Jawaharlal Nehru Port Trust’s (JNPT) plan to buy the debt-laden Dighi Port Ltd could fizzle out after Tuesday’s Supreme Court’s order striking down the February 12, 2018 Reserve Bank of India (RBI) circular on stressed assets.
The RBI circular mandated banks to initiate insolvency proceedings against companies with debt of above ₹2,000 crore, in case the debt is not resolved within 180 days with the approval of 100 per cent (all) lenders.
Resolution process
In January, the committee of creditors, led by the Bank of India, approved the resolution plan submitted by JNPT for Dighi port which owes around ₹2,628.84 crore to a clutch of 16 banks. JNPT’s resolution plan is yet to be approved by the National Company Law Tribunal (NCLT). The corporate insolvency resolution process of Dighi port was initiated after the RBI circular, on a petition filed by an operational creditor, DBM Geotechnics and Constructions Pvt Ltd.
Dighi port, jointly promoted by Balaji Infra Projects Ltd and IL&FS Ltd, owes around ₹30 crore to DBM Geotechnics for constructing multi-purpose berths 1 and 2 at Dighi and berth number 3 at Agardanda, in Maharashtra.
Vijay Kalantri, chairman and Managing Director, Dighi Port Ltd and Balaji Infra Projects Ltd, has reiterated that lenders had not taken the port to the NCLT and that he was in discussion with two investors for a resolution with the banks, when the port was admitted to the insolvency court. “Quashing of the 12 February circular and declaring it ultra vires and unconstitutional is a welcome decision of the Supreme Court as it was bad in law and had impacted various resolution plans, which were under process between lenders and debtors,” said Kalantri, who is also the President, All India Association of Industries (AIAI), after the court ruling.
Scope for restructuring
“The democratic resolution process of negotiation between lenders and debtors had come to a halt by this circular and, especially, the infrastructure, shipping, power and other manufacturing companies were compelled to undergo insolvency proceedings under the NCLT and the Insolvency and Bankruptcy Code (IBC),” he said. Kalantri added, “Now the lenders and borrowers will be able to come up with resolution plans that will restructure the existing units, thereby not only generating employment but also encouraging other entrepreneurs to venture into new business activities.”
JNPT could not be reached immediately for comment. The acquisition of Dighi port was part of the strategy of India’s busiest container port to develop a hub and spoke model with JNPT at the centre.
A shipping ministry official said, “Dighi will be a satellite port; dealing with specialised cargo like the cargo which Mumbai Port Trust is not handling now, will shift to Dighi.”