Supreme Court refuses to stay NCLAT proceedings scrutinizing approval of Hinduja's RP to acquire Reliance Capital

Supreme Court refuses to stay NCLAT proceedings scrutinizing approval of Hinduja's RP to acquire Reliance Capital

Earlier, the National Company Law Tribunal had ruled in favor of Torrent Investments, which emerged as the highest bidder

The Supreme Court has refused to stay the proceedings before the National Company Law Appellate Tribunal (NCLAT), which is looking into the grant of approval to the Hinduja Group company’s resolution plan (RP) for the acquisition of Reliance Capital.

In the first auction held in December, Gujarat-based Torrent Investments had emerged as the highest bidder with Rs.8,640 crores, while the Hinduja Group offered Rs.8,110 crores.

However, within 24 hours, Hinduja made a revised offer of Rs.9,000 crores. This was contested by Torrent before the National Company Law Tribunal (NCLT). It stated the violation of the auction process as it was made after the deadline.

The tribunal ruled in favor of Torrent, barring lenders from holding a second auction. However, the National Company Law Appellate Tribunal (NCLAT) overturned the tribunal’s order.

In April, the Apex Court directed lenders to hold a challenge-mechanism auction, adding that it would hear the matter in August.

But soon, another auction was held, wherein Hinduja offered Rs.9,640 crores while Torrent did not participate.

However, the deal required the top Court’s approval since Torrent, one of the initial bidders, had appealed over the extension of the first round of auction beyond the original deadline.

Meanwhile, the Hindujas sounded out global credit funds to raise up to $1 billion (about Rs.8,200 crores) to finance the potential acquisition of Reliance Capital, as it was the favored bidder after lenders to the insolvent financial services company approved its RP.

In July, the lenders of Reliance Capital approved a Rs.9,650 crore RP made under the Insolvency and Bankruptcy Code (IBC) rules from Hinduja Group’s company IndusInd International Holdings Limited (IIHL).

The offer could result in a successful resolution for the debt-laden Reliance Capital, the second largest financial services company after Dewan Housing Finance Limited (DHFL) to be sold under IBC.

In November 2021, the Reserve Bank of India (RBI) superseded the board of Anil Ambani-owned Reliance Capital, citing governance concerns. It brought in Nageswara Rao Y, a former executive director at the Bank of Maharashtra, as the company's administrator.

Financial creditors of the company have since filed claims worth Rs.24,000 crores for recovery of their dues.