In tussle with Adani, Baba Ramdev's Patanjali may drag Ruchi Soya to NCLT

The resolution process of bankrupt Ruchi Soya, being conducted under the Insolvency and Bankruptcy Code (IBC), may be 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,” a lawyer 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 Insolvency and Bankruptcy Code. 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 resolution professional.

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 committee of creditors.

“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, Tijarawala 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 committee of creditors had asked them to top the Adani bid.

“Absolutely, we have been asked to top the bid by June 16,” he said.

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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”

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.

By Praveena  Sharma, DNA India