How JNPT lost its bid for Dighi Port to Adani Ports & SEZ

Adani Ports and Special Economic Zone (APSEZ) completed the acquisition of 100% Dighi Port Limited for Rs 705 crore on 15 February 2021 through a Corporate Insolvency Resolution Process (CIRP) that lasted almost two years.

But before Adani Ports could successfully bid for Dighi Port, which became APSEZ’s 12th port across eastern and western coast, it was Jawaharlal Nehru Port Trust (JNPT) which was slated to take over the 30-million tone capacity port.

The CoC had at first rejected Adani Ports and SEZ’s resolution plan despite it being declared the highest evaluated Compliant Resolution Plan.

The resolution plan submitted by JNPT was approved by the committee of creditors (CoC) with 99.38% vote share. As per the resolution plan submitted by JNPT, it would pay Rs 670 crore to creditors against their total dues of Rs 3,150 crore, and infuse equity capital of Rs 190 crore.

As per JNPT’s resolution plan, all funds for payment to stakeholders and capital expenditure would be brought in by JNPT through its resources. It is stated that the same would be funded through a mix of equity and preference shares and shareholders’ funds.

What tilted the deal in favour of Adani Port

After the CoC gave its approval to JNPT resolution plan, a petition was filed by Veritas (India) Limited (VIL), Veritas Infra & Logistics Private Limited (VILPL) and VeritasPolychem Private Limited (VPPL), which are sub-lessees and sub-concessionaires of Dighi Port.

The corporate debtor had entered into an agreement with the Veritas group firms to set up PVC plant. Veritas group wanted to ensure that the resolution plan had sufficient provisions to protect its interest as a third party. However, the resolution professional had refused to share the copy of the resolution plan, forcing Veritas to move a petition in the NCLT.

The NCLT concurred with Veritas’ concerns and also noted that the resolution plan has agreed to give Vertias an opportunity for renegotiation. However, it said that the resolution applicant in its resolution plan, cannot seek to terminate agreements that have created legal rights in third parties without adhering to the due process of law by which those agreements could have been terminated in case there was no CIRP in place. Such termination of legally binding agreements would violate the law under which such contracts are governed and thus in violation of section 30(2)(e) of IBC.

The NCLT, therefore, directed JNPT to make necessary modifications in the resolution plan and file an affidavit before this tribunal submitting its acceptance or rejection of the said modification in the resolution plan.

JNPT, however, refused to make the necessary modifications and hence the CoC had to put resolution plan of Adani Port to vote again. The CoC this time approved the resolution plan with 99.68% vote share.

Read also: Piramal Group’s letter to creditors of DHFL protesting Adani’s ‘unsolicited’ bid

Meanwhile, Adani Ports and SEZ plans to invest over Rs 10,000 core to develop the port into a multi-cargo port with world class infrastructure as well as investing in the development of rail & road evacuation infrastructure for seamless and efficient cargo movement. The company will strengthen and repair existing infrastructure and invest in development of facilities for dry, container, and liquid cargo.

APSEZ in a press release said that Dighi Port will evolve as an alternative gateway to JNPT and will invite and support the development of port-based industries on port land.