NCLT dismisses Torrent Investment plea- seeking a stay on the Reliance Cap CoC's voting process for second round of auction
The National Company Law Tribunal (in short NCLT) Mumbai bench, on 9 January, 2023 rejected the interim relief sought by Torrent Investments, seeking a stay on the voting process for the second round of auctions by the lenders of debt-laden respondent- Reliance Capital (in short also called RCap).
The NCLT in the case of Reserve Bank of India vs. Reliance Capital Ltd on 3 January, 2023 had directed the lenders not to accept the bid offered by the Indusland International Holdings (also called the Hinduja Group Company) which had also pleaded to be a party in the matter. Torrent Investments and Hinduja Group Company are in the fray for Reliance Capital.
Torrent had moved an interlocutory application seeking a stay on the revised bid of Rs. nine thousand crore by the Hindujas.
On 6 January, 2023 the Committee of Creditors (CoC) of RCap floated a proposal to hold a second round of auctions over two days. It is estimated that the RCap has a debt of over Rs. Twenty thousand crore.
Torrent Investment is the main bidder for RCap's assets under the insolvency resolution process and in the first round of auctions, it had offered to pay Rs. eight thousand six hundred forty crore in advance to the lenders.
On 21 December 2022, Torrent tendered a bid worth Rs. eight thousand six hundred and forty crore higher than the Rs. eight thousand one hundred and ten crore offered by a Hinduja Group entity IndusInd International Holding.
While the proposal to conduct a second auction required fifty-one per cent voting by the creditors, it crossed seventy-five per cent mark in favor of the proposal. Life Insurance Corporation of India and Employees' Provident Fund Organization, the two largest lenders, which have thirty-five per cent voting rights, voted in favour of the second challenge mechanism.
The division bench comprising of Justice P.N. Deshmukh (Judicial member) and Technical member Shyam Babu Gautam stated, "The complied plan should be put before committee of creditors. Everybody has to act in accordance with the law."
Vikram Nankani, the counsel representing Torrent Investments notified the Tribunal that the previous order of the NCLT on a stay on the Hinduja's bid has been an overreach. "We have argued that under the rules, there cannot be more than one challenge mechanism because then it is an endless exercise," he added.
The tribunal ordered that no urgent hearing was required for Torrent's application and posted the matter for 12 January.