NCLAT Issues Notice to Adani's Ambuja Cements Regarding Alok Sanghi's Insolvency Plea

The National Company Law Appellate Tribunal (NCLAT) has issued a notice to Ambuja Cements, part of the Adani Group, following a plea by Alok Sanghi. Sanghi, a former promoter of Sanghi Industries, challenged an order from the National Company Law Tribunal (NCLT) that initiated insolvency proceedings against him. The appellate tribunal has temporarily halted this order, stating no further actions should be taken based on it.

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Alok Sanghi's appeal stems from a February 25, 2025, NCLT decision under Section 95 of the Insolvency and Bankruptcy Code (IBC). This section allows creditors to initiate insolvency proceedings against debtors, including personal guarantors. Ambuja Cements had filed an application citing a personal guarantee of Rs 84 crore by Sanghi. However, Sanghi contends that the Share Purchase Agreement (SPA) dated August 3, 2023, did not mention any personal guarantee.

Ambuja Cements' Acquisition and Dispute

In August 2023, Ambuja Cements entered into an agreement to acquire Sanghi Industries from its promoters. The acquisition was completed in December 2023 for Rs 5,185 crore. As part of this deal, indemnities were provided to the Sanghis. However, a dispute arose over an unpaid electricity bill which led Ambuja Cements to invoke Sanghi's personal guarantee for Rs 84 crore.

Sanghi's counsel argued that the NCLT prematurely adjudicated issues related to the SPA during the appointment of the Resolution Professional. They referenced a Supreme Court judgment in Dilip B Jiwrajka Vs. Union of India & Ors., asserting that such adjudication was unnecessary at this stage. The NCLT had already appointed an interim resolution professional to handle the matter.

NCLAT's Interim Order and Future Proceedings

The NCLAT has granted Ambuja Cements two weeks to respond and scheduled the next hearing for April 14, 2025. The tribunal acknowledged that both parties raised significant issues requiring careful consideration. Consequently, it stayed further proceedings until the next hearing date.

Ambuja Cements' counsel argued that the NCLT did not fully examine various clauses of the SPA. They claimed that despite the document's nomenclature, it revealed a personal guarantee by Alok Sanghi. The NCLT had directed the Resolution Professional to submit a report on whether to admit or reject the application based on debt and indemnity considerations.

The NCLAT emphasized that both parties' arguments need thorough examination before proceeding further. "We are of the view that the issues which have been raised by learned counsel for the parties needs consideration," stated NCLAT while issuing notice to Ambuja Cements.

This legal battle highlights complexities in corporate acquisitions and insolvency proceedings in India. It underscores how disputes over agreements and guarantees can lead to prolonged legal challenges affecting all involved parties.