Patanjali could drag Adani Wilmar and the IRP of Ruchi Soya to National Company Law Board over alleged breach of the IBBI guidelines for code of conduct for IRP
The resolution process of bankrupt Ruchi Soya, being conducted under the Insolvency and Bankruptcy Code (IBC), looks headed for a litigation.
Sources in the legal industry, who spoke on condition of anonymity, told DNA Money that Baba Ramdev-promoted FMCG company Patanjali Ayurved could take Adani Wilmar and insolvency resolution professional of Ruchi Soya to the Mumbai branch of National Company Law Board (NCLT) over a breach of Insolvency and Bankruptcy Board of India (IBBI) regulations.
"It (Ruchi Soya case) will land up in the court. There are conflict of interest issues, which are apparent in the entire process. And it is a breach of IBBI guidelines. Patanjali may take the RP, Adani and the lenders to the court," he said.
The lawyer said if the provisions relating to confidentiality and code of conduct are "attracted" then Adani's bid could even be disqualified.
"The IRPs have to function within the code of conduct guidelines. They have to maintain confidentiality and ensure there is no conflict of interest. One has to look into whether those provisions are attracted or not. The conflict of interest is a very critical part of the entire process of resolution under the IBC. If the provisions are attracted then they (Adani Wilmar) could be disqualified or debarred," he said.
The source said that the committee of creditors (CoC) could be questioned for approving the Adani's resolution proposal when it was apparent that the law firm Cyril Amarchand Mangaldas (CAM), which is closely associated with Adani, was also the counsel of the RP.
S K Gupta Tijarawala, the spokesperson of Patanjali, told DNA Money that any action would follow only after the company gets response to its queries from the CoC.
"We have sought the papers on conflict of interest and details about it, but we have not got any response. We have sent them reminders also. So, let it (reply) come to us," he said.
When asked against whom the homegrown FMCG firm will take the legal action, Tijariwala replied; "Let us not jump to the next level. First and foremost thing is we must know the details and have the reply of the CoC and see what they have to say".
The Patanjali spokesperson confirmed to DNA Money that the CoC had asked them to top the Adani bid.
"Absolutely, we have been asked to top the bid by June 16," he said.
As per the first schedule of IBBI (Insolvency Professionals) Regulations, 2016, the code of conduct on confidentiality adopted by the Insolvency Professional Agency of Institute of Cost Accountants of India; "an insolvency professional must ensure that confidentiality of the information relating to the insolvency resolution process, liquidation or bankruptcy process, as the case may be, is maintained at all times. However, this shall not prevent him from disclosing any information with the consent of the relevant parties or required by law".
Another lawyer, who is closely working on Ruchi Soya's bankruptcy case, however, ruled out any legal dispute, saying all parties had signed on the decision taken at the CoC meeting.
"I don't think there will be any litigation. All of them (parties involved) have signed on the decision taken (at the meeting with the CoC)," he told DNA Money off-the-record.
Ruchi Soya's bankruptcy process is mired in conflict of interest issue with CAM reportedly quitting as legal adviser to Adani Wilmar. The law firm distanced itself from Adani because they were also advising Shailendra Ajmera, IRP of Ruchi Soya.
According to the lawyers DNA Money spoke to, this was a breach of IBBI guidelines.
"See, if you are close to one side, you can't be a lawyer for the other side in the same case. They (CAM) are very close to Adani and they can't be possibly advise the lenders too. The whole process of resolution under the IBC has to be kept confidential. Now, in this case since you have common lawyer firm, the issue of confidentiality has become a matter for scrutiny. I am sure, this matter will get escalated," said a lawyer, who did not want to be named.
Meanwhile, sources revealed that Adani Wilmar was ahead of Patanjali in the race for Ruchi Soya with a higher bid. It was reported that Adani's bid involved payment of over Rs 6,700 crore. According to reports, Patanjali has been given the opportunity to top Adani's bid.
The total sour debt of Ruchi Soya is Rs 12,000 crore. The other bidders, who fell out of the race in the initial round, were Godrej Agrovet and Emami Agrotech. The former, which had submitted a bid, is most likely to buy a part of Ruchi Soya's business from Patanjali if it wins.
"Godrej has lent support to Patanjali. It may buy a part of the business (of Ruchi Soya) from Patanjali if it wins the bid," said a source, who spoke on condition of anonymity.
NOT SO EDIBLE
Adani has bid the highest for the bankrupt edible oils company, while Patanjali is the second highest
Rs 6,000 cr
Adani Wilmar has offered for Ruchi Soya
Rs 5,700 cr
offered by Patanjali Ayurved
INITIAL ROUND
Rs 4,300 cr
Patanjali was the top bidder
Rs 3,300 cr
Bid by Adani Wilmar
Rs 12,000 cr
Sour debt of Ruchi Soya
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