consortium has now renamed Minosha India.
Kotak Investment Advisors, the private equity arm of Kotak Mahindra Bank which was one of the bidders for Ricoh India, had challenged the National Company Law Tribunal’s (NCLT) decision before the appellate body. It had argued that the Dharamshi-Jhunjhunwala consortium was allowed to submit its bid after the expiry of the deadline and when the bids by other bidders had already been opened.
On Wednesday, the appellate tribunal directed Ricoh’s committee of creditors (CoC) to take a decision afresh within 10 days on the resolution plans that had been submitted within the stipulated timeline.
“If no decision is communicated to the adjudicating authority (NCLT) and the timeline for completion of CIRP (corporate insolvency resolution process) has already expired, then the adjudicating authority is to pass an order for liquidation of the corporate debtor (Ricoh India),” ruled the appellate tribunal presided over by acting chairperson Justice Bansi Lal Bhat.
Email queries to Kotak Investment, Minosha India and Krishna Chamadia, who was the resolution professional (RP) of Ricoh India, remained unanswered till press time Thursday.
“Our faith in the rule of law and the fairness of the judicial process has been reiterated by the National Company Law Appellate Tribunal’s order in our favour,” Kotak Investment managing director Srini Sriniwasan said in a LinkedIn post. “While this may not be the end of the matter, it does show that the process works and one needs to have the tenacity to pursue.”
In its 43-page order, the appellate tribunal said the RP had “committed a grave error” in accepting the resolution plan of the consortium after the expiry of the deadline, without notifying any extension to the timelines.
“The act of the resolution professional to accept the resolution plan after opening the other bids, which were all submitted within the deadline for submission of plans, cannot be justified by any means and is a blatant misuse of the authority invested in the RP to conduct CIRP,” the tribunal said.
During the course of the arguments, the RP’s counsel argued that the correct procedure was followed as prescribed under the Insolvency and Bankruptcy Code and accompanying regulations. The RP also argued that Kotak Investment was one of four bidders and its plan was rejected at a CoC meeting on February 13, 2019. On the same date, the Dharamshi-led consortium’s plan was approved with 84.36% of the votes in its favour, the RP had said.
Last year in November, the Mumbai bench of the NCLT had approved the resolution plan of the Dharamshi-led consortium. In December, Kotak Investment challenged the NCLT ruling in the Bombay High Court with the arguments that the entire resolution process was flawed. The high court refused to give any relief to Kotak Investment. Later, it challenged the NCLT ruling in the NCLAT.
In November 2014, Ricoh India had won a project to digitise 130,000 post offices across the country and the work is still in the installation phase. Besides, the company has installed 50,000–70,000 units of equipment at post offices on which it earns maintenance and other services fees. Apart from India Post, it has service and maintenance contracts for banks and financial institutions.