New Delhi, Aug 15 (IANS): NCLT Chennai has rejected the one-time settlement offer made by Siva Industries and ordered that the company will go into liquidation.

The NCLT Chennai Bench, comprising R. Sucharitha and Anil Kumar B., said in the order, "The purported settlement plan proposed by the promoters of the Corporate Debtor is not a Settlement simpliciter, rather it is a 'Business Restructuring Plan'. As per the plan, there is no final offer made by the promoter of the corporate debtor and also the acceptance made by the CoC in this regard. There is no finality reached between the promoter of the Corporate debtor and the CoC of the Settlement proposal; hence based on ambiguity of the terms of settlement, we cannot order for the withdrawal of CIRP."

The order also said that seeking liquidation should there be a default was beyond the scope of IBC.

The NCLT said the application made by RCK Vallal, one of the shareholders of the company, is not conforming to the Section 12A of the Insolvency and Bankruptcy Code.

Eyebrows had been raised at the settlement offer as public sector banks agreed to settle with the promoter of Siva Industries, a huge loan of Rs 4,863 crore at just 318 crore -- recovery of only 6.5 per cent.

Lenders were even withdrawing the bankruptcy process of Siva Industries

It was pointed out that the settlement amount accepted by banks is even lower than the liquidation value of Siva Industries -- will result in loss of approximately Rs 4,700 crore public money

Instead of invoking personal guarantee of promoters, the public sector bank Canara Bank privately sold its exposure of Rs 1,148 crore to a foreign owned ARC -- International Asset Reconstruction Company Private Limited (IARC).

CBI has also filed criminal case against former senior officials of IDBI Bank and Sivasankaran for allegedly defrauding the lenders to the tune of Rs 600 crore.