Jindal Saw's Merger Plan Gets Green Light from NCLT Hyderabad

Jindal Saw's Merger Plan Gets Green Light from NCLT Hyderabad

The National Company Law Tribunal (NCLT), Hyderabad bench, has approved the Resolution Plan submitted by Jindal Saw Limited (JSL), a subsidiary of the P.R. Jindal Group. The decision paves the way for the merger of SathavahanaIspat Limited (SIL) with JSL, creating a dynamic synergy between the two businesses and enhancing JSL's market presence and operations. This landmark decision comes after a series of challenges and upheavals.

Jindal Saw Limited (JSL) and Sathavahana Ispat Limited (SIL) are listed on NSE and BSE, and the merger between them marks a significant achievement for JSL.

JSL, a prominent manufacturer of submerged arc and spiral welded pipes, will gain a competitive advantage from SIL's proficiency in producing and selling pig iron and ductile iron pipes. This amalgamation of industry leaders is expected to augment JSL's manufacturing capabilities, further consolidating its position in the industry.

JSL's eligibility to submit a resolution plan had faced multiple challenges from operational creditors, including Trimex Industries Pvt. Ltd., who had contested it on the grounds that JSL was a related party under Section 29A of the Insolvency and Bankruptcy Code (IBC) and thus ineligible.

Trimex had challenged JSL's eligibility twice, and a special bench was constituted at Cuttack to resolve one of the challenges due to a divergent opinion between the judicial member and technical member of the Hyderabad bench of NCLT. However, the Hyderabad bench of NCLT ultimately rejected Trimex's application, paving the way for the approval of JSL's Resolution Plan.

Trimex filed an appeal challenging NCLT Hyderabad's decision to reject its application before the Chennai bench of the National Company Law Appellate Tribunal (NCLAT), but NCLAT directed Trimex to present its grievances before the NCLT. Ultimately, the NCLT dismissed Trimex's objections filed by way of a second application, and imposed a cost of ₹5 lakh for filing frivolous applications that consumed the Tribunal's valuable resources and time, thus solidifying JSL's eligibility to submit the resolution plan.

A recent development involved the filing of a Public Interest Litigation (PIL) [Writ Petition(C) 979 of 2022] in an attempt to halt JSL's resolution plan. However, the Supreme Court dismissed the PIL, thus failing to derail the plan. Additionally, an application by operational creditor Maa Tara Enterprises, made later on to stall JSL's plan, was also rejected and resulted in costs being imposed.

Several potential bidders, including Sarda Mines Limited, Vedanta Limited, Welspun Corp Limited, Khandwala Finstock Pvt. Limited, Trimex Industries Pvt. Ltd., and ARES SSG Capital Management (Singapore) Pte Limited, vied to become Prospective Resolution Applicants (PRA) for SIL, which entered the Corporate Insolvency Resolution Process (CIRP) in 2019. However, only Vedanta Limited and Jindal Saw Limited submitted resolution plans. JSL's bid was superior to Vedanta Limited's offer of ₹620 crore to creditors, including an upfront payment to financial creditors. Consequently, JSL's Resolution Plan was approved unanimously by the Committee of Creditors (CoC) with 100 per cent votes.

JSL received invaluable legal representation from a team of experts at S&A Law Offices, New Delhi, led by Senior Partners Vijay K Singh (Litigation) and Daizy Chawla (Corporate), who provided effective advocacy for the company throughout the challenging process before the NCLAT in Chennai, NCLT in Cuttack (Special Bench), and NCLT in Hyderabad.