Another setback to Gujarat NRE Coke liquidation process; NCLAT halts asset sale process
There is no end to the ‘liquidation’ process of Gujarat NRE Coke, it seems. The Gujarat NRE Coke was ordered to be liquidated by the Kolkata bench of the National Company Law Tribunal (NCLT) in January 2011. And yet after more than two-and-a-half years the process is far from over.
The National Company Appellate Tribunal (NCLAT) on 28 October 2020 asked the Kolkata bench of NCLT to revisit its order of 25 September directing the liquidator “to complete the process of liquidation of the Gujarat NRE Coke and pay dues of all stakeholders according to their proportion including the workers.”
Hearing on a plea against the NCLT’s order, the NCLAT said that if the Kolkata tribunal considers that the impugned order is not in conformity with the order passed by the Supreme Court, then the Tribunal should recall the impugned order and pass appropriate orders in conformity with the order passed by the Supreme Court.
The appellants, former employees of Gujarat NRE Coke, had cited a Supreme Court order dated 24 February 2020, wherein the apex court had asked the liquidator that “proceedings may go on only and sales, if any, will not be confirmed.”
The NCLAT has basically sent the ball in NCLT’s court to decide the further course of action.
Gujarat NRE Coke was the first company to be liquidated as a going concern. It had about 1,100 employees on the date of liquidation, and according to the employees association of the company, even after 1,000 days under liquidation, the company remains operational with around 900 employees directly dependent for their livelihood.
They claim that the company has achieved a turnover of more than Rs 1300 crores during liquidation and has paid monthly salaries and wages of the workforce from its own operational cash flows without any outside funding support. Therefore, the employees believe that the company has the potential to revive itself.
The company promoter Arun Kumar Jagatramka and 109 shareholders (most of whom are employees as well) have proposed a scheme for revival under Section 230 of the Companies Act.
However, the employees alleged that liquidator Sumit Binani has not been doing enough to revive the company under Section 230 of the Companies Act. The employees blame the liquidator of not paying wages since April 2020.
Meanwhile, sources said that employees continue to receive salaries and that the revival under Section 230 is not possible. Besides, no buyers have shown interest in acquiring the company as going concern in the liquidation stage.
