NCLT Mumbai in Reliance Cap case considers Whether to Defer the date for Challenge or Extend Mechanism Proposed by Lenders
The National Company Law Tribunal, Mumbai Bench (in short NCLT) stated that it will continue to hear and conclude the plea moved by Torrent Investment against the second round of auction of the financial services company- Reliance Capital and will determine on whether to in the interim, defer the date for the 'challenge or extended mechanism' proposed by the lenders.
On 12 January, 2023, Torrent, was the highest bidder among others in first round of auction and had approached the NCLT Mumbai, seeking to stay on the 'challenge mechanism' scheduled for 19th January, 2023.
The Counsel for the administrator and Committee of Creditors (in short CoC) stated before the NCLT that the fresh auction for sale would be held on 23rd January, 2023 as the it was expected that the hearing of challenge may not be concluded before 19th January, 2023.
Appearing for Torrent, Senior Counsel Darius Khambata was rejoining to submissions made by other Senior Counsels including Kapil Sibal for the CoC, Ravi Kadam, AM Singhvi and Harish Salve who all sought dismissal of the application.
Mukul Rohtagi, Torrent's other Senior Counsel advised that any fresh auction be deferred by the Tribunal for a week so as to give sufficient time to the opposite parties to challenge the outcome of its plea, if matter is reserved for orders by Friday.
Per contra, Senior Counsel Kapil Sibal for the CoC interjected and opposed. "I am objecting. The mechanism must go on."
The NCLT bench also stated, "you will be notified when we are ready with the order."
Parallelly, another bidder Hinduja Group Company (Indus International Holdings), Advocate Harish Salve was appearing whose bid was higher than Torrent's but also considered to be 'sub optimal' as it was below the cut off liquidation value and expressed his view that, "if CoC feels in its commercial wisdom that the fresh auction will general be more money, it must be allowed. The Tribunal cannot interdict at this stage."
Opposing Torrent's plea Sibal said the "whole process has been stymied contrary to the court''. He urged the Tribunal to declare Torrent's application as "non-maintainable'', also premature, and to dismiss it saying, "CoC be allowed to proceed in accordance with court and law.''
Salve said the "purpose of the insolvency court is not to create an avenue for lucrative investment. The company belonging to a group of shareholders is not a largesse of the government to be distributed. And therefore, all these notions saying you cannot have multiple biddings…is completely misconceived.''
Salve submitted, "unless there is an express statutory bar, the general principle of whether or not to accept a resolution plan at all must lie with the CoC, or administrator or Resolution Professional as the case may be Salve added later, "public monies have been given to a corporate debtor and public monies have to come in, Torrent cannot enrich itself at the cost of the Indian tax payer."
Khambata in his rejoinder began asserted with Sibal and Salve and argued that its plea was premature, and asked how on 23 December, the administrator said the plan was unfair to Torrent. Khambata stated, "a new process is a wipe out.'' The NCLT asked Khambata to continue and conclude on Friday and listed the matter high on board.