Ratnagiri Gas Demerger Scheme Gets Approval

The demerger scheme for Ratnagiri Gas and Power Pvt. Ltd. and Konkan LNG Pvt. Ltd. has been approved by the National Company Law Appellate Tribunal (NCLAT).

Setting aside the earlier order of the National Company Law Tribunal, Delhi, the NCLAT has extended the ‘Long Stop Date’ for the scheme of demerger of the companies to March 31, 2018. “We set aside the impugned order dated 16th August, 2017 passed by the Tribunal, Principal Bench, New Delhi... (and) approve the scheme with modification as noticed... and the Long Stop Date stands extended up to 31st March, 2018,” said a NCLAT bench headed by Chairperson Justice S. J. Mukhopadhaya.

Earlier, the National Company Law Tribunal, Delhi had held that ‘Long Stop Date’ was March 31, 2017 and there was no record to establish that it has been extended beyond that. ‘Long Stop Date’ is the last day by which something must be done. Agreements terminates automatically if they fell beyond the stipulated time.

NCLAT had held that modified scheme cannot be sanctioned without complying with the Section 66 of the Companies Act, 2013 or at least without obtaining fresh consents from the shareholders and creditors of the Appellant Companies.

Mr. Tushar Mehta, Additional Solicitor General appearing for the companies, submitted that NCLAT’s refusal to sanction the scheme was not only legally but also factually unsustainable. The appellate tribunal did not consent with NCLT that one of the grounds for rejection was that life of the scheme terminated on March 31, 2017 and there is no record to suggest that the same has been extended.

NCLAT observed that extract of 101st meeting of the board of Ratnagiri Gas and Power held on March 23, 2017 and extract of minutes of Konkan LNG on March 30, 2017 show that the demerger scheme was extended to March 31, 2018.

The tribunal had also observed that one of grounds of rejection was that Power Finance Corporation (PFC), which was one of the secured creditors had dissented to the scheme. “However, we find that such finding is contrary to the records. IDBI Bank, which is the lead creditor, filed an application before the tribunal, wherein it is specifically and categorically stated that initially PFC had objected to the scheme, however, the said objection was withdrawn subsequently,” it said.

The scheme was first filed by Ratnagiri Gas and Power, which is a petitioner company and Konkan LNG, a petitioner/resulting company before the Delhi High Court, which had later transferred the case to NCLT.

Incorporated in July 2005 Ratnagiri Gas and Power is promoted by NTPC and GAIL. The company was set up to takeover and revive the assets of Dabhol Power Company Project.