Sterling Biotech offers suspicious, says NCLT

Mumbai: Andhra Bank-led lenders’ plan for a one-time settlement with Sterling Biotech, whose absconding promoters are under investigation, has “created suspicion”, observed the National Company Law Tribunal (NCLT). The court has asked various government investigative agencies to make their representation on the proposal within seven days.
“How the proposal submitted by Sandesara group is accepted by financial creditors creates suspicion,” the court said in its order on March 11. The NCLT has issued notices to the ministry of corporate affairs, the Enforcement Directorate, income-tax authorities, the CBI, Sebi and the RBI, in respect of Andhra Bank seeking to withdraw insolvency proceedings against Sterling Biotech. The promoters of the Gujarat-based firm Nitin Sandesara and Chetankumar Sandesara have been absconding and are sought by various investigative agencies, including the CBI and the ED.

Andhra Bank, which is the lead banker to the group, had initiated insolvency proceedings against the company for failure to repay its dues. However, even as the insolvency proceedings were under way, the lenders said that they had considered a one-time settlement which was agreed by over 90% of the lenders and sought withdrawal of the insolvency proceedings.

In their order, members Ravikumar Duraisamy and V P Singh noted that the resolution professional, appointed by the court, had asked lenders to provide him with the details of the offer, sources of funds, the time frame for payments, compliance with the RBI norms and whether the interest of all stakeholders have been provided for under the offer.

However, Andhra Bank informed the resolution professional that they will directly address the issue with the tribunal and did not submit any information to the resolution professional. “...the promoters of the corporate debtor are absconders and we often get the news from newspapers that various government agencies like ED, CBI, and other agencies are unable to trace the promoters of the corporate debtor,” the court said in its order.

Curiously the offer accepted by the lender was extended by one Farhad Daruwalla, who had signed on behalf of ‘Sandesara Group’. It was not mentioned in the proposal whether Daruwalla has been authroised by Sterling Biotech to submit the proposal. “It is also important to point out that the corporate debtor is Sterling Biotech and no proceedings under IBC has been initiated against Sandesara group,” the court said.